How 'black swans' and 'perfect storms' become lame excuses for bad risk management

Nov 15, 2012

The terms "black swan" and "perfect storm" have become part of public vocabulary for describing disasters ranging from the 2008 meltdown in the financial sector to the terrorist attacks of September 11. But according to Elisabeth Paté-Cornell, a Stanford professor of management science and engineering, people in government and industry are using these terms too liberally in the aftermath of a disaster as an excuse for poor planning.

Her research, published in the November issue of the journal Risk Analysis, suggests that other fields could borrow risk analysis strategies from engineering to make better , even in the case of once-in-a-blue-moon events where statistics are scant, unreliable or non-existent.

Paté-Cornell argues that a true "black swan" – an event that is impossible to imagine because we've known nothing like it in the past – is extremely rare. The is one of very few examples. But usually, there are important clues and of emerging hazards (e.g., a new flu virus) that can be monitored to guide quick risk management responses.

Similarly, she argues that the risk of a "perfect storm," in which multiple forces join to create a disaster greater than the sum of its parts, can be assessed in a systematic way before the event because even though their conjunctions are rare, the events that compose them – and all their dependences – have been observed in the past.

"Risk analysis is not about predicting anything before it happens, it's just giving the probability of various scenarios," she said. She argues that systematically exploring those scenarios can help companies and regulators make smarter decisions before an event in the face of uncertainty.

THINK LIKE AN ENGINEER

An engineering risk analyst thinks in terms of systems, their functional components and their dependencies, Paté-Cornell said. For instance, in many that require cooling, generators, turbines, , safety valves and more, all contribute to making the system work. Therefore, the analyst must first understand the ways in which the system works as a whole to identify how it could fail. The same method applies to medical systems, financial or ecological systems.

Paté-Cornell stresses the importance of accounting for dependent events whose probabilities are intertwined, to create a complete list of scenarios – including the dependencies – that must be accounted for in the risk analysis. It is, therefore, essential that engineering risk analysis include external factors that can affect the whole system, Paté-Cornell said.

In the case of a nuclear plant, the seismic activity or the potential for tsunamis in the area must be part of the equation, particularly if local earthquakes have historically led to tidal waves and destructive flooding. Paté-Cornell explained that the designers of the Fukushima Daiichi Nuclear Power Plant ignored important historical precedents, including two earthquakes in 869 and 1611 that generated waves similar to those witnessed in March of 2011.

What some described as a "perfect storm" of compounding mishaps Paté-Cornell sees as failure to assess basic failure probabilities based on experience and elementary logic.

A VERSATILE FRAMEWORK

Engineering risk analyses can get complex, but their components are concrete objects whose mechanisms are usually well understood. Paté-Cornell says that this systematic approach is relevant to human aspects of risk analysis.

"Some argue that in engineering you have hard data about hard systems and hard architectures, but as soon as you involve human beings, you cannot apply the same methods due to the uncertainties of human error. I do not believe this is true," she said.

In fact, Paté-Cornell and her colleagues have long incorporated "soft" elements into their systems analysis to calculate the probability of human error. They look at all the people with access to the system, and factor in any available information about past behaviors, training and skills. Paté-Cornell has found that human errors, far from being unpredictable, are often rooted in the way an organization is managed.

"We look at how the management has trained, informed, and given incentives to people to do what they do and assign risk based on those assessments," she said.

Paté-Cornell has successfully applied this approach to the field of finance, estimating the probability that an insurance company would fail given its age and its size. She said the companies contacted her and funded the research because they needed forward-looking models that their financial analysts generally did not provide.

Traditional financial analysis, she said, is based on evaluating existing statistical data about past events. In her view, analysts can better anticipate market failures - like the financial crisis that began in 2008 - by recognizing precursors and warning signs, and factoring them into a systemic probabilistic analysis.

Medical specialists must also make decisions in the face of limited statistical data, and Paté-Cornell says the same approach is useful for calculating patient risk. She used systems analysis to assess data about anesthesia accidents – a case in which human mistakes can create an accident chain that, if not recognized quickly, puts the patient's life in danger. Based on her result, she suggested retraining and recertification procedures for anesthesiologists to make their system safer.

Professor Paté-Cornell believes that the financial and medical sectors are just two of many fields that might benefit from systems analysis in uncertain, dynamic situations. "Lots of people don't like probability because they don't understand it," she said, "and they think if they don't have hard statistics, they cannot do a risk analysis. In fact, we generally do a system-based because we do not have reliable statistics about the performance of the whole system."

She hopes that her probabilistic approach can replace the notions of black swans and perfect storms, making the public safer and better informed about risks. Apparently, others have this same hope.

"It must have struck a chord," she said, "because I already get lots of comments, responses and ideas on the subject from people around the world."

Explore further: When shareholders exacerbate their own banks' crisis

add to favorites email to friend print save as pdf

Related Stories

Risk management critical to corporate strategy

Jan 07, 2009

With the consequences of the current financial crisis spreading to the real economy, lawmakers are exploring new regulations to govern the financial markets. The concern among market participants is that policy-makers do ...

Can we future-proof against another financial crisis?

Jan 26, 2010

(PhysOrg.com) -- On the day that the UK emerges from the recession, an Oxford University study warns that by continuing to test and future-proof individual banks without considering the resilience of the financial ...

Recommended for you

When shareholders exacerbate their own banks' crisis

12 hours ago

Banks are increasingly issuing 'CoCo' bonds to boost the levels of equity they hold. In a crisis situation, bondholders are forced to convert these bonds into a bank's equity. To date, such bonds have been ...

Trouble with your boss? Own it

12 hours ago

Don't get along with your boss? Your job performance may actually improve if the two of you can come to grips with the poor relationship.

