Nassim Taleb on #OccupyWallStreet, Global Banking and Hammurabi’s Code

 

Erik Schatzker:  So if you like

 

Nassim Taleb:  So that’s why I like the model of Hedge Fund because at least we see what’s there

 

Erik Schatzker:  If you’re right

 

Nassim Taleb:  Yeah

 

Erik SchatzkerIf your right and the banks aren’t quote and quote, not telling us the truth.  What does that say about the state of the economy?  What does is it say about the fragility if you will of the economic system?

 

Nassim Taleb:  Okay the system we have now.  Is not normal economic system.

We are not living in Capitalism.  We are not living in Socialism.  We are living in some weird combination.

 

With a cartel the banks controlling… ah, ah more than their share.  It’s like we are serving them.  Rather than the, or they should be serving us.

 

Now the, the compensation, it’s a compensation scheme nothing more.

 

Erik Schatzker: Okay

 

Nassim Taleb:  You can see it.  The banks never have made money in the history of banking.  They were worth of ’83… ’84,’83.  They were worth of ’91.  They’re worth now.

 

 

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Goldman Sachs coming in behind Citi and JP Morgan. When it comes to fixed income commodities and currencies.  It’s also down 36& versus the same time last year overall investor and banking revenue.  This are fees that companies collect from underwriting debt and equity offerings, and advising from M&A transaction.  That was 781 million dollars down.  A 3rd from the same time last year.  And off by almost half from the 2nd quarter.  And Nassim Thaleb our guest. Was talking about how these results really showcase compensation.  For the quarter we can tell you 1.58 Billion dollars were put aside for compensation and benefits.  That’s down 59% versus the same time last year.

 

(Clip ends)

 

 

 

Erik Schatzker:  Nassim 1.6 Billion maybe down 60% from the year ago period.  Still a lot of money though.

 

Nassim Taleb:  Yeah anything above zero is too much money.

 

Erik Schatzker: (laughs)

 

Nassim Taleb:  Anything we bail out.  Anything above zero and bonuses in particularly

 

Erik Schatzker:  Okay well but the compensation and benefits.  The salary plus bonuses

 

Nassim Taleb: The company have been inflating salaries.  Knowing that we are gonna go after their bonuses

 

Erik Schatzker:  But why zero?

 

Nassim Taleb:  That’s why we won’t be fooled

 

Nassim Taleb:  Because it is a utility.

 

Banks anything you bailout should not have, and later on we talk about Hammurabi’s Law.  Should not, you should not be earning more than the civil servant of a corresponding rank, period.

 

I mean its good life.  But you should not.  If we bail you out.  You should not be paid a bonus.

 

Erik Schatzker:  Or, or, or.  Okay but these banks would say that they no longer need to be bailed out

 

Nassim Taleb:  But I mean, the, the, the fact is exactly like a gambler.

 

You borrowed your money alright, to go gamble.

 

You made some money, and now he’s telling me, Oh I made some money I didn’t need you.

 

Well they needed us.  Without us Goldman Sachs will not be in existence.

 

Without our loan to AIG… the, the taxpayers won’t do AIG.

 

They will not exist okay.  So they are on our official life support periodically.

 

Erik Schatzker:  Still because of the fact that they could be bailed out again.  Is that the fact?

 

Nassim Taleb:  In fact we don’t know what risks they have.  We don’t they don’t.  I’m sure they themselves don’t know what risks they have.

 

And, and you know last… We had a bailout 1983, okay.

 

You’re on the Regan administration.  They said it’s the last time, and it’s an American, and we will never do it again, okay you see.

 

You don’t know if something is relying on a taxpayer as a stop.  Then necessarily enters the class of… of, of ah… you know should be a civil servant

 

Erik SchatzkerIt was 11 months ago that you wrote me in email saying – I have to come on and talk about Bernanke.  We talked about Bernanke

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