Genius Transparency to Lead Innovation


An interesting and thought-provoking piece from Brain Leaders and Learners

Gridlock feeds ego and shuts out brainpower while transparency fosters innovation and increases trust.

The more gridlock we see, the more open exchanges get lost. Have you seen bullies and cynics keep ego alive by banishing transparency through backdoor deals?

Flawed leadership, whether called democracy or dictatorship generates gridlocks that block creative brainpower.

Never before in history have we needed more successful innovators who rev up mental equipment for innovation.

It’s true that Barak Obama, Bill Gates, Ursula Burns, and Hillary Clinton communicate see-through stories to leave no brain is left behind. Still, leadership openness is rare. Why so?

Dave Caiazza, put it this way:

Work against the dangerous twins of jealousy and hypocrisy. They come disguised as concern, shrouded in statistics, and hidden behind a smile. When you’re good at something, there will always be someone who wants to undo you. Don’t let them.

Transparency takes brainpower to tackle toxins from cynics who broker backdoor deals. How so?

 

1. Awaken more intrapersonal intelligence so that others will be led to respond openly to ethics that tend to follow.

2. Respond to confrontations by snipping your amygdala and peers often repeal demands spoken.

3. Spot opportunities within broken systems – and others tend to join with like minded willingness to risk riding transparency’s surf.

4. Relate neuro discoveries that resolve conflicts and reasonable parts of your brain win supremacy.

5. Offer mental olive branches to people who disagree and they tend to collaborate without forcing their views on one side.

6. Hone brainpower tools for peace rather than promote war where gridlock battles begin.

7. Suggest simplicity that adds intelligence to replace mental clutter with clear ethical practices that hold dividends for all.

8. Avoid hidden traps of cynicism by building transparent tone to open segues for all to speak and feel heard.

9. Brainstorm solutions with innovative peers rather than join in with naysayers who toss toxins into the mental mix.

10. Activate, encourage and open communication that sparks innovation, rarely found in tragic traits of a cynic.

Step into any gridlock situation and you’ll spot far more routines, ruts and rituals, than innovative designs can survive. Have you seen it?

Luckily, newly discovered mental equipment offers tools such as new neuron pathways to dynamic innovation. See why transparency’s not possible when ego generates gridlock?

Complexity: Global Banking – “The Sources of Unpredictability”


The Bank of England in Threadneedle Street, Lo...

Image via Wikipedia

Image via Wikipedia

A recent interesting speech by Mervyn King, Governor of the Bank of England, on the “Uncertainty in Macroeconomic Policy Making: Art or Science?” discusses the sources of unpredictability. He goes on to claim that the sources of unpredictability are at least three: “First, it is very difficult to assign probabilities […]

This is not the first time that Bank of England have dealt with the matter of learning lessons from other “disciplines”. Andy, Haldane, Executive Director, Financial Stability went in to some detail during a presentation in April 2009.

“This paper considers the financial system as a complex adaptive system. It applies some of the lessons from other network disciplines – such as ecology, epidemiology, biology and engineering – to the financial sphere. Peering through the network lens, it provides a rather different account of the structural vulnerabilities that built-up in the financial system over the past decade and suggests ways of improving its robustness in the period ahead.”

The text of the speech is available here.

Of course this all feeds in rather well to previous blog items in relation to my firmly held belief that a fundamental part of the solution is the application of Quantitative Complexity analysis tools and management.

The Woman Who Just Might Save the Planet and Our Pocketbooks

Fund Strategy Magazine: Complexity lessons from nature for a better economic future

The following blog item from Willem Buiter reiterates the folly of financial modelling and, effectively, reinforces the argument

The unfortunate uselessness of most ’state of the art’ academic monetary economics

Those of us who have marvelled at the non-linear feedback loops between asset prices in illiquid markets and the funding illiquidity of financial institutions exposed to these asset prices through mark-to-market accounting, margin requirements, calls for additional collateral etc.  will appreciate what is lost by this castration of the macroeconomic models.  Threshold effects, critical mass, tipping points, non-linear accelerators – they are all out of the window.  Those of us who worry about endogenous uncertainty arising from the interactions of boundedly rational market participants cannot but scratch our heads at the insistence of the mainline models that all uncertainty is exogenous and additive.

Technically, the non-linear stochastic dynamic models were linearised (often log-linearised) at a deterministic (non-stochastic) steady state.  The analysis was further restricted by only considering forms of randomness that would become trivially small in the neighbourhood of the deterministic steady state.  Linear models with additive random shocks we can handle – almost !

Even this was not quite enough to get going, however.  As pointed out earlier, models with forward-looking (rational) expectations of asset prices will be driven not just by conventional, engineering-type dynamic processes where the past drives the present and the future, but also in part by past and present anticipations of the future.  When you linearize a model, and shock it with additive random disturbances, an unfortunate by-product is that the resulting linearised model behaves either in a very strongly stabilising fashion or in a relentlessly explosive manner.  There is no ‘bounded instability’ in such models.  The dynamic stochastic general equilibrium (DSGE) crowd saw that the economy had not exploded without bound in the past, and concluded from this that it made sense to rule out, in the linearized model, the explosive solution trajectories.  What they were left with was something that, following an exogenous  random disturbance, would return to the deterministic steady state pretty smartly.  No L-shaped recessions.  No processes of cumulative causation and bounded but persistent decline or expansion.  Just nice V-shaped recessions.

