Economist Nouriel Roubini Calls Binance CEO a “Walking Time Bomb”(cnbc.com)
cnbc.com
Economist Nouriel Roubini Calls Binance CEO a “Walking Time Bomb”
https://www.cnbc.com/2022/11/16/crypto-an-ecosystem-that-is-totally-corrupt-says-nouriel-roubini-.html
81 comments
What are some examples of things he's mostly been wrong about?
I know he's been saying crypto is a scam for awhile, in addition to calls he made regarding the financial crisis under Bush.
I know he's been saying crypto is a scam for awhile, in addition to calls he made regarding the financial crisis under Bush.
Here's an article from 2011 illustrating a few of his predictions, including a recession in 2004, 2005, 2006, 2007/2008, 2011, and a collapse of the Chinese economy in 2013
https://www.firstpost.com/world/how-seriously-should-we-take...
More color: https://www.erictyson.com/articles/20081024_1
https://www.firstpost.com/world/how-seriously-should-we-take...
More color: https://www.erictyson.com/articles/20081024_1
He was right tho. There should have been a recession way before the Lehman and subsequent housing bust. History is repeating itself again with the Covid downturn. The fact that the FED/government came to the "rescue" and pushed the recession into the future is irrelevant. The reasons he was positing recessions were sound and they eventually all came to fruition.
I know being early and/or late is considered being wrong. The fact remains he is calling it like he sees it. A reversion to the mean during a mania is a ballsy thing to predict. If the fundamentals are fucked, it will eventually correct.
I know being early and/or late is considered being wrong. The fact remains he is calling it like he sees it. A reversion to the mean during a mania is a ballsy thing to predict. If the fundamentals are fucked, it will eventually correct.
Nobody cares when an economy should do something.
They care when it does.
If the former mattered, then it'd be a much simpler science.
They care when it does.
If the former mattered, then it'd be a much simpler science.
It's easy to be "less wrong", or "wrong less often", by not predicting a recession in 2004, 2005, 2006, 2007/2008, 2011 and 2013. Yet it is not any more useful.
If you predict a recession every year for a decade+, you're not making a prediction. You're just repeating words until the inevitable happens.
This is why I prefer 24h time, it's only wrong once a day.
This is all you need to know about this story. This guy is a clown. Disregard and move on
Roubini is more of a pop economist who is famous for issuing lots of predictions and some of which turned out to be correct.
It's the p-value hacking of forecasting.
It's the p-value hacking of forecasting.
Roubini = After receiving a BA in political economics at Bocconi University, Milan and a doctorate in international economics at Harvard University, he became an academic at Yale and a visiting researcher/advisor at the International Monetary Fund (IMF), the Federal Reserve, World Bank, and Bank of Israel.
CZ (Binance CEO) = Zhao attended McGill University in Montreal, Quebec, where he majored in computer science.
I am not into judgements based on education alone... Especially considering the recent developments with the MIT grads at FTX. However, calling Roubini a "pop economist" is really not accurate to the slightest degree.
CZ (Binance CEO) = Zhao attended McGill University in Montreal, Quebec, where he majored in computer science.
I am not into judgements based on education alone... Especially considering the recent developments with the MIT grads at FTX. However, calling Roubini a "pop economist" is really not accurate to the slightest degree.
You can be a pop economist and have an academic pedigree.
Nobody thinks Roubini is famous due to his research or academic work.
I fail to see how CZ's academic credentials are at all relevant. I didn't call CZ an academic economist.
Nobody thinks Roubini is famous due to his research or academic work.
I fail to see how CZ's academic credentials are at all relevant. I didn't call CZ an academic economist.
Ditto - Look at Paul Krugman, who used to be academic before going full Twitter.
In general not a Krugman fan, but this is brilliant
https://www.princeton.edu/~pkrugman/interstellar.pdf
The Theory of Interstellar Trade, in which he develops a theory of trade where differences in time due to relativistic speeds is considered.
https://www.princeton.edu/~pkrugman/interstellar.pdf
The Theory of Interstellar Trade, in which he develops a theory of trade where differences in time due to relativistic speeds is considered.
Ehhh, Paul Krugman is legitimately famous in his own right for his academic contributions. He would be famous even if he wasn't an NYT/Twitter warrior.
