TMR Editor’s Note:
DEFINITION of ‘Grey Swan’
An event that can be anticipated to a certain degree, but is considered unlikely to occur and may have a sizable impact on the valuation of a security or the health of the overall market if it does occur. A grey swan event is unlike a black swan event whose total impact is difficult to predict. Despite the possibility of determining the properties and potential impact of such an event, it is difficult to create precise calculations regarding the total impact.
BREAKING DOWN ‘Grey Swan’
The term “black swan” was coined by Nassim Nicholas Taleb to describe the uncertainty and risk posed by unpredictable events. Grey swan events, which are derived from the black swan concept, may include earthquakes and even events like the Great Depression. While analysts can look at the impacts that similar events had across history, the exact extent of damage and risk cannot be calculated.
(Source: Grey Swan)
The worldwide investment realm has been full of talk about the ‘Grey Swan’ … and for very good reason. DEEP CONNECTIONS‘ Jim Autio has looked deeply into this matter, particularly those grey swan events which can manifest on the global geopolitical chessboard at any moment. His “Clear and Present Dangers List” shown below has well captured those areas of greatest risk and peril across the planet.
The DEEPS CONNECTIONS intelligence platform has quite accurately isolated many of those flashpoints which possess a certain level of precarious volatility. Jim has identified those geographic areas marked by grave political instability and/or profound economic insecurity, which also represent the greatest potential for gray swans to occur.
All contractors, both government and corporate, are highly encouraged to consider the astute analyses contained within these uniquely objective intelligence briefings. This rapidly evolving boutique intelligence agency — DEEP CONNECTIONS — is distinguished by its competence to both recognize and integrate the most critical factors of any prospective gray swan, and then synthesize the most likely scenarios. Such a valuable service offers what few others anywhere in the industry can.
Go to: http://medium.com/deepconnections for further information and in-depth gray swan assessments.
The Millennium Report
August 28, 2016
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Prevailing Gray Swans: The Clear and Present Danger List for the Week Ending August 19, 2016
by James Autio
DEEP CONNECTIONS
Prevailing Gray Swans provides a list of known catalysts or flashpoints in the world today that have the highest likelihood of causing great harm to quality of life to North Americans or on a global scale. These flashpoints are called gray swans in lieu of black swans because instead of being absolutely unknown there is a limited visibility to estimate their consequence and nature — they are clear and present dangers that command vigilance. The list is unranked (and unrankable) and is updated weekly.
Note: As conditions change from week to week there are updates to the [Analysis…] documentation of each item on the list. Items are delisted if they no longer warrant clear and present danger status. There is no preset number of items. The first step was creation of the list and the second step is building out the [Analysis…] which houses the intelligence briefing, the essence of Deep Connections. There is still significant sourcing, researching and composition to be done on many items so the [Analysis…] sections will be published as they are completed.
Each intelligence briefing at the top displays which of the six knowledge dimensions [economics | finance | politics | sociology | military strategy |technology] are emphasized with bold face meaning primary, regular face meaning secondary, and <totally absent> meaning not applicable or trace.
The Clear and Present Danger List
- European banking collapse with immediate global contagion (ground zero: Deutsche Bank). [Analysis…]
- European banking collapse (ground zero: Italian banking sector).[Analysis…]
- Economic collapse of Japan. [Analysis…]
- Cyberterrorism/cyberwarfare/sabotage affecting US infrastructure (e.g. financial markets, power grid, internet). [Analysis…]
- The collapse of the European Union due to a successful Brexit-like referendum in France or Italy. [Analysis…]
- Escalation of a war between the US/NATO and Russia originating from the Syrian conflict or from the eastern European border countries (Balkans/Poland). [Analysis…]
- Bursting of the global sovereign bond bubble.
- Escalation of a war between the US and China originating from the South China Sea territorial water disputes.
- A large and rapid Chinese currency devaluation.
- A failure to physically deliver (force majeure) on the New York Comex precious metals market exchange (monetary metals: gold and/or silver).
- Organized civil unrest that escalates to prolonged violence in multiple US cities which triggers martial law and a permanent re-calibration of the social consciousness vis-à-vis a collective, national awakening to a starkly different definition of America on all levels — from its 1776, constituent DNA to the US’ perceived status through the eyes of the rest the world.
The depth chart (Gray swans on deck)
Assume these are background “noisy” existential risks (i.e. also gray swans but not clear and present dangers front-and-center): strategic nuclear war between nuclear club nations; a nuclear device detonated on sovereign soil by a non-state actor (nuclear terrorism); release of a biological agent of Category A in a large city; electromagnetic pulse (EMP) detonation at altitude; financial warfare (e.g. an unexpected aggressive devaluation of the yuan; politically-induced massive short-selling directed at vulnerable strategic assets or systemic disruption of markets using algorithmic proxies or hijacking market-controlling software (i.e. cyberwarfare); aftermath of US fracking energy sector derivatives exposure to the banking system as a nonlinear function of a declining crude oil price; the Fukushima nuclear disaster of March 2011 causing a marked rise in cancer occurrence in the greater Tokyo region and/or qualitative losses of maritime ecosystems like fish populations in the pan-Pacific ocean regions that provide staple and mandatory dietary requirements for large human populations; severe water shortages in US western states beyond the scope of rationing; bank runs across Europe due to threat of bail-in.
Other sources: [World Economic Forum: The Global Risk Report 2016 (pdf)] [Minutes Until Midnight | details]
Background on the nature of black, gray, and white swans, and the impact of tail events [interview with Nassim Taleb]
Prepared by: James Autio
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http://medium.com/deepconnections/prevailing-gray-swans-7bfd3c292134#.p9uyismgj