PREDICTING BLACK SWANS AT THE BEGINNING OF 2008. I first posted on Nassim Taleb’s concept of black swans in September 2007 (Shakespeare was the subject of the post). The “Buttonwood†feature in the Economist for December 22, 2007 wrote about black swans and attempted to predict areas where black swans might emerge in 2008. (Buttonwood noted that a prominent Goldman Sachs expert had predicted that the S&P 500 index would end up 2008 at 1675. It was in the 870 range today.) Buttonwood nominated two areas as potential black swans in 2008: commercial property and Eastern Europe. It turned out that the impending disaster was in front of everybody. Buttonwood’s description of the black swan for 2007 also applied to what would happen in 2008: In the December 2007 article, Buttonwood said: “Although many anticipated a fall in American house prices for 2007, for example, few expected the scale of the ramifications for financial markets, as a whole system of structured finance appeared to unravel and the banking system was plunged into crisis. …â€
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