Nassim Taleb discusses what's wrong with the economy and with economics

Nassim Taleb is an economist who wrote the book The Black Swan.

In a 20 minuted interview with Charlie Rose he says a number of very interesting things. They include

• "Nouriel Roubini is an optimist." He doesn't realize just how bad the economy really is.
• "Markets are stupid. They can be fooled by trends in numbers and by rare events." Every market trend that a 29 year-old analyst spots and sells to investors can be gamed. and
• Much of the problem in the banking industry is based on bad analysis of risk by the economics profession. Economists presume that what has been happening regularly will continue to happen, so they define measures of risk that apply to what happens regularly. They completely overlook the unusual events that will disrupt the apparent stability. They then build models which describe the period of regularity and which ignore rare events. Economists have in fact defined the rare events which define turning points in the economy away, even though those rare events are critical to the economy and over any longer period of time are certain to finally occur.
• "The problem with the economy today is that it is based on speculation in excessively leveraged assets rather then on the skills and efforts of workers like Dentists and engineers. As a result, assets are over-priced. This means that the economy will continue to fall until the excess price and leverage that held that price up are swept out of the economy."

These are just a few of the provocative, very rational things and currently apropos things Taleb has to say in this interview with Charlie Rose.

For an interesting and highly informatives view of what is wrong with the current economy and the current state of the discipline of economics, go watch the interview with Charlie Rose conducted with Nassim Taleb.