The economy’s biggest problem now isn’t recession but the mushrooming debt burden, says economist Nassim Taleb, author of the seminal book “The Black Swan.”
"The situation today is vastly worse than a couple years ago,” he told CNBC.
“We had less debt worldwide then and more people employed. Today, we have more risk in the system, and a lower tax base.”
Indeed, debt has spread “like a cancer,” Taleb said. “We need to slash debt like what we’re doing to the Greeks.”
The Obama administration's efforts to pull the economy out of recession have failed, he says.
"They almost get nothing right. Obama promised us 8 percent unemployment thanks to a stimulus. It hasn't worked."
The United States already has the highest liabilities in the world, Taleb notes.
Government debt hit a record of $13 trillion in June and it’s on pace to surpass GDP by 2012, according to International Monetary Fund (IMF) forecasts.
"Don't give a junkie more drugs, don't give a debt junkie more debt," Taleb said.
Others are worried about the trend too.
“The burden of debt can take decades to accumulate, but only a few short months to change course into crisis,” Pimco chief investment officer Bill Gross wrote in his monthly commentary.
“Many investors, economists and politicians alike have little understanding of why attitudes and lending standards can reverse so quickly — how a seemingly innocuous build-up of debt will suddenly produce a crisis.”
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