Black Swan Events

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rstora01's picture
rstora01
Status: Member (Offline)
Joined: Apr 22 2009
Posts: 2
Black Swan Events

One very important item missing from all your videos (which I believe are great and I am promoting) are Black Swan events.

That are events that cannot be fore seen but nonetheless occur. Such as War!  It is a historial fact that wars occur over resources.

Given your likely probable outcomes of resource depletion, population increases. Demands for survival will force human beings to make difficult choices and war is the logical conclusion.

Rick

Lemonyellowschwin's picture
Lemonyellowschwin
Status: Platinum Member (Offline)
Joined: Apr 22 2008
Posts: 547
Re: Black Swan Events
rstora01 wrote:

war is the logical conclusion.

Then it's not really a black swan, is it.

SkylightMT's picture
SkylightMT
Status: Silver Member (Offline)
Joined: Sep 30 2008
Posts: 125
Re: Black Swan Events

Black swan is like the swine flu, I guess.. if it gets more virulent or spreads greatly.

We talk about black swan events here a bit on these forums, but since they are unpredictable, and could go either way (meaning, an event could contribute to a positive outcome as well as a negative outcome), I don't think it makes sense to include them in any discourse on economics, or most other sciences. I do recall that the more complex and large a system is, the more likely a black swan event could occur (if I'm remembering correctly) so there is some relevance to including them when talking about economics because derivatives have massively increased both complexity and impact, but still... to me its kind of like prefacing ANY scientific research with the warning, "Results are applicable only in the absence of a large, unpredictable event."

SagerXX's picture
SagerXX
Status: Diamond Member (Offline)
Joined: Feb 11 2009
Posts: 2219
Re: Black Swan Events
Lemonyellowschwin wrote:

Then it's not really a black swan, is it.

Took the words right outta my mouth.  [smile]

 

rstora01's picture
rstora01
Status: Member (Offline)
Joined: Apr 22 2009
Posts: 2
Re: Black Swan Events

The "Black Swan" theory refers only to events of large consequence and their dominant role in history by definition.

No one had ever seen a black swan all swans were white thus they did not exist. Then in the 18th century in Australia they were discovered to exist. So the origial perception (mistakenly) that swans were only white was proved false.

  1. The event is a surprise.
  2. The event has a major impact.

After the fact, it is usually the case that the event is rationalized (logical outcome) by hindsight, as if it was expected to occur all along. That seems to me to be happening now with our current economic downturn. Very few people saw it coming (predicted it) but many describe it now as if it was expected to occur all along (20/20 hind sight).

 

Rick

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