What is Nassim Taleb suggesting…?
July 14, 2009
In an FT op-ed Nassim Taleb and co-author Mark Spitznagel suggest the following:
“The only solution is to transform debt into equity across all sectors, in an organised and systematic way. Instead of sending hate mail to near-insolvent homeowners, banks should reach out to borrowers and offer lower interest payments in exchange for equity. Instead of debt becoming “binary” – in default or not – it could take smoothly-varying prices and banks would not need to wait for foreclosures to take action.”
Can anyone explain what they mean by this…?