George Soros, The new paradigm for financial markets, 2008 [ ]
p.82
United Kingdom, Spain, and Australia.
pp.82-83
p.82
the Federal Reserve lowered the federal funds rate to 1 percent and kept it there until June 2004. This allowed a housing bubble to develop in the United States. Similar bubbles could be observed in other parts of the world, notably the United Kingdom, Spain, and Australia.
p.82
What sets the United States housing bubble apart from the others is its size and importance for the global economy and the international financial system. The housing market turned down earlier in Spain than in the United States, but that passed unnoticed, except locally.
pp.82-83
By contrast, U.S. mortgage securities have been widely distributed all over the world with some European, particularly German, institutional holders even more heavily involved than American ones.
<< this biblio (book) has no index >>
(The new paradigm for financial markets : the credit crisis of 2008 and what it means / George Soros., 1. financial crises──united states., 2. united states──economic policy., 3. united states──economic conditions──21st century., 4. credit──united states., HB3722.S673 2008, 332.0973──dc22, 2008, )
2004 June the Federal Reserve lowered the federal funds rate to 1 percent and kept it there until June 2004., p.82 (George Soros, The new paradigm for financial markets, 2008)
2004 FBI warning of a looming financial crisis
the warning from an assistant FBI director that the growing mortgage fraud caseload could signal a problem with potentially wide economic repercussions
2005 Bankruptcy Reform Act, aka Bankruptcy Prevention and Fraud on Consumers Bill
For eight years (1997), the credit card industry pushed for new bankruptcy laws, and thanks to their intense lobbying efforts and high political contributions, they succeeded. The changes make it harder for consumers to file bankruptcy and have eliminated some of the benefits of prior law for consumers protection.
2005 Derivatives contracts are exempt from normal bankruptcy law
derivatives and other financial contracts
http://economicsofcontempt.blogspot.com/2009/03/special-treatment-of-derivatives-in.html
2006
2007 ‘On April 17, 2007, famed short-seller Jim Chanos and other hedge fund managers met under tight security at the World Bank in Washington for the G-8 meeting. Chanos and Paul Singer briefed prominent policy officials [including Gordon Brown] about the growing financial instability. They gave irrefutable evidence that a catastrophe was building. They told officials that banks
were about to sink the global economy. They called for decisive action. And they were ignored.’
2007 ‘August 9--BNP Paribas announces it is unable to value mortgage-related assets on the books of three funds it manages, sparking a freeze-up in money markets and a 95 billion EUROs intervention by the ECB (European Central Bank)’
[p.1, p.2, p.3]
[p.1]
Gigantic French bank BNP Paribas had announced that it was suspending withdrawls from three investment funds it managed. The funds were invested heavily in U.S. home-mortgage-backed securities that had become nearly impossible to value ([fraud]). Customers' money would be locked up until the bank could figure out exactly how much the investments were worth.
[p.2]
The three relatively obsure funds held only 1.6 billion EURO in assets.
[p.3]
By 10 a.m., the full Executive Board was on line. [Jean-Claude] Trichet was emphatic: "There is only one thing we can do, which is to give liquidity." The ECB, he insisted, must flood the banking system with euros. He was proposing that the central bank fulfill its traditional role as "lender of last resort," stepping in when private banks were pulling back, ... . The ECB would abandon its usual practice of pumping some fixed amount of money into the banking system and instead make an unlimited number of euros available to the banks that needed them. The technical term for what Trichet and the Executive Board did at 12:30 p.m. central European time is to offer a "fixed-rate tender with full allotment."
Translation: Come and get it, guys. We'll give you as many euros as you need at 4 percent. Some forty-nine banks took 95 billion EUROs.
(Irwin, Neil (2013), The Alchemists, the penguin press, new york, 2013 ) (The Alchemists : three central bankers and a world on fire, Neil Irwin, p.1, p.2, p.3 )
2007 (Why no financial panic? M3?)
(There should be a financial panic about now because of the huge spike in DJIA volume from 2001-2005.)
(Nouriel Roubini forecasts that the panic should happened about now.)
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https://en.wikipedia.org/wiki/Jonathan_Swift
https://en.wikipedia.org/wiki/A_Modest_Proposal
https://en.wikipedia.org/wiki/Anthropometry
https://en.wikipedia.org/wiki/Exoskeleton
http://www.dudeiwantthat.com/fitness/equipment/fortis-exoskeleton.asp
http://channel.nationalgeographic.com/breakthrough-series/articles/paul-giamatti/
https://www.youtube.com/watch?v=y8veXeZxzOE
https://www.youtube.com/watch?v=y8veXeZxzOE
<-------------------------------------------------------------------------->
<-------------------------------------------------------------------------->
filename: ‘reality’ (petrodollar).txt
Two forces or dual functions (coping with the reality of living)
• to ‘understand reality’ (un-r)
• to ‘manipulate reality’ (ma-r)
To ‘understand reality’ (un-r)
■ positive+ (upside) (healthy aspect) (helpful) (good aspect)
■ negative- (downside) (sickly aspect) (hurtful) (bad aspect)
■ combine (composite) (hybrid) (aspect of upside and downside)
To ‘manipulate reality’ (ma-r)
■ positive+ (upside) (healthy aspect) (helpful) (good aspect)
■ negative- (downside) (sickly aspect) (hurtful) (bad aspect)
■ combine (composite) (hybrid) (aspect of upside and downside)
To ‘understand reality’ (un-r)
■ we are doing this - ‘understand reality’ (un-r)
• we are figuring out - what is happen - what is going on?
• is this some thing new, or, is this more of the same?
• is it - the more things changed, then the more they stay the same?
• if it is some thing new, then can we get a template [cookie cutter] solution from the past, with some tinkering and modification [get feedback and input from the community and neighborhood], apply the modified solution to our new situation?
• is it something completely new that we have not seen before?
• is it something we have seen before?
■ the question is - are we in a default mode of ‘understand reality’ (un-r)
• if we are in a default mode and we encounter a novel environment and situation that does not fit the usual pattern (from our current and past experience), then we are going get bias and ...