Ethnic diversity reduces risk of market bubbles

Nov 18, 2014

If they consider it at all, investors likely regard ethnic diversity as a matter of social policy. But new research by an MIT Sloan professor suggests a much more practical reason to consider diversity: compared ...

User comments : 73

Adjust slider to filter visible comments by rank

Display comments: newest first

Milou
3 / 5 (2) Nov 15, 2012
"...In fact, Paté-Cornell and her colleagues have long incorporated "soft" elements into their systems analysis to calculate the probability of human error. They look at all the people with access to the system, and factor in any available information about past behaviors, training and skills. Paté-Cornell has found that human errors, far from being unpredictable, are often rooted in the way an organization is managed.

"We look at how the management has trained, informed, and given incentives to people to do what they do and assign risk based on those assessments," she said. ..."

Strange how all of these can be twisted by ex-presidents Bush/Cheney, Blair, Howard (Australia) to create their own "intelligence scenario facts" to get us into a war. This is the same actions criminals use to create their crimes and deny wrong doing.
ryggesogn2
1 / 5 (10) Nov 15, 2012
Strange how all of these can be twisted by ex-presidents

...and current presidents to impose taxes on carbon and collapse economies.
cantdrive85
1 / 5 (11) Nov 15, 2012
The economy WILL collapse regardless of the carbon tax, or any other for that matter. This is a fact of fiat based economies, there is not one fiat based economic system that has not collapsed in the history of the world. We are currently in the death throes of the current system, additional taxes (carbon,OBAMA!care) will only speed the decline. OBAMA! wants to enact his fiscally irresponsible policies to ensure the collapse happens under his watch though, when the gov't needs to take control to retain "stability" and "safety", he wants to make sure his regime is in power.
ryggesogn2
1 / 5 (11) Nov 15, 2012
Socializing risk, inflating the money (fiat currency) to buy votes today is the standard practice of 'progressives'.
kochevnik
3.7 / 5 (9) Nov 15, 2012
Socializing risk, inflating the money (fiat currency) to buy votes today is the standard practice of 'progressives'.
US deficit grew the most under Regan and republicans
ryggesogn2
1 / 5 (12) Nov 15, 2012
From 1949 to 1995, the democrats controlled the House of Representatives. In that time there were 6 years of budget surplus. Four of those six years had Republican presidents.
In 1995, Newt Gingrich and the Republicans took control of the House and deficits began to decline until there were surpluses for four years.
Deficits exploded to over $1 Trillion/year from 2009, 2010,2011 with socialists Obama, Reid and Pelosi.
The total deficits under GWB were 2660.25 Billion in 8 years, 332 B/year.
Under Obama, it they have been 6179.41 B, 1.2 TRILLION/year, FOUR times greater than the 8 years of GWB.
Reagan's average deficits were 306 Billion/year.

http://www.davema...ates.php
Caliban
3.7 / 5 (6) Nov 15, 2012
Socializing risk, inflating the money (fiat currency) to buy votes today is the standard practice of 'progressives'.


Got an answer for everything, haven't you Swenson?

Of course, you would never back "Too Big To Fail", and rightly so. The pragmatic solution to the crisis would have been seizure, dismantling, liquidating, and reorganizing the banking cartels, but of course you would oppose this as an affront to free-enterprise.

It's convenient that you always manage to ignore or sidestep the simple, uncomplicated fact that your Libertarian Utopia of Free Markets MUST BE REGULATED in order to safeguard the Public Interest from the inevitable, endemic, systemic GREED (and the resultant trampling of other's rights)that is the ultimate, hallmark, identifying driver of Capitalism at any level of organization larger than a Family Farm, at which scale the effects are undeniably visible.

"Free Enterprise" is inherently corrupt. This alone makes Gov't necessary, if no other reason.
cantdrive85
1 / 5 (10) Nov 15, 2012
This same reasoning suggests government is inherently corrupt as well, as is every human venture.
What this realization leads to is that the ultimate responsibility of safeguarding the "Public interest" must arise from the individual. The one requirement for a "Libertarian Utopia" to exist is responsible ADULTS who are willing to accept the consequences of their own actions, rather than relying on socialism's "safety nets" for those who'd rather act like children and leave the responsibilities of being an adult to the nanny state.
Jeddy_Mctedder
2 / 5 (6) Nov 15, 2012
this title says it all, the ongoing coverup of massive fraud at the highest level of coverups being described as 'bad risk management' . let me guess this article was written by a business school professor whose job depends on coming up with academic articles that complicate and otherwise simple pattern of massive fraud ensconced within blowing credit bubbles and debasing currency in order to rob investors of their cash by inducing them to make bad investments that they will never make money on .
kochevnik
3 / 5 (8) Nov 15, 2012
The one requirement for a "Libertarian Utopia" to exist is responsible ADULTS who are willing to accept the consequences of their own actions, rather than relying on socialism's "safety nets" for those who'd rather act like children and leave the responsibilities of being an adult to the nanny state.
You mean like your libertarian paradise, Somalia?

Black swan events are unpredictable to the selfish and greedy. They're perfectly predictable to those with a refined understand of the psyche.
Caliban
4.2 / 5 (5) Nov 15, 2012
This same reasoning suggests government is inherently corrupt as well, as is every human venture.
What this realization leads to is that the ultimate responsibility of safeguarding the "Public interest" must arise from the individual. The one requirement for a "Libertarian Utopia" to exist is responsible ADULTS who are willing to accept the consequences of their own actions, rather than relying on socialism's "safety nets" for those who'd rather act like children and leave the responsibilities of being an adult to the nanny state.


And, by the above response, do you mean to say that Individuals cannot be corrupt? Again --this is what makes Government, ie, publicly legislated/administered Law-- necessary. The idea that individuals --much less corporations-- would thwart their own self-interest or impose penalties upon themselves for wrongdoing is ludicrous.

