Introduction: What inspiration does the black swan give us?
The origin of the name Black Swan: Before the 17th century, Europeans believed that swans were all white. But with the appearance of the first black swan, this unshakable belief collapsed. The existence of the black swan symbolizes unpredictable major rare events, which are unexpected yet change everything.
Black Tuesday outbreak on the New York Stock Exchange
On October 29, 1929, everyone on the New York Stock Exchange was caught in a whirlpool of selling stocks. At 10 o’clock in the morning, the New York Stock Exchange had just opened, and everyone was selling regardless of price, causing chaos on the trading floor.
The Dow Jones index has plummeted by a thousand miles, with the stock price index dropping from its peak of 386 points to 98 points, a decrease of 22%, and the New York Times index falling by 41 points.
At the end of the day, the stock market set a historical record of 16.41 million shares traded. Known as the ‘worst day’ in the 112 year history of the New York Stock Exchange, this is the most famous’ Black Tuesday ‘in history.
In November, the stock market continued to decline, sliding to 198 points, a drop of up to 48%.
From May 1930 to November 1932, the stock market experienced six consecutive sharp declines, with the Dow Jones index dropping to 41 points.
This is the darkest day in the history of American securities, the most influential and harmful economic event in American history, with its impact affecting Western countries and even the entire world. Afterwards, the United States and the world entered a decade long period of economic depression.
The 1973 Middle East Oil Crisis
In August 1971, the Nixon administration announced the decoupling of the US dollar from gold.
In March 1973, major Western currencies implemented a floating exchange rate against the US dollar, which led to the collapse of the two pillars that supported the Bretton Woods system.
On August 15, 1971, US President Nixon issued a statement terminating the obligation to exchange the US dollar for gold, openly and unilaterally tearing up the Bretton Woods system. The collapse of the Bretton Woods system.
In October of the same year, the Fourth Middle East War broke out, and the International Organization of the Petroleum Exporting Countries (OPEC) announced an oil embargo and suspended exports in order to strike its rival Israel and its supporting countries. This led to a surge in crude oil prices from less than $3 per barrel to over $13 per barrel, triggering the most serious economic crisis in the post-war capitalist world.
From then on, the share of the United States in the world’s gross domestic product gradually decreased, from the world’s largest creditor country to the largest debtor country, the US dollar depreciated, and its dominant position began to shake. In the following years, until 1980, the price of gold rose from $35 to $850.
Black Monday stock market crash in the United States
On Monday, October 19, 1987, the “Black Monday” stock market crash occurred in the United States. The Dow Jones Industrial Average fell significantly by 508 points, a drop of over 20%, triggering panic in financial markets and causing major economic stock indices to plummet.
A stampede on Wall Street occurred instantly, leaving a mess. In just a few hours, stock prices plummeted and liquidity dried up instantly.
The Asian Financial Crisis
On July 2, 1997, the Asian financial crisis swept through Thailand, causing the Thai baht to depreciate. Soon, this storm swept through Malaysia, Singapore, Japan, South Korea, China, and other places. Breaking the scene of rapid economic development in Asia.
The economies of some major Asian economies have begun to decline. In early 1998, the Indonesian financial crisis resurfaced, causing the most severe economic recession in Indonesia’s history.
On September 2, 1998, the ruble depreciated by 70%, causing a sharp decline in the Russian stock and foreign exchange markets. From the May Russian financial crisis to the complete collapse in September, the net asset value decreased by 90% in just over 150 days, resulting in a huge loss of $4.3 billion. This financial crisis has a wide and profound impact, and has led to comprehensive and severe fluctuations in the stock and foreign exchange markets of the United States and Europe.
The Asian Financial Crisis
In the summer of 2007, the international financial market experienced turbulence, panic, and crisis due to the sharp increase in defaults and credit tightening in the US subprime mortgage industry. The full name is’ subprime mortgage crisis’. The storm caused by the bankruptcy of subprime mortgage institutions, forced closure of investment funds, and severe stock market volatility.
