Sunday, March 22, 2009

Taleb on Debt

I love this interview with Taleb and a few nuggets of wisdom:
"Complex systems do not like debt. So it will proceed to destroy tens of trillions in debt until society rebuilds itself in an ultraconservative manner. We are in for a worse ride than people think.

[C]omplex systems cascade much faster than that. However, the destruction will be deeper than people anticipate. It will bring down a lot of people.
My rosy scenario is that a better economic environment will develop, a low-debt, robust growth world, in which whatever is fragile will be allowed to break early and not late.

My nightmare scenario is that the government saves Citibank once again, as well as the other banks, and business resumes as usual. Then, the next time the system breaks, it breaks much, much bigger."
In other words, short-term stability for long-term instability.

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