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Nassim Nicholas Taleb: Every single human being should short Treasuries

BusinessWeak:
Nassim Nicholas Taleb, author of “The Black Swan,” said “every single human being” should bet U.S. Treasury bonds will decline, citing the policies of Federal Reserve Chairman Ben S. Bernanke and the Obama administration.

It’s “a no brainer” to sell short Treasuries, Taleb, a principal at Universa Investments LP in Santa Monica, California, said at a conference in Moscow today. “Every single human being should have that trade.”

Taleb said investors should bet on a rise in long-term U.S. Treasury yields, which move inversely to prices, as long as Bernanke and White House economic adviser Lawrence Summers are in office, without being more specific.

The Fed and U.S. agencies have lent, spent or guaranteed $9.66 trillion to lift the economy from the worst recession since the Great Depression, according to data compiled by Bloomberg. President Barack Obama has increased the U.S. marketable debt to a record $7.27 trillion as he tries to sustain the recovery from last year’s recession. Obama projects the U.S. budget deficit will rise to a record $1.6 trillion in the 2011 fiscal year.

3 comments:

Adam Freund said...

He's right. There is no way that we don't suffer severe inflation due to the monetary policies which have been adopted and the absolute impotence of Washington to stop spending. There is no political will to prevent this.

AnnaMerkin said...

I think NNT's making a subtler point. AF. One one hand, he's correct - the very high debt levels (combined with our extended military commitments and ongoing entitlement spending) don't give the U.S. wiggle room in the case of an unexpected catastrophic event. Moreover, they don't resolve the underlying problem: too much leverage. Substituting public debt for the poor quality private debt might have saved the global financial system from immediate collapse in 9/08 but it only seems to be delaying the day of reckoning. Global imbalances combined with (or fueled by) loose monetary policy and extreme (and inappropriate) use of leverage throughout the system have put us here. The traditional tools for dealing with these situations are woefully inadequate. This is something that none of the pols or economists in DC seem to understand.

Anonymous said...

Hate to say it - 'cause Taleb is sharp - but the guy is talking his book, if his past investment ideas are any indication of it.

Nor is he wrong on the face of it. However, it is highly probably that his timing is off by enough to fry out any leveraged or derivative bets on the matter.

Look at the yield on 10yr JGBs. And they had savings, from the beginning of the very long deflationary spiral.

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