Posts Tagged ‘nassim taleb’

Coronavirus Threatens To Unleash Next Global Economic Crisis

March 6th, 2020 Comments off


In 2007,just before the last great worldwide financial and economic crisis was unleashed, a book by Nassim Nicholas Taleb was published entitled The Black Swan. It explored how unpredictable and outlier can events can unleash extreme impacts of greave consequence. Though Taleb’s book foretold of the Global Financial Crisis that was about to occur, it is just as prescient regarding the unleashing of the Corona virus and its increasingly devastating impact on the global economy.

Seemingly out of nowhere, Corona virus, specifically the strain identified as Covid-19, began spreading like wildfire towards the end of 2019 in Wuhan, China. Since then, it has been occurring in dozens of countries, leading health authorities worldwide to label Covid-19 a pandemic. And though we are only in the early stages of the outbreak, the global economy is already in dire straits.

Stock markets are plummeting, global supply chains are being disrupted, the travel and tourism and related industries are being devastated, and economic fear is becoming as contagious as Covid-19 spread with virulence.

The economist noted for predicting  the 2007-2008 financial collapse, Nouriel Roubini, otherwise known as “Dr. Doom,” is now predicting massive economic collapse as the Corona virus spreads and intensifies. In his views, any equity recoveries are only temporary and the worst is ahead of us, with stock markets possibly contracting by 40 percent or more. Other elements, which Roubini describes as Whites Swans, such as tension with Iran and the China-U.S. trade war, will further exacerbate the economic consequences of Covid-19.

This is not a mere correction or cyclical recession that is being discussed, but a global economic depression of massive proportions. Central banks are already slashing interest rates to near zero, and other signs of panic are setting in. The next Global Economic Crisis appears to be just ahead, with the world geopolitically far more divided and conflicted than was the case back in 2008.


Global Economic Crisis Much Worse Now Than Two Years Ago, Warns Nassim Taleb

June 11th, 2010 Comments off

In an interview with CNBC, the bestselling author of  “The Black Swan,” Nassim Taleb, described the current economic environment as being significantly deteriorated from 2008, when Lehman Brothers went bankrupt. In his gloomy assessment of the global economic crisis, Taleb said, “We had less debt cumulatively (two years ago), and more people employed. Today, we have more risk in the system, and a smaller tax base.”

According to Nassim Taleb, the core economic and financial problem afflicting major economies is a saturation of debt, both public and private. The current Eurozone and UK debt crisis is a manifestation of the age of austerity that lies before us. The United States and UK share the debt crisis afflicting Eurozone economies, however policymakers are still addicted to deficits even in the current critical economic environment. Taleb warned that a debt crisis could not be countered by taking on even more debt, a policy response he compared with giving more alcoholic beverage to an alcoholic.

Nassim Taleb also pointed out that toxic assets on bank balance sheets were as severe a problem now as two years ago. While acknowledging that governments have used taxpayer money to take some toxic assets off bank balance sheets, he pointed out that further degradation of remaining bank assets due to deteriorating economic metrics meant that banks were as fragile today as they were in 2008.

Global Economic Crisis Top National Security Threat Facing U.S.

February 13th, 2009 Comments off
The Global Economic Crisis has now replaced international terrorism as the most menacing threat to the national security of the United States, according to testimony by Dennis Blair, Director of National Intelligence. He presented this chilling assessment to the Senate Select Committee on Intelligence, where he delivered an annual threat assessment, based on the consensus views of the 16 U.S. intelligence agencies, including the CIA. His sober presentation reflects the realistic comprehension by the American intelligence community of the geopolitical consequences likely to result from the Global Economic Crisis.

Illustrating the quantitative and qualitative thinking that went into the annual threat review, Blair told the senators that, “statistical modeling shows that economic crises increase the risk of regime-threatening instability if they persist over a one to two year period.” In other words, many countries will be vulnerable to the fracturing of their social cohesion, some obviously more prone than others. The implications are clear; internal instability will induce external behaviors that are geopolitical destabilizing. Among the examples of such behavior cited by the Director of National Intelligence is the scourge of economic nationalism and protectionism that is likely to result from the prolongation of the Global Economic Crisis. Protectionism will exacerbate the economic and financial crisis while creating rivalries and tensions involving the United States and her allies.

Not specifically spelled out, but a clear menace understood by the U.S. intelligence community, is that major worldwide economic turmoil will multiply the danger of armed conflict between nation states. The Great Depression of the 1930s provided the context that led to the most destructive war in human history. In the first decade of the twenty-first century, with the scourge of nuclear proliferation a dire reality, the dangers pointed out by Dennis Blair are sobering in the extreme.

The Global Economic Crisis already poses, according to leading economic analyst Nassim Taleb, possibly the greatest challenge to the United States since the American Revolution. The essence of Blair’s threat assessment is that the Global Economic Crisis may represent the most threatening challenge to the preservation of world peace since the end of the Cold War. “Time is not on our side,” warns Blair. The Global Economic Crisis is now a strategic crisis, with dangers that go beyond the economic and financial meltdown of the planet.