Posts Tagged ‘nassim taleb’

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.