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The financial crisis will be harder to end than the Great Depression and may force banks to be nationalized, “Black Swan” author Nassim Nicholas Taleb said. A more complex financial system makes the current problems, which cut global stock market value by 55% to US$28T since October 2007, worse than the contraction in the 1930s, Taleb said in a Bloomberg Television interview today.

Bonuses paid on Wall Street encouraged risk taking with no regard for losses, he added. Rare and unforeseen events are known as “Black Swans,” after Taleb’s 2007 book, “The Black Swan: The Impact of the Highly Improbable.” The financial crisis isn’t one, he said. “The “black swan” for me would be for us to emerge out of this unscathed and return to normalcy,” Taleb said.

Compared with the Great Depression, this crisis is “very different, and it requires much more drastic action.” Taleb’s book was published in May 2007, about three months before the credit crunch led banks to announce write downs and credit losses that now total more than US$1T

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Investors cannot shake the fear that the US government will seize control of a Big Bank, but experts do not believe that will happen.

The word “Nationalization” puts fear in the hearts of bankers and their equity and debt holders like no other word.

The fear of such an event over the past few weeks has caused a lot of speculation that the US government may have to seize control and management of one or more of the country’s largest financial institutions.

This is the worry that has sent bank stocks into a death spiral, as shares of some of the biggest banks, including Citigroup (C), Bank of America (BAC), and Wells Fargo have been hammered in a big way.
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