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1913 Intel is about emerging risks. Each day I try to track down a few articles discussing issues that could give us a bad day.

One thing that is important to understand is the process that governs our lives. How does the future unfold? It doesn’t unfold like you think. Stability is not followed by more stability even if it feels that way. “Stability is destabilizing,” says Hyman Minsky.

Next, I let you take a look at what analysts are saying about the prospect of nuclear war – the big crash. Unprecedented peace and stability are followed by unprecedented war. This is serious stuff.

I try to lay a foundation for war. A big war does not just spring up out of nowhere. Problems slowly build up for years. Along the journey there are analysts talking about these problems, and what they might mean. And sometimes experts give us a big picture forecast of the future. We just need to follow along for the ride.

Now let’s dive right in. What is the process that drives our lives forward in time? Sorry, but you look a lot like a turkey.

The Thanksgiving day turkey process:

the_thanksgiving_turkey_problem_small

(Nassim Taleb’s Black Swan Thanksgiving Turkey – Business Insider)

The turkey thought everything was just fine until day 1001. He didn’t really understand the process that was driving his life. Too bad he didn’t talk to the butcher earlier. He might have learned the truth of his existence.

How could you predict the collapse (dinner or Thanksgiving) of the turkey colony? Wouldn’t the key factors be time and stability? The turkey needs a predictable amount of time to get to the right size. Also, a certain amount of stability is required in the life of turkey to make an accurate estimate. What if the turkeys get sick for several months and lose a lot of weight? Based on history, we can estimate when the turkeys will be ready for shipment (collapse), given a relatively stable environment.

At the end of the growth period, what if a truck came for only one-quarter of the turkeys because of the truck size? That would represent a partial collapse. Naturally, the truck would be back for more on subsequent days. However, we could estimate the demise of the remaining turkeys if we saw a partial collapse (partial pick-up) at the end of a long, stable period. The partial collapse just gives us confirmation that enough stable-time has elapsed – the full colony is ready for a collapse (shipment). So time plus stability plus partial collapse(s) are all warnings of an impending collapse of the remaining turkeys.

Who cares? Well, let’s look at how things work in societies.

The process that moves us forward in time is a whole lot like the Thanksgiving turkey process: A long period of relative stability only to be followed by a huge crash. Like snow falling undisturbed on a mountain for a long time. But after a very long time the impossible slowly and silently becomes the inevitable – the avalanche that wipes out everything.

Crash = Time + Stability

During the stable times (the good times), the problems naturally grow and grow and grow. Given enough time these problems will become so large that there is no escaping a large crash. Both 9/11 and the 2008 financial collapse represent partial collapses after a long period of time and stability.

Another sign of avalanche danger is represented by diverse signs of collapse after a longer period of time and stability: One or more sudden large shocks after a long period of stability. They tell us that there has been enough time and stability so that problems have grown to become huge. And these problems have spread to all corners of society. That is why, for example, large financial shocks tend to precede great wars by 7 to 10 years. Both are collapses. The financial shock tells us that we meet the time and stability requirement, and problems permeate society.

Please check out a little history:

1. Financial crisis in 1907, and World War I in 1914.
2. Financial crisis in 1929, and World War II in 1939.
3. Financial crisis in 2008, and World War III in 2015-2018?

The research I’ve done indicates the process that drives our collapses follows a power law distribution. But other things we know also follow a power law distribution: Snow avalanches, forest fires and earthquakes. We know that long periods of stability are followed by big crashes in these kinds of systems. History gives us a clue. Thanksgiving day is coming.

In the next section I look at what analysts are saying about the future. Is it really true that Thanksgiving day is coming? For a quick scan of article headlines pointing at the big picture, please check out this page.

The perils of Putin’s grim trigger – The Washington Post

“Putin’s response to a bad situation is usually to gamble for resurrection through some form of escalation. Fisher’s concern — and mine — is that Putin will respond to his current status quo with even more conflict escalation to test NATO’s mettle.”

