This crisis is a structural problem, not a random mess caused by bad luck.

Yup.

However, what makes the situation a potential Black Swan is that the economy of the United States has over the past several years become far more inextricably interwoven in a complex web with many other world economies, all of them affecting each other almost simultaneously via instant global communications.

A broken bubble in the US housing market sends almost immediate shock-waves throughout the rest of the economy and then around the world within weeks or even days and hours. It’s a completely unique situation, far different than the Great Depression or any other economic mini-crises ever faced.

The ramifications of this highly complex and volatile relationship is a lot more difficult to predict, and the potential of this being an outlier wave, a “once every 500 years”-type seismic shift (i.e. a complete overturning of the “normal” prevailing economic models which calls for a total “rebooting” of capitalism and perhaps other other societal systems) is not beyond the realm of possibility.

Taleb himself said a more accurate comparison to our current situation is not the Great Depression but the American Revolution.

http://www.pbs.org/newshour/vi…..#038;seg=5

I’m reading “Nudge” by two authors whose names I don’t recall. Interesting book.

The lead author is Cass Sunstein, Obama’s buddy and advisor, who advises against prosecution of members of the Bush administration, because that would be “criminalizing policy differences.” Not one of my favorite people.

Well, I’m still here in the corner wondering what the heck ‘leverage’ is when it’s at home. But anything that has to be strapped down to a ‘10X’ factor just smells bad from the outset, to me.

What was really crazy, and I failed to mention it in my first response to Ian’s post, is the leveraging on top of leveraging. The creation of multi-leveraged products made the net effect more like 200X. THAT is what definitely has to be stopped in it’s tracks.

allowing banks to become casinos and allowing companies to have their capitol gains without forcing them to reinvest back into their company and our economy

Yep. An upside down tax policy lets people take money to of the financial arena and put it into (mostly) CEO pockets. Taxing individuals more highly than corporations would turn that around and tend to put the money back into corporations.

So, first, tax all income, whether earned or rent or interest or dug up in Switzerland. Second, make super high incomes painfully taxed (even if that only means 35%).