And this is what makes these Libertarian/randite maunderings from you, ryggsuckn', et al such patent, self-serving idiocy.
ryggesogn2
1 / 5 (10) Nov 15, 2012
what makes Government, ie, publicly legislated/administered Law--

How do you fix the corruption of the govt?
It was hoped the Constitution would limit the corruption, but we now have all three branches of the federal govt violating the spirit and letter of the Constitution.
It is the socialists who have this belief in an all powerful, super smart, uncorruptable dedicator that will lead them to Utopia.
That's what they say when a socialist paradise collapses. They didn't have the right leader in charge.

It's the classical liberal, like John Locke, who understood man is weak and immoral and therefore no one individual or group of individuals should have limited power.
The atheist socialists take the opposite view and all power should be concentrated in the hands of a few, who are of course pure and uncorruptable.
ryggesogn2
1 / 5 (8) Nov 15, 2012
The pragmatic solution to the crisis would have been seizure, dismantling, liquidating, and reorganizing the banking cartels, but of course you would oppose this as an affront to free-enterprise.


I have never claimed the banks operated in a free market. They haven't since the creation of the Federal Reserve.
All US banks and most foreign banks are state controlled and are the responsibility of the state, not any free market.
If you don't believe me try creating and using free market money. Don't counterfeit any currency, create your own and see how long the govt let's you operate.
kochevnik
1.7 / 5 (6) Nov 15, 2012
If you don't believe me try creating and using free market money. Don't counterfeit any currency, create your own and see how long the govt let's you operate.
Zionist banksters aren't the government, ryggie. In fact they are the ZIon in naZI.
kochevnik
2 / 5 (4) Nov 15, 2012
Oh for you Israel-firsters you should know that a colleague of mine in California predicted the 2008 crash using maths he invented IN 2005. That's because the event was MANUFACTURED to SUCK MONEY OUT OF YOUR POCKETS. It was artificial and left markings we detected. Just as fraudulent accounting has an unnatural ration of 1s and 9s. But bad news at the time was heresy. The neokhan echo chambers were blasting at full volume. Think about that when your sons are dripping blood on Iranian soil.
cantdrive85
1 / 5 (7) Nov 15, 2012
The one requirement for a "Libertarian Utopia" to exist is responsible ADULTS who are willing to accept the consequences of their own actions, rather than relying on socialism's "safety nets" for those who'd rather act like children and leave the responsibilities of being an adult to the nanny state.
You mean like your libertarian paradise, Somalia?

Black swan events are unpredictable to the selfish and greedy. They're perfectly predictable to those with a refined understand of the psyche.


Nobody said anarchists' paradise, take your straw man argument elsewhere.
ryggesogn2
1.6 / 5 (7) Nov 15, 2012
koch's true nature is revealed, but who should be surprised he hates Jews?
Regardless, the 'progressives' created the Federal Reserve.

"For five years, Li's formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels."
"Nassim Nicholas Taleb, hedge fund manager and author of The Black Swan, is particularly harsh when it comes to the copula. "People got very excited about the Gaussian copula because of its mathematical elegance, but the thing never worked,""
http://www.wired....Page=all
Caliban
5 / 5 (3) Nov 15, 2012

How do you fix the corruption of the govt?
It was hoped the Constitution would limit the corruption, but we now have all three branches of the federal govt violating the spirit and letter of the Constitution.


--By strictly limiting the influence of money in politics, and electing candidates who serve our will, and electing them out of office if they fail to perform our will.

This is the Purpose, in part, of that Constitution to which you so often make reference.

To bewail the intrinsically corruptible status of any individual or group of individuals as grounds to dispense with any government is blatant dissembling.

Corporations, special interest groups, lobbyists, police and Lawyers, for example, are just as susceptible to corruption as government officers and employees --but I don't see you insisting that they be disbanded.

No, your greed-head profit motive is only too apparent as the driver behind your noisemaking.

ryggesogn2
1.4 / 5 (9) Nov 15, 2012
electing candidates who serve our will,

What is 'our' will?
The Constitution created a republic with limited, ENUMERATED powers, NOT to serve 'our will', but to serve to protect the life, liberty and property of every individual.
Corporations, special interest groups, lobbyists, police and Lawyers, for example, are just as susceptible to corruption as government officers and employees --


Only govt officials have the power and authority to put you in jail and or kill you if you don't do what they say. Corporations do not, lawyers do not, police do. With great power comes great responsibility and accountability.
Three federal branches, state govts, local govts and jury trials were all intended to disperse power.
But there is always someone who thinks govt should be more 'efficient' and it's always at the expense of the individual.
Star Trek's 'Patterns of Force' illustrated this quite well.
VendicarD
4.3 / 5 (6) Nov 15, 2012
RyggTard conveniently forgets that Republicans have been working to destroy the U.S. economy for decades.

It is all specified in their "Starve the beast" economic program.

The idea is to collapse the economy in order to assure that the government will not have enough money to afford social programs and hence be forced to cancel them.

Jeb Bush sums it up as follows, "We must manufacture an (economic) crisis in order to assure that there are no alternatives to a smaller government." - Impris Magazine 1995

"and current presidents to impose taxes on carbon and collapse economies." - RyggTard

Some dare call it Treason.
VendicarD
4.2 / 5 (5) Nov 15, 2012
Yes. Bush drove the U.S. economy into the ground so badly that it has taken trillion in deficit spending to prevent the U.S. from entering a decades long Grand Economic Depression.

The educated who can actually do basic math realize this and re-elected Obama.

Those who flunked out of pubic school before they were taught how to add, voted for Ronmey.

"Under Obama, it they have been 6179.41 B, 1.2 TRILLION/year, FOUR times greater than the 8 years of GWB." - RyggTard

http://elsmar.com...0GDP.gif

Here is a nice little chart showing the treason of the last 30 years of Borrow and spend Repubicansm.
VendicarD
4.3 / 5 (6) Nov 15, 2012

"Reagan's average deficits were 306 Billion/year." - RyggTard

According to the inflation calculator run by Coin News Corp. (snicker), an item purchased in 1980 for $1.00 costs $2.87 today.

