Tom Sharpe’s comic novel Porterhouse Blue begins with an account of the annual College Feast. "No one, not even the Praelector who was so old he could remember the Feast of ’09, could recall its equal – and Porterhouse is famous for its food. There was Caviar and Soupe a l’Oignon, Turbot au Champagne, Swan stuffed with Widgeon, and finally, in memory of the Founder, Beefsteak from an ox roasted whole in the great fireplace of the College Hall."

Porterhouse, a fictional Cambridge college, was given special dispensation by the monarch, back in the mists of time, to serve swan. This particular water fowl has not been popular table fare since the Middle Ages. However, it has achieved an enormous following among commentators on financial markets. The Black Swan: The Impact of the Highly Improbable has become a bestseller. Since the market dislocation that began in August its author, Nassim Taleb, has been lionized as the seer of the credit crunch.

The theory is nuanced but, with due deference to Taleb, can be summed up briefly. Just because something has not been seen before does not mean it does not exist and unexpected events have the greatest impact. The core of Taleb’s critique of modern finance is that historical analysis is an inadequate way to price risk. The bell-shaped curve beloved of statisticians is inappropriate in financial markets where there is a much larger probability of extreme events.

Anyone with more than a passing interest in finance theory knows about fat-tail events, kurtosis and Pareto distributions. They have been aired in academic journals for decades. Benoît Mandelbrot has spent a distinguished career examining them. The problem for modern finance is not that no one has ever thought about these issues. Rather, to steal another popular phrase, it is an inconvenient truth that extreme events are more common than the hawkers of MBS backed by sub-prime slime care to admit.

Taleb, to be fair, does not call the credit crunch a black swan. But unfortunately people who should know better have stolen his language as a fig leaf to hide their own embarrassment and culpability as events have unfolded. The credit crisis was predictable and predicted by some. Raghuram Rajan, then the director of research at the IMF, was warning of the systemic risk posed by intermediation, securitization and the originate-to-distribute investment banking business model in 2005, at Alan Greenspan’s valedictory Jackson Hole central banking jamboree.

He said: "...banks now require more liquid markets to hedge some of the risks associated with the complicated products they have created or guarantees they have offered. Their greater reliance on market liquidity can make their balance sheets more suspect in times of crisis, making them less able to provide the liquidity assurance that they have provided in the past... even though there should theoretically be a diversity of opinion and actions by market participants, and a greater capacity to absorb risk, competition and compensation may induce more correlation in behavior than is desirable."

He goes on: "While it is hard to be categorical about anything as complex as the modern financial system, it’s possible that these developments are creating more financial-sector induced procyclicality than in the past. They may also create a greater (albeit still small) probability of a catastrophic meltdown." If the credit crunch was a black swan it seems as if it was spotted in Wyoming three years early. Even Greenspan himself noted at the same meeting that the property boom was an "imbalance" and that "history has not dealt kindly with the aftermath of protracted periods of low risk premiums."

This column railed against the excesses of the credit boom and financial innovation to the point that Cassandra would have been a better title than Inside Investment. One example, from March 2007: "The relatively short history of what happens when cycles turn and benign markets get nasty does not make pleasant reading for those investors bowled over by CDOs and other such products.

"Why did LTCM collapse in 1998? A big part of the story was that supposedly liquid structured exposures to markets turned out to be anything but. The death spiral of illiquid securities being marked to market, margin calls, illiquid securities being sold at a fraction of their former value, and yet more margin calls, did for LTCM. It had also sucked in investors in structured products in the US mortgage markets four years earlier. The same horror show will be rewound and replayed again." Gillian Tett at the Financial Times was admirably far sighted and Edward Chancellor wrote an elegant treatise on "Ponzi finance".

The Black Swan is an excellent read. But it does not make it intellectually coherent to spew forth self-serving nonsense about "25 standard deviation events". If the black swan had stayed in Australia, rather than popping up all over the financial pages, the appropriate culinary treatment is surely to barbecue. The inclusion of widgeon is optional.

Andrew Capon is editor-in-chief at State Street Global Markets, the research and trading business of State Street Corp. He was formerly senior editor at Institutional Investor and has won numerous awards for journalism on fund management and investment issues. The views expressed are the author’s own