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Black Swan
Vanity (long) ^ | December 10, 2011 | Nathan Bedford

Posted on 12/10/2011 2:43:44 PM PST by nathanbedford

Seven decades after Pearl Harbor and one decade after 9/11 we Americans dare not remain willfully oblivious to the threat of the Black Swan. Our grand American experiment is more vulnerable now that it was in 1941 and it is certainly more precariously balanced than it was in 2011.

These conundrums are what Donald Rumsfeld might describe as the "known unknowns" but by definition a Black Swan event is as surprising as it is earth shattering. So all of these threats which beset us are by definition not Black Swan events. They are known risks. There are many more risks which are known and, frighteningly, there are many more which are unknown.

The point of Black Swan is that we get blindsided. Considering the landscape it is not at all improbable that something will go very wrong in the next four years. Another unpleasant feature of Black Swan is that it is catastrophic. The surprises are always bad.

What does this have to do with electing a president?

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TOPICS: Business/Economy; Constitution/Conservatism; Foreign Affairs
KEYWORDS: ammunition; blackswan; camps; derivatives; economy; genocide; nukeexchange; starvinghoardes; teotwawki; terrorism; zombies
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Seven decades after Pearl Harbor and one decade after 9/11 we Americans dare not remain willfully oblivious to the threat of the Black Swan. Our grand American experiment is more vulnerable now that it was in 1941 and it is certainly more precariously balanced than it was in 2011.

It is a commonplace to observe that our economic health is dependent upon a globalized economy, a stool resting on three legs: United States, Europe and China (BRICS).

Newtonian physics is implacable, if one leg of a three-legged stool fails, it crashes. Yet we woke up Friday morning to read that the summit failed to put together a deal to save the euro as Great Britain declines to participate, and even if a deal was cut, one fears that at best a deal will only kick the can down the road. We fear the crash of the euro and even the disintegration of the European Union with inevitable consequences for the United States.

The patch which the elites of Europe seek to engraft on the euro zone's melanoma is an elitist, top-down, anti-democratic grafting over, which is unlikely to cure the disease and likely to be rejected by the body politic.

Daily we read of a rising tide of unrest in China with literally dozens of riots occurring somewhere every day over grievances which are papered over by a government induced real estate bubble. A government of elites has contrived to stay a half jump ahead of insurrection by raping the environment, inflating the economy, and generating a mercantilist expansion. The entire edifice is without honest transparency so that the central planners do not even know, and certainly cannot trust, the reported data upon which they must rely to shape the economy. They cannot know so they cannot be wise, even if such a thing were possible. One false step and the edifice implodes, yet every day the Chinese elites must take portentous decisions or be swamped by a demographic tsunami. As sure as human nature, wise men must eventually misstep and the Chinese economy must eventually come to its reckoning. When?

We commonly think of the Chinese economy as vibrant but actually it survived the crash of 2008 by massively inflating. It had to somehow cope with its teeming hundreds of millions of jobless. Although the resulting inflation was masked by its exports which created a positive trade balance, the problem had to be dealt with so the elites tried to tamper down inflation by belt-tightening. If they under shoot they will fail to control inflation and the real estate bubble will only inflate more. If they over shoot they will burst the bubble and crash the economy. Lately, it appears they have reversed course fearing that they have tightened too much.

To say that American conservatives are skeptical of the ability of elites to manage the world's second-largest economy from the top downward is to belabor the obvious. But even if nine old men sitting in a room are wise enough to weave the Chinese economy through the thickets without a single misstep, the fate of China is not entirely in their own hands. China is utterly dependent on its markets in Europe and America because its own domestic economy is nowhere near the size which can sustain the country.

If the euro zone is about to be undone by Greece, what of the American Republic which has California at 10 or 20 times the size of Greece? Our Republic boasts multiple examples of California? If Greece cannot come to political sanity, what can we say of the California legislature and the electorate that returns them to Sacramento? If chicanery and socialism have led to violence in the streets of Greece, what can we say of the Occupy Movement in Berkeley and elsewhere? If there is chicanery and socialism in Greece, what can we say of Detroit, Los Angeles, Chicago…?

If the euro zone can be undone by tiny Greece how can the American economic unit survive?

