Sunday, May 20, 2007

The Black Swan's Homeland(?)

A big story unfolded; in the sordid bank robbery in Amioun, I could see our own Lebanese version of James Burke's great Connections TV Show.

Syrian Connection (?)

The larger bank robbers in Lebanon usually get away with it, but the smaller fry that hit Amioun were an oddity.

They thought that they could act with impunity, and tried to hide out in the village of Qalamoun, where they were surprised to face the hostility of its inhabitants. This triggered a serendipitous chain of events of far-reaching political impact. Has “IT” really happened?

This may not be the “Ultimate Black Swan” in Lebanon, but it sure comes close; this new high in the series could well be thanksgiving. But it is not yet clear who the Turkeys are; as of the time of writing, Nasrallah’s silence was deafening, as brave Lebanese soldiers were bleeding.

As the robbers escaped, they were chased by the Lebanese army in a massive manhunt. Some of them went deeper into Koura, where ambushed one of the Army’s patrols at the outskirts of Kalhat, before running away form the Army and the inhabitants, to hide into the olive groves and the thick maquis.

The others were “luckier” initially, as they escaped to the Nahr El-Bared camp in Tripoli. It is unclear how exactly it happened, or who did it, but the robbery soon escalated into a full-fledged confrontation as the Syrian-backed Fath Al-Islam rushed to their support. Fath Al-Islam, incidentally, is apparently a spin-off of another Syrian-backed front, Fath Al-Intifada…

Amid this escalation, Northern Lebanon was deserted, a good opportunity to spend the day there as the roads were empty of traffic. Yours truly and a few “unconcerned” citizens choose that opportunity to have a “quiet” Sunday barbeque, with friends, a few beers, and some background music… A few other bloggers will recognize this apparent obliviousness to events as a necessary form of “mental resistance”… But I digress; back to the localfun-damentalists”.

Fath El-Islam

Groups like those Fath Al-Islam and other similar fundamentalist groups are “true believers”.

In practice, they are opportunists who follow whatever the “cause du jour” happens to be. They have become more vocal and were overdue for some action; with the approach of the Hariri tribunal, their Syrian masters may have seized their chance to “activate” them. That much was clear to the Mufti, who called for support to the Lebanese armed forces as the fighting got bloodier.

In theory, it was meant to be different, at least from the perspective of the cannon fodder they recruit. The ideology of Fath Al-Islam and similar groups is geared towards a return to the heydays of the Caliphate. While this particular outfit is focused on a return to Palestine, others want a return to Al-Andalus.

Back then, Al Andalus was the scene of the greatest Arab golden age. But they got complacent and far too self-centered, and fell to the Reconquista.

The Reconquista

The Castillian kings had undertaken this Reconquista at a great cost to their own treasury. The booty from Grenada and the last Moor holdouts was soon insufficient to cover their growing expenses, and the kings were soon pressed for money. When the Genovese Christopher Columbus came to them with a speculative scheme to reach the Indies from an alternate route, they jumped at the chance. Either that, or they feared the Portuguese would…

Columbus’ trip lead him to discovering the New World. He did not know it then, but his trip would prove to be the heyday of the great “Age of Discovery”. Serendipity, as we’ll see later, has as much to do with human advancement as hard work. This does not meant that chance replaces hard work, but it luck goes a long way to leverage sweat; in this case, the Spanish Kings maximized their “exposure to serendipity” by taking varied bets such as Columbus, and reaped huge rewards as a result.

Indeed, the “Age of Dicovery” afforded Spain access to New World gold, so much of it that it propelled it from a European backwater to the world’s first superpower. Spanish Galleons were plowing the world’s ocean, bringing in precious gold, silver, sugarcane, and spices back to the rulers of Castille and Aragon. The influx was such that sugar prices soon collapsed, down from a parity with gold. Over time, the Spaniards’ lot did not improve, as they forgot about the benefit of “diversifying their exposure to serendipity” and hard work.

“Dutch Disease”

The Spaniards had fallen prey to another unforeseen event; they had caught what economists call “Dutch Disease”, where the discovery of a resource provokes currency overvaluation, deindustrialization, leading to a greater poverty on the long run.

