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Redundancy

By John Batchelor on May 23, 2010 at 5:30 PM in Current Affairs

Editor’s Note: Catch Larry Johnson on John Batchelor’s syndicated radio show tonight at 9:05 p.m. ET. You’ll find programming details and “how to listen” instructions at the end of this post.

 

“Small possibility for the break-up of Europe.”  

Nassim Nicholas Taleb.
Spoke to the Black Swan himself this week, Nassim Taleb, who is gifted, endlessly philosophical, common sensical and deeply witty in a dry, grim-eyed, stoical way.  See his prognostications from February 2010, 3 months back, on Treasuries, Gold and the Euro.)

Taleb makes the sharp point that nature likes redundancies, which is why we have two eyes, two lungs, two ears, two limbs and so forth.  Redundancy in finance is to have several years of income piled up in cash assets.  Not debt.  Cash assets.

In sum, our grandparents did this correctly, and we are reckless, foolish, stupid and laughable to treat debt as an asset-base.

 All credit is fleeting.  Taleb recommends rebuilding the system.  The banks can only gamble with their own earnings, not with our savings and not with our mortgages.  House prices too high?  Wait.  The real estate market for land in Las Vegas is down 80%.

There is ironic music for what has happened (Tim Miller, below).  Your house is worth half?  Wait.   There is a narrative about how the bankers plundered our lives like drug dealers hooking the weak and wrecking the neighborhood and town with lawlessness and profits.

Larry Summers and Ben Bernanke.
Taleb’s disdain for POTUS economic weights Summers and Bernanke is droll and accurate reflection of the markets.  

As long as Summers, Bernanke and POTUS in office, short Treasuries.

The dollar looks credible these days only in comparison to the absurd Euro.  We are all drachmas now, unless we are also all Bernankes.

Translation of Taleb’s pitch above is to short POTUS and go long basket of precious metals that the central banks do not control — as banks can control the gold price by dumping, but the central bankers (the bane of the Earth along with Platonists and economists) do not own silver, palladium and so forth precious.

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Larry Johnson is a regular on the “experts panel” every Sunday night on John Batchelor’s syndicated radio show that airs nightly from 9:00 p.m. to 1:00 a.m. ET. You can listen live to every show via iTunes, and you can also listen to podcasts of previous shows.

Check today’s schedule for topics and co-guests during Larry’s appearance and for the full four-hour broadcast. Here’s Larry Johnson’s schedule as of Saturday night (John Batchelor may add more details before air time):

Sunday 905P Eastern Time: Larry Johnson, No Quarter, Jodi Schneider, American Banker.
Sunday 920P Eastern Time: continued.

Here’s how to listen to the live show, using iTunes:

  1. Click Radio.
  2. Double-click News/Talk Radio.
  3. Scroll down and double-click WABC-AM.

FYI: WABC is New York City’s most popular talk show station, and is the anchor station for John Batchelor’s nationally syndicated show.

  • elaine

    I couldn’t get the videos to play. Oh well…I still would appreciate more info on how the banks can dump gold. How much gold do the banks own anyway?