Tags: taleb | nationalize | banks

Taleb: Nationalize the Banks

By    |   Friday, 30 Jan 2009 11:49 AM

Investment guru Nassim Taleb, who soared to prominence with the book “The Black Swan: The Impact of the Highly Improbable,” says the U.S. government must take over the banking system.

Nationalizations are “absolutely necessary” to keep the banks from causing further damage to the financial system, he told Bloomberg TV.

“You cannot trust the banks in taking risks,” he says

“We have a very strange situation in which it’s the worst of capitalism and socialism, a situation in which profits were privatized and losses were socialized. We taxpayers have the worst.”

Banks around the world have suffered more than $1 trillion in losses related to the global financial meltdown so far.

“We should not trust these bankers; look at their track record,” Taleb says.

“They know we’re going to bail them out. They hold us as hostages,” and “the only way to stop the process is for the government to own those banks, tell them what to do.”

Taleb isn’t so hot on complicated derivatives either. “I don’t like credit default swaps,” he says.

“We should probably stop trading derivatives, anything more complex than regular options. I am an options trader, and I don’t understand options. How do you want a regulator to understand them?”

Not surprisingly bankers themselves take a more optimistic view of their institutions than Taleb does.

“JPMorgan will be fine if everybody stops talking about nationalizing banks,” the bank’s chief executive Jamie Dimon told the World Economic Forum in Davos.

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Investment guru Nassim Taleb, who soared to prominence with the book “The Black Swan: The Impact of the Highly Improbable,” says the U.S. government must take over the banking system.Nationalizations are “absolutely necessary” to keep the banks from causing further damage...
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Friday, 30 Jan 2009 11:49 AM
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