The Minsky Moment: Getting Ready for the Edge of Crisis

“Everyone has a plan,” said Mike Tyson, “until they get punched in the face.”

How do we resist the brutal blows of destiny? Until it happens, it’s difficult to predict. Strength of character cannot be judged by one's intentions, and perhaps not even by one's convictions, even the most deeply held ones. It’s judged in the critical moments—when fate strikes and weakens even the best-prepared defenses.

This is something that’s impossible to foresee before that fateful moment. The human spirit has its flaws and weaknesses. Each of us harbors untapped strengths and, simultaneously, strange, hidden vulnerabilities—our own "kryptonites," waiting to be revealed.

How can we respond to threats?

As the world turns upside down, with geopolitical conflicts intensifying, societies fracturing, and technological disruptions multiplying, this question becomes strategically essential for understanding our times.

Psychology offers three responses: paralysis, flight, or aggression.

• Paralysis likely comes from an atavistic reflex to "play dead" when faced with a predator, which, generally, is more interested in living prey. Sometimes effective in ancient times, and although it’s widely used today in bureaucratic organizations (1), this tactic rarely works in truly critical moments.
• Often mocked, flight has nonetheless proven its value. While it may sometimes allow us to evade danger, it doesn’t definitively overcome it.
• Aggression, meanwhile, has unpredictable effectiveness. It might succeed, but it can also backfire. War is a dangerous affair.

So, which strategy prevails?

It all depends on the circumstances. But one thing is sure: whether we flee or fight, anything is better than paralysis, especially if we must endure over time.

Any energy left unexpressed turns against us (2). This explains the countless burnouts in today’s hyper-connected society, where stress is a constant. It also accounts for the various social derivatives of flight or fight emerging in our divided Western societies:

• Looking for scapegoats.
• Seeking escapism in drugs or dreams of afterworldly salvation.
• Withdrawing from society, like collapsologists and survivalists (3).

When a critical shift happens, though, the pressure intensifies. We arrive at the moment of truth—what, in finance, is known as the "Minsky moment" (4): the breaking point. It’s when we begin our descent toward catastrophe, marked by the five stages of collapse: financial, commercial, social, political, and cultural.

How to confront crisis and collapse?

This is where crisis management emphasizes the importance of preparation: risk analysis, protection of critical vulnerabilities, and proactive prevention. As the military says, “Plans are useless, but planning is everything.”

This is also when experience highlights the need to apply a few simple principles:

• Stay grounded and begin by protecting ourselves, so we can effectively protect others.
• Remain connected to our vision, never losing hope that we will ultimately prevail.
• Confront the brutal reality of facts while proactively doing all we can to mitigate risks, focusing on our circle of control.
• Shift our thinking from risk to opportunity, exploring new target markets, offerings, or business models that the crisis might open up.
• Move quickly: a good plan executed today is better than a perfect plan imagined for tomorrow.

But above all, this is when we must summon every ounce of strength we possess. Often, when faced with disaster, we think we won’t make it. The monster looms, but we hesitate to cross the abyss. We think the gap is too wide to overcome. We forget that we have untapped resources within us—a second wind that emerges when we believe all is lost.

Will it be enough?

While it’s impossible to know how we’ll react in that critical moment, one thing is certain: when destiny strikes, when the defenses collapse, it’s then that the reflexes built over years of anticipation—and the options prepared for even the most unlikely scenarios—can make all the difference.

In the coming years, we may well need these reflexes…

The next post in this 'Mastering Antifragility' series - PAST THE EVENT HORIZON - will be published next week. Click here to subscribe > 

'THE DARKEST HOUR' is the fifth post of our 'Mastering Antifragility' series. The previous posts of this series, 'THE DOOMSDAY CLOCK', 'THE 10th MAN', 'THE 5 STAGES OF COLLAPSE' and 'THE WAY OF THE SURVIVOR' can be found here >   

_{(1) Such bureaucratic and political inertia is often observed in large, rigid organizational structures, where people are frantically busy managing internal processes, policies, and compliance tasks, yet producing few tangible external results. This “phantom enterprise” syndrome, filled with "bullshit jobs," is famously illustrated by former politician Henri Queille’s quote: “There is no problem so urgent that it cannot be solved by doing nothing.”}

_{(2) The harmful effects of this paralysis were powerfully demonstrated by Henri Laborit, a pioneering French neuroscientist known for his work on stress. When both fight and flight are impossible, an organism enters a state of "inhibition of action" or passive resignation, where immobilizing stress responses negatively impact physical and mental health. This explains the rise of psychopathic behaviors in decaying societies and the accumulation of tensions that may ultimately erupt in violent social movements and revolutions.}

_{(3) As we described in "Escaping from Zombieland" the popular cultural zeitgeist of recent decades appears to have drifted toward darkness, from the triumphant age of space exploration to a culture populated by stories of collapse, whether climatic, nuclear, or pandemic, set in post-apocalyptic worlds. Today, with half the population inclined to fear the future, large parts of Western society are fracturing into factions seeking various forms of escape: claimants, dreamers, survivalists, and collapsologists. A clear sign of our troubled times.}

_{(4) The "Minsky Moment" is a financial term describing a sudden market collapse following an extended period of reckless risk-taking and unsustainable borrowing. Named after economist Hyman Minsky, who specialized in understanding financial instability, it represents a tipping point where debt levels become unsupportable, leading to a rapid market sell-off and liquidity crisis. Minsky theorized that prolonged economic stability encourages investors and institutions to take on increasingly risky debt under the assumption that conditions will remain favorable. His "Financial Instability Hypothesis" outlines three stages: hedge finance (safe debt where cash flow covers repayments), speculative finance (debt that depends on refinancing), and Ponzi finance (debt reliant on asset price increases to stay solvent). As the market tilts toward Ponzi finance, any small shock—such as a shift in interest rates or declining asset prices—can spark a Minsky Moment. When this moment hits, credit dries up, asset values plummet, and a cycle of panic selling ensues, often triggering recession or financial crisis. Consequences include mass bankruptcies, job losses, and a severe contraction in economic activity.}