Not only were their galleons soon falling prey to British and French pirates, all that easy money provoked a de-industrialization of the country, and it became harder and harder to recruit competent crews and construct seaworthy ships. A growing number of ships were being lost in the high seas, and their precious cargoes never reached the Spanish coffers.

Odyssey Marine

Such sunken treasures remained inaccessible till the advent of new diving technologies over the course of the second half of the 20th Century. New companies were formed whose chief purpose was to prowl the oceans, looking for such discarded or forgotten bounty.

The world leader in the field of “deep-ocean shipwreck exploration” is “Odyssey Marine Exploration”, who announced on May 18th, 2007 that it had “completed the pre-disturbance archaeological survey and preliminary excavation of a Colonial period shipwreck site code-named “Black Swan”… As expected, this was missed by the MSM...

The Black Swan’s Back Home

The concept of the “Black Swan” was developed by Nassim Nicholas Taleb in his eponymous book. Though my mind finds the coincidence remarkable, I know that “the fact that he is of a Lebanese origin is totally irrelevant”.

Still, I will go further in committing this ultimate sin of narrative fallacy (some sins are fun), by noting that he hails from Amioun, the same village where the current mess started, and where this post began...

Maybe I have a crack at writing for "Connections", if it's still on...


Amos said...

Another remarkable post. Jeha, I have a more basic question. Was the bank robbery and the pursuit of the robbers into the camp really what set this off? This trigger is being treated as tangential in the Western media.

I could not believe my eyes when I saw the headline "48 dead" - just like that. With that many people killed, it seems hard to believe that this will just blow over.

None of the Naharnet links seem to be working. Please keep us updated.

Jeha said...

Thanks Amos,

The robbery started this; they were apparently Syrian gunmen who first tried to hide in Qalamoun, a Sunni seaside village in which they had rented a flat.

I fear there may well be more dead, they were well armed, and the population opposed them as soon as it found out, so they ran away before they got caught up. They must have split.

Some ran towards Kalhat, where they were chased by the army. The managed to ambush the army at the corner near Univ. of Balamand, but the population there also provided support to the army, carrying the dead and wounded... They then ran towards Fi3, then into the olive groves in the valleys there. Good hiding, but the army's choppers are looking for them, and with a hostile population and no food, they should not be able to last more than 3 days, tops.

The others ran towards tripoli, where they tried to find refuge in the nahr-el-bared camp. The army there was supported by the "legal" Fatah and much of the local population. It has now deployed tanks, and has been hammering at the strongholds held by Fatah Al-Islam since around 10:00...

Sunnis, as well as the Mufti, all came in full force in support of the Army. Things are different.

Anonymous said...

Please Amos, Realy? Since times immemorial such groups financed themselves by robbing banks. The black panthers,the Mexicans, ect. They have the guns, the time, the bravado and the need. Also you are never sure who told them about the security set up in the bank.

ghassan karam said...

Obviously the turkeys are those that believe that they can game the system.But if one understands the limitations of empiricism, like Karl Popper, then one would lead life as a skeptic i.e we are never certain that something is true , we only know that it is not. An excellent example of this, used by Mr. Taleb, is that when a patient undergoes a scan to look for cancerous cells then the physicisn can only say with certainty that the scanned cells do not show signs of cancer but can never say that the patient does not have cancer.

To me the survival of Lebanon is a Black Swan because most of the evidence says that it will not survive. But as Keynes famously retorted at one time"In the long run we are all dead". In such circumstances one can be a believer in Black Swans but yet conduct everyday activity with measured skepticism. To bet that HA and Bashar will always make the right moves is one bet that a Black Swan believer will not make. And that is also true of the establishment. Their victory over their opponents will occur not as a result of their wisdom and insight but because of the mistakes that will inevitably be committed by the other side who believe that they are so good that they can game the system.

