{"id":34606,"date":"2018-05-30T06:46:22","date_gmt":"2018-05-30T11:46:22","guid":{"rendered":"http:\/\/olduvai.ca\/?p=34606"},"modified":"2018-05-30T06:46:22","modified_gmt":"2018-05-30T11:46:22","slug":"blowing-up-the-italian-debt-crisis-the-experts-that-missed-it-and-whats-next","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=34606","title":{"rendered":"Blowing Up: The Italian Debt Crisis, the Experts That Missed it \u2013 And What\u2019s Next"},"content":{"rendered":"<div class=\"thumbnail-wrap\"><img loading=\"lazy\" decoding=\"async\" class=\"attachment-post-thumbnail size-post-thumbnail wp-post-image\" src=\"https:\/\/palisade-research.com\/wp-content\/uploads\/2018\/05\/run-e1527670667134.png\" alt=\"\" width=\"850\" height=\"471\" \/><\/div>\n<h3><a href=\"https:\/\/palisade-research.com\/italys-debt-crisis-whats-next\/\">Blowing Up: The Italian Debt Crisis, the Experts That Missed it \u2013 And What\u2019s Next<\/a><\/h3>\n<p>With the <a href=\"https:\/\/www.wsj.com\/articles\/italy-and-the-euro-crisis-how-we-got-here-1527603984\">crisis unfolding<\/a> in Italy, I can\u2019t help but remember the lessons from the underrated book \u2013\u00a0<em>Fat Tail\u00a0<\/em>by Ian Bremmer.<\/p>\n<p>This book is an excellent read and explains how political risks can lead to <em>severe<\/em> economic and social risks.<\/p>\n<p>But first, <em>what exactly is risk<\/em>? I sum it up into <strong><em>three<\/em> <\/strong>things. . .<\/p>\n<p><strong>1.<\/strong> Probability \u2013 <em>how likely is the risk to happen<\/em><\/p>\n<p><strong>2.<\/strong> Impact \u2013 <em>if it does happen, how big will the loss be<\/em><\/p>\n<p><strong>3<\/strong>. Consequences \u2013 what is exposed to the impact, what are the second order effects (basically what\u2019s the chain reaction from it)<\/p>\n<p>Once we know the three parts to risk, we can start to understand how it works and what will be affected.<\/p>\n<p>Bremmer\u2019s book shows that throughout history, the government\u2019s political risks \u2013 <em>caused by their near-sighted policies<\/em> \u2013 can lead to unknown monumental shifts and catastrophes. . .<\/p>\n<blockquote><p><em>\u201cWhat do we mean by a \u2018fat tail\u2019? Fat tails are the unexpectedly thick \u2018tails\u2019 \u2013 or bulges \u2013 that we find on the tail ends of distribution curves that measure risks and their impact. They represent the risk that a particular event will occur that appears <strong>so catastrophically damaging, unlikely to happen, and difficult to predict, that many of us choose to simply ignore it<\/strong>\u2026 \u2013 Ian Bremmer, Fat Tail.<\/em><\/p><\/blockquote>\n<p>For instance, in the mid-1700\u2019s, England\u2019s King George was facing <em>severe<\/em> financial problems. Because of the costly French and Indian War, the British Empire was deep in debt. They needed to generate revenue \u2013 <em>and quickly.<\/em><\/p>\n<p>The Empire\u2019s solution was to pass a series of new taxes designed to profit from the colonies in the 1760\u2019s \u2013 the infamous \u2018stamp act\u2019 and \u2018tea tax\u2019. But these were <em>wildly<\/em> unpopular. And led to the colonies fighting for their independence in the American Revolution.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Blowing Up: The Italian Debt Crisis, the Experts That Missed it \u2013 And What\u2019s Next With the crisis unfolding in Italy, I can\u2019t help but remember the lessons from the underrated book \u2013\u00a0Fat Tail\u00a0by Ian Bremmer. This book is an excellent read and explains how political risks can lead to severe economic and social risks. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[19913,195,4106,281,1464,19915],"class_list":["post-34606","post","type-post","status-publish","format-standard","hentry","category-economics","tag-adem-tumerkan","tag-debt","tag-debt-crisis","tag-europe","tag-italy","tag-palisade-research"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/34606","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=34606"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/34606\/revisions"}],"predecessor-version":[{"id":34607,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/34606\/revisions\/34607"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=34606"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=34606"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=34606"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}