• on the other hand, it is expensive (mentally taxing) to always questions, discriminate, analyze, parse, infer, interpret, translate, deduce, synthesize, connect the dots, and triangulate each and every situation we encounter - novel situation or reassessment of a current and historical situations; maybe the famous fictional detective Sherlock Holmes can do this at the drop of a hat, but most mortal and cousins to the chimpanzee can not;
• so what do we do?; we use our default mode and do the best we can with what we've got, using pattern matching from our experience, traditions, culture, rules of thumb, stereotype, cues, sign, signals, decision-making short cut, and other mental labor saving tactics and schemes;
• in brief, we live with biases and stereotypes; and when we are fortunate (the lady luck of fortune grants us favor), the bias or stereotype work itself out; and if not, then we are wrong; and when we are wrong, we either deal with consequences, kick the can down the road to the next generation, or do a bit both (address some aspects of the consequences and kick the rest of the cans down the road).
To ‘understand reality’ (un-r)
■ passive or inactive ‘understand reality’ (default mode)
• positive+ (upside) (healthy aspect) (helpful) (good aspect)
• negative- (downside) (sickly aspect) (hurtful) (bad aspect)
• combine (composite) (hybrid) (aspect of upside and downside)
■ active ‘understand reality’ (many levels) (hardwork) (training)
• positive+ (upside) (healthy aspect) (helpful) (good aspect)
• negative- (downside) (sickly aspect) (hurtful) (bad aspect)
• combine (composite) (hybrid) (aspect of upside and downside)
To ‘manipulate reality’ (ma-r)
■ passive or inactive ‘manipulate reality’ (more natural)
• positive+ (upside) (healthy aspect) (helpful) (good aspect)
• negative- (downside) (sickly aspect) (hurtful) (bad aspect)
• combine (composite) (hybrid) (aspect of upside and downside)
■ active ‘manipulate reality’
• positive+ (upside) (healthy aspect) (helpful) (good aspect)
• negative- (downside) (sickly aspect) (hurtful) (bad aspect)
• combine (composite) (hybrid) (aspect of upside and downside)
To ‘manipulate reality’ (ma-r)
■ passive or inactive ‘manipulate reality’ (more natural)
• going to happen anyway (daily activities essential to living)
• subconscious generalization, subconscious deletion, subconscious distortion (three different kinds of filters), p.145, Thom Hartmann, Cracking the Code, 2007, 2008.
• [subconscious is also refer to as unconscious; we uses the word ‘subconscious’ with intention, in place of the word ‘unconscious’ because ‘subconscious’ suggests below the level of conscious, like a similar word ‘submarine’ (below the [surface of] sea); ‘unconscious’ might suggest to the Reader that the ‘unconscious’ is unavailable or disable or mentally handicapped in some way, which is not what we want to say; ...]
■ active ‘manipulate reality’
• distortion, distraction, deception
• misinformation, disinformation
• active generalization, active deletion, active distortion (three different kinds of filters)
• operationalize the activity or function
To ‘understand reality’ (un-r)
• surveillance, detection, identification, investigation, report (SDIIR)
• passive or inactive ‘manipulate reality’ (more natural)
• active ‘manipulate reality’
• ...
• interaction between ‘manipulate reality’ <==> ‘understand reality’
■ passive ‘manipulate reality’ (more natural)
• Choose truth (when choice is possible)
• “Our basic beliefs are very simple. Choose truth and oppose lies. And always strive for good words, good thoughts and good deeds.”, p.229, Paul Kriwaczek, In search of Zarathrustra, 2002
• honesty is the best policy
• brutal honesty is not always the best policy
• it isn't what you say, it is how you say it
• it isn't what you say, but what the listener's interpretation of what your said
• it isn't what you say, but how you make someone feel
• ...
■ active ‘manipulate reality’
• positive
• see lecture notes and case explanation of Dr. Milton H. Erickson
• “The psychotherapist Dr. Milton H. Erickson always tried to find symbols and images that would communicate to the patient in ways that words could not. When dealing with a severely troubled patient, he would not question him directly but would talk about something irrelevant, such as driving through the desert in Arizona, where he practiced in the 1950s. In describing this he would eventually come to an appropriate symbol for what he suspected was the man's problem. If he felt the patient was isolated, say, Dr. Erickson would talk of a single ironwood tree, and how its isolation left it battered by the winds. Making an emotional connection with the tree as a symbol, the patient would open up more readily to the doctor's probing.”, p.315, Robert Greene, The 48 laws of power (a Joost Elffers book), 1998
• “In his family-therapy practice, Dr. Milton H. Erickson found that if the family dynamic was unsettled and dysfunctional there was inevitably one person who was the stirrer, the troublemaker. In his session he would symbolically isolate this rotten apple by seating him or her apart from the others, if only by a few feet. Slowly the other family members would see the physically separate person as the source of their difficulty. Once you recognize who the stirrer is, pointing it out to other people will accomplish a great deal. Understanding who controls the group dynamic is a critical realization. Remember: Stirrers thrive by hiding in the group, disguising their actions among the reactions of others. Render their actions visible and they lose their power to upset.”, p.363, Robert Greene, The 48 laws of power (a Joost Elffers book), 1998
• not so positive (bordering on negative?)
• dysfunctional?
• pathological?
• psychopathic/ sociopathic like behaviour?
• take on the disease model, and exhibiting ‘Cancer like’ behaviour, see Joseph Panno, Cancer : the role of genes, lifestyle, and environment, 2005.
• is it doable (possible)?
■ to prevent the manipulative function from interfering with the pursuit of knowledge (to understand reality).
• the two tasks [or functional units] of ‘understand reality’ (un-r) and ‘manipulate reality’ (ma-r) are divergent
■ (in other word, when we are trying to ‘understand reality’, we are NOT going ‘manipulate [the very] reality’ we are trying to ‘understand ...’, because beside creating a conflict of interest, and being confusing, if we violate this rule, we set ourselves up for a potential feedback loop.)
• the two tasks [or functional units] of ‘understand reality’ (un-r) and ‘manipulate reality’ (ma-r) are convergent (???)
