First published in the May/June 2011 issue of Foreign Affairs, The Black Swan of Cairo: How Suppressing Volatility Makes the World Less Predictable and More Dangerous is a thought-provoking effort by co-authors Nassim Nicholas Taleb and Mark Blyth to advance the idea the efforts of policy-makers to smooth out the peaks and troughs of volatility actually has the unintended consequence of making the world a more volatile place.
I was reminded of the Taleb and Blyth article when I recently read Suppressing Volatility Makes the World More Dangerous, by Kurt Cobb of Resource Insights. Here Cobb extends the thinking of Taleb and Blyth and argues that not only do efforts to suppress volatility backfire in the economic and political realms, but also in areas such as agriculture and public health.
Of course, I could probably argue that Jeff Goldblum’s ranting against the instability of complex systems in Jurassic Park some two decades ago outflanked Taleb, Blyth and Cobb, but on a week when a low VIX seems to have many vexed, ruminating on the ideas of Taleb, Blyth and Cobb may help readers flesh out some insights into what may lie ahead. Along the same lines, I believe the links below might also contain some provocative and related thought starters.
- Thinking About Volatility
- The Risk Library
- A Conceptual Framework for Volatility Events
- Forces Acting on the VIX
- Fukushima Daiichi and ‘Event Theta’
- Expectations, Surprises and Fear in 2011