Appearing on CNBC today, Nassim Taleb, author of Black Swan: The Impact of the Highly Improbable, denied any central role in precipitating last Thursday’s crash, as The Wall Street Journal yesterday implied.
“I don’t know anything about Thursday’s event,” Taleb told the program. Taleb is an advisor to trading firm Universa, but is not familiar with the everyday strategy of the firm.
“I don’t have enough facts” about Thursday to say whether the collapse was, indeed, a “black swan” event.
What Taleb wanted to tell the world, as his book approaches re-print, is that the financial situation is more dire than it was a year ago, when he took a self-imposed hiatus from everyday trading.
“The world is vastly more fragile than it was when I left it. The crisis of 2008 was caused by debt, hidden risks, and irresponsible risk management. We have more debt, more irresponsible risk management … lower tax basis, and more hidden risks.”
The only encouraging thing Taleb sees are the Greek austerity measures. “Even the Europeans who are lecturing the Greeks are not in great shape. Everyone is in the same boat. The problem today is government should shoot for a surplus, because the environment is much more fragile than before.”
And the catalyst for something bad: “The U.S. is going to have $5 trillion to $6 trillion to borrow next ten years. It’s going to be competing with European governments, and corporates. One day, you’re going to have a bad auction. And that’s going to be the start of something new.”
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