A quick examination of Mr. Taleb's hedge fund Empirica should make it clear what it means to arrange your life according to Black Swans. Nassim N Taleb cannot own any stocks because one hoplds shares in companies based on the premise that the future is going to be better than the past. That is total nonsense and so Empirica invests all its funds in options. Taleb refuses to sell any options , they are too risky and so he only purchases out of the money options since the downside is very limited. He will continue to roll over these options until a major break in the market occurs. Such events, similar to 1987, will then pay back very handsomely. Note that this strategy is based on the fact that the buyer does not know much about the future and that the seller thinks that he/she knows much more than they do.

Before I bore everyone to death with this let me mention two things:
(a) The example regarding turkeys and thanksgiving is really nothing else than a rephrasing of a popular example used at one time by Bertrand Russell.
(b) Some might find it helpful to become familiar with what Hume said about Swans:"No amount of observations of white swans can allow inference that all swans are white, but the observation of a single black swan is sufficient to refute that conclusion".

What would Nassim Taleb do in order to protect himself from the calamitous Black Swan in Lebanon? Why , he would leave the country. But what should one do if the Black Swan in Lebanon turns out to be prosperity and peace? Live outside the country and wait until conditions change. Even then maintain the ability to move quickly. Big returns will accrue often to the risk takers but their success is more the result of randomness than asstutness. Whatever benefits are accumulated through luck can also be lost in a jiffy through an unpredictable event.

Lebanon will muddle through because the current opposition acts as if they are in control of all the variables. That is when they are the most vulnerable.

Sam said...
This comment has been removed by a blog administrator.
Jeha said...


No dice.

Yes, Sunni fundamentalism is a concern, as I have pointed out countless times before, in many other posts. It is well established that the facts in Lebanon are a bit more complex than Saymore Harsh's simplistic pieces let on. I have pointed out before as well, and as Tony, SandMonkey, and many others highlighted. We can revisit the specifics of those arguments, but I will not accept that we "rehash" old "rants" after they had been debunked so thouroughly.

I cannot tolerate any recycling of Syrian intelligence's rants and plants, and US Lefty hearsay. If you want to rant, get more intelligent and reliable sources, please.

I am sorry for being rude, but I do not feel very democratic, not when my people are bleeding. There will be time enough for armchair quarterbacking and passing blame when the blood dries. But again, we should stick to facts, build on established discussions, and not recycle ancient themes in a shouting match.

ghassan karam said...

As I revisited your post I clicked on the "pilgrim turkey" illustration in order to enlarge it but was I surprised!!! Thanks for the link to NNT's home page of sorts. I found that to be very instructive.

BTW, "Dutch Disease does not imply poverty in the long run. Deindustrialization merely suggests that a boom in services, similar to the US experience that took hold in the 80's, is possible usually at the expense of another sector although the economy overall is larger and in a way more prosperous. To be fair, there is a condition of more production that leads to worsening of economic well being but that is NOT the Dutch Disease but the Bhagwati Effect better known as Immiserizing Growth. Saudi Arabia of the late 1980's is one of the best examples of the Bhagwati effect. When the price of oil dropped precipitously Saudi Arabia was worse off although it was producing more oil. A good example of a potential Dutch Disease phenomenon is occuring currently in Canada. Alberta, as a result of the tar sands, is experiencing growth but it is feared that the growth in producing oil from the tar sands will occur at the expense of some other sectors and regions in Canada. Canada will be better off although some sectors will experience tremendous hardships.

Jeha said...

Thanks Ghassan,

I was ignorant of the "Bhagwati effect"; thank you for bringing this up to my attention. More reading for me.

I had done some quick searching earlier, and had came up with this interesting e-book, that touches on an "Arab Disease"...

ghassan karam said...

The most serious affliction of the "Arab Disease" is the paucity of democracy. It occured to me a few weeks ago , and I might be wrong on this because I have been in the West for so long, that there is no word for citizen in Arabic. You cannot have responsible democracy without educated citizens can you?

Jeha said...

This Arab disease can take many forms, like ignoring well established facts to go recycle a tired old theory...

Roman Kalik said...

Jeha, and it is only helped along by Bureaucrat's Syndrome, when every little peon tries to puff himself up to show that *he* is the true shaper/knower of US foreign policy.