Krawcheck on banking complexity:: The Complexity of the Simplicity Solution


After so long it is encouraging to know that complexity in banking is, at least, getting a more frequent airing by others! But, unlike the headline in the recent FT article, we (at Ontonix) don’t believe that “fighting complexity is futile“…far from it! Einstein knew of the rewards available to those who “reached” the simplicity beyond complexity. The scale of the problems created by the excesses of our financial system should tell us that the quest is only futile if banks DON’T adopt a culture and the tools that facilitate “transformation”.

Joining the dots between the ongoing banking crisis and the enlightened output from, such as, Andy Haldane resolves nothing until we act upon what we have learnt! We can’t afford to overlook the obvious shortcomings in Risk Management, Regulatory failures and abandonment of Corporate Governance.

But SURELY, as the author has identified some of the current problems, it can only be a matter of time before sufficient number of enlightened, influential, individuals reach their “flipping points“, act to influence and educate the crowd  – at Ontonix we are doing our utmost to aid this process [refer following video] – so we reach a “tipping point” and effect a, long overdue, paradigm shift.

Krawcheck offers some basic ideas for “paring back the complexity risk” in banking. She argues for looking at the bank’s overall risk profile; for compensating bank executives based on the bank’s risk profile (in terms of debt and equity); paying out dividends as a percentage of earnings; reforming the credit agencies (sigh); and urging boards to worry about booming, not struggling, businesses. (The last advice makes sense, but if we need to remind boards of that, we’re really screwed.) All this is very nice, but very broad — and given, yes, the complexity of banking, it’s a little hard to see the kind of effect it would have.

In fact, except for her first notion, I’m not sure it would do much to either rein in complexity or too-big-to-fail. The devil here is in the details. How would you calculate the “overall risk profile”? Is this a mark-to-market process, in which daily, weekly or monthly numbers are generated, like the much abused and suspect value-at-risk? How, given the enormous complexity, would these metrics be generated — and by whom?

If JPMorgan Chase & Co.’s big ugly trade managed to escape the bank’s internal risk management operation — not to say regulators — how would that have found its reflection in the bank’s overall risk number? It’s a rule: It’s the stuff we don’t know, or don’t want to know, that tends to kill us. And just remember: We’ve had a devil of a time just trying to provide guidelines on bank capital. What makes anyone think calculating an overall risk profile would be easier?

Huffington Post 

Hopefully the following video will go some way to answering critical questions and paving the way to a, less volatile, sustainable future…

Morally bankrupt culture:: Why I Am Leaving Goldman Sachs – NYTimes.com


A salutary lesson for every firm…particularly those within Financial Services (irrespective of scale).

Any “leader” who believes this is only about banks or bankers had better think again!

This is about the prevailing culture that they have presided-over, if not created. It may have enabled you to secure the wealth and power you so craved. But, if it is all that some of the newest, youngest, brightest recruits of the last 10 years have been fed and were/are too fearful to question, you can no longer deny that YOU have done your firm, these individuals, your clients (past and present), economies (local &/or global), future generations and, perhaps, the planet untold, perhaps irreparable, damage.

Unlike a Rating Agency my opinion is completely free! It is based upon both qualitative and quantitative data. Put as simply as possible, unless a financial organisation can offer a high level of transparency, sufficient to reassure its stakeholders and to (re)build TRUST it is not and cannot be deemed to be “investment grade”.

Financial Reform, courtesy of Basel and such like, should not come at the enormous expense that it does. Instead of spending increasing amounts on relentless lobbying it could be invested in “change” that stakeholders can see and believe in…TRANSFORMATION from the inside because you know and admit that it is the only way forward.

I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.

via Why I Am Leaving Goldman Sachs – NYTimes.com.

If you like a good conspiracy story I would urge you to read this piece about Martin Armstrong who was only released from jail last year:

Looking behind the curtain: If you like a good conspiracy theory…

Don’t forget that Goldman’s played their part on aiding the Greek Government bring the Euro to the brink of the abyss! I (like others) have had a go at Goldman Sachs on more than one occasion. Enjoy.

 

Nassim Taleb gives us Bob Hope & carries a "AA" rating!!!


Bob Hope

Cover of Bob Hope

 

Like him or not no-one can deny that NNT doesn’t have (and demonstrate) just what a quick mind he has. Interviewers or fellow panellists have to be careful not to test his, equally quick, temper. But what I have really come to enjoy in recent years is the more frequent use of his quick wit. Like the man himself it is sharp…even “spikey”.

Acerbic Aphorisms: whilst he may have some way to go before rivalling the late Bob Hope, his back catalogue of one-liners is growing. They are a cocktail of humour and wisdom. Are served “dry” and you do NOT want to be on the wrong end of too many of them as a nasty headache is assured!

“It is much easier to scam people for billions than for just millions.”

“The difference between banks and the Mafia – banks have better legal-regulatory expertise, but the Mafia understands public opinion.” Read more of this post

U.S. Financial World War: word up bro’ G20 showdown…may be “rap war”


The G20 is getting underway in South Korea. High on the agenda is the brewing currency battle between China and the United States.
Need a primer on the issues? Check out our US-Sino Currency Rap Battle, featuring Chinese president Hu Jintao and American president Barack Obama.

Serious message goes “street”

China has mad stacks of US Treasury debt and fears America will inflate its way out the hole by weakening the greenback further.
The US, on the other hand, says China is keeping its currency artificially undervalued to protect its exports.
It’s a battle for the ages. And everything you need to know about US-Sino trade relations can be learned right here.

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All you could ever want to know about why complexity is THE big deal


This video by David Korowicz [Complexity, Economy, Civilisation & Collapse] will answer the questions you may not have even thought to ask yourself (or others). His holistic perspective, born out of inter-disciplinary thinking tells you all you need to know about complexity, the folly of a “silo mentality” and the power of interdependence.

DK provides some superb illustrations including something as, apparently, simple as buying a loaf. At the other end of the scale he deals (briefly) with Thermodynamics and the “unseen” complexity of the Global Supply Chain driven by supply and demand. Complexity is the link. Read more of this post