Nassim Taleb Rips Summers, Geithner, Bernanke (VIDEO)
One of earliest and most outspoken experts who warned of disaster before the nation plunged into an economic crisis called out the president Monday for turning to advisers who either missed, fundamentally misunderstood, or contributed to the financial industry meltdown.
Nassim Taleb, author of the book "The Black Swan," took some highly personalized swipes at what he deemed "the triplets" -- Barack Obama's chief economic adviser, Larry Summers, Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernake -- during an appearance on MSNBC's "Morning Meeting with Dylan Ratigan."
"Let's look at them," said Taleb. "They don't seem to understand risk. They have their models and were blinded by their models. The first person not to understand risk is Larry Summers ... [L]ook at Harvard's finances, all right? He is going to do to us what he did to Harvard?"
"Second one, look at Geithner," he added. "In the rare instance in which you have to look at someone's behavior, the gentleman's house, he couldn't understand the risk of the real estate market? That the house could drop in value? Look at him. He is stuck with his house. Look at the numbers. You can see a lot of jokes on the way with someone with these mortgages."
"The third person is Bernanke," Taleb said. "We're giving more power to the Fed, who got us here?"
Ouch. For the record, Harvard's endowment dropped more than 20 percent last summer after risky investments -- ignored by Summers -- turned up lame. Geithner, meanwhile, had difficulty selling his New York home after moving to D.C. because of a lousy housing market. He was ultimately forced to rent his house at a rate that was short of the monthly mortgage payments on his two loans.
The episode was part of a larger discussion on systemic risk. Taleb, a scholar in the epistemology of chance who became a critic of the financial derivatives industry during his time on Wall Street, used the forum to outline the need for regulatory reform that would ensure that future errors or misdeeds don't bring down the entire financial system.
"What got us here is the pseudo-expert," he said. "So I want an economy where economists can be as incompetent as they want, and we are still adaptable."
And while Summers, Geithner and Bernanke received the brunt of Taleb's criticism, President Obama himself was not left untouched.
"When I saw Obama I had high hopes, all right? Although I'm not a Democrat by any standard, I'm close to libertarian, but I had high hopes when I saw Obama," he said. "He did very well... in the international scene. But here I'm so disappointed."
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First Posted: 08- 3-09 11:10 AM | Updated: 09- 3-09 05:12 AM