Coin news then goes on to claim that this represents an annual rate of inflation of 180.7 percent.

Snicker.

But lets take that factor of 2.87 as accurate.

Reagans average deficit was therefore $878 billion in current dollars.

And Reagan spent that year, after year, after year, for no other reason to give tax breaks to the wealthiest Americans.

As one of Reagan's advisors stated "Borrowing 2.87 trillion plus (inflation adjusted) was the greatest thing we ever did."

I'm sure you agree, don't you RyggTard?
FrankHerbert
3.5 / 5 (8) Nov 15, 2012
Lol Adam Smith, the father of Capitalism, supported banking regulations. It's right there in The Wealth of Nations, something you've obviously never read, ryggesogn.
kochevnik
4 / 5 (4) Nov 15, 2012
koch's true nature is revealed, but who should be surprised he hates Jews?
Ah poor Ryggie always confusing you zionist handlers with the ancient wisdom of Judiasm. Did you get paid your $5 by Mr. Koch today for posting?
Regardless, the 'progressives' created the Federal Reserve.
LOL now liberals are zionist banksters! What kind of special Norwegian schrooms are you eating ryggie?
VendicarD
4.2 / 5 (5) Nov 15, 2012
Isn't it odd that the states with the highest reliance on Food Stamps and welfare voted for Ronmey.

"Socializing risk, inflating the money (fiat currency) to buy votes today is the standard practice of 'progressives'." - RyggTard

In fact if you add up all of the people who receive food stamps, that would make up 78% of the people who voted for him.
kochevnik
3 / 5 (6) Nov 15, 2012
Isn't it odd that the states with the highest reliance on Food Stamps and welfare voted for Ronmey.
Breakdown of red state socialism: http://www.lazlow...8920.jpg
VendicarD
4.2 / 5 (5) Nov 15, 2012
Poor Libertarian/Randite Tard. You don't even know how your own government is designed to work.

"How do you fix the corruption of the govt?" - RyggTard

Elections are the designed method of control. If there is corruption then you vote it out of office.

The system works on the presumption that the voting public are not corrupt and are smart enough to avoid electing scumbags like Ronmey into high office.

They barely made it this time. But in prior elections Corrupt Republican Scumbags have been elected to office, and did their best to destroy their own nation for the purpose of transferring as much wealth as possible from the middle class to their wealthy backers.

Remember the immortal words of Republican Vice President Dick Cheney when he said... "Reagan proved that the deficit doesn't matter."

And suddenly to Republicans the Bush Deficit was insignificant.

Remember that RyggTard? Or is 6 years beyond your ability to remember?

VendicarD
4 / 5 (5) Nov 15, 2012
http://www.lazlow...8920.jpg

Excellent link Kochevnik.

RyggTard has been asking why the red states aren't permitted to leave the U.S.

1. No one has denied them permission.
2. The U.S. would be vastly better off financially without them.

3. Kinda blows Ronmey's comments about Obama purchasing votes, into perspective - Yet another Ronmey Lie - as even the GOP is now admitting.

What does it tell you about America when almost 50 percent of the electorate are willing to vote for a Congenital Republican Liar?

RyggTard asks how you rid government of corruption. He apparently thinks that you vote corrupt Republicans into high office.

VendicarD
4.3 / 5 (6) Nov 15, 2012
Poor RyggTard. Now he can't manage to figure out the difference between a Filthy Zionist Pig and a Jew who is most probably a fine, respectable person like every other non-Republican.

Zionists are not Jews RyggTard. Never have been, and never will be, although many Jews are Zionist as are many Filthy Republican Gentiles.

"koch's true nature is revealed, but who should be surprised he hates Jews?" - RyggTard

Race baiting is the hallmark of Conservatives and Filthy Zionist Apologists like RyggTard.
VendicarD
3.7 / 5 (3) Nov 15, 2012
Patterns of force was about a benign planetary government set up by an earth man named George Gill, patterned on NAZI Germany, "The most efficient state the world has ever known", and corrupted by an evil man - Melacon - who used the state to a wage war of genocide on a neighboring planet.

That war of genocide is very similar to the pattern of force that Israel is employing in it's war of Genocide against the Palestinian people.

The Israeli's learned much from the NAZI's.


"But there is always someone who thinks govt should be more 'efficient' and it's always at the expense of the individual. Star Trek's 'Patterns of Force' illustrated this quite well." - RyggTard
VendicarD
4.2 / 5 (5) Nov 15, 2012
http://lasttechag...saez.gif

As the preceding chart shows, the death of the U.S. middle class started with the middle class voting for the traitor called Ronald Reagan.
FrankHerbert
3.7 / 5 (9) Nov 15, 2012
But there is always someone who thinks govt should be more 'efficient' and it's always at the expense of the individual.Star Trek's 'Patterns of Force' illustrated this quite well.


Holy Jesus, how can you be so ignorant Ryggesogn2? You do know that Star Trek was actual, real world communist propaganda, right? They outlawed money!

Roddenberry was definitely a communist sympathizer if not a communist himself. The intended main antagonists of The Next Generation were the Ferengi, a race of hypercapitalists. It wasn't until after Roddenberry's death that the Borg took that role.

Let's see how your broken mind achieves consonance this time.

AHHHHH You're so fucking stupid.
VendicarD
4.2 / 5 (5) Nov 15, 2012
RyggTard. Can you tell us why Libertarian/Randite economics has been such a spectacular disaster for America?

...
...
...

