Discussion
Man who predicted credit crunch warns on 'vicious' debt crisis
watch:
http://www.citywire.co.uk/clickout.aspx?TargetURL=...
Story:
http://www.citywire.co.uk/personal/-/news/money-pr...
Taleb brands the government bailouts of the financial system and the transfer of debt from the private to the public sector as a fast-track to increasing moral hazard and is scathing about the profits made by the banks over the past year.
‘Look at all of the money they made with our backing- it is like they spat in our faces,’ he said. ‘’We have a lower tax base than two years ago because less people are in work than two years ago and are now depending on economic forecasting by governments. Obama is forecasting a deficit of $4-7 trillion depending on the parameters you use but a small glitch can mean the deficit for the next 10 years swells to $20 trillion.’
He points out that Greece was forecasting debt to GDP of 3%, which has since risen to 14% and counting.
‘The same thing will happen to the US- typical government underestimating,’ he says.
Taleb says that the escalation of the debt crisis will be sparked by what he says as the inevitable failed auction of Treasuries and the subsequent contagion around the world.
‘There will not be enough buyers of Treasuries and the government may have to print them,’ he says. ‘Before you know it you wake up to hyper-inflation without having had any inflation. I am extremely worried about government debt and long-term interest rates. A rise in interest rates can be extremely punishing. Governments want a bit of inflation, it would help everyone, but hyper-inflation penalises the stockmarket.’
So what does this all mean for investors?
‘I don’t recommend investors use long-term Treasury bonds as a repository of value- go very short-term,’ he says. ‘If you are European and think the dollar is a going to be a good hedge- both [the euro and the dollar] are going to have the same ills.’
If you back his perception that hyper-inflation is likely, then move into hard assets.
‘A good collection of metals and land, but agricultural land, not speculative real estate,’ Taleb says.
Perhaps his highest scorn is held over for equities.
‘’I recommend not thinking about the stockmarket,’ he says. ‘It is a big hoax that has disappointed people over the last decade making their retirement plans, thinking it would appreciate.’
‘Use it as something to play with for entertainment and nothing more.’
watch:
http://www.citywire.co.uk/clickout.aspx?TargetURL=...
Story:
http://www.citywire.co.uk/personal/-/news/money-pr...
Taleb brands the government bailouts of the financial system and the transfer of debt from the private to the public sector as a fast-track to increasing moral hazard and is scathing about the profits made by the banks over the past year.
‘Look at all of the money they made with our backing- it is like they spat in our faces,’ he said. ‘’We have a lower tax base than two years ago because less people are in work than two years ago and are now depending on economic forecasting by governments. Obama is forecasting a deficit of $4-7 trillion depending on the parameters you use but a small glitch can mean the deficit for the next 10 years swells to $20 trillion.’
He points out that Greece was forecasting debt to GDP of 3%, which has since risen to 14% and counting.
‘The same thing will happen to the US- typical government underestimating,’ he says.
Taleb says that the escalation of the debt crisis will be sparked by what he says as the inevitable failed auction of Treasuries and the subsequent contagion around the world.
‘There will not be enough buyers of Treasuries and the government may have to print them,’ he says. ‘Before you know it you wake up to hyper-inflation without having had any inflation. I am extremely worried about government debt and long-term interest rates. A rise in interest rates can be extremely punishing. Governments want a bit of inflation, it would help everyone, but hyper-inflation penalises the stockmarket.’
So what does this all mean for investors?
‘I don’t recommend investors use long-term Treasury bonds as a repository of value- go very short-term,’ he says. ‘If you are European and think the dollar is a going to be a good hedge- both [the euro and the dollar] are going to have the same ills.’
If you back his perception that hyper-inflation is likely, then move into hard assets.
‘A good collection of metals and land, but agricultural land, not speculative real estate,’ Taleb says.
Perhaps his highest scorn is held over for equities.
‘’I recommend not thinking about the stockmarket,’ he says. ‘It is a big hoax that has disappointed people over the last decade making their retirement plans, thinking it would appreciate.’
‘Use it as something to play with for entertainment and nothing more.’
Edited by amir_j on Tuesday 18th May 17:27
Political Pain said:
The world is full of gurus, every one of them, every single one of them is the benefactor of happen-stance.
Only the very naivest of human beings believe in gurus.
Replace the word guru with lucky gambler and you have this man.
And countless other people in the City that are paid massive bonuses because they have special skills that we can't possibly let go elsewhere.Only the very naivest of human beings believe in gurus.
Replace the word guru with lucky gambler and you have this man.
amir_j said:
Man who predicted credit crunch
I was banging on about it 5 years before it happened due to stupidly rising houses prices, fuel prices etc etc etc. Everybody who owned a house at the time poo pooed it and said I was being an idiot. Sadly they are all now are eating their words.Mans greed will always create these situations because we are too short sighted and bloody minded to see whats coming.
Maybe that makes me a Guru
, then again you didn't really need to be a rocket scientist to see what was in store. Edited by Westy Pre-Lit on Wednesday 19th May 07:40
anonymous said:
[redacted]
Or success with ladieshttp://www.businessinsider.com/nouriel-rubini-part...
NoelWatson said:
anonymous said:
[redacted]
Or success with ladieshttp://www.businessinsider.com/nouriel-rubini-part...
As much as the doom mongers may be right to an extent, it's a relative. In their own ways the Euro, sterling and USD all have their weaknesses. I'm not putting my tinfoil hat on yet.
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