■ (in what situation would this happen, and, in what situation would this be a good thing)
• interaction between ‘manipulate reality’ <==> ‘understand reality’
■ we are doing this - ‘understand reality’ (un-r)
■ passive ‘manipulate reality’ (more natural)
■ active ‘manipulate reality’
■ crafting the future you want to happen
• structure separation of ‘manipulate reality’ and ‘understand reality’?
■ ‘separating pee from poo’, p.16, Gar Smith, When the pumps run dry (getting a handle on the drought: from waterless toilets to fog harvesting), common ground (commongroundmag.com), Bay Area's magazine, April 2015
• interaction between ‘manipulate reality’ <==> ‘understand reality’
■ positive+ (upside) (healthy aspect) (helpful) (good aspect)
■ negative- (downside) (sickly aspect) (hurtful) (bad aspect)
■ combine (composite) (hybrid) (aspect of upside and downside)
• structure separation of ‘manipulate reality’ and ‘understand reality’?
■ positive+ (upside) (healthy aspect) (helpful) (good aspect)
■ negative- (downside) (sickly aspect) (hurtful) (bad aspect)
■ combine (composite) (hybrid) (aspect of upside and downside)
George Soros, The new paradigm for financial markets, 2008 [ ]
p.22
Until then I had taken it for granted that Orwellian Newspeak could prevail only in a closed society like Orwell's 1984.
p.22
His [Karl Popper] argument hinged on the unspoken assumption that political discourse aims at a better understand of reality. But the concept of reflexivity asserts that there is such a thing as the manipulative (formerly participating) function, and political discourse can be successfully used to manipulate reality.
pp.22-23
That is appropriate for a social scientist whose aim is the acquisition of knowledge, but not for a politician whose primary purpose is to get elected and to stay in power.
p.23
Enlightenment fallacy, which assumes that the purpose of reason is to produce knowledge.
p.74
They use scientific method to manipulate reality, not to understand it.
p.74
As I have shown in my discussion of the human uncertainty principle, social situation can be influenced by making statements about them. In other words, they can be manipulated.
p.75
Once we recognize that reality can be manipulated, our first priority ought to be to prevent the manipulative function from interfering with the pursuit of knowledge.
p.76
To be specific, financial markets cannot predict economic downturns accurately, but they can cause them.
p.76
The divergence provides useful feedback on the basis of which they can adjust their behavior.
(The new paradigm for financial markets : the credit crisis of 2008 and what it means / George Soros., 1. financial crises──united states., 2. united states──economic policy., 3. united states──economic conditions──21st century., 4. credit──united states., HB3722.S673 2008, 332.0973──dc22, 2008, )
• humour (humor)
• theatrical play (comedy and tragedy)
• stories (storytelling tradition)
■ personal stories
■ family stories
■ cultural stories
■ traditional stories
■ myths, legends, parables, fables, tales
• magic act (illusion, sleight of hand, ...)
Two forces or dual functions (coping with the reality of living)
• to ‘understand reality’ (un-r)
• to ‘manipulate reality’ (ma-r)
To ‘understand reality’ (un-r)
■ positive+ (upside) (healthy aspect) (helpful) (good aspect)
■ negative- (downside) (sickly aspect) (hurtful) (bad aspect)
■ combine (composite) (hybrid) (aspect of upside and downside)
To ‘manipulate reality’ (ma-r)
■ positive+ (upside) (healthy aspect) (helpful) (good aspect)
■ negative- (downside) (sickly aspect) (hurtful) (bad aspect)
■ combine (composite) (hybrid) (aspect of upside and downside)
To ‘understand reality’ (un-r)
■ passive or inactive ‘understand reality’ (default mode)
• positive+ (upside) (healthy aspect) (helpful) (good aspect)
• negative- (downside) (sickly aspect) (hurtful) (bad aspect)
• combine (composite) (hybrid) (aspect of upside and downside)
■ active ‘understand reality’ (many levels) (hardwork) (training)
• positive+ (upside) (healthy aspect) (helpful) (good aspect)
• negative- (downside) (sickly aspect) (hurtful) (bad aspect)
• combine (composite) (hybrid) (aspect of upside and downside)
■ both - passive some of the time, active some other time
To ‘manipulate reality’ (ma-r)
■ passive or inactive ‘manipulate reality’ (more natural)
• positive+ (upside) (healthy aspect) (helpful) (good aspect)
• negative- (downside) (sickly aspect) (hurtful) (bad aspect)
• combine (composite) (hybrid) (aspect of upside and downside)
■ active ‘manipulate reality’
• positive+ (upside) (healthy aspect) (helpful) (good aspect)
• negative- (downside) (sickly aspect) (hurtful) (bad aspect)
• combine (composite) (hybrid) (aspect of upside and downside)
■ both - passive some of the time, active some other time
To ‘manipulate reality’ (ma-r)
■ to overtly ‘manipulate reality’ (explicit, transparent, made public)
• reason, intention, purpose
• goal, objective, mission
• positive+ (upside) (healthy aspect) (helpful) (good aspect)
• negative- (downside) (sickly aspect) (hurtful) (bad aspect)
• combine (composite) (hybrid) (aspect of upside and downside)
■ to covertly ‘manipulate reality’ (cover, hidden, secret, protected)
• all covert projects or operations has overt purpose (legitimate reason and a cover story) and covert goal (real objective or mission which is not made public)
• ...
• ...
• positive+ (upside) (healthy aspect) (helpful) (good aspect)
• negative- (downside) (sickly aspect) (hurtful) (bad aspect)
• combine (composite) (hybrid) (aspect of upside and downside)
• interaction between ‘manipulate reality’ <==> ‘understand reality’
■ positive+ (upside) (healthy aspect) (helpful) (good aspect)
■ negative- (downside) (sickly aspect) (hurtful) (bad aspect)
■ combine (composite) (hybrid) (aspect of upside and downside)
• structure separation of ‘manipulate reality’ and ‘understand reality’?
