The only way for the world to say goodbye to the credit crisis is for governments to lower their debt levels, says New York University Professor and author Nassim Taleb.
“The crisis came from debt and you don’t escape it with more debt,” Taleb says.
“We’re in a situation where we had a patient who we discovered had cancer a year and a half ago and all we’ve been giving the patient is painkillers. The tumor is getting worse because we are transforming private debt into public debt and public debt is not manageable.”
The Obama administration should work to convert its massive public debt into equity or else generations will end up paying for it, Taleb told Bloomberg.
“That’s immoral,” Taleb says.
The United States and countries in Europe — Greece especially — have run up their debts to the point they have fueled a global debt crisis.
Greece, which has run a fiscal deficit of over 12 percent, well above the European Union limit of 3 percent, is working with the International Monetary Fund and other countries to craft a plan out of its crisis.
Greece’s debt woes have sparked fears that its problems could pummel other economies around the world, worrying even U.S. President Barack Obama.
“I am very concerned about what's happening in Europe,” Obama told Russia's Channel Rossiya, according to the AFP newswire.
“But I think it is an issue that the Europeans recognize is very serious.”
“If we can stabilize Europe that will be good for the United States,” says Obama.
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