June 8th. My life has taken another turn again, writes Travis Bickle (Robert Di Niro) in the 1976 movie, “Taxi Driver”. The days move along with regularity over and over, one day indistinguishable from the next, a long continuous chain. Then suddenly there is a change.
Suddenly there is a Black Swan, something unanticipated. Iranian President Ebrahim Raisi dies in a helicopter crash.
A session of the Taiwanese parliament, the Legislative Yuan, descended into a fist fight on Friday, with members suffering concussions, fractures and other injuries. “Chaos erupts in Taiwanese parliament”, headlines Russia Today (RT). [1]
The world is a dynamical system, writes Nassim Nicholas Taleb in his book, The Black Swan. The Black Swan is called “chaos” because we are not sophisticated enough to have foreseen it. We do not know what we will know. Taleb found no convincing evidence that economists as a community have any special ability to predict. We live in “Extremistan” not “Mediocristan”. Extremistan is dynamic and the irregular cannot be predicted. The world is far, far more complicated than most of us realize. [2]
The financial press each day gives immediate explanations for why the market behaved as it did. But they don’t really know. When Saddam Hussein was captured in December 2003, Bloomberg headlined: “U.S. Treasuries Rise; Hussein Capture May Not Curb Terrorism”. A half-hour later, when Treasury bonds fell in price, Bloomberg changed the headline to, “U.S. Treasuries Fall; Hussein Capture Boosts Allure Of Risky Assets.” [2]
Expect the unexpected. We do not know what we will know. There’s no way we can fathom all the variables. Then suddenly there is a change.
——- Sources ——-
[1] “Chaos erupts in Taiwanese parliament (VIDEO)”, Russia Today (RT), May 19, 2024. https://on.rt.com/ctax
[2] The Black Swan, by Nassim Nicholas Taleb. New York: Random House, 2007/2010.