Nils Gilman at Small Precautions:
Six months ago (specifically: March 8, before even Bear Stearns had collapsed) I undertook a scenario planning exercise with Peter Schwartz, Steve Weber, and several other colleagues, trying to assess where this whole “sucker” (to use Bush’s choice phrase) could possibly end up. We spent a lovely, sunny afternoon on Peter’s balcony in the Berkeley Hills thinking rational but black thoughts about where it could all end up.
By the end of the exercise, as we discussed the various risks in the system, and how it might all play out, we had laid out a scenario whereby the money center banks, that is, the very core of the Western financial system (in the U.S., these are Citigroup, JP Morgan Chase, and Bank of America) could end up insolvent, necessitating a wholesale nationalization of the banking sector. We then looked around the table at each other and tried to imagine what this would mean for Western capitalism and democracy, and it just seemed too crazy to even consider. Political and ideological apocalypse on a scale of the collapse of the Soviet Union.
We all sat there, feeling a little crazy, and then finally one of us (who shall remain, for now, unnamed) uttered the most taboo words in scenario planning: “That could never happen. Impossible.”
And we all agreed, and wrapped up the session.
The wholesale ideological and political collapse of Communism? There were lots of smart people as late as 1989 who said that couldn’t ever happen, either….
