Another Intelligence Failure: Iranian Uprising Flies a Black Swan

Posted on June 20th, 2009 by admin in Political Economy

It has become clear now that the world was quite surprised at the Iranian uprising.

We speculate the intelligence organs as well as the commentariat in USA and elsewhere complacently assumed the Iranian elections would be rigged. After all, every candidate was pre-approved by the boss mullah. The fact that the proletariat in Iran rose up against what everyone assumed would occur is the Black Swan Event. A BSE has the definitional properties that it has very high impact, is exceptionally unlikely and can be explained only in hindsight.

The subtlety is this: Our BSE may not be yours. You may have special insight leading you to expect my BSE. An example: John Paulson saw the credit collapse coming and massively invested his hedge fund in shorting the bank stock index. He made billions of dollars for his fund and himself…while the rest of us were running for cover.

So now we ask: were our intelligence agencies expecting this BSE? We doubt it.

Leave a Reply

More News