■ positive+ (upside) (healthy aspect) (helpful) (good aspect)
■ negative- (downside) (sickly aspect) (hurtful) (bad aspect)
■ combine (composite) (hybrid) (aspect of upside and downside)
• interaction between ‘manipulate reality’ <==> ‘understand reality’
■ ‘understood reality’ and ‘manipulated reality’ diverged
■ ‘understood reality’ and ‘manipulated reality’ converged
■ ‘understood reality’ and ‘manipulated reality’ follow a trend
■ ‘understood reality’ and ‘manipulated reality’ exhibit a pattern
■ ‘understood reality’ and ‘manipulated reality’ show no pattern
• positive+ (upside) (healthy aspect) (helpful) (good aspect)
• negative- (downside) (sickly aspect) (hurtful) (bad aspect)
• combine (composite) (hybrid) (aspect of upside and downside)
• exhibit linear behavior, pattern, or trend
• exhibit non-linear behavior, pattern, or trend
• both - linear behavior during normal daily activities and non-linear behavior at time of self-organized critical condition [Per Bak, Chao Tang, and Kurt Weisenfeld, 1987]
• structure separation of ‘manipulate reality’ and ‘understand reality’?
■ ‘understood reality’ and ‘manipulated reality’ diverged
■ ‘understood reality’ and ‘manipulated reality’ converged
■ ‘understood reality’ and ‘manipulated reality’ follow a trend
■ ‘understood reality’ and ‘manipulated reality’ exhibit a pattern
■ ‘understood reality’ and ‘manipulated reality’ show no pattern
• positive+ (upside) (healthy aspect) (helpful) (good aspect)
• negative- (downside) (sickly aspect) (hurtful) (bad aspect)
• combine (composite) (hybrid) (aspect of upside and downside)
• exhibit linear behavior, pattern, or trend
• exhibit non-linear behavior, pattern, or trend
• both - linear behavior during normal daily activities and non-linear behavior at time of self-organized critical condition [Per Bak, Chao Tang, and Kurt Weisenfeld, 1987]
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Two forces or dual functions (coping with the reality of living)
• to ‘understand climate’ (un-c)
■ meteology
■ physics
■ geophysics
■ agriculture (water usage) (crop failure) (crop yield)
■ heat wave and below freezing temperature (wind chill factor)
■ flood and drought
■ heating and cooling (energy generation and usage)
■ ...
• to ‘manipulate climate’ (ma-c)
■ pollution
■ our economic system
■ pace of economic activities
■ economic development
■ ‘Derrick Jensen (a self-styled “anti-civilization” activist and author of The Culture of Make Believe) argues, most of our environmental problems are products of our economic system, ...’, p.17, Gar Smith, When the pumps run dry (getting a handle on the drought: from waterless toilets to fog harvesting), common ground (commongroundmag.com), Bay Area's magazine, April 2015
Two forces or dual functions (coping with the reality of living)
• to ‘understand weather’ (un-w)
■ In 1971, I was the chief forecaster at Phu Cat Air Base in Vietnam, I missed a weather warning. Someone decided to dispose of a bunch of old tires in our dump.
• They set them on fire at about 0900. By 1300, during what we had forecast as a “clear” day, we had a fully developed thunderstorm over our base!
• We concluded that because we were close to the South China Sea, the rising smoke and hot air over the fire sucked in enough moist air from the coastline to cause a “pyrocumulus” event. ── By Maj. David J. Mueller, USAF (Ret)
• to ‘manipulate weather’ (ma-w)
Two forces or dual functions (coping with the reality of living)
• to ‘understand fire’ (un-f)
■ natural occuring fire
• lighting strike
• volcanoe
• ...
• to ‘manipulate fire’ (ma-f)
■ man-made (artificial)
• ...
• ‘Derrick Jensen (a self-styled “anti-civilization” activist and author of The Culture of Make Believe) argues, most of our environmental [fire] problems are products of our economic system, ...’, p.17, Gar Smith, When the pumps run dry (getting a handle on the drought: from waterless toilets to fog harvesting), common ground (commongroundmag.com), Bay Area's magazine, April 2015
Two forces or dual functions (coping with the reality of living)
• to ‘understand earthquake’ (un-e)
■ ...
• to ‘manipulate earthquake’ (ma-e)
■ “They also wanted to remind the Bureau that there was evidence that reservoirs actually cause earthquakes.
“For example, in 1935 the Colorado river was damned, creating the large reservoir called Lake Mead. In the next ten years, 6,000 minor earthquakes occurrred in what was previously an earthquake-free area. The underlying rocks──had 10 cubic miles of water set on top of them.”, p.234, Charles Perrow, Normal accidents : living with high-risk technologies, 1999
■ “Denver, Colorado, had a mild earthquake in April 1963. It was a surprise, since there had not been an earthquake in the area in eighty-one years. Small ones continued for several years; one in 1967 did a little damage to the city. It turned out that the army caused them.
“The army's Rocky Mountain Arsenal is 10 miles from Denver. It manufactures toxic materials, such as nerve gas, and had to get rid of large amounts of contaminated water. For a time they just put it into holding ponds, but this led to the death of crops, livestock, and wild life. So they dug a well, 2 miles deep, and forced the garbage into it under high pressure. Six weeks later there was the first earthquake, and then an almost daily series of minor tremors. The source of the earthquake was suspected within a year, but the army denied it could happen and went on pumping. The water, under high pressure, force the old cracks in very old rocks to grow, and this allowed the rocks, under pressure from tectonic movements, to slide in jerky movement over one another. Even after the pumping stopped, for a time the pressurized water continued to force open the cracks. About two years after the army finally stopped the practice, the earthquakes also stopped.
“National Center for Earthquake Research
“The National Center for Earthquake Research took over part of the field for deliberate experimentation. When they pumped water in, earthquakes occurred; when they pumped the water back out, they stopped.”, p.243, Charles Perrow, Normal accidents : living with high-risk technologies, 1999
• is it doable (possible)?
■ to prevent the manipulative function from interfering with the pursuit of knowledge (to understand reality).
