We've been in a financial crisis for a couple of years now, beginning
with the subprime housing problem which the authorities initially
discounted as well contained. It degenerated quickly, though. And
today, there is some acceptance of the fact that it is the worst
financial crisis since the end of World War II, which is a polite way
of saying the worst financial crisis since the Great Depression.
Now, this financial crisis was, not to use Nassim Taleb's metaphor,
not a black swan. Nassim Taleb wrote a book, the title of which is The
Black Swan, by which he meant something that was unpredictable. Many
hundreds of years ago in Europe people believed that there were only
white swans because they had never seen a black swan until somebody
went to Australia, came back to Europe and said, "Hey, I saw a black
swan." In other words, Nassim Taleb is saying that the mere fact that
Europeans had never seen a black swan did not mean necessarily that
there was no such thing as a black swan.
And yet, almost all professional investors did not see the crisis
coming, even though as I said before, it was not an unpredictable
event. Because they didn't see the crisis coming, they said, "Hey,
nobody predicted it" or "The only ones who predicted it were people
who for decades have been saying that the end is near." It's simply
not true. A few people did; people from the establishment, a very few.