Subscribe to John Mauldin's
FREE Publication:

Thoughts From the Frontline

Sign up for John’s free weekly letter and join 1 million of his closest friends.

We will never share your email with third parties

Thoughts from the Frontline

Uncertainty and Risk in the Suicide Pool

September 29, 2012

Choose your language

“By ‘uncertain’ knowledge, let me explain, I do not mean merely to distinguish what is known for certain from what is only probable. The game of roulette is not subject, in this sense, to uncertainty; nor is the prospect of a Victory bond being drawn. Or, again, the expectation of life is only slightly uncertain. Even the weather is only moderately uncertain. The sense in which I am using the term is that in which the prospect of a European war is uncertain, or the price of copper and the rate of interest twenty years hence, or the obsolescence of a new invention, or the position of private wealth owners in the social system in 1970. About these matters there is no scientific basis on which to form any calculable probability whatever.”

-John Maynard Keynes, The General Theory of Employment, 1937

“... there are known knowns; there are things we know that we know. There are known unknowns; that is to say there are things that, we now know we don't know. But there are also unknown unknowns – there are things we do not know we don't know.”

-Donald Rumsfeld, Secretary of Defense, 2002

“There are four types of men:

1. One who knows and knows that he knows... His horse of wisdom will reach the skies.
2. One who knows, but doesn't know that he knows... He is fast asleep, so you should wake him up!
3. One who doesn't know, but knows that he doesn't know... His limping mule will eventually get him home.
4. One who doesn't know and doesn't know that he doesn't know... He will be eternally lost in his hopeless oblivion!”

-Ibn Yami, 13th-century Persian-Tajik poet

For the past 80 years, we have created ever more sophisticated models of risk in the economic and investment worlds. With each new tool we create to measure risk, we seem to think we have somehow gained more control over our future. Paradoxically, we appear to believe that the more we understand risk, the more we can somehow control our exposure to it. The more we build elaborate models and see correlations between events and…

Discuss This

1 comment

We welcome your comments. Please comply with our Community Rules.


Tom Casanovas

Jan. 26, 2013, 12:26 a.m.

Dear Mr. Mauldin

Thanks for your kind sentence:

” One of my favorite regions of Spain, Catalonia, which includes the beautiful city of Barcelona, is seriously talking about seceding from Spain. As much as 20% of the population (1.5 million) turned out for a march supporting independence last week”.

I would appreciate one comment from you about the decision made by the Catalonian Parliament this week. IMHO the figures are impressive:

Catalonia deficit with Spain is 16 billion euros every year, on average, in the last six years. Only as a reference, the deficit of Germany with the other 26 states of the European Union is 10.4 billion euros every year, on average, between 2007 and 2011. Catalonian GDP is 200 billion euros, so that 8% of its GDP is ‘stolen’ by Spain every year.

Catalonian people have a lot of Historical, Cultural, Economic and Financial reasons to secede from Spain. This week decision by the Catalonian Parliament ( 85 YES votes against 41 NO) paves the way -hopefuly- for a smooth and democratic secession from Spain.

How do you see this crucial issue for the EU?. Your opinion is very important for us. Thank you very much in advance.

Tom Casanovas