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'We're in the Middle of a Crash': Black Swan
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The financial system is crashing and action must be taken by the US government to convert debt into equity to produce a more stable environment, Nassim Taleb, author of "The Black Swan," told CNBC Thursday.
"You may have green shoots, whatever you want to call them, you may have temporary relief,
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Anything that's fragile like the financial system will eventually crash, he said.
"We're in the middle of a crash," Taleb said. "So if I'm going to forecast something, it is that it's going to get worse, not better."
The government needs to deleverage debt and not try stimulus packages that will inflate assets, he said.
"What makes me very pessimistic in not seeing any leadership or awareness on parts of government on what has to be done, which is deleverage $40-to-$70 trillion," Taleb said.
"The monkey on our back is debt," he added.
As an example, Taleb said banks should not be sending demands for larger and larger sums from homeowner in arrears on their mortgage. Instead the bank should offer to lower the monthly payments in return for part-ownership of the property.
"People would be able to start from scratch on a healthy basis. You don't want to wait for foreclosure," he said.
More from and About "The Black Swan"
- Swan Song: Why Nassim Taleb Is Still Wrong
- Authorities Will Fail Us Again: Black Swan
- Don't Change 'Mark to Market': Black Swan
- If you think the rally in Treasurys is tired, maybe it’s time for corporate, high-yield and agency debt.
- Under pressure, Apple has moved to quell a swelling controversy over its Apps privacy policy.
- Corporate America may be ready to share a bigger chunk of its record profits with investors.
- A Porsche historian has assembled some of the most coveted sports cars in the world.
- Monday is on your calendar as President’s Day, but to the NYSE, it’s still something else. (By the way, they’re still closed Monday)
- While booming air travel in Asia has led to a rush of aircraft orders, there’s concern over financing.
Data is a real-time snapshot *Data is delayed at least 15 minutes
