The author of "Black Swan", who predicted the 2008 meltdown, is somewhat of a genius in my opinion.
He has apparently decided that the reappointment of Bernanke is enough to make him depressed enough to withdraw from the world economic scene for a while.
http://www.cnbc.com/id/34234721
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Perhaps I am just a naive student of Economics but why are so many people out there claiming that Bernanke essentially saved the economy from going over the edge? Is the issue in the fact that he certainly could have stopped the mess from occurring?
You are not naive at all. That is a very good question.
In my opinion, Bernanke did not save the economy at all. The economy can't be saved. He saved the banks. Many people see this as the same this as saving the economy, but it is not. I think don't think any one man could have stopped what is occuring now. The main cause of our current situation is the bursting of the credit bubble in this country. If you believe Fed policy is to blame for the bubble existing in the first place, then Greenspan is to blame for holding rates so low for so long after 9/11 to stimulate the economy. This encouraged irresponsible lending and borrowing on a massive scale. The result was that most of the growth of the last 15 years or so has been driven by debtand fueled by cheap money (low interest rates). This is the Feds fault. But it is also everyone's fault, to the extent that so many people borrowed more than they could afford to repay and used the loan proceeds for consumption instead of investment.
So, Bernanke may have saved the banks in the short run, but he didn't save the economy, just put it on life support. It is still a very critically ill patient.
And maybe he could have helped by not advocating such loose monetary policy in the first place, but I don't think he alone could have stopped this from happening.
That is my short answer. You REALLY don't want the long one.
Thanks, your question was very thought provoking and has given me ideas for future posts!
Oh, Matt - I just realized I didn't really explain Taleb's take on Bernanke.
He fundamentally disagrees with Bernanke's approach to solving the crisis we are facing. I do too. He was probably hoping a new Chairman would be picked who would discourage risk taking and fix the real problem of the bad loans sitting on the books of the banks.
His "Black Swan" theory also says that the kind of economic modeling that was done by financial firms to limit their risk of defaulting loans was inherently flawed and as it was not able to model for outliers, or events that were considered highly improbable. (Like a Black Swan)
I think he would prefer a Chairman who would recognize that risk modeling in the entire financial system needs an overhaul instead of just giving large financial institutions more taxpayer money to take more risks with.
He is probably "depressed" because he thought perhaps the Government would realize this and change its policies toward regulating large financial institutions.
Instead, Bernanke and the Fed he runs provided a bit of "the hair of the dog that bit ya" to financial institutions. The real problems that caused the crises have not been fixed, and he knows this.
The reappointment of Bernanke signals to him that no one "gets it" yet.
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