These conundrums are what Donald Rumsfeld might describe as the "known unknowns" but by definition a Black Swan event is as surprising as it is earth shattering. So all of these threats which beset us are by definition not Black Swan events. They are known risks. There are many more risks which are known and, frighteningly, there are many more which are unknown.

Known or unknown, the economic condition of the world is precarious and any disturbance is likely to be utterly catastrophic. But what of the threats which are not directly economic in nature?

What of the rise of aggressive Islam? Do we not face a caliphate extending from Pakistan's border with China all the way to the Atlantic shores of Africa? Are we witnessing a rising Iranian hegemony? Do we not face the probability that Iran will get the bomb, cause a world oil shock and turn the balance of power in the Persian Gulf against us? What happens to our fragile world economy if there is an oil price shock? If we strike militarily against Iran to stop them getting the bomb, will they close the Straits of Hormuz and precipitate an oil shock? Do we have any good options?

Do we not face the game ending possibility that murderous, suicidal Islamic terrorists will get the bomb from either Pakistan or Iran and explode it in one or more American cities? If terrorists can smuggle atomic devices across the Mexican border and detonate them in one or two American cities, can our democracy survive? What will the mothers of America do if they read in the Internet after the first American city is destroyed that an American city will be destroyed every day until we submit to sharia ?

If the threat of Islamic terrorism is expressed only by freelance groups like Al Qaeda, the threat is still ominous enough. These groups divide and multiply amoeba like and might eventually succeed in evading our intelligence and breaking through our defenses. But consider, is the landscape of terrorism changing, is terrorism about to be embraced and nurtured by nation states in the grand arc of the new caliphate? Worse, are these Islamic elements about to combine or at least act in concert with exogenous forces such as Third World socialists represented by the likes of Hugo Chavez? Are we about to witness an aggressive Islam protected by a militarized China where the forces of the military are assuming more and more dominance? Is the recent saber rattling by a Chinese general who threatened the United States in the event that we act against Iran, when considered with China's romance with Venezuela, part of a new world power alignment?

If the forces of proto-Marxism are combining with militant Islam abroad, what is happening within? Are we seeing the nascent union of radicals at home with enemies abroad? If the Occupy Movement is in fact a Soros/Obama joint enterprise, what is its purpose, with whom is it allied? In the event of a world political, military, or economic crisis likely to resonate with civil unrest at home, will we also be facing a fifth column? Whose side would a reelected Barak Obama be on?

If a real or contrived insurrection occurs at home, what would Obama do with his newly granted sweeping extra-constitutional powers of arrest and detention bestowed upon him by the National Defense Authorization Act?

Are there forces at work which we do not understand? Consider the other side of the coin, why would Congress, including a Republican House, bestow the naked prerogatives of a tyrant on Barack Obama? In keeping with the theme of this piece, Michelle Bachmann recently stated that she was more concerned about national security then she was about the economy and she was concerned enough about the economy to recommend stockpiling provisions. She said this in the context of serving on the House intelligence committee. What has spooked her?

The point of Black Swan is that we get blindsided. Considering the landscape it is not at all improbable that something will go very wrong in the next four years. Another unpleasant feature of Black Swan is that it is catastrophic. The surprises are always bad.

What does this have to do with electing a president?

As we conservatives proceed to nominate our candidate we have concentrated our attention on the economy and, if you've read this far, you will agree that the emphasis is not misplaced. But our consideration of the economy has been somewhat insular in that it has focused on the American situation, especially the deficit, the debt, and jobs without very much attention directed to our global vulnerabilities. But our domestic challenges are ultimately manageable with good sound conservative governance. The deficit can be trimmed, entitlements can be tamed, and budgets can be balanced if Democrats can be kept away from power. The private sector will rebound when it gets out from under Obama's boot. Our domestic economic destiny is manageable if not easy but the threat from abroad is so big as to be entirely unmanageable and I am, of course, referring to the staggering liabilities which might come crashing down on all of us if the mountain of derivatives begins to slide.

The derivative market is so big that no one knows how big it is. It is not clear that anyone knows what it is, these instruments having assumed, chameleon like, so many aspects. Created at the stroke of a computer key and sent into the ether like so much space junk, derivatives can be Frankensteins, literally unknown even to their creators. No one knows for sure how to judge the risks of derivatives, or how to defend against them. Estimates as to the total potential liabilities vary to upwards of $300 trillion. No matter how large the sum, anything in the double-digit trillions would be unmanageable even if one could assemble all the known wealth in the world to liquidate the problem. No government and no collection of governments could cope with this Black Swan. That is one reason why the Fed and this Administration, without consulting their people or Congress, are joining with Europe to cope with the threat precipitated by Greece. It is not just the euro at stake but a mountain of derivatives and all of this can come crashing down because of the profligacy of a country of a few million people with no real economy except tourism and olive oil.