He has been incredibly influential in neo-keynesianism. Roubini has nothing like that.
He has been incredibly influential in neo-keynesianism. Roubini has nothing like that.
In fact this is literally the only path to becoming a pop economist. You collect your prestigious degree and then realize it's a lot easier to sit on cable news and throw out crazy sound bites or write NYT articles about how the internet will never work and we need a bigger housing bubble than to do research.
Long Term Capital Management was ran by Nobel laureates in economics (or its equivalent), it was FTX before FTX was a glimmer in SBF's effective altruism narrative. Academic authorities these days are not worth appealing to.
I don't really understand the comparison of LTCM to FTX. Long Term Capital Management was a hedge fund. Hedge funds entire model are based on leverage and making big bets. Its customers were wealthy accredited investors and institutional investors who well understood this and understood the risks associated with hedge funds. FTX's customers had no such understanding that their deposits were being loaned out and used for making big bets.
Reading up what available publicly on FTX saga, it is clear they do make big bets in cryptos while misusing their funds. We will wait for the FTX book written to know more detail.
"Economist"? at the very least say what economist it is, why should anyone care if a random economist says anything about anyone, half of them agreeing on anything is probably unheard of in the first place!
Now I am being facetious of course, but hopefully the point was made regarding the title. Most that would be drawn in would be people looking to wage their side on the crypto war using the comments as a battleground, completely ignoring the article.
Now I am being facetious of course, but hopefully the point was made regarding the title. Most that would be drawn in would be people looking to wage their side on the crypto war using the comments as a battleground, completely ignoring the article.
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A couple of good apples still makes the barrel a trash bin.
https://www.mentalfloss.com/article/31666/does-one-bad-apple...
Choose your friends wisely still makes sense in the 21st century.
https://www.mentalfloss.com/article/31666/does-one-bad-apple...
Choose your friends wisely still makes sense in the 21st century.
This is absolutely funny if he knows about the banking system of the UAE
Binance and CZ would be saints compared to them. He is an economist, he should know. Ergo, he must be an idiot
Binance and CZ would be saints compared to them. He is an economist, he should know. Ergo, he must be an idiot
I recently read his last book and he keeps saying the same things over again and again. He is basically selling fear, spreading Fear, Uncertainty and Doubt.
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Person says thing about stuff...
> Earlier at the same event, CZ [said] the crypto industry “will be fine,” and there was “significant interest” in his proposal for a crypto recovery fund.
Oh hell no. I'd rather let crypto collapse, take the banks down with them, and bail out the banks again, than enable the creation of a second parallel class of wealth-extracting, economy-manipulating parasites.
Oh hell no. I'd rather let crypto collapse, take the banks down with them, and bail out the banks again, than enable the creation of a second parallel class of wealth-extracting, economy-manipulating parasites.
Agree, but let's let banks fail and put them in receivership. Nationalize them if needed.
Anyone speculating in crypto shouldn't get backstop by government. Wasn't the whole DeFi argument that fiat/government could be bypassed?
Anyone speculating in crypto shouldn't get backstop by government. Wasn't the whole DeFi argument that fiat/government could be bypassed?
DeFi and FTX (and all the CEXs/Centralized lending platforms who credited FTX) are basically on opposite ends of the spectrum.
Most who are getting fucked by this fiasco are retail who have never touched DeFi.
Most who are getting fucked by this fiasco are retail who have never touched DeFi.
FTX was in bed with regulators and SBF was calling for more regulatory capture. The "reasonable regulation" trope is fit for parody.
Yes, DeFi has a high barrier to get into. But, once you are in the rabbit hole, there is no going back...
Ridiculous you are getting downvoted for stating something that is clearly true.
Nationalizing all banks seems like the worst option of them all. There is no precedent in history of a society built around government owned banks that doesn’t include oppression and failure.
Nationalize, recapitalize, and reprivatize. So that the benefits of government recapitalization don't get captured by the same people who caused the crisis.
Semi-independent federal reserves?
We can quibble about fiat/currency vs banking, but technically the government owns all money.
Granted, retail and last-mile banking seems a poor fit for government control.
Although from memory Japan offers retail banking services through their postal service? (for historical quirk reasons, see: https://en.m.wikipedia.org/wiki/Japan_Post_Bank )
We can quibble about fiat/currency vs banking, but technically the government owns all money.
