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How to become Very Rich by Implementing Story Based Games (Part 4, Story Based Games)

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A few years ago I met the most important game-designer in the world. He is the inventor of many board-games but also of very successful television-games. His games were sold all over the world. At that time he was just hired by one of the most important entertainment-firms in the word to become their Chief Creative Officer (CCO).

We started to talk and I found out that I could do what he could do. I was generating new game-concepts with ease. When I generated these concepts his comments were very clear.

“This is not possible because of the state of the IT-technology“.

What I found out first surprised me but later I found the reason. The entertainment-industry was way behind the banking industry. This is normal. Every segment in the Industry goes trough a cycle of maturity and has no idea what is happening in another segment.

I wan’t say they are re-inventing the wheel because the Entertainment-Industry has been very innovative in the area of the User-Interface (The front-end). Banks were unable to do that because their front-end was a branche-office.

Because I understood what the CCO wanted to do I was able to make a connection between two independent areas.

The other thing that surprised me was his focus on the TV. I explained him how easy it was to use a PC as a TV. I also explained him that a combination of many User-interfaces (PC, TV, and GSM) could create completely new concepts. Concepts are named Formats in the Entertainment Industry.

After some time he asked me to arrange a demo. I went to TNO. I have been working as an advisor for TNO for many years. TNO is a huge government-paid research organization. They experiment with every thing you can imagine. They were abl to demo all the upcoming innovations and he was very surprised.

I wrote a document about “what was possible” in his language. I used Cordys as an infrastructure and defined many new technical concepts like the Worldwide Media Hub, a Format Engine, a Monitor (Generating Feedback) and a model of the Emotions that could be used to stimulate Impulsive Buying Behavior (based on Frijda). I also defined a Scenario-generator based on the collected Stories. This generator could generate a completely new type of Soap.

The CCO became very interested and wanted to start a business outside his own Company. The company he was working for was not interested. He was allowed to do this (The so called Right of First Refusal). We made a complete business-plan and started to look for people that wanted to finance our business. The amount of profit we could generate was tremendous.

To my surprise nobody was interested. Our plan was too advanced. People in the Investment Business had no idea about the combination of Banking Technology and Entertainment Technology. Their idea about the World was based on the concept of the Website.They were also very hesitant because they lost a lot of money in the E-Commerce Hype.

Now almost 3 years later big worldwide media companies are finally interested and it looks like we are going into business. So if you want to make a lot of money this is your chance to jump on the bandwagon.

This is the last blog about Story Based Games.

Want to read the others?

About Life Stories

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When you want to build a Story-Based-Game the best way to interview is to ask people about their Life-story. Let us first have a look at the The Foley Center.  The Foley Center of Northwestern University is specialized in Life Stories.

Dan P. McAdams of the Foley Center uses Agency and Communion as the major “modalities in the existence of living forms“. These two modalities may be viewed as two thematic clusterings in life narratives, each articulating important life goals, strivings, needs, and desires”.  When I read the articles of McAdams it was not difficult to see that he was using Interpersonal Theory .

Because I was able to map Interpersonal Theory to The Theory of Will McWhinney . I was able to to open up a huge potential to litterally Play with Life Stories. Will has also mapped his World Views to Games Levels.

When you consider a Life Story as a Narrative a mapping to the Theory of Bakhtin about Chronotopes is also very helpful.

When you use the concept of the Chronotope you will see that a life-story takes Place in a named Time/Place-continuum (A House, The Office,). So not only ask When an Event took place but also Where it took place. A place is are very important factor in a life story. Many people remember the atmosphere of a Place. The House I was born felt Warm and Cosey. In my office I felt Alone.

When we had a look at the thoughts of Bahktin about Context we realized that we were really trying to describe a Situation and that other Actors in the Situation also plaid an important Role (Father, Mother, Manager, …..). So not only ask Where and When but also Who was playing an important Role.

Many people are unable to make a distinction between the Self (I AM) and the Role they are playing in a Situation. This is an important cause of conflicts. When you are a Manager you have to play the Manager and not be the Manager.