■ yes, it can be done (people don't want to) (the interested party might not want to)
<-------------------------------------------------------------------------->
Living in the futures
how scenario planning changed corporate strategy
by Angela Wilkinson and Roland Kupers
May 2013
hbr.org harvard business review
still on going experiment using scenario planning to engage with an uncertain future.
As unthreatening stories, scenarios enable Shell executives to open their minds to previously inconceivable or imperceptible developments.
formal strategic foresight efforts:
(1) an enchanced capacity to perceive change,
(2) an enchanced capacity to interpret and respond to change,
(3) influence on other actors, and
(4) an enchanced capacity for organizational learning.
[Ted] Newland and [Pierre] Wack, aware of both [The American approach came to emphasize probability, with degrees of likelihood assigned to various outcomes][while the French approach focused more on what should happen], steered clear of probabilistic forecasts and normative statements and instead insisted that scenarios should first and foremost be plausible.
Royal Dutch Shell process
Betty Sue Flowers
scenarios are not predictions but can provide a deeper foundation of knowledge and self-awareness in approaching the future.
the business-us-usual outlook──both reflects an optimism bias and is based on human tendency to see familiar patterns and be blind to the unexpected.
some worried was likely to suppress discussion rather than to encourage a healthy exchange of differing perspectives.
The trap of having a “good” versus a “bad” future is that there is nothing to learn in heaven, and no one wants to visit hell.
Shell scenarios are intended to set the stage for a future world in which readers imagine themselves as actors and are invited to pay attention to deeply held assumptions about how the world works.
the storyline's clarity of logic and how it helps open the mind to new dynamics.
Plausible stories encourage judgment, not just attention to data and other information.
scenarios create a safe space in which to acknowledge uncertainty.
it [intuition] can be stifled by a paralysis of analysis.
started out by exposing and questioning the official version of the future.
Scenarios facilitated dialogue in which managers' assumptions could safety be revealed and challenged.
scenarios had to be more than disruptive and challenging; they had to be relevant to executive,
The early ones [scenarios] were designed to open up executives thinking in an environment in which oil companies had long been logistical machines that saw no need to communicate with one another or to focus on external events. Demand was assumed to be predictable, and the main job was to get oil to the customer as efficiently as possible.
before the 1970s, produced 10% of the world's oil and gas ==> produces less than 2% today
Relevant can be too familiar, but challenging can go unheard. As Wack once said, “You take the piece of bread and you put it in front of the goldfish, but not so far that the goldfish can't get it.”
“Tell stories that are memorable yet disposable; You are trying to manipulate people into being open minded.”
──Ted Newland, manager of Long-term studies 1965-1971; scenario team leader 1980-1981
Peter Schwartz later experimented with computer models linked to scenarios as a means of encouraging serious learning through “play”.
It [preparation of the 2007 long-term energy scenarios][simulated the development of the energy market over decades] allowed the team to explore a much wider range of what-ifs by tweaking a large number of inputs, including the energy efficiency of electrical appliances, the depreciation time of coal-fired power plants, and shifts in consumer behavior.
The challenge lies in realizing how, when, and why models linked with them [quantification] can hide assumptions and constrain thinking rather than refine it.
The persuasive power of scenarios in the world of business rests on an effective combination of narrative and numbers.
scenarios are valuable in external engagement.
Shell has used global scenarios to add color to corporate speeches, to open doors to privileged conversations with resource holders and governments, and to build a network of NGO contacts.
Building scenarios with key stakeholders in prospective joint projects has enabled an invaluable exchange of perspectives and insights.
1998 effort to develop global scenarios covering 2000-2050 for the World Business Council for Sustainable Development, which highlighted alternative models for thinking about progress.
exposed difficult choices between prevention and treatment and care.
In hindsight, the greatest value of scenarios is that they created a culture where you could ask anyone a question, and the answer would need to be contextual.
Scenarios have the power to engage and open the minds of decision makers so that they pay attention to novel, less comfortable, and weaker signals of change and prepare for discontinuity and surprise.
enabling new concepts, such as resilience (1970s), sustainable development (1989), and systemic risk (2002), to penetrate the organization.
scenarios provided a way to manage disagreement about group strategy or priorities and helped disturb the business-as-usual view that tends to result from wishful thinking or the linear extrapolation of current trends.
The next challenge is to look for some degree of fit between the company's core capabilities and the variety of plausible future conditions.
historian Keetie Sluyterman
It [sustained scenario practice] can counter hubris, expose assumptions that would otherwise remain implicit ([ and tacit? ]), contribute to shared and systemic sense-making, and foster quick adaptation in times of crisis.
They [scenarios] can aid in navigating complexity and conflict──managing disagreement while avoiding the extremes of groupthink and fragmentation.
Living in the futures.pdf
[verify the following links, make sure they are still working]
< https://drive.google.com/open?id=0B_QGelltdb4fUXBtWFdxYVZ6cjA >
< https://drive.google.com/open?id=0B_QGelltdb4fUXBtWFdxYVZ6cjA >
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William R. Clark, Petrodollar warfare, 2005
David Spiro's book, The Hidden Hand of American Hegemony
F. William Engdahl, A Century of War, 1992, 2004
// if you have one view [perspective, orientation] of reality
// and someone presents a potentially credible view of a different reality
// if you connect and fill in some of the missing the dots
// the following could be subversive to reality
// for others, this reality is a no brainer
// the conventional view is that something is either right or wrong
// is there a contradiction between this reality and the other reality
// can both realities be right
// and wrong?
