Moving from black swans to green frogs…

Neel Kashkari (along with his other PIMCO fellas) is  in top form.

In an article he points how frogs appeared on the well near his house. There was no sign of frogs coming and no home design/maintenance advice mentions about frogs. So he was unprepared to handle them.  Much like the risks in financial markets which keep surfacing.

I was stunned. Not because I don’t like frogs. I do like frogs: I remember catching and playing with them when I was a kid. Frogs don’t mean harm to anyone, except for the insects they eat. These three frogs were just hanging out, minding their own business, taking an occasional swim, eating a fly from time to time.

But they were hanging out in my water tank! The tank that feeds my house – drinking water, showers, laundry. And who knows how many of their friends were in the tank with them.

The shocking part for me was that I couldn’t figure out how they got there. There is no body of water within miles of my cabin. I’ve seen plenty of animals and insects but have never once seen a frog in this mountain forest. Even if they did live in the forest, how did they find my water tank and how did they climb six feet to the top and sneak their way in the lid? Could tadpoles have been living 500 feet underground and been pumped in? I had flashbacks to the movie “Jurassic Park,” in which Jeff Goldblum’s character tried to explain how a population of all female dinosaurs managed to procreate: “Life finds a way.”

No homeownership book I read ever warned me about frogs living in my water tank. I even Googled it to see if this is a common problem; I couldn’t find another example. With all my vigilance trying to identify things that could go wrong, I simply never conceived of this possibility.

Following the financial crisis of 2008, many people were understandably angry that banks, investors, ratings agencies and regulators all missed the housing bubble. How did they not see it coming? Why didn’t they take action to protect against such a collapse? The rallying cry became, “We need better risk management!”

It is easy to identify risks in hindsight – even frogs living in your water tank; unfortunately it is much harder to identify them in advance, particularly when they had been “unthinkable.” I bought real estate in 2005, after all. I didn’t spot the housing bubble either.

 Hmm.. From Black swans to Green Frogs ( he does not mention the color of the frog, am just assuming them to be green based on my little know how..)

Nice stuff..

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