When Taleb Speaks One Listens

My regular readers know that I a a big fan of Nassim Nicholas Taleb, the author of Black Swan.

In a very short and sweet article, published in the Financial Times, he says,

The core of the problem, the unavoidable truth, is that our economic system is laden with debt, about triple the amount relative to gross domestic product that we had in the 1980s. This does not sit well with globalisation. Our view is that government policies worldwide are causing more instability rather than curing the trouble in the system. The only solution is the immediate, forcible and systematic conversion of debt to equity. There is no other option.

Their conclusion "Invoking the pre-internet Great Depression as guidance for current events is irresponsible: errors in fiscal policy will be magnified by this kind of thinking" makes sense.

To read the trenchant analysis, click here.

You may have to register to read the whole article (it is free). The article is worth the small trouble.

What India Must Do - A Must Read

Martin Wolf, the famous columnist of the Financial Times has just published an article titled What India Must Do If It Is To Be An Affluent Country. While the details and the solutions suggested is well known, I am struck by the conclusion.

What I take for the world is that India, for all the huge challenges it confronts, is likely to continue its rise, if more slowly than the report assumes. The job of adjusting the familiar western ways of thinking about the world to the new realities has hardly begun. Within a decade a world in which the UK is on the United Nations Security Council and India is not will seem beyond laughable. The old order passes. The sooner the world adjusts, the better.

Many years ago Rabindranath Tagore had penned this ...

Sound the clarion
India is going to reclaim its position at the top in the world stage.
(Lousy translation of the excellent Bangla poetry, I agree, but the meaning is conveyed, I hope)

But before that we need to change. The good thing is the path is clear, but do we have the political and social will?

read the article by Martin Wolf.

Lost Time

It was getting dark. An old man bent low with age was making his way back to his his house. A group of young boys were hanging around the corner. As the old man passed them one of them called out, "Grand uncle, what are you searching? Lost something?" The group hooted in merriment. The hunchback stopped. Turned towards the boys, smiled and said in his gruff voice, "I am looking for the time I wasted in my youth. I must have lost it somewhere around here."

Strong Dollar

Feels nice when you observe something and the experts catch up later, doesn't it? This is from Financial Times dated 17.Sep.2008 (see my post on 17.Sep.2008):

One of the most extraordinary features of the past month is the extent to which the dollar has remained immune to a once-in-a-lifetime financial crisis. If the US were an emerging market country, its exchange rate would be plummeting and interest rates on government debt would be soaring. Instead, the dollar has actually strengthened modestly, while interest rates on three- month US Treasury Bills have now reached 54-year lows. It is almost as if the more the US messes up, the more the world loves it.

For the complete article go here.