Longtime correspondent (and Oregon resident) R.S.D. recently made this observation about black swans:

I notice that a number of predictors for 2012 never mention the flock of black swans that are currently circling in the murk before us. While I appreciate their anonymity, I was reminded of their presence last night about 10 PM while working in my shop. I had the door open to an almost Springlike night when I heard quite a flock of Canadian Geese passing over, heading north. In December!

Well said, R.S.D. For an example of the Status Quo's confidence that the odds of a financial or political black swan disrupting their Empire are essentially zero, let's turn to "conservative" pundit George Will, one of the Status Quo's leading proponents of bloviated smugness.

Mr. Will begins his syndicated New Year's column by hugging himself with Imperial self-satisfaction: America is a net exporter of energy products for the first time in 62 years!

The unwary consumer of Mr. Will's self-congratulatory prose (he has a corner office in the sprawling Ministry of Propaganda) might wrongly interpret this to mean that America is a net exporter of energy: it is not. The U.S. is a net importer of over 9 million barrels of oil a day.

How dependent are we on foreign oil? (U.S. Energy Information Administration)

The United States consumed 19.1 million barrels per day (MMbd) of petroleum products during 2010, making us the world's largest petroleum consumer. The United States was third in crude oil production at 5.5 MMbd. But crude oil alone does not constitute all U.S. petroleum supplies. Significant gains occur, because crude oil expands in the refining process, liquid fuel is captured in the processing of natural gas, and we have other sources of liquid fuel, including biofuels. These additional supplies totaled 4.2 MMbd in 2010.

In 2010 the United States imported 11.8 million barrels per day (MMbd) of crude oil and refined petroleum products. We also exported 2.3 MMbd of crude oil and petroleum products during 2010, so our net imports (imports minus exports) equaled 9.4 MMbd.

Apparently Mr. Will is incapable of performing either simple math or a basic web search to confirm the breezy implications of his carefully vague confidence in a future of never-ending, low-cost surplus energy.

If he'd performed five minutes of journalism instead of spewing propaganda, he might have stumbled upon this report, which suggests that U.S. dependence on imported energy will rise going forward: US Oil and Gas Import Dependence: Department of Energy Projections in 2011

Much propaganda has been issued over the years about the hundreds of years of supply of energy the U.S. possesses, but journalism is supposed to ferret out the current facts as its foundation rather than begin with self-satisfied pontification.

If we consult the facts, we find the storied Bakken oil/gas formation currently produces 445,000 barrels a day, certainly a substantial quantity of energy but a mere sliver of America's daily consumption of 19 million barrels a day. According to the EIA report Bakken formation oil and gas drilling activity mirrors development in the Barnett, Bakken production, which averaged just over 2 thousand bbl/d in 2000, averaged more than 260 thousand bbl/d in 2010. This rise in production is the result of hundreds of horizontal wells being drilled and brought online.

Is this new source of domestic energy welcome? Of course. Will it some day replace the 9 million barrels imported from elsewhere? A variety of sources suggest reaching 1 million BPD would be an extraordinary accomplishment, and that projecting the recent growth to millions of barrels a day is more fantasy than fact.

If we had to summarize the Status Quo's confidence that no black swans will threaten its control in 2012, we might begin with its faith that the system's self-regulation will resolve all systemic challenges. Just as the Status Quo has placed all its chips on a single bet--that "growth" from debt-based consumption can be resumed with vast public borrowing and saving the predatory financial sector--it also bases its confidence on the system's self-regulation.

If the banking sector is riddled with fraud and embezzlement, then some minor tweaking of regulation will solve all issues. If demand for debt has collapsed, then the solution is for the Federal Government to borrow 10% of GDP every year to compensate for the decline of private debt and spending.

The faith is that extending and pretending will magically restore the "growth" the Status Quo needs to support its ballooning debt. Extending and pretending offers up the compelling illusion that the system's broken self-regulation is up to the task of fixing systemic problems.

The essence of Talib's "black swan" insight is that instabilities that are written off by the Status Quo as "extremely low probability" become high-probability when low-level systemic instabilities are suppressed by extend and pretend and endless propaganda.

The Status Quo has suppressed instability with brute force and propaganda for four long years; while the Elites are patting themselves on the back and confidently predicting they can safely navigate 2012 with more extend and pretend, the odds are increasingly favoring the emergence of "unlikely" disruptions.

Mr. Will is supremely confident that whatever happens in 2012 will be a mere "pebble in the river of American history." In the darkness overhead, we can hear the beating of unseen wings that promise to make a mockery of the Status Quo's supreme Imperial hubris.

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