The Next Financial Crisis Is Coming Any Day Now

Interview with Nassim Nicholas Taleb on Bloomberg in October 2018

 One of my favourite provocateurs struggles to clarify his argument in this brief interview – this format, with short and pointed statements, and gross over-generalisations, is not Taleb’s preferred arena for exploring important issues. Taleb is a creative and intuitive commentator who needs time to elaborate and substantiate his insights – and to handle objections. He’s not at his best under pressure and simplification.  

In summary –

The next economic crisis will be bigger than the last one because there is more debt, active (visible) and latent (hidden and residual) – and because nothing has changed structurally (and no one went to jail).

Symptoms have not dissipated – and Taleb anticipates that the next one will start in real estate, at the premium end, and then it spill and contaminate the stock market …

Debt remains a ticking time bomb – Government buys loans to pay for their loans – they also buy loans to pay for interest only – but what happens to the principal debt – who will pay that?

This is somewhat manageable, though not ideal in the medium to long term, when interest rates remain at all-time lows – but what happens when rates begin to rise?

Are there any safe bets right now? – Taleb has ‘skin in the game’ with investments in gold and real estate (?)