On August 8, 2007, Bear Stearns, the fifth largest investment bank in the United States, announced the bankruptcy of two of its funds.
On August 9, 2007, BNP Paribas, the largest bank in France, announced the freezing of three of its funds, causing a sharp decline in European stock markets.
On August 13, 2007, Mizuho Group, the parent company of Japan’s second-largest bank, announced a loss of 600 million yen related to US subprime loans. Japanese and Korean banks also suffered losses due to the subprime mortgage crisis in the United States; Citigroup also announced that in July 2007, it suffered a loss of $700 million due to subprime loans, resulting in a 90% decrease in market value.
In August 2007, it swept through major global financial markets such as the United States, the European Union, and Japan. Since the outbreak of the subprime mortgage crisis in August 2007, it has caused great impact and damage to the international financial order.
Ping An Financing Gate Incident
On January 18, 2008, Ping An of China announced a huge refinancing plan in the A-share market, intending to publicly issue no more than 120000 shares, separate convertible bonds worth 41.2 billion yuan, and raise nearly 160 billion yuan in total, creating the largest refinancing in A-share history.
On January 21st, the Shenzhen Component Index experienced its largest single day drop in points in history. The Shanghai Composite Index also fell 266.08 points on the same day, breaking the two major barriers of 5100 points and 5000 points one after another. The 5.14% decline was also the largest decline in six months.
The daily evaporated market value of the two cities is nearly 1.7 trillion yuan. From January 14th to March 5th, in less than two months, the circulating market value evaporated by 203.853 billion yuan. During the same period, Shanghai Pudong Development Bank was also suspended due to financing news, and its circulating market value evaporated by 69.516 billion yuan in one month. The massive refinancing incident of Ping An in China has devastated the stock market.
European debt crisis
The European debt crisis, also known as the European sovereign debt crisis, refers to the sovereign debt crisis that has erupted in some European countries since 2009. The European debt crisis is a continuation and deepening of the US subprime mortgage crisis, and its essential reason is that the government’s debt burden exceeds its own capacity, causing default risk.
The three major rating agencies in the United States have repeatedly downgraded the credit ratings of debtor countries such as Greece. The debt crisis is spreading throughout Europe, eroding the fragile recovery of the world economy.
Lightning Crash Promotes Circuit Breaker Mechanism
On May 6, 2010, the Dow Jones Industrial Average of 30 stocks plummeted by about 1000 points in just over 20 minutes, a drop of 9%, known as the “flash crash” in the market.
The ‘flash crash’ ultimately gave rise to the stock circuit breaker mechanism in the United States. In June of that year, under the leadership of the US stock exchange and the Financial Industry Regulatory Authority (FINRA), the US Securities and Exchange Commission launched a corresponding stock circuit breaker mechanism.
Everbright Oolong Index Incident
At 11:05 am on August 16, 2013, the Shanghai Composite Index surged by over 5% within three minutes. Some media pointed out that the index volatility was caused by Everbright Securities’ own stock index, but the market did not believe it and the index continued to rise.
At noon, the Secretary of Everbright Securities claimed that the “Oolong Index” was completely untrue. The market opened in the afternoon and Everbright Securities suspended trading.
At this point, the abnormal fluctuations in the index have been confirmed to be caused by Everbright Securities’ ‘own long index. The operational errors of Everbright have caused significant losses to followers of the stock market fluctuations, Everbright shareholders, clients of securities firms, and self operated businesses of enterprises.
Brexit from the European Union
On June 24, 2016, the United Kingdom announced its withdrawal from the European Union through a national referendum. As a result, global financial markets reacted rapidly and violently, with the pound dollar exchange rate plummeting by over 1000 basis points, reaching its lowest level since 1985, and British Prime Minister Cameron resigning.
Taleb said:
Life is just the cumulative result of a few major events, history and society do not crawl, they jump. They jump from one fault to another with little sway between them.
What you don’t know is more meaningful than what you know. In the process of human social development, what has had a significant impact on our history and society is usually not something we know or can foresee.