Taleb Says Current Crisis `Vastly Worse' Than 1930s; Gold, Copper to Surge

Discussion in 'Wall St. News' started by ByLoSellHi, May 7, 2009.

  1. S2007S

    S2007S

    This crisis is 1000X worse than the Great depression.
     
  2. i have to disagree!
















    it is 1500X worse! :D
     
  3. Taleb is a drama queen.
     
  4. S2007S

    S2007S






    :D :D :D :D :D
     
  5. Lucky for you fools, none of you know what the hell is REAL deoression is.

    If any of you had lived through one and especially were on of the many who had nothing to eat, you wouldn't be saying the trash you are.

    Most of you don't even know what the hell a recession is, much less a depression!
     
  6. Settle down, grandpa. Since you were around for the Great Depression and you know what it is (sorry to hear you didn't have anything to eat), in your opinion are we in a depression now? If the answer is no, what is your problem with mocking Taleb and his "vastly worse" comment?
     
  7. May 7 (Bloomberg) -- The current global crisis is “vastly worse” than the 1930s as financial systems and economies worldwide have become more interdependent, “Black Swan” author Nassim Nicholas Taleb said.

    The global economy is heading into a “big deflation,” though the risks of inflation are increasing as governments print more money, Taleb said at a conference in Singapore today. Gold and copper may “rally massively” as a result, he added.

    “The gravity of the situation is vastly worse than the thirties,” Taleb said. “Navigating the world is much harder than in the 1930s.”

    The International Monetary Fund last month cut its world economic growth forecasts and said the global recession will be deeper and the recovery slower than previously predicted as financial markets take longer to stabilize. The world economy will contract 1.3 percent this year, the IMF said.

    “This is the most difficult period of humanity that we’re going through today because governments have no control,” Taleb told the conference organized by Bank of America-Merrill Lynch. “They had in the 1930s. Today they have no control.”

    Taleb is a professor of risk engineering at New York University and also advises Universa Investments LP, a Santa Monica, California-based firm opened in 2007 by Mark Spitznagel, Taleb’s former trading partner.

    Pressure on Currencies

    Gold, copper and other “assets that China will like” are the best investment bets as currencies including the dollar and euro face pressures, Taleb said.

    Gold, which is traditionally viewed as a hedge against accelerating consumer prices, jumped to a record $1,032.70 an ounce March 17, 2008. The metal for immediate delivery traded little changed at $910.88 at 12:32 p.m. Singapore time, up 3.6 percent this year.

    Copper for three-month delivery on the London Metal Exchange has surged 55 percent this year on speculation demand will rebound as the global economy recovers from its worst recession since World War II. The metal, seen by some investors as a gauge of economic growth, stood at $4,748 a metric ton today.

    Commodity prices are also gaining amid signs that China’s 4 trillion yuan ($585 billion) stimulus package is beginning to work in Asia’s second largest economy. Quarter-on-quarter growth improved significantly in the first three months of 2009, the Chinese central bank said yesterday, without giving figures.

    Hedge Funds

    China will avoid a recession this year, though it will not be able to pull Asia out of its economic slump as the region still depends on U.S. demand, Nouriel Roubini, the New York University economics professor who predicted the financial crisis, said in an interview with Bloomberg News yesterday.

    Taleb said he was more worried about hedge funds than banks because of the risks they are taking.

    “The risks won’t be taken by banks but by hedge funds,” he said. “How many hedge funds has the government bailed out? None. The banks are no longer going to be in that business of taking risks; they’re going to be facilitating other risk takers.”

    To contact the reporters on this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Netty Ismail in Singapore nismail3@bloomberg.net
     
  8. I would also like to add to BLSI that he is trying to warn, in real time the decay that may soon be on your street.

    I cant help but think of the town of Pompei.

    We hear Vesuvius rumbling, but as almost no one is alive that remembers the last time she erupted, the townspeople saw it as somewhat concerning more of a curiosity really.

    They didn't recognize the disaster until too late.
     
  9. With all due respect, I think you miss the point. What many people like Taleb are saying is that the fundamentals leading to this crisis are far worse than the same fundamentals leading to the Great Depression.

    Thus, if the fundamentals are worse, then it is not a stretch of the imagination to say that things could get worse than the Great Depression.

    A few things to consider, that show how fragile the world is today:

    In the 1930s, 20% of the population was engaged in farming. That's a lot of people that were close to food sources. Today? About 2-3% of the population. And you know what? Many grow inedible GM Corn that needs to be processed into cattle feed, high fructose corn syrup, etc....

    Food has to move a lot today - and far. One oil shock, combined with high unemployment and you have a recipe for disaster. And it's not just our country that has this potential problem.

    Also, the financial world is extremely complex and interconnected. This is the first time in a long time that ALL major nations' financial systems have caught pneumonia... It's gone viral.

    Social Security, Medicare, Pensions... on the ropes. Think of the consequences. That's a fire that will grow in the near future and we're currently using A LOT of water to put out the current fires.

    Comparing today's world of global trade and finance to the world of the 1920s, is like comparing a bicycle to an F-16. Which one is more difficult to fix, especially when you find out it has a nasty design flaw? Would you rather be on the bicycle or the F-16 when the design flaw impacts it's functioning?

    I'm not saying we're heading into the stone age. And I'll be the first to admit that our solutions to problems are more advanced as well. The problem however, is that the solutions are being cooked up by the same people that created this crisis. They truly think they are indespensable and will not sacrifice their positions of power and wealth if that is truly required.

    An uncle of mine once told me a story that took place during the depression - he lived in Europe at the time in a small farming village. One night he ate so much rice pudding (homegrown ingredients) that he thought his stomach was going to burst. Guess what? A few hundred miles away, during that same time in the early 1940s, his country's capital had wagons and carts comb the city every morning to cart off those that died of famine.

    I'm not saying we're definately heading for doom. But we shouldn't be too quick to dismiss the dangers we face.
     
    #10     May 7, 2009