// how can something be both right and wrong,
// at the same time, at different time, in different context,
// in the same context, at the same position, at different location,
// with different boundary [territory], with the same boundary [territory]
// how can something be neither right nor wrong,
// or right at all time (in all context with no exception to the rule)
// or wrong at all time (in all context with no exception to the rule)
// or never right (in any context with no exception to the rule)
// or never wrong (in any context with no exception to the rule)
// right at some time, and wrong at some other time
William R. Clark, Petrodollar warfare, 2005 [ ]
p.20 (pdf - page 41/289)
David Spiro's book, The Hidden Hand of American Hegemony
pp.20-21 (pdf - page 41/289)
In typical understatement Spiro noted that, “clearly something more than the laws of supply and demand ... resulted in 70 percent of all Saudi assets in the United States being held in a New York Fed account.”42
p.21 (pdf - page 42/289)
In May 1973, with the dramatic fall of the dollar still vivid, a
group of 84 of the world's top financial and political insiders met
at Saltsjobaden, Sweden, the seclude island resort of the Swedish
Wallenberg banking family. This gathering of [the] Bilderberg
group heard an American participant, Walter Levy, outline a ‘scenario’
for an imminent 400 percent increase in OPEC petroleum
revenues. The purpose of the secret Saltsjobaden meeting WAS NOT
TO PREVENT THE EXPECTED OIL PRICE SHOCK, BUT RATHER TO PLAN HOW TO MANAGE
THE ABOUT-TO-BE-CREATED FLOOD OF OIL DOLLARS, a process US Secretary
of State Kissinger later called ‘recycling the petrodollar flows.’
[emphasis added]
-- F. William Engdahl, A Century of War43
p.21 (pdf - page 42/289)
Engdahl's remarkable book, A Century of War, chronicled how certain geopolitical events mirrored a “scenario” discussed during a May 1973 Bilderberg meeting. Apparently powerful banking interests sought to “manage” the monetary dollars flows that were premised upon what the group envisioned as “huge increases” in the price of oil from the Middle East. The minutes of this Bilderberg meeting included projections of OPEC oil prices increasing by 400 percent.44
In 1974 US Assistant Treasury Secretary Bennett and David Mulford of the London-based Eurobond firm of White Weld & Co. set about the mechanism to handle the surplus OPEC petrodollars.45 Kissinger, Bennett, and Mulford helped orchestrate the secret financial arrangement with SAMA that creatively transformed the high oil prices of 1973-1974 to the direct benefit of the US Federal Reserve Banks and the Bank of England.
p.22 (pdf - page 43/289)
Saudi Arabia and the other OPEC producers deposited their surplus dollars in US and UK banks, which then took these OPEC petrodollars and re-lent them as Eurodollar bonds or loans, to governments of developing countries desperate to borrow dollars to finance their oil imports. While beneficials to the US- and UK-based financial centers, the buildup of these petrodollar debts by the late 1970s facilitated the basis for the developing world's debt crisis of the early 1980s. Hundreds of billions of dollars were recycled between OPEC, the London and New York banks, and back to developing countries.
p.22 (pdf - page 43/289)
In The Dollar Crisis, Richard Duncan attributed the 1974 petrodollar recycling mechanism to the “first boom-and-bust crisis of the post-Bretton Woods era.”46
(Petrodollar warfare : oil, Iraq and the future of the dollar, William R. Clark, 2005, )
Mihajlo Mesarovic and Eduard Pestel, Mankind at the turning point: The Second Report to The Club of Rome, 1974
p.178
(see Table III C-1).*
Table III C-1
Cost in U.S. Dollar
Technical
Energy source capital cost unit cost
Persian Gulf 100-300 0.10-0.20
Nigeria 600-800 0.40-0.60
Venezuela 700-1000 0.40-0.60
North Sea 2500-4000 0.90-2.00
Large deep-sea reservoirs over 3000? 2.00-?
New U.S. reservoirs (not too remote) 3000-4000 2.00-2.50
Easy part of Alberta tar sands 3000-5000 2.00-3.00
High-grade oil shales 3000-7000 3.00-4.50
Gas synthesized from coal 5000-8000 3.00-6.00
Liquid synthesized from coal 6000-8000 3.00-6.00
Liquid natural gas (landed) 6000-9000 3.00-6.00
* A. B. Looius, "Energy Resources," paper at the UN symposium on population, resources, and environment, Stockholm, 1973.
(Mankind at the turning point, Mihajlo Mesarovic and Eduard Pestel, The Second Report to The Club of Rome, 1974, p.178)
Bạch Hổ oil field (White Tiger oilfield) (offshore oil in Vietnam)
Large deep-sea reservoirs over 3000? 2.00-?
Daniel Yergin, The prize : the epic quest for oil, money, and power, 1991 [ ]
p.590
The demand for low-sulfer oil, which had to be imported from such countries as Libya and Nigeria, grew dramatically in those months as electric utilities switched from coal to oil.
p.590
Quotas were meant to manage and limit supplies in a world of surplus, while allocations were aimed at distributing whatever supplies were available in a world of shortage.
p.590
James Akins, Foreign Service officer, one of the State Departments chief oil experts, directed a secret oil study, in which he had concluded that the world petroleum industry was passing through “the last gasp in the buyers market.”
p.591
April 1973
He prepared a secret report filled with proposals to counter the growing energy threat, among which were expanded coal use, development of synthetic fuels, stepped-up conservation efforts (including a stiff gasoline tax), and much-increased research and development spending in order to get beyond hydrocarbons. His ideas were met with incredulity. “Conservation is not the Republican ethic,” John Ehrlichman, Nixon's chief domestic adviser, told him flatly. That same month, Akins went public with his concerns. He published an article in Foreign Affairs whose title captured the economic and political trends: “The Oil Crisis: This Time the Wolf Is Here.”
p.601
gravity differentials
p.616
As a result, in Japan, the oil shortage was accompanied by a toilet paper shortage.
p.622
In a meeting with oil executives, Henry Kissinger did make it a point to ask them “to take care of Holland,” which had been made a particular target by the Arabs because of its traditional friendship for Israel.
pp.622-623
Japan felt a special vulnerability. It had little indigenous energy, and imported oil fueled its formidable economic growth. Not only was its public in a panic, but Japan was highly dependent on the majors, most of which were American. At one meeting, a senior MITI bureaucrat warned representatives of the majors not to divert non-Arab oil from Japan to the United States. The company representatives replied that they were allocating oil as fairly as possible, and that they would be more than happy to hand the whole thankless job over to the governments, Japan included, if they wanted it. The Japanese government backed off; thereafter, it seemed to be satisfied with what was being done, though it continued to monitor the operation very closely.
p.721
“It should be remembered that oil is not an ordinary commodity like tea or coffee,” intoned Yamani. “Oil is a strategic commodity. Oil is too important a commodity to be left to the vagaries of the spot or the futures markets, or any other type of speculative endeavor.” But that was exactly what began to occur. One reason was the buildup of a huge surplus in the world market. In a complete reversal of the 1970s, producers now had to worry about their access to markets, rather than consumers about their access to supplies.
