Nassim Taleb's economic nudity.....the exposed truth

Margaret Wente: Happy days are here again. The central bankers say the recession is over. The markets are buoyant. Can we relax?

Nassim Taleb: Not at all. Central bankers have no clue. In the first place, the financial crisis was not a black swan. It was perfectly predictable.

MW: Are you saying the U.S. shouldn't have done all those bailouts? What was the alternative?
NT: Blood , sweat and tears. A lot of the growth of the past few years was fake growth from debt. So swallow the losses, be dignified and move on. Suck it up. I gather you're not too impressed with the folks in Washington who are handling this crisis.

NT: Globalization and the Web create worldwide mass effects, whether positive or negative. We have planetary fads that cause random variables to have bigger spikes than ever before. Variables that used to move 10 per cent now move 30 per cent. The whole planet can pull its money out on the same day.

MW: So if everyone is still on the wrong track, what's the right track?

NT: My whole idea is to lower risk in society by developing a system that can resist human error, rather than one where human error rules. The first step is to make sure that no financial institution is too big to fail. Next, make sure governments don't favour big companies. Governments should also decrease the role of economists – they're no more reliable than astrologers, and they do more damage.