Top 10 political fat tail events.

(HT: FT Alphaville.)
Risk consultancy Eurasia Group released a report where they discuss possible fat tail events in the political arena.

The combination of lost savings, banking crises and credit crunches, rising unemployment, growing popular discontent with financial and political elites, and the squeeze on government services is dramatically increasing the pressures on political leaders, institutions, and stability in countries all over the world.

Their top 10 fat tail scenarios are:

• Pakistan: The military returns to power, 30 per cent.
• Ukraine: Kyiv turns towards Russia, 15 per cent
• Russia: Kremlin hardliners toss out liberals, 20 per cent.
• Mexico: Corruption forces Calderon out, 10 per cent.
• Nigeria: The federation disintegrates, 15 per cent.
• Turkey: Secularists lash out, 15 per cent.
• Argentina: Kirchners fall, economic policy shifts, 15 per cent.
• United Arab Emirates: Emirates split, 10 per cent.
• Japan: Political gridlock undermines confidence, 15 per cent.


• Poland: Moving from first to last in region, 10 per cent.

With the current events in Pakistan, replace military with "military or Taliban" and the probability just went up A LOT.

We live in interesting times.

Sources:

Political fat tails
FT Alphaville
http://ftalphaville.ft.com/blog/2009/04/28/55246/political-fat-tails/

Fat Tails in an Uncertain World.
eurasiagroup
http://docs.eurasiagroup.net/fattails2009.pdf