(Yergin, Daniel, The prize : the epic quest for oil, money, and power / Daniel Yergin, 1. petroleum industry and trade--political aspects--history--20th century, 2. petroleum industry and trade--military aspects--history--20th century, 3. world war, 1914-1918--causes, 4. world war, 1939-1945--causes, 5. world politics--20th century, 1991, )
(The prize : the epic quest for oil, money, and power / Daniel Yergin, 1991, )
According to Bert Ruiz (Pleasantville, NY USA) review of the book ‘The Control of Oil’ by John M. Blair, there was no real shortage of oil or gas.
I quote Bert Ruiz review, “The author also goes into great detail to reveal how the "Arab Embargo" that set the stage for the massive oil price explosion of October 1973 - January 1974 had little impact on supply and that in reality there was no crude oil shortfall.”
And according to John P. Jones III (Albuquerque, NM, USA) commentary, I quote, “Blair starts with the "energy crisis" of 1973, and proves rather convincingly that overall there was no restriction in supply, yet nonetheless, the price quadrupled, and even after the purported boycott was ended, the price remained at these elevated levels. The author devotes two chapters to the evolution of the control mechanism, both in terms of supply and marketing, and the concerted effort to exclude the "outsiders," those not in the club, and who would truly represent an aspect of a "free market." One of his most astonishing assertions concerns the establishment of a predetermined growth rate.”
“people will always attempt to consolidate gains by establishing a set point that can be seen, and set, by them. Any free market is thus the most ephemeral of phenomena, soon to be replaced by cartels, monopoly, trade associations, fair trade agreements, tariffs, quotas, cliques, inner circles, trusts, syndicates, pools, consortiums, regulatory agencies, exclusive territories, and even trade unions. The business of business is far too important to be left in 'invisible hands.'” (Weinberg and Weinberg, 1979, p.285)
*********************************************
http://www.amazon.com/Control-Oil-John-Malcolm-Blair/dp/0394494709/
A look at how the price of crude oil was determined, August 28, 2003
By
Bert Ruiz "Author" (Pleasantville, NY USA) -
This review is from: The Control of Oil (Hardcover)
"The Control of Oil," By Dr. John M. Blair is a brilliant look at how the price of crude oil was determined by giant petroleum companies (the seven sisters) and a dozen members of the Organization of Petroleum Exporting Countries (OPEC). Blair traces the history of these controls and explains how they recklessly triggered the 1970's global energy crisis.
This 1976 publication is a classic. To this end, Blair spent thirty-two years in the federal government. He started in 1938 as an author of monographs for pre-World War II investigations. Early on, he made his name focusing on the sizable concentrations of economic power in the oil industry by the Rockefeller family and family foundation. Afterwards he spent nearly a decade with the Federal Trade Commission as an Assistant Chief Economist and finally Blair spent fourteen years as Chief Economist of the Senate Subcommittee on Anti-trust and Monopoly. What makes this book truly special is the author's enormous access to critical government information.
Blair describes the oil industry's principal tax preferences, which worked to the advantage of the major companies and against smaller nonintegrated companies that could have favorably altered the availability and price of oil to consumers. The author also goes into great detail to reveal how the "Arab Embargo" that set the stage for the massive oil price explosion of October 1973 - January 1974 had little impact on supply and that in reality there was no crude oil shortfall. Ultimately, Blair emphasizes the need for developing alternate energy sources in the future.
This book had its genesis in a special 1973 Ford Foundation Energy Policy Project. The final result is a groundbreaking examination of the dramatic profits of oil companies.
Bert Ruiz
*********************************************
Top priority, March 6, 2003
By Javier A. Barrientos-Olivares (Mexico City) -
This review is from: The Control of Oil (Hardcover)
[. . .] how the "free" market has been circumvented by the best kept secret conspiracy of all times, between major producers and giant distributors at the expense of domestic and foreign consumers. There is no such thing as an oil shortage, that's a lie.
*********************************************
On the guys in the backroom with the cigars and brandy..., June 17, 2011
By John P. Jones III (Albuquerque, NM, USA)
This review is from: The control of oil (Paperback)
John M. Blair wrote the seminal account of the methods utilized to explore for, produce, and market one of the world's most important physical resources, petroleum. His account dates from the mid-70's, shortly after the loosely termed "Arab Oil embargo." At the time he was a professor at the University of South Florida, but he drew on his experience, and the data obtained through 32 years of work in the Federal government. In many ways, he was uniquely placed to write such a book. Overall, it is written in textbook-style, with flat prose, and lots of charts and graphs. The account though is sprinkled with acerbic passages that underscore his central thesis that a small group of individuals, working for the major oil companies ("The Seven Sisters"), devote their efforts to determining, as they see it, an orderly manner in which this resource is sold to the general public, on highly lucrative and beneficial terms to the "guys in the backroom." Yes, Virginia, there really is a "free-market," but you see it exists in the minds of these guys, and their PR minions, as the most effective mechanism for diverting a glaring light from their decisions.
Blair starts with the "energy crisis" of 1973, and proves rather convincingly that overall there was no restriction in supply, yet nonetheless, the price quadrupled, and even after the purported boycott was ended, the price remained at these elevated levels. The author devotes two chapters to the evolution of the control mechanism, both in terms of supply and marketing, and the concerted effort to exclude the "outsiders," those not in the club, and who would truly represent an aspect of a "free market." One of his most astonishing assertions concerns the establishment of a predetermined growth rate. Get ready for a little math, Virginia, but it is worth it. The math involves a regression line by least squares to the logarithms of the data... stick with it...and calculating a "coefficient of determination." His data involves the production from 11 quite different countries, over a 22 year period (1950-72). That coefficient is 99.9%(!) which means: "In other words, an assumption that oil production would increase at an average annual rate of 9.55 percent explains all but one-tenth of 1 percent of the actual change (p100-101).
