To explain: black swans were discovered in Australia. Before that, any reasonable person could assume the all-swans-are-white theory was unassailable. But the sight of just one black swan detonated that theory. Every theory we have about the human world and about the future is vulnerable to the black swan, the unexpected event. We sail in fragile vessels across a raging sea of uncertainty. “The world we live in is vastly different from the world we think we live in.”

Shit happens, we just don’t know how and when? Everyone know this right? Well everyone except the experts that work in banks such Bear Stearns, Bradford and Bingley and Northern Rock. They predicated a lot of their investments on the idea that they could calculate the risks in the market and the world at large.

It seems blindingly obvious that humans are imperfect and that any models we will come up with are imperfect as well. So why bet he whole house (or should I say other peoples houses) relying on your imperfect models. I guess if your greedy and stupid you would. So they did, hence the credit crunch, house price crash, recession and who knows even a full scale depression.

The philosopher / trader Nass Nicholas Taleb (together with every 19 year old philosophy undergraduate) understood this and he has written a book about our human falibility when it comes to predicting the future called the Black Swan. It’s named on the fact that people used to use the image of a black swan as a metaphor for the impossible (there are black swans in Australia).

The Times Online has an interview with Taleb. Nassim Nicholas Taleb: the prophet of boom and doom