No? I didn't think you could.
VendicarD
4 / 5 (4) Nov 15, 2012
Jean-Luc Picard explained to Lily Sloane that "the economics of the future are different," that those of the 21st century, as "money doesn't exist in the 24th century" He further explained that "the acquisition of wealth is no longer the driving force in our lives. We work to better ourselves and the rest of humanity." (Star Trek: First Contact) It was further explained by Nog that Humans "abandoned currency-based economics in favor of some philosophy of self-enhancement." (DS9: "In the Cards")

http://en.memory-...conomics
FrankHerbert
3.5 / 5 (8) Nov 15, 2012
RyggTard. Can you tell us why Libertarian/Randite economics has been such a spectacular disaster for America?


I don't think he is capable so I will for him.

Clinton raised taxes. He created 22 million jobs in 8 years.
Bush lowered taxes. He created 1 million jobs in 8 years.

Do the math, retard.

Back to Star Trek.
What about Chekov? I'm sure letting a Russian navigate the ship was a coincidence, right?
VendicarD
3.7 / 5 (3) Nov 15, 2012
Sulu was the navigator.

Chekov was the weapons officer.

The Devil was the Science officer.

"He has no heart" - Neo-American John McCloud was convinced, but like RyggTard, he didn't know what his constitution meant either.

VendicarD
3.7 / 5 (3) Nov 15, 2012
ka_
3 / 5 (1) Nov 16, 2012
To quite a large degree I do agree that perfect storm and black swan is abused, however, I am slightly skeptic in the remark "ignored important historical precedents, including two earthquakes in 869 and 1611 that generated waves similar to those witnessed in March of 2011".

Lets consider the following - Yellowstone has blown up before, and we have predicted that it will blow up again though we do not know if it will happen next year or 10000 years into the future. Now tell me the risk of having any nuclear power plants, bombs, huge cities and so on in the 50% of USA that is expected to blow up in the event Yellowstone erupts?

And here is the problem - most of the power plants such as those affected in Japan where past their expected lifetime!! Lets say the plants where supposed to have operated for 20 years and we knew it was 800 years between the two preceding disasters, is it probable such a flood would take out the plant?

How many ships are constructed to support a 25m wave?
ka_
3 / 5 (1) Nov 16, 2012
A lot of this represent calculated risks - we assume the risk of a 25m wave to be so low that constructing for it is waste of money. That is likely what happened in Japan too - they most likely where aware of the previous incidents, but viewed the risk too low for the investment, or might even have believed they had enough defenses prepared.

It is always easy to look back and state such after the fact. I believe this make it a bad example to include, however, I still believe it is largely true that decision makers often hide themselves behind excuses such as "perfect storm" etc. when in fact bad risk management was the cause.
Caliban
not rated yet Nov 16, 2012
Here's another nifty little site that aids in visualizing the popular, electoral, and mixed popular votes- it quickly becomes apparent that the conservative 'Heartlands' are pretty much just a political metaphor or conservative dreamstate:

http://www-person...on/2012/

Caliban
5 / 5 (1) Nov 16, 2012
A lot of this represent calculated risks - we assume the risk of a 25m wave to be so low that constructing for it is waste of money. That is likely what happened in Japan too - they most likely where aware of the previous incidents, but viewed the risk too low for the investment, or might even have believed they had enough defenses prepared.

It is always easy to look back and state such after the fact. I believe this make it a bad example to include, however, I still believe it is largely true that decision makers often hide themselves behind excuses such as "perfect storm" etc. when in fact bad risk management was the cause.


Right you are, ka --it's called putting short-term gains over long-term planning.

But in the case of our financial collapse, it was deliberate, greed-driven fraud and chicanery perpetrated knowingly by (mostly) the financial industry.
And, even at that, it didn't happen without prior warning or prior warnings from people that should have been heeded.

ka_
5 / 5 (1) Nov 16, 2012
I would like to ask the following challenge:
Los Angeles has been supposed to have had a major earthquake for the last 30 years - it has still not happened. Has it been "bad management" not to have evacuated the city already? We essentially know it will happen eventually, after the fact we know the entire world would say something like "told you so".

In the last week alone it was more than 1400 earthquakes in the world, 250 quakes in category 2.5 : http://earthquake...kes/map/

Click California on that map and add the layers "global hazard" and "USGS Topology", then click on the "Legend" and notice that L.A. is colored with maximum risk.

True, L.A. is having a large amount of so called earth quake proof buildings, however several scientists think there will be a super shear earthquake for which those measures wont work : http://ericfdiaz....-deadly/
Caliban
not rated yet Nov 16, 2012
I would like to ask the following challenge:
Los Angeles has been supposed to have had a major earthquake for the last 30 years - it has still not happened. Has it been "bad management" not to have evacuated the city already? We essentially know it will happen eventually, after the fact we know the entire world would say something like "told you so".


Los angeles isn't unique in this regard. A distressingly large number of cities in the world are located in high-risk areas, geologically speaking.

This is generally because of the geomorphology of these areas being so amenable to human activity -usually sited in coastal areas and/or river valleys that occur in and on fault zones that form the very features that make them so desireable for settlement in the first place.

Typically, they were densely populated long before the seismic risks were understood, and now --it is assumed-- will be cheaper to rebuild than relocate, possible exception in the case of TOTAL devastation.
hb_
1 / 5 (1) Nov 16, 2012
@ka

The bad management would be not to adapt the buildings to the likely event of an earthquake, make the streets wide enough to supprt efficient transport even in the event of a disaster, etc.

The very clever work of Paté-Cornell could help asses which of the possible remedies that should be implemented. This work, by the way, is really good in my oppinion!
ryggesogn2
1 / 5 (5) Nov 16, 2012
Frankie, Roddenberry was a libertarian.
Clinton raised taxes.

