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« Nouriel Roubini On The Geithner Bailout Plan: Insolvent Banks Will Still Require Nationalization (CNBC Video March 31, 2009) | Main | Bailout News Links For Tuesday March 31 »

The Black Swan Doesn't Need A Bailout: Dr. Nassim Taleb Says "Bernanke Should Be Removed From Office" (CNBC Video March 31)

Nassim Taleb made an appearance on Squawk Box this morning with Arianna Huffington and the crew.  The discussion of failed banks dominated.  Taleb correctly demands that those in power who did not see foresee the crisis should be removed.  Federal Reserve Chairman Ben Bernanke is singled out.  How can we rely on failed leaders to extract us from a crisis they neither understood nor saw coming.  The bank bailout crisis continues in his view because the same disgraced few are attempting to continue with the old order. 

  • "Myron Scholes should be in a retirement home doing Sudoku."
  • "Remove people from office who oversaw and caused the build-up of hidden risk in the system.  Bernanke and others."
  • "The academic economics establishment failed us.  Their econometric systems failed."
  • "All but the least complex of derivatives should be eliminated."
  • "Doing away with mark to market accounting equates to putting your head in the sand."


Altering mark-to-market accounting rules would bring more opacity to the financial system, said Nassim Taleb, “The Black Swan” author.

“It’s exactly like how a thermometer makes a patient look more sick,” he said in a CNBC interview. “Eliminating the mark-to-market is exactly like putting your head in the sand.”

Rather than taxpayers propping up large banks, Taleb said, the hedge fund model should be followed.

“Some go bust, some do okay, some have problems,” he said. “We don’t care. It’s their problem. It’s not society’s problem.”

Fixing the financial crisis requires a financial system with less debt and less complex derivatives, he said. The solution is not to alter the current financial structure, said Taleb, but rather, to look for “robustness” in the system.

“Complexity causes fragility,” he said. “You’re no longer riding a horse—you’re flying a Concorde. A horse doesn’t explode but a Concorde can have a problem. We now have a Concorde in our hands.”


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Reader Comments (19)

ABC news on Cassano.

I'll be putting together something on this next.

Mar 31, 2009 at 3:09 PM | Registered CommenterDailyBail
As of this morning, Bloomberg's new bailout total is $12.8 trillion.

Mar 31, 2009 at 3:12 PM | Registered CommenterDailyBail
Mar 31, 2009 at 3:14 PM | Registered CommenterDailyBail
But now, in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the "Pay for Performance Act of 2009," would impose government controls on the pay of all employees -- not just top executives -- of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.

Mar 31, 2009 at 3:14 PM | Registered CommenterDailyBail
Geithner's Bank Rescue Plan Not A 'Cure-All': Roubini

Mar 31, 2009 at 3:15 PM | Registered CommenterDailyBail

"Morgan Stanley's John Mack is honest."

No, he wants to be perceived as being honest. There is a difference. Suffice to say I am not a member of the John J. Mack fan club, nor of Philip Purcell, NASD, or FINRA.


"Morgan Stanley, the second-largest securities firm, will pay $12.5 million to settle regulatory claims it wrongly withheld e-mails in arbitration cases by saying they were lost in the Sept. 11 attacks, the company's third sanction since 2002 for mishandling the records."

"Current CEO John Mack made improving the firm's standing with securities regulators a priority when he took the helm in June 2005. Today's accord resolves a claim filed in December by Finra's predecessor, NASD."
Mar 31, 2009 at 7:43 PM | Unregistered Commenterspideydouble
" The world has manny problems that cannot be solved by the level of thinking which created them"

Albert Einstein
Aug 9, 2009 at 12:10 PM | Unregistered CommenterTerry Nevins
Why 10 minutes into Talebs description of the economy and its failings does the f******* us media deem it appropriate to play some halfassed rock music over his piece?

Doesn't the american media 'do' intelligent discussion programs any more?

Was the music played to wake up the hillbillies and get them dancing their way to economic prosperity?

What is wrong with just silence and human voices?
Aug 21, 2009 at 9:08 AM | Unregistered CommenterDavid H Parry
Was the music played to wake up the hillbillies and get them dancing their way to economic prosperity?

Absolutely yes. In our post apocalyptic, anti-narcoleptic, MTV driven culture, entertainment rules.
Aug 23, 2009 at 10:45 AM | Registered CommenterDailyBail
Way for Arianna to butt in...
Aug 23, 2009 at 3:38 PM | Unregistered CommenterB
She's the lost Gabor sister, dahling.
Aug 28, 2009 at 9:17 PM | Unregistered CommenterWhit Tarlton
I was totally prepared to write something long and, by my estimate, intelligent about Taleb's brilliance. But then my 8 year old walked in and asked who this was. I told him he is a brilliant man that he should get to know. The following was the rest of the response;

"Does he rock people? Is he a football player?"

"No, he's a banker, a trader."

"Oh, he's a bad guy?"

You know, doesn't that just about sum it up?

I did explain the difference...
Sep 3, 2009 at 6:50 PM | Unregistered CommenterOberron4life
oh a bad guy....you have a smart son...
Sep 3, 2009 at 11:54 PM | Registered CommenterDailyBail
Maybe Taleb is the guy I've been looking for - the one I can trust. But then he tells me to question everything. Now what do I do? I'm sure the panel was all over him, asking him how he invests. He didn't say it in so many words, but his answer appears to be "I invest in myself". Brilliant. And quite a sense of humor.
Dec 24, 2009 at 3:55 PM | Unregistered CommenterNeruda
DB...MTV still exists. Hmmm.
Dec 24, 2009 at 6:01 PM | Unregistered CommenterGobiasBestFriend
Einstein spells worse than me.
Dec 24, 2009 at 6:02 PM | Unregistered CommenterGobiasBestFriend
"DB...MTV still exists. Hmmm. "

Yeah, but it is not cool like back in the day. Music has really gone to hell...
Dec 24, 2009 at 10:03 PM | Unregistered CommenterS. Gompers
The republic was lost long ago. Only now are a few waking to the realization that international boundaries are blurring and being replaced by multinational corporations. At the head of this loosely associated oligarchy is the financial industry which now accounts by sector about one third of the wealth of Wall St. T...here is a smooth transition in and out of the most powerful government positions and back into corporations. Elections are essentially decided by the most money wins and the ones with the most money are of course .....HUGE corporations. These are some of the conclusions put forth by John Perkins in his book, Confessions of an Economic Hitman. The proof of this assertion you ask ? Where are the investigations, the indictments, claw backs for outrageous bonuses ? Instead, the financial institutions that engineered the collapse are stronger than ever. What more do you need ?
Sep 26, 2010 at 10:29 AM | Unregistered Commenterthruid3
well said thruid...
Sep 26, 2010 at 10:44 PM | Registered CommenterDailyBail

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