A “black swan” is a term coined by
Nassim Nicholas Taleb and it has three (or perhaps four) characteristics:
1. unpredictable;
2. massive impact;
3. everyone comes with
an explanation (like using Nostradamus after the event); and
4. no “expert” actually
saw it coming
Black swan events can be positive or
negative. The genesis of the term (black swan) is the western belief that all
swans are white. In 1697, a Dutch explorer made it to Australia and discovered
black swans.
World War I was when an Archduke was
shot. That cost was 40 million dead (civilians and military). Was it worth it?
No! Anyone saw it coming? None!
Today there is a similar pile of dry
tinder waiting for spark. Too much debt, worsening geo-politics, fake news,
climate change and trade wars (and maybe many others!). The world is waiting
for a black swan with a lit coal in its beak.
Can we connect some dots? Massive pile
of debts (USD250 trillion) makes you vulnerable to shocks. This is the
financial tinder. Few expert economists are worried. Why? It is business as
usual. We need massive QEs or liquidity will dry up.
Then there is oil. Energy resources
allow economic growth. If the Straits of Hormuz is shut for a month because of
war, then price (of oil) will spike and we end up in negative growth territory.
Many will lose their business, jobs and savings.
With Trump in office, no one knows
what could be the black swan! It could be an economic tsunami or a terrorist
initiated action that culminates in a “war to end all wars”.
Reference:
Waiting
for the Black Swan,
Chris Martenson, June 14, 2019 (www.peakprosperity.com)
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