Let’s head over to Felix Salmon’s place for a moment.
I want to preface this with a bold claim: Felix Salmon is one of the best American political analysts on the internet bar Intrade. That said, I start to wonder when he veers off the well-trodden horse-race path towards other topics. He didn’t do a great job with the KFC Double Down, for example. EDIT: I was thinking of Nate Silver, not Felix Salmon; I’m an idiot. Now we get this comment on a recent piece of prognostication by Greg Ip:
In particular, I want to quibble with this bit:
Ip puts the chance of a Chinese hard landing at 20%; of the euro falling apart at 40%; and of the US fiscal cliff actually happening at 30%. Individually, each of these risks is bearable. But make the reasonable assumption that they’re independent variables, and it turns out that if you put them all together, the chances of none of them happening are just one in three.
That little clause in there is doing a lot of work. It’s reasonable to assume that disastrous economic outcomes in three of the world’s major trading areas are independent? That a collapse of the Euro would have no impact on the likelihood of a Chinese “hard landing”? That neither one would affect, say, US tax revenue?