What sort of man do we need the Oval Office in these tremulous times? The electorate, especially those fickle Independents, tend to decide their vote on presidential elections according to their assessment of the personality of the candidate. They ask themselves, is this individual presidential? Normally, I complain against this approach telling my acquaintances who inhabit the mushy middle that they ought to fix a coherent political philosophy and seek the candidate who will faithfully express that view. Naturally, I expect a prudent person to accept a conservative philosophy. But it is human nature to concentrate on the person rather than the policy and it is easy to form an opinion from a television image.

When an incumbent seeks reelection as Obama is now doing, one can project an outcome by analyzing the undecideds. It is a given among political scientists that undecideds fall into that description because they are unhappy with the incumbent but have not yet decided for the challenger. This dynamic is especially clear in debates where the incumbent need only appear "presidential" to "win" the debate. If the incumbent makes no gaffes and looks presidential he will have satisfied the test laid down by the undecideds and they will then be free to indulge their predilection to remove the incumbent. It is significant that Obama faces an unusually large contingent of undecideds and, to the degree that they have expressed a preference, they are predominantly opposed to his reelection.

I believe this rule of thumb obtains even more forcefully this election cycle. I believe the general public, the undecideds not excepted, have a sense if not a fully formed conviction that the nation is in real peril. They might not have even heard of a Black Swan, but they sense they need a real leader with the right stuff so they will be judging the candidates not just whether he "looks" presidential but whether he can be the man for the times. That is, a serious man for a serious time.

Clearly either Gingrich or Romney come off well in this test. Romney benefits because he projects integrity, at least bedroom integrity if not policy consistency, and many people will want a president with unquestioned personal integrity because they believe it will be sorely tested. Romney can also boast that he has succeeded already in a rescue mission when he saved the Olympics.

Gingrich benefits greatly from this new sober mood because it changes the entire test for this election cycle. Gingrich likely would not be seriously considered if the times were not so parlous, but they are. The polls suggest that the Republican electorate sees Gingrich, warts and all, as the man for the season not because he has personal integrity, but despite his lapses, and affirmatively because they see him as a leader.

Above all, they want a leader.

Like our economy, I apply a three-legged test: who is the candidate with the best combination of electability, conservative bona fides, and character which we sometimes called "vision."

Gingrich himself calls this the most important election since 1860. I do not think that is an overstatement. The man who becomes President of the United States in January 2013 is likely to be tested as no president since Abraham Lincoln. It will require a man of extraordinary character, tenacity, resilience, and luck. He must be able to unite the country, lead it to sacrifice and make it drink. No matter what, he must never lose sight of the city on the hill.

I do not think this is a time to choose the man on his conservative bona fides alone. I see Gingrich as the most electable of the acceptable conservatives and, above all, the man who has the best chance of coping with the Black Swan. I have made my decision to support Gingrich but I do not think I am doing so naïvely. I am aware of his faults, it is his qualities that compel me.

I fault no one, certainly no conservative, who says we need a man of a different kind of character. Every honest conservative must search his soul and decide for himself the essential elements of character which the times demand of the next president.


1 posted on 12/10/2011 2:43:55 PM PST by nathanbedford
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To: nathanbedford

Very good, sir.


2 posted on 12/10/2011 2:55:18 PM PST by Repeal The 17th (We have met the enemy and he is us.)
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To: nathanbedford

Except for one thing: Gingrich is not a conservative. He is a Tofflerite.


3 posted on 12/10/2011 3:02:45 PM PST by Captain Jack Aubrey (There's not a moment to lose.)
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To: nathanbedford

Well written... and you don’t even consider Black Swan events outside of politics and economics, such as another Carrington event, a Year without a Summer, an influenza pandemic, or some other extraordinary occurance. It does look like the global system which has been set up for the past century or so is wobbling towards a crash. God help us.


4 posted on 12/10/2011 3:04:52 PM PST by redpoll
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To: nathanbedford

I appreciate a well-thought out rationale instead of ridiculous hyperbole, e.g. “Newt is the exact same as Obama.”


