PBS NEWSHOUR: Conversation with Roubini and Taleb on the Potential for Recovery
PBS NEWSHOUR — Transcript
GWEN IFILL: Now: what two economists who warned of the coming financial crisis are worried about today.
It’s part of “NewsHour” economics correspondent Paul Solman’s ongoing reporting Making Sense of financial news.
PAUL SOLMAN: October 2006, here on the “NewsHour,” Nassim Taleb warned of the fragility of markets well before the crash, before his cautionary book, “The Black Swan.”
As I understand it, your central insight is that people underestimate the likelihood of rare events.
NASSIM TALEB, author, “The Black Swan”: Exactly. And my idea is twofold, number one, that rare events happen more often, and, two, that, when they happen, they’re far more devastating than we can imagine.
PAUL SOLMAN: A few weeks later, economist Nouriel Roubini took us on a pessimistic real estate tour.
NOURIEL ROUBINI, NYU Stern School of Business: Many people had no equity in their homes. Essentially, they had zero down payments, and now prices are falling, so they have negative equity. There will be lots of delinquencies, a lot of foreclosures.
Click for full transcript
All rights reserved, RoubiniGlobalEconomics, LLC
8 Responses to “PBS NEWSHOUR: Conversation with Roubini and Taleb on the Potential for Recovery”
Good background article on the Greenspan put which quickly evolved into an extremely harmful Washington put, Wall Street put, Bernanke put, Summers put, Obama put, or whatever name you prefer.”Her man in WashingtonCommentary: Did Greenspan channel or betray Ayn Rand?”http://www.marketwatch.com/story/greenspan-and-ayn-rand-disciple-or-traitor-2010-06-19?pagenumber=1The put citizens are still forced to write, because quick killings are more important than moral standards for those at the politico-economical top. And yes, we are paying for it right now and for quite a while in the future.
“Rational maximization by businessmen and consumers, all pursuing their self-interest more or less intelligently within a framework of property and contract rights, can set the stage for an economic collapse,” he (federal judge Richard A. Posner) wrote in his 2009 book, “A Failure of Capitalism.”
White House Opposing Key Measure in Shareholder v. Bank Executive Pay Reform FightYves SmithJun 18, 2010 5:58PMhttp://www.roubini.com/us-monitor/259094/white_house_opposing_key_measure_in_shareholder_v__bank_executive_pay_reform_fightYves here. I suggest you read the entire piece. This conduct is a disgrace, and should settle any doubts as to whose interests Obama really serves. Hint: it isn’t yours and mine.
FDIC Sheila Bair:”The financial crisis and the Great Recession it spawned threw 8 million people out of work, reduced our GDP by about 3 percent, caused a huge increase in federal debt, and virtually wiped out the entire net income of FDIC-insured institutions for at least a two-year period.We need to get back to a world where our financial sector supports the functioning of our economy, and not the other way around.”http://www.fdic.gov/news/news/speeches/chairman/spjun1810.html
A message to Prof’ Nouriel Roubini:As one of the very few heroes of this historic crisis, I believe your job is not done completely until you will ‘connect the dots’ surrounding the remaining huge dilemma, which may be described concisely as follows:Is the level of governmental debt and imbalances in budget deficits and current accounts are sustainable enough to support and bring about a healthy and stable economical growth in the years to come, while the deleveraging and rebalancing of the nations finances are gradually yet successfully being accomplished?A stubborn group of top professionals say that it is false to assume that given the extremely excessive debt levels on all accounts that caused the financial collapse, and given the additional unprecedented piling debt upon debt resulted by the huge QE policies that were put to the rescue, that given the fragile and minimal private sector recovery thus far that is still deficit nurtured – that a relatively stable and painless recovery in the years to come is realistically possible. Rather, they claim we have reached the utmost limit of government leveraging and only a shift of financial regime that will restore saving, investment and production through unavoidable great pain is the inevitable remedy. There is great fear in the markets that is driven by the threatening sovereign debt and the accrued deficits, etc., and that fear can burst violently following any ‘grave surprise’ to heighten the debt service cost to immediate governments’ insolvency.Your credible and sound judgment is needed here, tall above all other voices, to describe in sufficient detail where are we standing here between these two extreme scenarios.Thank you so much for your time and consideration.
The organized gridlock in Washington guarantees crisis. That way they can pass crisis legislation which will again be beneficial to them and harmful to the general population.. the little people… which is us.Here are a couple of pieces to ponderhttp://www.chrismartenson.com/crashcourse/chapter-1-three-beliefshttp://www.financialsensenewshour.com/broadcast/fsn2010-0619-2.mp3The first one is a well done series showing the predicament we are in with lots of solid information and some very alarming conclusions. Martenson is not a professor of economics but he comes to similar conclusions as does Dr. Steve Keen in Australia who is. Keen does the math and Martenson does the fundamentals. Very interesting and pretty disturbing.The second one is about Prechter’s cycle research and where he sees us. They are done from completely different perspectives yet come to startling similar conclusions..Worth your time IMHOP.S. I like the confirmation word.. Sort of a pun or not?Sorry Professor, I really do think you are one of the worlds best thinkers. I don’t always agree but that is because all of us see the sphere of existence and economics from a different vantage point.
check my post below for a link to Chris Martenson’s video series. He explains clearly WHY we can’t get back to where our financial sector is no longer driving our ship of state. He is very persuasive and I believe totally correct.I shouldn’t say can’t but it is totally unlikely considering that we have been able to be so successful due to cheap energy and exponential debt.Yves! Watch the videos and you will also understand that this is neither new behavior nor will it likely change until it is forced to change by We the People!We are still in denial and trying to maintain an unmaintainable status quo. The people are awakening but slowly. The government is so entrenched in its own psychosis and gridlock that the only way they will change is for us to just throw all the bums out…Which also seems unlikely until at least 2012.
yo eco,Check out the inflation or deflation article within the economonitors. Keeping in mind if we don’t get a substantial increase in jobs, that type of inflation would be much worse than the 70′s here in USA. Of course, with so much consumer debt, creating jobs seems like wishful thinking.Also, Prechter needs a boost over at http://www.cxoadvisory.com/gurus/