Granted, retail and last-mile banking seems a poor fit for government control.
Although from memory Japan offers retail banking services through their postal service? (for historical quirk reasons, see: https://en.m.wikipedia.org/wiki/Japan_Post_Bank )
Is’t what happened in 1929 in the us ?
https://www.federalreservehistory.org/essays/emergency-banki...
Title 2 above seems to describe a government appointed regulator in case of failure.
https://www.federalreservehistory.org/essays/emergency-banki...
Title 2 above seems to describe a government appointed regulator in case of failure.
> Title 2 above seems to describe a government appointed regulator in case of failure
Receivership is different from nationalisation. It’s aimed at winding down or disposing of the asset on a short timeline. For comparison, we’re FTX in receivership, its assets would be controlled by a third party whose job would be to protect it for users’ benefit.
Receivership is different from nationalisation. It’s aimed at winding down or disposing of the asset on a short timeline. For comparison, we’re FTX in receivership, its assets would be controlled by a third party whose job would be to protect it for users’ benefit.
Anyone speculating in crypto should be let to fail, but anyone speculating in stocks or housing should be backstopped... Why?
Well, speculators should not be backstopped at all.
But if you feel there’s no difference between stocks (an enforceable legal claim on the real property and intellectual property of an on going enterprise), housing (real property) and crypto (nothing, literally nothing) then there’s no point in discussing it.
But if you feel there’s no difference between stocks (an enforceable legal claim on the real property and intellectual property of an on going enterprise), housing (real property) and crypto (nothing, literally nothing) then there’s no point in discussing it.
> but anyone speculating in stocks or housing should be backstopped... Why?
Crypto is cauterised. There were inklings of institutionalisation, but the Fed raised rates before that took hold. This means the people and wealth in crypto can vanish without compromising much else, a statement I cannot make about most industries or assets.
I would also venture that most people suggesting we not backstop crypto were also opposed to bailing out banks. But unlike with banks or housing, there is no broader interest in crypto.
Crypto is cauterised. There were inklings of institutionalisation, but the Fed raised rates before that took hold. This means the people and wealth in crypto can vanish without compromising much else, a statement I cannot make about most industries or assets.
I would also venture that most people suggesting we not backstop crypto were also opposed to bailing out banks. But unlike with banks or housing, there is no broader interest in crypto.
Before trying so hard to put your thoughts into the ether, stop for a moment and ask yourself if you can’t find the answer to that question. Is everyone on the fucking planet wrong? Or are you being stupid? Are stocks different from crypto? Why was there a need to bail out mortgage buyers? Did everyone just wake up one day and make a decision or is there detailed reasoning available for your perusal should you choose to look?
Seems quite easy for me to see the majority of people on the planet being wrong. Historically, it has happened quite a bit.
Indeed. But that is both from a less globalized and less open times. There have always been people who have recognized social idiocies and questioned why other people follow them blindly. We are not unique in that regard. Where we are unique though, is in living in an era of unprecedented freedom to voice that opinion and call others out (in the west at least).
Which means, errors get caught before compounding too much. It also means knowing that no decision is made with the greater good or lining my pockets mantra solely. It is a combination of both.
Which means, errors get caught before compounding too much. It also means knowing that no decision is made with the greater good or lining my pockets mantra solely. It is a combination of both.
Because letting the fake crypto economy go to zero has no tangible effects on the real world, while letting stocks and housing go to zero has very real, very negative effects on people's lives.
Because a government is only as strong as its businesses and buildings/assets. Crypto is on another tier and apart from government.
because crypto is icky and weird
Are you saying that regular, mainstream banks have enough crypto exposure that they're in actual trouble? If so, any particular ones that you think are at risk of failing?
(Apologies if this is a dumb question. I don't follow crypto news very closely.)
(Apologies if this is a dumb question. I don't follow crypto news very closely.)
Not sure if any US banks got so far as legitimizing crypto.
There was a big lobbying push to fool representatives into making the ponzi circus legit.
But then FTX suddenly disappeared below the waves, so I think that's on hold right now.
There was a big lobbying push to fool representatives into making the ponzi circus legit.
But then FTX suddenly disappeared below the waves, so I think that's on hold right now.
