In case you've been wondering what all the predictions about "manic Monday" are about, the Wall St Journal writes: you've heard of black swans—events that are unthinkably rare, immensely important, and as unpredictable in advance as they are inevitable in hindsight. Now, with no one ruling out a default or downgrade of U.S. Treasury debt, investors face a new kind of threat: what we will call the neon swan, an event that is unthinkably rare, immensely important and blindingly obvious.
The politicians in Washington have a couple weeks to forestall a disaster that has begun to seem like a certainty. Investors everywhere are perfectly aware of the consequences if Congress and the Obama administration can't strike a deal: The U.S. is likely to lose its privileged triple-A credit rating, and corporate bonds and stocks alike could plummet in response.
As Nassim Nicholas Taleb's bestseller "The Black Swan" made clear, the human mind is poorly equipped to prepare us for rare, important and unpredictable events. But maybe our minds—and our markets—aren't very well equipped to protect us against neon swans, either.
Many investors seem to be coping with what seems like an obvious risk simply by closing their eyes….
Gird your loins. There's more at http://online.wsj.com/article/SB10001424053111904233404576462410143674364.html?mod=WSJ_business_LeftSecondHighlights
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