"The economy grew slower than it should have in the years after Clinton's 1993 tax hike. The strong economic growth that is associated with his presidency occurred only after he agreed with Congress to cut taxes in his second term."
http://www.herita...d-growth
Socialists tend to forget that Clinton so energized the conservative republicans that they took control of the House in 1994 and voted Newt Gingrich as Speaker. It was only then, with a House that had courage and backbone that that the economy began to turn around. Sure, Clinton had to sign the legislation, but he did not take the lead in cutting taxes.
ryggesogn2
1 / 5 (5) Nov 16, 2012
-it's called putting short-term gains over long-term planning. But in the case of our financial collapse, it was deliberate, greed-driven fraud and chicanery perpetrated knowingly by (mostly) the financial industry.

Like members of Congress (Barney Frank) passing a law REQUIRING Freddie and Fannie to purchase low quality securities in 1992?
That spawned a chain of events in which investors sought out mortgage back securities. A bad financial model failed to predict risk, and a collapsing tech stock market created a supply of cash looking for a place to invest.
Of course Cali believes all those investors, which included union pension funds, state pension funds, should not be motivated by profit for their future retirees, but should have donated their cash to the govt.

FrankHerbert
2.6 / 5 (5) Nov 16, 2012
Frankie, Roddenberry was a libertarian.


Right, because you like Star Trek and something you like couldn't be communist propaganda, right? Maybe in your few remaining years you'll realize how much of a simpleton you were your entire life.

The Federation is a communist utopia. Get over it.
ryggesogn2
1 / 5 (5) Nov 16, 2012
"The FHA has permanent and indefinite authority to draw money from the Treasury, although it has never had to use that power.

The FHA does not lend money, but guarantees loans made by banks in exchange for insurance premiums. The agency's role has expanded since the crash of the subprime mortgage market, and it now insures about $1.1 trillion in loans, according to Inside Mortgage Finance.

But the expanded role, including backing mortgages with as little as 3.5% down payment and for some people who have undergone recent foreclosures, has taken a toll on its finances. The agency boosted premiums and took other steps in 2009 to shore up its capital reserves."
http://www.latime...53.story
ryggesogn2
1 / 5 (5) Nov 16, 2012
Communist Utopia is redundant. Utopia be definition was communist.
The first series, under Roddenberry's control was more libertarian. The Federation had the Prime Directive and guaranteed individual rights of its members to live as they chose. Individuals could create their own colonies.
During DS9 and Voyager, the Federation began to act in quite statist fashion forcing Federation citizens off of their property.
Caliban
3 / 5 (2) Nov 16, 2012

Clinton raised taxes.

"The economy grew slower than it should have in the years after Clinton's 1993 tax hike. The strong economic growth that is associated with his presidency occurred only after he agreed with Congress to cut taxes in his second term."
http://www.herita...d-growth


riggsuckn'

I shouldn't have to tell you that citing a heritage foundation revisionist opinion piece in your appeal to authority regarding this matter carries exactly as much weight as citing the Milk Man as an authority in a matter of quantum electrodynamics, which is to say --none.

Caliban
5 / 5 (1) Nov 16, 2012
...But in the case of our financial collapse, it was deliberate, greed-driven fraud and chicanery perpetrated knowingly by (mostly) the financial industry.

Like members of Congress (Barney Frank) passing a law REQUIRING Freddie and Fannie to purchase low quality securities in 1992?
That spawned a chain of events in which investors sought out mortgage back securities.


More ryggsuckn' revisionism.

The requirement was to purchase the mortgages, to make home ownership more widely available option for people for whom it was, historically an out-of-reach dream.

It DID NOT REQUIRE that mortgage loan originators make available marginally documented, fraudulently-approved, predatory loans, which they knew, AT THE TIME OF LOAN DOCUMENTATION AND ORIGINATION, were virtually assured of going into default.

Nor did they care, They took their origination fees and commissions, and sold off the loans to be knowingly bundled into fraudulent mortgage-backed securities.

ryggesogn2
1 / 5 (5) Nov 16, 2012
people for whom it was, historically an out-of-reach dream.

Why was it out of reach? They did qualify for a loan because they could not AFFORD it.
Nor did they care, They took their origination fees and commissions,

Because Freddie and Fannie were FORCED to buy the mortgages by Barney's legislation.

If you have any legitimate data an analysis to support YOUR socialist POV, please post.
ryggesogn2
1 / 5 (5) Nov 16, 2012
people for whom it was, historically an out-of-reach dream.

Why was it out of reach? They did qualify for a loan because they could not AFFORD it.
Nor did they care, They took their origination fees and commissions,

Because Freddie and Fannie were FORCED to buy the mortgages by Barney's legislation.

If you have any legitimate data an analysis to support YOUR socialist POV, please post.

Correction:

Why was it out of reach? They did NOT qualify for a loan because they could not AFFORD it.
Caliban
5 / 5 (1) Nov 16, 2012
Why was it out of reach? They did NOT qualify for a loan because they could not AFFORD it.


They were (fraudulently)qualified for loans by the thousands upon thousands by unscrupulous, no --criminal-- mortgage loan originators such as CountryWide, who knowingly originated loans for people who would not have ordinarily qualified for them by falsifying loan documentation, losing qualifying "documents" after the loan was made, conning people into ARMs, et c.

You are perfectly well aware of this, and how widespread these practices were, and that they were all instances of GAMING THE SYSTEM.

The purpose of the legislation was to make it possible for lenders to --LEGITIMATELY-- make mortgage loans to lower income people --IT WAS NOT INTENDED OR WORDED AS A MANDATE FOR LENDERS TO LOWER THEIR LOAN QUALIFICATION STANDARDS OR OFFER USURIOUS ARMs to people.

The watchwords in mortgage lending are "Due Diligence" and "Adverse Risk", NOT "Criminal Fraud" and "Exploit loopholes".
ryggesogn2
1 / 5 (5) Nov 16, 2012
But Cali, how else were they to obtain their 'out of reach dream'?