I follow pretty closely and have not seen any evidence or heard any rumors that there are any reputable banks with significant direct exposure. Many of the banks that might fall would be ones whose primary customers are people in the crypto space but really its all shrouded in mystery. VC firms and PE, on the other hand, are probably going to see a lot of bloodshed
My understanding is that banks have invested directly to some extent in the safer end of crypto (Bitcoin) and indirectly on more risky stuff, through funding crypto hedge funds and the like.
I don't have any sources that I trust at hand, but a quick Google search shows aggregated data about investment banks and the assets they hold on the crypto economy: https://www.blockdata.tech/blog/general/top-banks-investing-...
For better or for worse, it doesn't seem big enough of an investment to actually bring down traditional banking.
I don't have any sources that I trust at hand, but a quick Google search shows aggregated data about investment banks and the assets they hold on the crypto economy: https://www.blockdata.tech/blog/general/top-banks-investing-...
For better or for worse, it doesn't seem big enough of an investment to actually bring down traditional banking.
Let them fail full stop. If there's any lesson from 2008, it's this. Do not bail out banks and their execs.
I think where we go wrong is in bailing them out, but not nationalizing them afterward. If we're going to make the losses public, then the gains afterwards become public as well. The executives, though, should be prosecuted, or at the very least removed from being executives and board members at any financial or ancillary institution ever again.
But for real. Why not nationalize the failed institutions? It's not as if the incentives can get more perverse than they are now, unless I'm missing something.
But for real. Why not nationalize the failed institutions? It's not as if the incentives can get more perverse than they are now, unless I'm missing something.
The American government, and several across the pond, literally did (partially) nationalize major banks and the treasury sold those shares back after the crisis, leaving the taxpayer with a pretty decent return. TARP earned a net benefit of 15 billion.
Then you're locking failed institutions into an even bigger monopoly. The problem is that they were already "too big to fail" as a result of regulatory capture, revolving doors between government and big banks and bailouts. Just let them fail.
Because that's communism.
(Not even /s, that's the actual argument people make)
(Not even /s, that's the actual argument people make)
Same with fire depts, police, medicare, sewage, roads?
Don't shoot the messenger. I didn't say I agreed with the argument.
For example, anyone who is in favor of "smaller government" should support of the "Defund the police" movement. They do not. That should tell you something about the state of critical thinking.
Public healthcare is "communism" but police and the armed forces are somehow not. I've made literally the same argument to someone on here a while back. Here it is: https://news.ycombinator.com/item?id=25503815
For example, anyone who is in favor of "smaller government" should support of the "Defund the police" movement. They do not. That should tell you something about the state of critical thinking.
Public healthcare is "communism" but police and the armed forces are somehow not. I've made literally the same argument to someone on here a while back. Here it is: https://news.ycombinator.com/item?id=25503815
Right, forgot about the armed forces :)
RBS was nationalised in the UK in 2008. It's still doing fine.
I didn't say I agreed. I'm just telling you why it didn't happen.
FWIW the UK and Canada (and maybe other Commonwealth countries) have had successful examples of public-owned companies. The US has no such tradition and is, therefore, culturally resistant to the idea.
FWIW the UK and Canada (and maybe other Commonwealth countries) have had successful examples of public-owned companies. The US has no such tradition and is, therefore, culturally resistant to the idea.
Not sure about the GP, but the case that you want to avoid is capital being allocated for political reasons rather than towards productive enterprise.
I thought the lesson was to invest in finance industry because if you win you win and if you lose you'll be bailed out using tax funds from people who chose not to play
Sounds like the same thinking for overpaying for college.
Reminds me of the Satoshi's BTC genesis block message:
Referenced The Times article: https://archive.ph/FqRF3
Bonus article with some interesting takes: https://www.coindesk.com/markets/2021/01/24/crypto-long-shor...
EThe Times 03/Jan/2009 Chancellor on brink of second bailout for banks
Referenced The Times article: https://archive.ph/FqRF3
Bonus article with some interesting takes: https://www.coindesk.com/markets/2021/01/24/crypto-long-shor...
As I understand it CZ was referring to an entirely private fund to provide liquidity to projects he felt are worth saving. This is not another gov. supported bailout.
