Looking For Black Swans
I have often written about the Black Swan Event. To review, a Black Swan Event is that which makes perfect sense in hindsight, indeed looks inevitable in hindsight, but no one saw it coming at the time – or at least no one who was in a position to do anything about it saw it coming.
Considering the state of the world there is nothing to say that the Black Swan Event cannot be war or terrorism. It very well could be either or both of those. One can effectively argue that World War I was the ultimate Black Swan.
I am not writing this as a prediction – but just for general awareness. The world economy, including the United States economy, has lost elasticity. It has become fragile in the sense that it is a very delicate balancing act of government and central bank planning and action (or inaction). This central planning has produced a rigidity that is not friendly to unanticipated change. Our current economy is like a pane of glass – it is stable and solid when left in place. If something were to be dropped on it or if it was forced to bend it will shatter.
Unanticipated change is what the central planners in the Federal government and Federal Reserve fear. That unanticipated change, that Black Swan Event, is inevitable. That does not mean it is imminent. However it does not take much imagination to look around the world and see a political assassination, a military misjudgment, a terrorist act could be lurking any day which would be of sufficient magnitude to be a Black Swan.
Keep your eyes open…