Rumsfeld knows a thing about risk CBD Ben Butler

Would one of the main architects of the Iraq war have been better off monitoring the financial system?

Would one of the main architects of the Iraq war have been better off monitoring the financial system?

It may sound a bit crazy, but that's the view of the Australian Prudential Regulation Authority's general manager, David Lewis.

In a speech in Toronto last month and published this week, Lewis quoted former US defence secretary Donald Rumsfeld's infamous "known unknowns" comments from 2002. Quizzed by journalists about his failure to find weapons of mass destruction in Iraq, Rumsfeld replied there were "known knowns", "known unknowns" and "unknown unknowns".

"Rumsfeld's answer was widely lampooned at the time, but many scholars have since rallied to Rumsfeld's defence, saying that this statement is actually a pretty good explanation of the limits of human knowledge," Lewis said.

"For me, Donald Rumsfeld has clearly missed his true calling: he should have been a prudential supervisor. As a statement of the challenges faced by prudential supervisors, this is a very astute observation."

Lewis reckons the Rumsfeldian framework is actually useful for regulators. It can help them think about risks in the system, from the "known knowns" of non-performing loans to the "unknown unknowns" such as "black swan" events.

Rumsfeld is developing a bit of a fan club among Australian regulators: RBA assistant governor Guy Debelle also cited him in a 2010 speech with the exciting title "On Risk and Uncertainty".

Fighting chance

On Tuesday, boat builder, dinosaur enthusiast and part-time mining magnate Clive Palmer dumped West Australian apocalyptic eschatologist Teresa van Lieshout as a Senate candidate for his Palmer United Party, but he's got plenty of hopefuls still boxing on - including former pugilist Barry Michael.

Van Lieshout's YouTube channel urges viewers to "choose your team" in the endtimes stoush between God and Satan or else "be forced by the antichrist to wear a mark, a mark of the beast, 666, and you won't be able to buy or sell anything at the shop without that mark".

In contrast, Michael fought his battles in the ring, winning the super featherweight title against Lester Ellis in Darwin in 1985.

But the bout did nothing to help Michael buy or sell anything at the shop. Promoter Ian Crawford had promised Michael a $140,000 payday, but a year later the boxer said he had yet to see a cent. And in August 1986, Crawford fronted the Prahran Magistrates Court to plead guilty to turning his East Malvern home into a marijuana farm. The court was told he hoped to sell the weed to raise between $60,000 and $80,000 towards his debt to Michael.

"He disappeared off the face of the earth ... The next thing the police contacted me and notified me he'd been pinched," Michael told CBD. "He bankrupted himself and sent me a cheque for five grand, out of $140,000. I love Darwin, it's a great place, but I haven't been back since."

Tensions over the Darwin fight boiled over in '87 when Michael was assaulted by one Al Gange in a Melbourne nightclub. Gange, at the time known as a boxing promoter who had been trying to stage a rematch with Ellis, was the nom-de-boxing of notorious underworld figure Alphonse Gangitano, aka "The Black Prince of Lygon Street". A notorious thug and standover man, Gangitano was shot dead in 1998, probably by drug dealer Jason Moran (later himself murdered).

"He tried to bite my cheek off," Michael said.

With base pay for a senator coming in at $190,550 a year, Michael could do better out of politics. But he has to be elected first, and on the present poll numbers that's a bigger ask than a featherweight like Michael defeating heavyweight champ Muhammad Ali at the height of his powers.

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bbutler@fairfaxmedia.com.au

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