BTW, Democrat Senator Dodd among many others benefited from Country Wide's Friends of Angelo program.

" former Senate Banking Committee Chairman Christopher Dodd, D-Conn., and current Senate Budget Committee Chairman Kent Conrad, D-N.D., received special terms on mortgages from Countrywide. "
"Countrywide tried to use its influence on Capitol Hill to bolster support for Fannie Mae, with which it had established a special relationship.

Fannie gave volume discounts on fees to Countrywide in exchange for the right to buy most of the mortgage loans it originated."
http://money.cnn....ndex.htm
ryggesogn2
1 / 5 (5) Nov 16, 2012
"Angelo Mozilo, the former Countrywide Financial CEO charged with fraud and insider trading by the Securities and Exchange Commission, had a lot of "friends." The Democratic leadership in Congress just doesn't want you to know their names -- or the details of their loans from Countrywide.

What we know is that Senators Chris Dodd and Kent Conrad were among the VIPs who received sweetheart mortgages under the "Friends of Angelo" program. What we don't know is how many other government officials also received such favors, or what exactly Countrywide expected in return."
http://online.wsj...813.html
"Fannie Mae and Countrywide lobbied against government-sponsored enterprise
(GSE) reform legislation that would have diminished Fannie Mae's ability to acquire and
hold subprime mortgages originated by Countrywide. Countrywide also lobbied against
predatory lending bills."
Govt Report
ryggesogn2
1 / 5 (5) Nov 16, 2012
" Low- and Moderate-Income Goal – Individuals earning no more than the area median income. Underserved Areas Goal – Individuals residing in lower income areas (90% of area median income in metropolitan areas), or higher minority areas (minority share 30% or more and median income no more than 120% of area median). Special Affordable Goal – Individuals earning no more than 60% of area median income or residing in low-income neighborhoods and earning no more than 80% of area median.

Fannie and Freddie were each required to devote a certain share of their business, roughly equal to their projected share of the overall "affordable" mortgage market, to each of these goals, although a single loan could be counted for multiple goals. "
http://www.ccc.un...ddie.php
ryggesogn2
1 / 5 (5) Nov 16, 2012
"Over the years encompassed by the book, Fannie spent roughly $100 million on lobbying and political contributions, so there are plenty of enablers. But Massachusetts Congressman Barney Frank stands out, particularly. Reckless Endangerment broke the news that Frank recommend his then-companion for a job at Fannie, where he worked for seven years. The book also recounts Frank's defenses of the GSE's, many offered in a brusque, peremptory manner that suggested the powerful congressman would brook no criticism of the affordable housing monsters."
http://www.realcl...102.html

Unintended consequences always accompany socialist central planning.
Caliban
5 / 5 (1) Nov 17, 2012
There were no unintended consequences in this disaster, Swenson.

As I said, this was an entirely forseeable and foreseen collapse.
The collapse was the result of trillions upon trillions of dollars being sucked from the economy by vampire capitalism.
I won't even bother to point out that I'm ignoring what happened in the rest of the world.

You do a fine job of attempting to divert attention from the core issue with your usual fingerpointing, blame assigning, and bits like:

Unintended consequences always accompany socialist central planning.


but the spin'n'spew strategy is tired, old, lying in the grave, and breathing dirt.

There was no "socialist central planning" involved in this catastrophe. All of the actual planning that went into enabling this harvest of the wealth of Americans was devised by the same silk-tie wearing Financial Industry thieves that were responsible for the Great Depression. Almost literally, since a large portion of them are direct descendants.
VendicarD
4.2 / 5 (5) Nov 17, 2012
Absolutely correct.

"As I said, this was an entirely forseeable and foreseen collapse." - Caliban

It is best not to forget the major cause of the current economic crisis has been RyggTard's own LiberTarian/Randite ideology as it was practiced by Alan Greenspan - the head of the FED, and Chief Randite disciple, who told congress that his error was in his idologie's presumption that corporations would never act against their own self interest.

Here is Randite Greenspan admitting to the failure of his Randite Ideology.

http://www.youtub...=related
ryggesogn2
1 / 5 (4) Nov 17, 2012
fine job of attempting to divert attention from the core issue

Yes, the core issue was govt control of the mortgage industry for political gain.
Freddie and Fannie are GOVERNMENT sponsored 'enterprises'. 'Liberals' changed regulations that forced the mortgage industry to make loans to people who could not afford them.
Anytime the govt squeezes a market, it becomes distorted and politicians benefit with increased power and influence.
That is the 'progressive' way that started over 100 years ago.
Caliban
not rated yet Nov 17, 2012
fine job of attempting to divert attention from the core issue

Yes, the core issue was govt control of the mortgage industry for political gain.
Freddie and Fannie are GOVERNMENT sponsored 'enterprises'. 'Liberals' changed regulations that forced the mortgage industry to make loans to people who could not afford them.
Anytime the govt squeezes a market, it becomes distorted and politicians benefit with increased power and influence.
That is the 'progressive' way that started over 100 years ago.