5 posted on 12/10/2011 3:05:34 PM PST by ChocChipCookie
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To: nathanbedford

I read, and agree with, your litany of possible catastrophic turns in our National Fortunes.. And, with that in mind. I look at our current crowd of ‘Leaders’ (AKA ‘Betters’), candidate or non-candidate, politican or non-politician, on all points of the political compass - and despair...

We need a magnificantly hirstute Samson pulling down the walls of the Palace, with the Righteousness of Jesus evicting the money-changers from the Temple, coupled with the Vision of Moses to lead us through and out of the coming Wilderness... (I’m not usually one to invoke the Bible in these discussions, but I’ve become convinced that the times desperately call out for a Hero in the Biblical scale)

These guys, and gals, just ain’t it....


6 posted on 12/10/2011 3:07:20 PM PST by Uncle Ike (Rope is cheap, and there are lots of trees...)
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To: nathanbedford
What if we have no country by next November ?

i.e. the Black Swan event.

Who we look to for leadership ?


7 posted on 12/10/2011 3:10:10 PM PST by Uri’el-2012 (Psalm 119:174 I long for Your salvation, YHvH, Your law is my delight.)
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To: nathanbedford

I don’t think it matters who gets elected President, none of them will give us the radical course correction that is needed.


8 posted on 12/10/2011 3:12:42 PM PST by GeronL (The Right to Life came before the Right to Pursue Happiness)
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To: nathanbedford
Our grand American experiment is more vulnerable now that it was in 1941 and it is certainly more precariously balanced than it was in 2011.

By definition, if we are aware of the possibility or vulnerability, IT CAN'T BE A BLACK SWAN.

The main characteristic of a true Black Swan is that the universal devastation caused is obvious only in retrospect. If a significant number see the danger beforehand, but fail to head off the disaster, it is simply incompetence or stupidity or a death wish.

Granted, Hussein's regime qualifies on all counts, but his millions of welfare and union supporters renders the obvious moot.

A deliberate Black Swan is only possible in the universe of the hopelessly stupid and clueless.

9 posted on 12/10/2011 3:24:23 PM PST by Publius6961 (My world was lovely, until it was taken over by parasites.)
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To: nathanbedford

Black Swan event? Never heard that term. Does it have something to do with a bar in Houston?


10 posted on 12/10/2011 3:30:34 PM PST by Fiji Hill
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To: Publius6961
The vanity contains two paragraphs beyond the first one which you quote which evidently eluded your attention:

These conundrums are what Donald Rumsfeld might describe as the "known unknowns" but by definition a Black Swan event is as surprising as it is earth shattering. So all of these threats which beset us are by definition not Black Swan events. They are known risks. There are many more risks which are known and, frighteningly, there are many more which are unknown.

And

The point of Black Swan is that we get blindsided. Considering the landscape it is not at all improbable that something will go very wrong in the next four years. Another unpleasant feature of Black Swan is that it is catastrophic. The surprises are always bad.


11 posted on 12/10/2011 3:33:35 PM PST by nathanbedford ("Attack, repeat, attack!" Bull Halsey)
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To: nathanbedford

A major Icelandic volcanic eruption could be that Black Swan event. Especially now since one is over due and could completely shut down European air space for months.


12 posted on 12/10/2011 3:39:03 PM PST by gunsmithkat (There is no such thing as Too Many Guns)
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To: nathanbedford

Black swan events? Sounds like something intellectual idiots use to describe what God already said would happen. I love over educated intellectual idiots... they keep the sheep on pins and needles for the entertainment of the very few rest of us.


13 posted on 12/10/2011 3:47:31 PM PST by 3boysdad (The very elect.)
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To: nathanbedford
Another unpleasant feature of Black Swan is that it is catastrophic. The surprises are always bad.

Black Swan events are not always negative. That much I remember.

I did have to look back because I didn't believe they had to be extreme, but I was wrong on that count.

"What we call here a Black Swan (and capitalize it) is an event with the following three attributes.

First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable. "

14 posted on 12/10/2011 4:12:40 PM PST by Darth Reardon (No offense to drunken sailors)
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To: nathanbedford

You make some valid points, but I can’t see the election of any identified candidate as a black swan event. Now if there were a spontaneous movement to write-in a candidate who actually won, that could be a black swan, assuming it has impact that otherwise would not occur.

