Airtime: Thurs. Jun. 10 2010 | :30:0 10 ET
“We have no other solution but to slash debt,” Nassim Taleb, author of ‘The Black Swan’, told CNBC Thursday. He discusses the outlook for the global economy with Bob Long, CEO, Conversus Capital.
Author and New York University professor Nassim Taleb told CNBC this morning reporters that the world’s debt problems were spreading “like cancer” — and worse than at the height of the recession.
“The situation today is vastly worse than two years ago. We had less debt then and more people employed then,” said the author of bestselling book, “The Black Swan.”
“Today we have more hidden risks to the system, more explicit risks, and on top of that we have a lower tax base. So explain to me [how] this remedy is going to work?”
Taleb blamed the U.S. government for spurring the growth of the “cancer” with remedies like stimulus packages, which he said only served to increase debt and unemployment.
“Obama promised us 8% unemployment after the stimulus,” he added.
Instead, he said, Western governments should follow Greece’s lead of slashing debt by belt-tightening, rather than shifting spending from the private to the public sphere.
Playing off the illness metaphor, a CNBC reporter asked Taleb whether he thought the US government would pass a second stimulus package given that “the politicians just can’t stomach another recession”.
“Unfortunately you may be right. They may not be able to resist giving the bad medicine.”