>“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify,"
https://twitter.com/cz_binance/status/1592044496174612482
>“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify,"
https://twitter.com/cz_binance/status/1592044496174612482
Ah, that would be interesting to see. I wonder, where would the money coming from for this fund? Would it be real money, or magic beans money? What does it mean for a financial product to be "otherwise strong" when it is "in a liquidity crisis"?
Indeed some 40% of Binance's reserves are in their own tokens.
https://markets.businessinsider.com/news/currencies/crypto-n...
>What does it mean for a financial product to be "otherwise strong" when it is "in a liquidity crisis"?
As to the rest of it, it is similar to any other speculative investment. If they like the future prospects, they'll assist. A liquidity crisis means there are not enough liquid assets to proceed with business.
You can read this as Binance seeking to eat the lunch of those which are unable to withstand depositors running for the exit. If there's no prospect of future luncheons, there's no bailout. The bit about stemming the hysteria and "we're all in this together" is the magnanimous marketing language you'd expect.
https://markets.businessinsider.com/news/currencies/crypto-n...
>What does it mean for a financial product to be "otherwise strong" when it is "in a liquidity crisis"?
As to the rest of it, it is similar to any other speculative investment. If they like the future prospects, they'll assist. A liquidity crisis means there are not enough liquid assets to proceed with business.
You can read this as Binance seeking to eat the lunch of those which are unable to withstand depositors running for the exit. If there's no prospect of future luncheons, there's no bailout. The bit about stemming the hysteria and "we're all in this together" is the magnanimous marketing language you'd expect.
> and bail out the banks again,
This time, please, can we not bail out the bankers?
This time, please, can we not bail out the bankers?
Ideally, yes. But if we haven't figured out a way around the whole "too big to fail" thing, let's not bail out the fake economy along with the real economy.
> "too big to fail"
I get bailing out the banks.
But we can bankrupt the owners, in the case of partnerships, and cancel the shares of public companies.
I get bailing out the banks.
But we can bankrupt the owners, in the case of partnerships, and cancel the shares of public companies.
The development of centralized exchanges into a class of companies equal to the existing financial infrastructure is unlikely to happen. Unlike traditional finance, the use cases for crypto seem to be mainly speculative. You can't pay your rent, buy a car or pay taxes using crypto, so it's unlikely that you'll be very affected by the rise or fall of these exchanges unless you choose to participate yourself.
There are massive black market uses and massive uses for people evading capital controls in the rest of the world.
Crypto can basically function as an extended version of dollarization in countries that have institutionally failed to manage their own currency (think the naira or the Turkish lira).
Crypto can basically function as an extended version of dollarization in countries that have institutionally failed to manage their own currency (think the naira or the Turkish lira).
the "crypto recovery fund" is not a govt bailout, it's binance investing private money into firms that are struggling to survive in the short-term: https://news.yahoo.com/cryptocurrencies-rally-binance-ceo-an...
> Binance investing private money into firms that are struggling to survive in the short-term
It’s a fake suggestion since the problem currently facing crypto is insolvency, not illiquidity. No amount of money would make FTX a good asset beyond the value of the cash itself.
It’s a fake suggestion since the problem currently facing crypto is insolvency, not illiquidity. No amount of money would make FTX a good asset beyond the value of the cash itself.
> No amount of money would make FTX a good asset
whatever your opinion of crypto, exchanges have generally been great businesses. lots of small fees add up to significant revenue. Binance generated $20 billion revenue in 2021.
whatever your opinion of crypto, exchanges have generally been great businesses. lots of small fees add up to significant revenue. Binance generated $20 billion revenue in 2021.
> exchanges have generally been great businesses. lots of small fees add up to significant revenue. Binance generated $20 billion revenue in 2021
Lots of things are good businesses, that doesn’t give a neighbouring trash pile value. Any amount of cash pumped into FTX would be better spent capitalising a new exchange. They’re not only insolvent, but fraudulently so in a very public way.
Lots of things are good businesses, that doesn’t give a neighbouring trash pile value. Any amount of cash pumped into FTX would be better spent capitalising a new exchange. They’re not only insolvent, but fraudulently so in a very public way.
> crypto recovery fund
Is there anything Inflation can't do?
Is there anything Inflation can't do?
Confused, do you think you'll be forced to participate in this crypto recovery fund or something?
That would be an actual full circle, and would have recreated what they claimed to oppose.
But then, even a broken clock is right twice a day!