It’s a useful theory for those of us who prefer using what’s between our ears. The thing is, a black swan truly has to be unexpected and unpredicted; perhaps 9/11 was the most memorable recent example (conspiracy nuts notwithstanding). It meets the last of Taleb’s criteria by only being rationalized after-the fact. I would argue that Sarah Palin’s stemwinder speech was another, while she was rumored to be one of the VP possibilities, she was so unknown that the full force of her presentation came as a big surprise to everyone.

While he’s not used the black swan terminology, Prof. Niall Ferguson of Harvard has spoken consistently about a “trigger event” or something unpredictable that brings us to the tipping point literally overnight. And from what I’ve seen, despite Ferguson’s endorsement of Romney, I’d be a little more comfortable with a more innovative thinker like Gingrich at the helm if that happens.


15 posted on 12/10/2011 4:21:40 PM PST by bigbob
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To: nathanbedford

Bump and Danke Sehr!

OK. Yes, Newt is better than Romney. But we are done. I will vote for absolutely anyone but Obama.

The issues are three (well, OK, a bunch more, but who’s counting?): 1) The nearly quadrillion dollars of notional value in derivatives which must be ‘written down’ and the concomitant devastation of the global economy (not just ours); 2) The character of the American psyche/electorate which is without a moral (i.e. Judaeo-Christian) foundation and capable of electing many Obamas, and 3) The conscious and unconscious collusion of the elites (bureaucrats and mediacrats) in a massive deception and the destruction of the uniquely American political system.

The administrative apparatus at the Federal level is interlarded with so many “useful idiots” and quasi-Leninists that the housecleaning required from a successful Newt Gingrich is unlikely.

Balkanization is inevitable. Tyranny is now probable, not merely possible.

We will fight the good constitutional fight, but with few illusions. Continue dollar cost averaging your way into real investments: pre-64 silver, storage food, defensive arms. Make some good friends, get out of the cities and build a rural community. Did I say, “Pray without ceasing.” ?

Please continue your pellucid posts...light in a dark space.

Shalom


16 posted on 12/10/2011 4:53:54 PM PST by esopman (Blessings on Freepers Everywhere, and Their Supremely Intelligent Designer)
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To: nathanbedford

I suppose it’s foolish of me but I still have hope. As I watch Republican hopefuls climb onto the stump, then get pelted by the media until they fall I have to wonder who will be next.

Romney was a shoo-in until it became obvious that no one would vote for him and Perry took his place. The media trained its guns on the simpleton from Texas and he fell too. Cain tried and failed and now Newt seems to be coming into the public eye — or shoukd I say he’s stepping into the bull’s eye? Whether or not he’s electable, the media will ruin him, his chances and the hopes of any who relied on him.

The only one who isn’t being constantly pilloried by the media is Sarah - and that’s just because she dropped out of the race. But she did say something about an electable candidate, didn’t she? If every candidate that raises his head is clobbered as if in a gigantic political ‘Wack-a-mole’ we would eventally be left with someone like me as the only remaining candidate.

Unless she gets back in.

Try as I might, I see no candidate on the stage that I can honestly vote for in the hope he will effect a change. As things stand now I will have to write her name in and vote for her. Any other choice leaves me voting - once again - for the lesser of two evils. As this may be my last election, I will not go down that road again.


17 posted on 12/10/2011 4:57:09 PM PST by oldfart (Obama nation = abomination. Think about it!)
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To: nathanbedford
Gingrich himself calls this the most important election since 1860. I do not think that is an overstatement.

I would be startled if history failed to confirm this assessment. If we elect an exceptional leader with both ability and patriotism, this election will be discussed for generations as the most important election since 1860. If we fail, this election could very easily be considered the decisive election in the decline and fall of the United States.

As for the quality of both your thought and your writing, they are exceptional. Well done!

18 posted on 12/10/2011 5:17:36 PM PST by Pollster1 (Natural born citizen of the USA, with the birth certificate to prove it)
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To: nathanbedford

Bookmarked


19 posted on 12/10/2011 5:37:20 PM PST by freemama
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To: nathanbedford

Nicely done, sir!


20 posted on 12/10/2011 6:02:41 PM PST by MV=PY (The Magic Question: Who's paying for it?)
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