The Thanksgiving day turkey process:


(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.

That’s all well and good, but we are not turkeys waiting for Thanksgiving dinner.  Well, let’s have a look at the process that drives societies forward in time.

The process: Like snow falling undisturbed on a mountain for a long time. And it never stops falling. After a long period of time there is danger of avalanche. If you read the link for the process then you’ll get a better understanding about this.

The first sign of avalanche danger is a long period of stability: Crash = Time + Stability. Problems naturally grow at a given rate. After enough time these problems will have grown so big that they cause some kind of collapse. Usually this kind of collapse is in the form of a financial collapse.

The butcher: Avalanche is near. Both 9/11 and the 2008 financial collapse represent partial collapses after a long period of time and stability.

The second 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 earth quakes. 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.

What are the signs we see today that things are just not right?

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

As part of the unraveling, could we be looking at a war between NATO and Russia?

With the 100th anniversary of the outbreak of World War I this year, who could have imagined “that war could become a genuine possibility in a country which shares a border with the European Union?” Schulz told the opening of the summit of the 28 EU leaders.

Ukraine crisis returns specter of war, EU chief warns | 1913 Intel

One thing is clear: Putin is not going to stop with just taking the Crimea.

Q: Does the West have to fear Putin?

A: Angela Merkel says that Putin has lost touch with reality. This is what it looks like from the viewpoint of a typical European politician, but it’s wrong. Putin does not behave like a normal statesman. The West should see the world with Putin’s eyes and understand his logic.

Q: What is Putin’s logic?

A: He is driven by personal and political power and has unleashed hysteria in Russia about becoming a new empire. This puts global security at risk. He will carry on until he is stopped.

“Crimea is Only the First Step”: Former Putin Adviser | The XX Committee

The driving force behind Putin’s actions is revolution, or more correctly the worry about a revolution in Russia.

Russia Must Stop U.S. Expansion in Ukraine | The Moscow Times

“Nobody in Moscow has any doubt that what happened in Ukraine will be repeated in Moscow in two or three years.”

It seems that the West simply does not like Putin. He is a huge obstacle who prevents them from achieving global hegemony. For this reason alone he must be broken. Nobody in Moscow has any doubt that what happened in Ukraine will be repeated in Moscow in two or three years. Without Putin, there will be few world leaders left who have the power or courage to stand up to Washington. When this happens, the entire world will have to quickly accept the new reality.

Russia Must Stop U.S. Expansion in Ukraine | The Moscow Times

The Third Russian Revolution | Atlantic Council

Make no mistake: On the current trajectory, Russia won’t be immune to many of the forces that provoked the so-called colored revolutions in adjacent states and even the misnomered Arab Awakening.

A third Russian revolution is unfolding. The only questions are when will that revolution reach a critical mass and, most importantly, will the forces of autocracy or pluralism carry the day?

In the two decades since, Vladimir Putin has emerged as the Ironman of Russia. In the process, Russia has been described and viewed by many as a kleptocracy ruled by the few who have pillaged national wealth for their own benefits.

Under what Republicans and Democrats alike in the United States see as a government of and by thugs, human rights have been violated; dissidents and members of the media arrested; and opponents of the Kremlin subjected to purges and show trials leading to long prison sentences.

The Third Russian Revolution | Atlantic Council

The possibility of war with Russia is not the only thing you need to worry about. There is also the possibility of war with China.

Though the islands in dispute in the East and South China seas are in many cases barren and below water during high tide, as Aristotle wrote, conflicts arise “not over small things but from small things.” The assassination of the Austrian Archduke Franz Ferdinand that sparked World War I was one such small thing. Claims in the Pacific, however petty, if they are tied to vital interests, can lead to war. Indeed, the primordial quest for status still tragically determines the international system — just as it did prior to World War I. And these islets have become, because of their very barren abstraction, logos of nationhood in a global media age.

The Guns of August in the East China Sea

Many analysts say that both sides need to be careful or there is the real risk of escalation, and even nuclear war. But there is a problem. Currently, only one side is being careful (the US and NATO). The other side (Russia and China) does as it pleases.

The New Abnormal

One by one different countries are stacking up on the edge of a cliff. First there was Japan who has been stuck economically at the cliff for 20 years. More recently the US and the EU have moved up to the edge. Now China is moving up to the edge.

Forget the new normal. Five full years after the financial crisis, we’ve entered a period of increasing global uncertainty and instability that’s almost certain to trigger a new crisis.

[Published on June 17, 2013.]

Ian Bremmer and Nouriel Roubini Unveil the New Abnormal | Institutional Investor

Watch a video on this topic here: http://video.cnbc.com/gallery/?video=3000176315

At Davos, they are calling it the “new normal:” At Davos, Crisis Is the New Normal – NYTimes.com

There is dangerous positive feedback and moral hazard present in modern democracy, under which far too many people “demand” ever bigger government but contribute only sloth and indolence.

The Commentator – Democracy’s positive feedback and moral hazard

What is happening is that country after country is doing everything possible to suppress the big collapse and maintain stability. All the problems that caused the big crisis in the first place are left in place continuing to grow. By suppressing the big collapse countries are stuck in the middle of a phase transition where things don’t act normally due to the build up of bad ideas, bad decisions and corruption. This is the new abnormal. Only a big crash can fix the problems, but leaders won’t let that happen.

War in the Middle East is also threatening to escalate into something much bigger:

Will conflict in the Middle East trigger the next great power war? | Foreign Policy

There appears to be some kind of democracy super-cycle lasting in the neighborhood of around 250 years. Corruption gradually takes hold over this period of time until the democracy is strangled.

Behind dysfunctional government, is democracy itself in decay?

It took only 250 years for democracy to disintegrate in ancient Athens. A wholly new form of government was invented there in which the people ruled themselves. That constitution proved marvelously effective. Athens grew in wealth and capacity, fought off the Persian challenge, established itself as the leading power in the known world and produced treasures of architecture, philosophy and art that bedazzle to this day. But when privilege, corruption and mismanagement took hold, the lights went out.

In Athens, democracy disintegrated when the rich grew super-rich, refused to play by the rules and undermined the established system of government. That is the point that the United States and Britain have reached.

Is American democracy headed to extinction? – The Washington Post

For more information about why the US is in trouble, please read this PDF file here. I put my old About page into that PDF file.


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

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