As if it were necessary, I will further belabor the obvious by saying "I rest my case".

ryggesogn2
1 / 5 (4) Nov 17, 2012
"At all times, but especially in the last few years, people have dreamt of universalizing wealth by universalizing credit. "
"And when a merchant borrows twenty thousand francs to buy a house, it is not the twenty thousand francs he owes; it is the house. "
"what good can credit institutions do? They can make it easier for borrowers and lenders to find one another and reach an understanding. But what they cannot do is to increase instantaneously the total number of objects borrowed and lent. "
"By guaranteeing insolvent debtors, the state can certainly increase the number of borrowers, raise the rate of interest (all at the expense of the taxpayer), but it cannot increase the number of lenders and the total value of the loans. "
http://www.econli...ss1.html
The state can when it devalues the money, aka inflation.
ryggesogn2
1 / 5 (4) Nov 17, 2012
Cali, believe what ever you want, and socialists must if they are to keep the faith.
But naturals laws keep inferring and socialists will keep making the same mistakes.
But this assumes socialists really want economic prosperity for individuals. What they really want is power to destroy the individual.
One, of many, episodes of Star Trek shows its anti-socialist, pro-individual stance. In A Taste of Armageddon, two warring planets agree to stop dropping real bombs since war destroys, but simulate the bombs and kill off the people. Sounds just like the AGW socialists of today. Better some individuals should die to preserve 'humanity'.
It's a metaphor for the cold and luke warm wars of today. Israel has every right to destroy Palestine, bomb it to rubble as the Allies did to Germany and Japan.
Gen. Sherman was right about war. It should be terrible, so terrible no one ever wants to engage the effort.
ryggesogn2
1 / 5 (4) Nov 17, 2012
"Mortgage brokers had to be able to sell their mortgages to someone. They could only produce what those above them in the distribution chain wanted to buy. In other words, they could only respond to demand, not create it themselves. Who wanted these dicey loans? The data shows that the principal buyers were insured banks, government sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac, and the FHA—all government agencies or private companies forced to comply with government mandates about mortgage lending."
", what can explain the fact that the FHA—a government agency—was guaranteeing the same bad mortgages that the unregulated mortgage brokers were supposedly creating through predatory lending?

The answer, of course, is that it was government policy for these poor quality loans to be made.

Read more: http://www.busine...CXhlvC3e
And now FHA needs govt money.
ryggesogn2
1 / 5 (4) Nov 17, 2012
"The Environmental Protection Agency on Friday rejected a request from eight governors and nearly 200 members of Congress to waive requirements for the use of corn-based ethanol in gasoline, after last summer's severe drought wilted much of the nation's corn crop.

The move is a victory for corn farmers who have seen corn prices jump 400 percent in recent years. But it is a loss for pork and beef producers who say the diversion of corn to ethanol raises feed prices and ultimately prices at the supermarket"

From The Detroit News: http://www.detroi...CXk6fw6H
How the govt distorts markets.
Of course the current regime wants everyone to be vegan so this advances their agenda.
Caliban
3 / 5 (2) Nov 18, 2012
Cali, believe what ever you want, and socialists must if they are to keep the faith.


riggsuckn',

If it were up to me, I would take everything that you possess away from you, including your family --if there are any unfortunate enough to fall into that category-- just so that you would actually have a legitimate reason for your endless paranoid whining about how the dirty Progressives/Libs/Dems/Athiests/Commies/Socialists are conspiring together and are/have/will take your stuff.

Put a goddam sock in it, willya...

ryggesogn2
1 / 5 (4) Nov 18, 2012
If it were up to me, I would take everything that you possess away from you,

I am not surprised. That is a tactic of the socialist.
Why are you so upset? Is it because socialism keeps failing or that you are a true believer, or both?
ryggesogn2
1 / 5 (4) Nov 18, 2012
The Federation is a communist utopia. Get over it.

Frankie, the the theme of the first Star Trek pilot dealt with the human response to being caged. No matter how gilded the cage, humans don't like being coerced into such a cage. Very anti-socialist.
In the second pilot that aired, a high ranking crew member acquires absolute power and would crush his fellow humans like bugs. Sounds like the typical socialist dictator or AGWite.
A common theme throughout the series is pro-individual. Socialism is anti-individual.
ryggesogn2
1 / 5 (4) Nov 18, 2012
"Although he didn't vote for Golden Dawn, he sees it as "the only party that is actually doing things for the Greek people" — a cross between the welfare state and the Mafia. If he needed an escort to walk down the street or help paying for his cancer medicine, he'd call Golden Dawn. "They're doing what the politicians should be doing," he said. "There's a hole, and they fill it." "
http://www.nytime...nted=all
European socialism is failing so Greeks resort to national socialism.
But the description of socialism is accurate, a cross between organized crime and the welfare state.
Golden Dawn sounds just like the Black Panthers in the US. A group the Obama regime refused to prosecute for violating the rights of voters.
julianpenrod
2 / 5 (4) Nov 18, 2012
Not surprising the New World Order response mentioned here. Taking the situation of literally unnatural, unprecedented incidents suddenly cropping up by the bushful and turn it into an issue of logistical response. No condieration of asking why all this is happening now! Diseases no one ever heard of, societal upheavals, explosions on the sun, asteroids coming closer than any ever before seen, wild animals roaming the streets of big cities, mass murders, violent natural phenomena from earthquakes to hurricanes. And the NWO only wants to focus on how to be ready for them, not what's causing this outbreak of abnormal occurrences! There can be two explanations. One is that they are indeed all caused by God's anger at mankind and the NWO wants to avoid the alternative of admitting the abominations that brought God's wrath; or the events are all fabrications and lies by the NWO and they want to install a martial law system that they will claim is the only way to protect all.
Caliban
1 / 5 (1) Nov 19, 2012
If it were up to me, I would take everything that you possess away from you,

I am not surprised. That is a tactic of the socialist.
Why are you so upset? Is it because socialism keeps failing or that you are a true believer, or both?


Nah --I stated --very plainly-- why I would do it.

But I will take your question as a request for clarification.

Your whining buffoonery is unbearably tiresome, specifically because it is entirely without merit. I thought that it would be nice to provide you with some REAL INJUSTICE so that your plaintive cries would be GENUINE, instead of the endless mumbo-jumbo by which you hope to propitiate your god, MAMMON.

Keep in mind, though, that all gods require a sacrifice.
Careful that it isn't your blotchy rump that gets stuffed into the meatgrinder.

Caliban
1 / 5 (2) Nov 19, 2012
@jp,

I gave your post a five just because of its total wackiness.
I don't know if you were being serious or farcical, but it made me laugh, so there you go.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.