[Video ] Nassim Taleb has strong feelings about the banking sector

With Halloween around the corner, it seems the favorite villain is the “banker”.  Not that there is something wrong with that. But not too many people have the courage to say what they feel about the banking sector on TV. Nassim Taleb has a great interview on Bloomberg about Occupy Wall Street, Bankers, Bonuses an the rest. He says the things you are thinking.

video here

6 thoughts on “[Video ] Nassim Taleb has strong feelings about the banking sector

  1. Sunt deacord cu el la faza cu salariile si bonusurile. Daca te uiti pe unele banci americane mari, platesc mai mult in salarii si compensatii decat dobanda totala platita pentru toate depozitele. Problema nu e injectarea de bani in sistem si salvarea bancii, in sine, ci modul in care lucrurile astea se fac.

  2. In fact the only problem is with paying for saving the failed banks. I am not a left wing kind of guy but when I see governments going through all the trouble to avoid spending on healthcare or education and then poor trillions to save an industry without asking it to reform I wonder if there is something I am missing.

  3. How do you see this reform? What do you mean by this? And what about the liquidity risk, the psychology, the asymmetry of information, induced by such failures? What effect could they have had if in the autumn of 2008 this would have happened? And what do you estimate about the cost of money after such an event, of 10 giant banks failing, mostly taking into consideration the amount of floating-rate loans, most of them in the companies side? How do you see this in following of the events?

    1. The biggest reform in the last 20 years eliminated one of the biggest monopolies in the world: state ownership in communist countries in CEE. The reform was painful and very hard to implement. It led to unemployment, recession and inflation in the short term. Some countries were able to stick with the reforms, e.g. Poland, some were not and are still reforming, e.g Romania. Compared to that shock the breaking up of the banking sector is a piece of cake. But because too much is at stake, if you catch my drift, we are told that reforming the banking sector would have huge costs in the short term. I say it is worth a try.

  4. It’s not about what they say. May intuition tells me that if this break up would be handed to fate and market, like: let the market decide who’s in and who’s out, we would be much worse off than with the bailout. We are talking about banks here, and not a regular company. If they can split the tbtf banks such that the liquidity and the access to liquidity don’t change too much at the aggregate level, in the system, so that the interest rates not to increase too much, and to protect the deposits, in the same time, I totally agree with you. If we can take 10 bank and split them to the other 1000, and this would improve the upside and limit the downside, I agree. But if not, I prefer the bailout+firing half of the building and cutting 50% of the wage for the rest+asking for an improved business plan. And what we should also remember is the level of credit in their society, both for humans and companies, which is really important. It’s not comparable with the CEE reform. You can’t just play with that interest rate, during such times, for the sake of an idea. But, again, if they could have done the split without society to be more affected than by that bailouts, and they didn’t do it, I agree it was a mistake. But I can’t answer the question now. I will try to look at the huge commercial banks, compared to the others, in terms of BSs, mostly, and see how much could the other have been able to absorb from the huge banks. I don’t know for sure the market share for the tbtf.

    What I totally disagreed was bailing out the investment banks. And also not helping CIT Group, their biggest SMEs lender.

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