10 February 2009

Roubini and Taleb Survive the Inanity of CNBC's Power Lunch

I caught Nouriel Roubini and Nassim Taleb on CNBC's painful-even-when-muted Power Lunch. When I saw they were on, I upped the volume to hear questions about what stocks to buy for a hypothetical newborn's college account. And comments like equating Roubini's and Taleb's 'rock star status' in Davos as marking a market bottom.

Completely unserious questions and unserious comments from completely unserious people like Dennis Kneale and Michelle Caruso-Cabrera.

Their disdain for their guests and their guests' market philosophies is palpable. For example, Kneale wants Roubini to name one metric that will lead to a market turnaround. Or perhaps up to three metrics if the world has to be THAT complicated.

Roubini doesn't take the bait at first. He goes through a litany of economic problems before settling on the conclusion that the U.S. should follow Sweden's example of nationalizing its insolvent banks versus following Japan's example of pumping up zombie banks that contributed to two decades of negligible growth.

Good succinct point. Not sure that's a metric according to Kneale. And since Kneale thinks nationalization=socialism=godless un-American communism, it's probably a moot point.

Taleb talks about deleveraging the banking system (seems to be working for Canadian banks right now--they are generally leveraged 16-1 versus 26-1 in the U.S.) and eliminating debt.

Taleb then tries to ignore the terrible line of questions and just present his worldview.

Apparently, this interview was so awful that political bloggers have taken notice, like Josh Marshall at Talkingpointsmemo.com:

TPM Reader JC sent me to this interview with Nouriel Roubini and Nassim Taleb on CNBC. Here's what JC wrote: "In this clip, Nouriel Roubini and Nassim Taleb are still being treated as a circus sideshow by CNBC... They're predicting the end of finance, and offering the only clear path out of this mess that I've seen offered (with the knowledge to back it up), and CNBC keeps asking them for stock tips. It's ludicrous. Wall Street media -- CNBC at least -- doesn't realize how bad this is yet. They're stuck in a bubble where they think everything will go back to normal in a few months...."

He hits it spot on. These two guys are talking about a deep structural crisis in the world economy. And these CNBC yahoos can't stop asking for stock tips. Really surreal.

I'm watching it again now. This is a seminal piece of video. You have to see it. I'm not sure I've seen anything that captures -- albeit unintentionally -- the vast disconnect over what is happening today in the US economy.

Marshall and his TPM reader are correct. CNBC generally blows sunshine up its viewers collective asses. I admit I was surprised to hear Roubini get the chance to mention deep-U-shaped recessions versus L-shaped recessions. But there was no discussion or examination of these ideas by the CNBC talking heads.

Perhaps these topics are over the heads of the CNBC presenters? Or perhaps the network want to keep things simple and stupid? Either way, you should watch the video.

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