There actually are approaches to economics that treat non-linearities seriously.  Much of this work is numerical – analytical results of a policy-relevant nature are few and far between – but at least it attempts to address the problems as they are, rather than as we would like them lest we be asked to venture outside the range of issued we can address with the existing toolkit.

The practice of removing all non-linearities and most of the interesting aspects of uncertainty from the models that were then let loose on actual numerical policy analysis, was a major step backwards.  I trust it has been relegated to the dustbin of history by now in those central banks that matter.

Lehman Bros “scandal”: The Video That Will Put Geithner Behind Bars


http://www.msnbc.msn.com/id/32545640

 

13th March 2010: If this doesn’t convince you that Timothy Geithner knew about the securities shenanigans that were going on at Lehman, than I don’t know what will.

Keep in mind, that Geithner ran Lehman through 3 "stress tests" prior to bankruptcy; all of which Lehman failed, and yet, nothing was done. Anton R. Valukas–the examiner who wrote the 2,200 page investigative-report which was released on Thursday– has provided plenty of information detailing Lehman’s “materially misleading” accounting and “actionable balance sheet manipulation.”

In other words, they “cooked the books” BIG TIME!

"Quite a few observers… have been stunned and frustrated at the refusal to investigate what was almost certain accounting fraud at Lehman. ….The unraveling isn’t merely implicating Fuld (Lehman CEO) and his recent succession of CFOs, or its accounting firm, Ernst & Young, as might be expected. It also emerges that the NY Fed, and thus Timothy Geithner, were at a minimum massively derelict in the performance of their duties, and may well be culpable in aiding and abetting Lehman in accounting fraud and Sarbox violations….

We need to demand an immediate release of the e-mails, phone records, and meeting notes from the NY Fed and key Lehman principals regarding the NY Fed’s review of Lehman’s solvency. If, as things appear now, Lehman was allowed by the Fed’s inaction to remain in business, when the Fed should have insisted on a wind-down ….. at a minimum, the NY Fed helped perpetuate a fraud on investors and counterparties.

This pattern further suggests the Fed, which by its charter is tasked to promote the safety and soundness of the banking system, instead, via its collusion with Lehman management, operated to protect particular actors to the detriment of the public at large.

And most important, it says that the NY Fed, and likely Geithner himself, undermined, perhaps even violated, laws designed to protect investors and markets. If so, he is not fit to be Treasury secretary or hold any office related to financial supervision and should resign immediately. (Naked Capitalism)

Repeat: "Accounting fraud", "collusion", "aiding and abetting." These are serious charges by a usually restrained blogger.

And this is from Zero Hedge:

"Lehman has become merely the latest example of all that is broken with today’s crony capitalist system…. The evident conclusion is that the core driver of modern capitalist society is fraud at its very core, and nothing short of a massive revolutionary overhaul of the political system, which is the number one defender .. of very lucrative bribes and kickbacks originating from the same rotten Wall Street that (is) nothing but a sham filled with toxic assets" Zero Hedge

This story isn’t going away. Someone has to go to jail. It’s clear that Geithner acted as the "chief facilitator" of industrial scale securities flim-flam which led directly to the Great Crash of ’08. He needs to be held accountable for his actions.

Battle of the Titans: JP Morgan Chase v Goldman Sachs


A very interesting piece by Ellen Brown (author of “Web of Debt”)

We are witnessing an epic battle between two banking giants, JPMorgan Chase (Paul Volcker) and Goldman Sachs (Rubin/Geithner). The bodies strewn on the battleground could include your pension fund and 401K.

The late Libertarian economist Murray Rothbard wrote that U.S. politics since 1900, when William Jennings Bryan narrowly lost the presidency, has been a struggle between two competing banking giants, the Morgans and the Rockefellers. The parties would sometimes change hands, but the puppeteers pulling the strings were always one of these two big-money players. No popular third party candidate had a real chance at winning, because the bankers had the exclusive power to create the national money supply and therefore held the winning cards….link to the remainder of the article.

Risk: Things that Cannot be Modelled Should not be Modelled


Ludwig Wittgenstein sustained that “what cannot be debated should not be debated”.

Ontonix say that what cannot be modelled should not be modelled. Otherwise one faces making massive investments with no tangible return. Based on our current understanding of physics and using our contemporary mathematics certain things are “impossible to model”.

Our (Ontonix) approach “flies in the face” of conventional wisdom but a host of high profile supporters are already advocating a shift of focus AWAY from risk modelling – using incomplete data to try to predict the future.

Ontonix are the first company to offer a model free means of Quantitative complexity analysis and management.