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The hard-working staff here at Spoiler Alerts prides itself on paying keen attention to warnings about the apocalypse (and usually pooh-poohing them). So when Vox’s Max Fisher writes a 10,000 word essay on “How World War III became Possible,” we here at Spoiler Alerts sit up and take notice.

Fisher ain’t soft-pedaling his thesis:

There is a growing chorus of political analysts, arms control experts, and government officials who are sounding the alarm, trying to call the world’s attention to its drift toward disaster. The prospect of a major war, even a nuclear war, in Europe has become thinkable, they warn, even plausible.

What they describe is a threat that combines many of the hair-trigger dangers and world-ending stakes of the Cold War with the volatility and false calm that preceded World War I — a comparison I heard with disturbing frequency.

They described a number of ways that an unwanted but nonetheless major war, like that of 1914, could break out in the Eastern European borderlands. The stakes, they say, could not be higher: the post–World War II peace in Europe, the lives of thousands or millions of Eastern Europeans, or even, in a worst-case scenario that is remote but real, the nuclear devastation of the planet.

You really have to read the whole thing because I’m not sure any summary will do it justice. Fisher does an excellent job of explaining why more nuclear tensions warrant more worry than, say, asteroid defense.

In essence, Putin thinks that his comparative advantage is his willingness to go to the brink and stare down the West in any confrontation.  …

So will it work? No, which is the problem. The hard truth remains that Putin’s strategic position now is weaker than it was five years ago. …

But, again, the failure of Putin’s strategy is the problem. As I noted last year, Putin’s response to a bad situation is usually to gamble for resurrection through some form of escalation. Fisher’s concern — and mine — is that Putin will respond to his current status quo with even more conflict escalation to test NATO’s mettle.

The truth, however, is that I’m not feeling all that calm, for two reasons. First, as I’ve said, I don’t think Putin’s strategy will work, which means that at some point he’s going to need to escalate again. Second, Fisher’s essay presents a Russia that believes the Obama administration is hell-bent on encirclement. Imagine what Russia will think when Obama’s more hawkish successor comes to power?

Developing…. in some very disturbing ways.

The perils of Putin’s grim trigger – The Washington Post

Back in 2008 the National Intelligence Council published a report called “Global Trends 2025.” I summarized some of that report here: Entering the Age of Great Upheaval. Here’s a brief glimpse of what it has to say:

The Global Trends 2025 report suggests that the international system as we know it today – created out of the ashes of World War II – “will be almost unrecognizable by 2025?.

Most of us haven’t seen something like this before.  Big changes are in the process of taking place. What if these big changes don’t go smoothly?

Historically, what happens when a superpower is approached or passed by another country, like the US vs China? The probability of war is at least 75% and could go as high as 100%. Right now conflict in the East China Sea between China and Japan is threatening to escalate:

Chinese think tank warns of military clashes with Japan
Why Japan and China could accidentally end up at war | FP Passport

The international order is starting to unravel:

Indeed it is. The international order is unraveling. Russia is of course smashing the post-Cold War order by seizing Ukraine, and blowing up the global architecture of nuclear non-proliferation. Let us not forget that Ukraine agreed to give up its nuclear weapons – the world’s third biggest arsenal at the time – in exchange for a guarantee by the great powers in 1994 that its territorial integrity would be upheld. Russia was one of the signatories.

China is laying claim to large parts of the East China and South China Seas, and has established an air identification control zone over the Japanese-controlled Senkaku islands.

China and Japan are one blow – or misjudgement – away from outright military conflict. …

Fire-sale of US Treasuries is a warning of acute stress across the world – Telegraph Blogs

So the big picture is not good. After 70 years of relative peace, the world appears to be in trouble. Thanksgiving day is coming.

Me

My name is Matt. I am an actuary. My primary role is risk management.

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Monitoring emerging risks.