Mobius Says Fresh Financial Crisis Around Corner…

Tree caricature from South Sea Bubble cards

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In case anyone was in any doubt about where we are headed…”GET REAL!”. It was never a question of “if”, merely “when”.

   Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven’t been resolved.

“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis”

via Mobius Says Fresh Financial Crisis Around Corner Amid Volatile Derivatives – Bloomberg.

The sheer scale of the gamble of pumping so much new money directly into markets that were shown to be (at very least) morally corrupt, had failed so spectacularly yet STILL remain little changed, unpunished and unbowed, will only be apparent when it explodes in the face of the Political and Financial elites.

They will be held accountable for their actions by the rest of society upon who the economic and social burden of TBTF has, well and truly, fallen.

It is not only the financial bubble that will burst

What the Mayans can teach us about wind turbines

Ms Costa is promoting her new book in this article and, perhaps understandably, is using GW Bush & Tony Blair to illustrate how belief can replace fact in complex situations. Please don’t get too hung up on that but, rather the “pattern” evident in the demise of once great civilizations. She does have the good grace to acknowledge Joseph Tainter (of whom I have written plenty)  but this is also a subject covered, most notably, by Jared Diamond amongst others.

I hope here book isn’t a tired “jump on the bandwagon” rehash of previous work on the subject!? If so, she may be better advised to consider the future “post critical” landscape because that will be interesting…and challenging!

Among physicists it is common knowledge that increased complexity leads to higher rates of failure. So as our problems become more complex, the number of wrong solutions begins to outnumber the right ones. As complexity escalates, the chances that we will make the right call diminish.

via What the Mayans can teach us about wind turbines | Mail Online.

Don’t blame luck when your models misfire –

John Kay is, merely, the latest authoritative voice to make points that appear to “fall on deaf ears”. We know they aren’t deaf but they just aren’t prepared to listen to anything that refers to “transparency” or otherwise threatens what has served them so well and that they control!

Can anyone else provide an alternative explanation as to WHY the following would not be a matter of historic record rather than a “plea”?

…We will succeed in managing financial risk better only when we come to recognise the limitations of formal modelling. Control of risk is almost entirely a matter of management competence, well-crafted incentives, robust structures and systems, and simplicity and transparency of design.

Read the full article

Complexity lessons from nature for a better economic future…

Here is a very brief snippet from a recent article in The writers, who form an, apparently, unlikely combination, are Andy Haldane, Executive Director for financial stability at the Bank of England, and Robert May, Professor of Zoology at Oxford University and former British chief scientific adviser.

You shouldn’t really be too surprised because, increasingly in “Corporate America” the realisation is that, rather than environmentalists and others who push a “Sustainability agenda” being the enemy, they have learned through their own performance that embracing Strategy for Sustainability IS transforming their results. And not just because “green washing” was so costly or that their “educated” customers are spending more but because it is genuinely better for their business, stakeholders and the environment.

Nor is this the first time that these unlikely bed-fellows have attempted to communicate a message so important that it is cultivating increasingly inter-disciplinary approaches – joined-up thinking. This is familiar territory for Ontonix. It highlights why Complexity Theory and systems-thinking are THE point at which a new understanding can be applied to begin the process of recovery…this quote may help your understanding of why complexity is so important:

”Imagine assessing the robustness of the electricity grid with data on power stations but not on the power lines connecting them”

.”..The present situation in banking is in many respects perverse. The magic of diversification, when assumed into banks’ risk models, means that large, complex banks often hold less capital than their smaller, simpler brethren. The rocket-scientists building models tell us this makes sense. But the rocket-scientists building rockets tell us it is nonsense. This error has cost the world dear. Through this year, the Financial Stability Board is leading the charge to boost loss-absorbing capital for the largest, systemically important institutions to correct this error. It is right to do so.”

Fund Strategy Magazine: Complexity lessons from nature for a better economic future… In case you thought that “complexity management” is just more mumbo jumbo from the financial sector I suggest that you read the following piece and any of my previous blogs on the subject of complexity. Complexity analysis, mapping and management is available NOW and, if a business leader is intent upon gaining a greater insight into their operations, making more informed decisions, managing more effectively, gaining competitive advantage and “st … Read More

via Get “fit for randomness” [with Ontonix UK]

Connecting the dissident dots from…Glasgow to the Great Pyramid: a practical lesson in Complexity Theory

Long before I gained any real understanding of  complexity, systems, fractals and power laws it had struck me how very different – I choose the word in preference to “better” – the world had become!

For some time now we have had the tools to facilitate communication like we had never experienced. But there was something fundamental missing…a widespread understanding of just how to put it to “good use”.

For as long as I can remember I have believed in and advocated interdependence [even though at various times in my life I have found it difficult to practice what I preach – delegation has never been a strong point!] and worked in an industry that, patently, doesn’t get it. The financial sector thrived, grew fat, lazy and untrusted by structuring (increasingly) win/lose contracts where value was replaced by advertising, hard-sell marketing and cheap prices.

Abandoning quality for quantity; mis-selling inferior products; misrepresenting debt as credit; abusing customer loyalty and inertia; peddling the myth of financial independence and contaminating a generation… Read more of this post