Technological progress has merely provided us with more efficient means for going backwards.” - Aldous Huxley

You’ve most probably read or heard about Black Swans, low probability, high impact events. People now apply this word to a variety of phenomenon, even if they do not necessarily understand its meaning. It is the difference between the Arab Spring and France’s terrorist attacks: one truly surprised the world and was largely impossible to predict, while the other was a quantified risk basically waiting to happen.

People tend to focus on high impact events with low probabilities rather than high impact events with high probabilities. The reasons are not clear to us, but certainly derive from a skewed understanding of risk which make us overestimate low probability events while underestimate high probability ones. In other words, people overestimate their probability to die in a terrorist attack while underestimating their risk of dying in a car crash, from a stroke or from food poisoning.

Most of the mainstream media plays onto people’s fear to drive up their audience. Sensational news are put forward while really important issues are overlooked. You only hear about climate change on TV news report when something dramatic happens. By focusing on the irrelevant, media effectively shifts the political debate toward peripheral issues while the most serious threats such as global debt levels or global warming are given lip service.

calvin-hobbes-global-warming

However, these are the events with very high probability of happening, bringing high impacts. They are known as Dragon King and are different from Black Swans because they are predictable. If we know the mechanisms that are likely to lead to these events, we can actually work to avoid them. The most obvious Dragon King is global warming: we know the planet is warming, that the climate is going rogue and that it will have dramatic costs for human life. Here is a condensed list of threats we are facing:

In addition to that and to climate change, there are a few other challenges that have been variously put forward by a range of researchers in recent years, such as fresh water availability, massive soil degradation, trace pollutants, degradation of life in oceans (about 99% of life is aquatic), staple food threats (e.g. black stem rust, wheat blast, ground level ozone, etc.), loss of biodiversity and 6th mass extinction, all the way to Joseph Tainter’s work concerning the links between energy flows, power (in TW), complexity and overshoot to collapse. These weak links are currently in the process of breaking or are about to break, the breaks forming a self-reinforcing avalanche (SOC) or Perfect Storm.

Another important feature of Dragon King is that they are the result of positive feedback mechanism which amplify their impact. You can think of it as leverage in finance: by borrowing too much money, speculators going bust will drag their creditors into a liquidity crisis, gradually spreading to seemingly unrelated entities. As a result of their ramifying complexity, the ability to reasonably predict Dragon King doesn’t mean we can precisely quantify their impact.

To conclude, we think it is too easy to advise focusing on Dragon King. The modern world is so complex that potential threats abound: global warming, worldwide economic inequalities, the European Union’s future, China’s housing market and long term economic health, the US/Russia relationships, the Middle East mess, the confrontation over the South China Sea, rising domestic extremism as an answer to globalization… Which one do you focus on? Then what about the others?

In fact, these issues are so complex that governments around the world have no idea what’s going on. The mainstream media has no idea what’s going on. And as a result citizens have no idea what’s going on. We’re overwhelmed with information, unable to focus, decide or act. We thus believe that individual preparedness is required to face the numerous brewing crisis: statistically, at least one of them will blow up over the next 10 years.

Knowledge of self-defense, surrounding threats (i.e.: nuclear power plants), preparation of escape plans, gardening and survival skills, are all competences that are not required in our current world. But this is the very idea behind preparedness: the ability to anticipate potential crisis and build tools to address them.

Science, General Knowledge & Environment

The dream of a fully connected future is starting to look like a nightmare – “In their rush to give us the new and improved, technology companies wave off concerns about the unintended consequences of digital lifestyles. Security flaws are just another bug to be fixed, or better, an opportunity to market a new product.

Why the Energy Crisis is Coming Sooner Than Most Experts Forecast – “In my view, given that nearly everything within the Globalized Industrialized World requires transport and that said transport is still about 94% dependent on oil-derived fuels, the rapid fizzling out of net energy from oil must be considered as the defining event of the 21st century – it governs the operation of all other energy sources, as well as that of the entire Globalized Industrialized World.

History & Geopolitics

Ungovernability – “Because, as I said in those articles, the overbearing principle is, and must be, that when centralized power ceases to deliver benefits to people, they will no longer accept that decisions about their – ever poorer- lives are taken by people hundreds or thousands of miles away from where they live. People allow that only when they reap sufficient benefits from it. With growth gone, there are no such benefits left.

Martin van Creveld explains why our armies are becoming pussycats – “Chapter I examines some of the ways in which modern Western societies raise, or rather mis-raise, boys in particular – from among whom, like it or not, they will have to draw their future soldiers. Chapter II focuses on the way those societies have been doing whatever they can to defang their armed forces. Chapter III looks at the way women — or perhaps I should say the way women are being incorporated into the forces — are devastating those very forces. Chapter IV looks at the unprecedented spread the phenomenon known as PTSD. Chapter V investigates the growing predominance of rights over duties, as well as the way war itself is being delegitimized.

Finance & Economics

Why Italy’s Banking Crisis is Spiraling Out of Control – “Somehow a government that is already crumbling under the sheer weight of its own debt exposure is supposed to bail out a banking sector that, according to some estimates, accounts for well over a third of Europe’s registered bad bank debt. It’s a tall order even at the best of times, and for Italy’s banks these are most certainly not the best of times.

China’s Insanely Leveraged Housing Market Will Enter Its Secular Bear Market In 2017 – Overly dramatic tone but interesting data. “In the casino that is China’s housing market, the institutional money has drastically cut down its exposures, and move its assets aboard on a massive scale; the local governments use the Local Debt Swap Program and the record number of “land kings” transactions to cash out and reduce their respective leverages; and there are only highly leveraged up Chinese Damas [individual speculators] left holding the bag.

Picture of the day: The battle to recapture Mosul

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About Carlito Riego

"Great perfection may appear imperfect, but its usefulness is inexhaustible. Great abundance may appear empty, but its usefulness cannot be exhausted. Great correctness may appear twisted, great skills appear crude, great eloquence appear awkward. Activity conquers cold; inactivity conquers heat. Clear serenity governs the world." - Lao Zi