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Wednesday, 25 February 2009

It will be totally impossible for this crisis to end fast

The author of “The Black Swan,” Nassim Nicholas Taleb, predicts that the global financial crisis will be harder to end than the Great Depression and it may force the United States government to nationalize some banks.

The world has a much more complex financial system than in the 1930s, Mr. Taleb told Bloomberg Television, and that makes the current problems worse. Bonuses paid on Wall Street encouraged risk-taking with no regard for losses, he added.

Rare and unforeseen events are known as “black swans,” after Mr. Taleb’s 2007 book, “The Black Swan: The Impact of the Highly Improbable.” Mr. Taleb said the current financial crisis isn’t one.

“The black swan for me would be for us to emerge out of this unscathed and return to normalcy,” Mr. Taleb told Bloomberg. Compared to the Great Depression, he said, this crisis is “very different, and it requires much more drastic action.”

Taleb’s book was published in May 2007, about three months before the credit crisis exploded.

Mr. Taleb’s severe pessimism follows a similar warning by the billionaire investor George Soros last week that the world financial system had effectively disintegrated and that there was no prospect yet of a near-term resolution to the crisis. Mr. Soros said at Columbia University that the turmoil was actually more severe than during the Depression.

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