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Thread: weekend commentary - Taleb says Obama's Stimulus Plan Made Crisis Worse

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    Default weekend commentary - Taleb says Obama's Stimulus Plan Made Crisis Worse

    Obama’s Stimulus Plan Made Crisis Worse, Taleb Says

    Sept. 25 (Bloomberg) -- U.S. President Barack Obama and his administration weakened the country’s economy by seeking to foster growth instead of paying down the federal debt, said Nassim Nicholas Taleb, author of “The Black Swan.”

    “Obama did exactly the opposite of what should have been done,” Taleb said yesterday in Montreal in a speech as part of Canada’s Salon Speakers series. “He surrounded himself with people who exacerbated the problem. You have a person who has cancer and instead of removing the cancer, you give him tranquilizers. When you give tranquilizers to a cancer patient, they feel better but the cancer gets worse.”

    Today, Taleb said, “total debt is higher than it was in 2008 and unemployment is worse.”

    Obama this month proposed a package of $180 billion in business tax breaks and infrastructure outlays to boost spending and job growth. That would come on top of the $814 billion stimulus measure enacted last year. The U.S. government’s total outstanding debt is about $13.5 trillion, according to U.S. Treasury Department figures.

    Obama, 49, inherited what the National Bureau of Economic Research said this week was the deepest U.S. recession since the Great Depression. Even after the stimulus measure and other government actions, the U.S. unemployment rate is 9.6 percent.

    Governments globally need to cut debt and avoid bailing out struggling companies because that’s the only way they can shield their economies from the negative consequences of erroneous budget forecasts, Taleb said.

    Errant Forecasts

    “Today there is a dependency on people who have never been able to forecast anything,” Taleb said. “What kind of system is insulated from forecasting errors? A system where debts are low and companies are allowed to die young when they are fragile. Companies always end up dying one day anyway.”

    Taleb, a native of Lebanon who gave his speech in French to an audience of Quebec business people, said Canada’s fiscal situation makes the country a safer investment than its southern neighbor.

    Canada has the lowest ratio of net debt to gross domestic product among the Group of Seven industrialized countries and will keep that distinction until at least 2014, the country’s finance department said in March. Canada’s ratio, 24 percent in 2007, will rise to about 30 percent by 2014. The U.S. ratio, now above 40 percent, will top 80 percent in four years, the department said, citing IMF data.

    “I am bullish on Canada,” he told the audience. “I prefer Canada to the U.S. or even Europe.”

    Mortgage Interest

    Canada’s economy also benefits from the fact that homeowners, unlike their U.S. neighbors, can’t take mortgage interest as a tax deduction, Taleb said. That removes the incentive to take on too much debt, he said.

    “The first thing to do if you want to solve the mortgage problem in the U.S. is to stop making these interest payments deductible,” he said. “Has someone dared to talk about this in Washington? No, because the U.S. homebuilders’ lobby is hyperactive and doesn’t want people to talk about this.”

    Taleb also criticized banks and securities firms, saying they don’t adequately warn clients of the risks they run when they invest their retirement savings in the stock market."(snip)

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    Default Re: weekend commentary - Taleb says Obama's Stimulus Plan Made Crisis Worse

    Funny that even many of the conservatives have yielded that the stimulus, bailouts, and TARP etc have helped the US avoid a depression. I believe these controversies should be more directed at the stupidities that got us into this mess rather than government attempt s to get us out of it. Certainly those who got us into the horrible mess are doing absolutely NOTHING to help clean up their mess, and in fact, if allowed, they would probably do the same things all over again. Those are the individuals and corporations that should be summarily horsewhipped and put out to pasture.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: weekend commentary - Taleb says Obama's Stimulus Plan Made Crisis Worse

    ^^^ believe it or not, I am in complete agreement that Lehman Brothers should have been the first of MANY subsequent bankruptcies of major Wall St. financial institutions. However, the 'gold foil hat' crowd would tell you that allowing resulting losses to accrue to America's ruling elite 1% was 'unthinkable'.

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