The author is rich in details and anecdotes on the machinations that promote and maintain beneficial control. For example: "...the `Brownsville turnaround' scheme, by which imports were brought via tanker from Mexico and unloaded into trucks at Brownsville, Texas. The trucks would then transport the oil under bond 10 mile south across the Mexican border, where they would immediately turn around and reenter the United States carrying what was now transformed into `exempt overland imports.'" The "Majors", with large integrated operation, from exploration through the corner gas station, would be active politically, "buy some politicians", obtain very favorable tax preferences (ah, those "incentives,") and use them to punish the independents, a thesis told well, in one chapter entitled "The evisceration of the Libyan independents," followed by another entitled "The Crippling of the Private Branders." His conclusion at the end of the latter chapter: "Whether the product of a carefully engineered, precisely executed plan or the coincidental result of a series of adroit improvisations, problems that only three years earlier had appeared insoluble were now resolved. Their resolution set the stage for a virtual explosion of prices."
OPEC features prominently in Blair's account, but it is not the universal "bad boy" of the media. The author also looks at the strategic advantages of a higher oil price to the United State vis-à-vis Europe.
It's not all whine and complain. The last part of the book outlines serious public policy objectives, and the mechanisms to achieve them, from conservation and technology to law, whereby this vital resource can be more equitable and strategically used in the national interest as opposed to the interest of the few. Written over 35 years ago, he covers shale oil, the use of lighter materials, and even electric cars. But he is hardly a Pollyanna, and although rationale alternatives are offered, he presciently describes the most likely scenario, the one that really has been followed: "If a regulatory agency were to propose any action strongly opposed by the industry, the probable subsequent sequence of event is not too difficult to predict. On the one side the agency's few overworked lawyers and economists would try to make a case based on limited amount of publicly available data, supplemented by such fragmentary information as could be pried out of the companies. On the other side, a veritable army of industry lawyers would not only contest the substance of the case by delay interminably... Based on `accepted' accounting principles, leading accounting firms would testify to the oil companies' financial impoverishment, while outstanding economists would emphasize the need for `adequate' earnings to support the industry's growth. Meanwhile, highly skilled public relations firms would be drumming up `grassroots' campaigns against harassment of the industry...Attacks, criticisms, and various forms of sabotage are also to be expected from other government agencies, many of which have long ago been infiltrated by the industry."
And verily, it has come to pass, in these intervening 35 years. "The Free Market" reigns, despite the 2008 "hiccup," and the quality of the brandy and cigars in the backroom has improved at least a magnitude. A depressing but essential read, that should be taken down from the back shelf. 5-stars plus.
George Soros, The new paradigm for financial markets, 2008 [ ]
p.64
the international banking crisis of the 1980s
p.65
The first country to run into severe difficulties was Mexico, which was an oil producing country. (Hungary preceded it but the problem was contained.) Since the international banking crisis of the 1980s, I have witnessed several real estate bubbles in Japan, Britain, and the United States. The misconception can manifest itself in different guises, but the principle is always the same. What is amazing is that it keeps recurring.
p.78
my preliminary hypothesis is that there has to be both some form of credit or leverage and some kind of misconception or misinterpretation involved for a boom-bust process to develop.
p.81
the international banking crisis of 1982, the savings and loan crisis of 1986, the portfolio insurance debacle of 1987, the failure of Kidder Peabody in 1994, the emerging market crisis of 1997, the failure of Long Term Capital Management in 1998, the technology bubble of 2000.
p.95
GLOBALIZATION
The globalization of financial markets was a very successful market fundamentalist project. If financial capital is free to move about, it becomes difficult for any state to tax it or to regulate it because it can move somewhere else. This puts financial capital into a privileged position. Government often have to pay more heed to the requirements of international capital than to the aspirations of their own people. That is why the globalization of financial markets served the objectives of the market fundamentalists so well. The process started with the recycling of petro-dollars in the aftermath of the 1973 oil shock, but it accelerated during the Reagan-Thatcher years.
p.95
The international financial system is under the control of a consortium of financial authorities representing the developed countries. They constitute the Washington consensus.
p.95
They seek to impose strict market discipline on individual countries, but they are willing to bend the rules when the financial system itself is endangered.
p.95
The way the system works, the United States, which enjoys veto power in the Bretton Woods institutions──the International Monetary Fund and the World Bank──is “more equal” than others. The dollar has served as the main international reserve currency readily accepted by the central banks of the world.
p.96
Most of the crises occurred in the less developed world and could be ascribed to their lack of development, but some endangered the stability of the international financial system, notably the international banking crisis of the 1980s and the emerging market crisis of 1997-1998. In these cases the financial authorities were willing to bend the rules to save the system, but market discipline continued to apply to the less developed world.
p.107 Bretton Woods institutions
p.108 Vietnam war
August 15, 1971, the ability to exchange US dollar for gold suspended
p.108
oil and gold stocks,
switch sterling, or premium dollars
p.108 European Common Market
p.108 interest equalization tax
15 percent surcharge on the purchase of foreign securities abroad
p.109 1972, report entitled “The Case for Growth Banks”
p.110 explosion of international credit between 1973 and 1979
first oil shock, recycling of petro-dollar,
Euro-dollar market
p.113 England 1974 (1973-1979)
p.113
p.114 Collective System of Lending
p.116 The international lending spree of the 1970s
turned into the international banking crisis in 1982
p.116 with the spreading of risk, more risk could be taken
p.116 excessive use of porfolio insurance
p.116 portfolio insurance, knock-out options
Because they were used on a large scale they could not be exercised without causing a catastrophic discontinuity.
(The new paradigm for financial markets : the credit crisis of 2008 and what it means / George Soros., 1. financial crises──united states., 2. united states──economic policy., 3. united states──economic conditions──21st century., 4. credit──united states., HB3722.S673 2008, 332.0973──dc22, 2008, )
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