A life story is a Sequence of Situations that are always started by a CRITICAL Event. There a many ways to classify Events but a simple classification is a high point, a low point or a turning point.

In his book Paths of Change Will explains that there a many “Strategies” to change a life and of course a Life Story. Every connection of a World View to another World View can be considered a Change, a Conflict, a Game or a Dialogue.

An Event is related to the the World View Sensory. Sensory People view the world as a Causal Chain. When an Event takes place the Emotions come into play. Emotions are related to the Social World View.

According to Nico Frijda:

  • An emotion is usually caused by a person consciously or unconsciously evaluating an event as relevant to a concern that is important; the emotion is felt as positive when a concern is advanced and negative when a concern is impeded.
  •  The core of an emotion is readiness to act and the prompting of plans; an emotion gives priority for one or a few kinds of actions to which it gives a sense of urgency – so it can interrupt, or compete with, alternative mental processes or actions. Different types of readiness create different outline relationships with others
  • An emotion is usually experienced as a distinctive type of mental state, sometimes accompanied or followed by bodily changes, expressions, actions“.

Emotions Evaluate a Situation. When they Evaluate a Situation they use a Concern to Priotize. When they are able to priotize with ease or when the Event is Dangerous the Action is Unconscious. When a dangerous event takes place the Reptile Brain starts to work and the only re-actions that are possible are Fight, Flight and Freeze.

When a Major Event happens the priotization becomes Conscious. The Actor has to make a Decision. This decision is crucial for the next step (a new Situation).

When you have a look at (or feel, or listen to, ) Life Stories the Process of Decision Making is the most important factor. Socials always feel what the Others are doing or start to take care. Unities start to manage and want to restore Order. Sensories take care of Themselves (Ego) and Mythics want to restore harmony. What we see here is the Self-refererence of the Model of Will McWhinney. Inside the Emotions the World Views are again at play.

If we know how people Evaluate we are able to learn a lot about their Personality.

When we look at the Chronotopes of Bahktin we also know their Favorite Life Narrative. A Sensory uses the Chronotope of Destiny. His or her life is a sequence of events that are just happening.

A Social uses the Biography, the praise of a public figure who has accomplished something in life. When he has not accomplished anything his life is worthless. He is a total failure.

A Mythic is always searching for something (The Grale). His story is described by the Chronotope of Adventure. Deep inside the Mythic wants to find Rest and Harmony. When he finally finds Rest he feels the urge to move on. Therefore the Life of a Mythic is full of Turning Points.

When we know the Favorite Life Narrative we also know “How to Help“. A Social needs to be re-valuated. He needs a tap on the shoulder. He needs to be praised.

A Sensory has to stop to Wait and See. He needs to do something and learn from his mistakes. Somebody has to tell him that others have made the same mistake and he is able to prevent mistakes by looking (!!) at other life stories of comparable people. The most important persons could be his father or mother. They also have made mistakes and when they just tell their children frankly what they did many children would simply learn from the parents.

I hope you understand why the theory of Roger Schank is so important. His theory is able to help the Unity/Sensory-combination (Experts or Craftsman) and this combination covers about 80% of the people in Western Civilization.

Roger has now created an impressive Virtual School for Children all over the World. He is teaching children to learn a CRAFT again. He is not teaching THEORY but he is giving children the opportunity to ACT in REAL LIFE SITUATIONS. He is teaching them to become a Nurse or an Engineer. Craftmanship is HIGLHY needed in the underveloped countries.

The Virtual School is FOR FREE. It is financed by people who want to take care of the poor children in the World. The Virtual High School is using Games and it able to train Children to move to the level of the University within a very short time (max 8 years). Roger has made connections to Famous Universities in the US. They are also giving away their educational content (again Games developed by Roger Schank!) for free.

Funny enough I was unable to find anybody in the Netherlands who just wanted to try out his Virtual School. Every School and University in The Netherlands is re-inventing the Wheel. This is a Rule. The Dutch Government is spending billions to create something that is already available. This is also a Rule. If you want to know more send me an EMAIL.

About Story-Based-Games

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About ten years ago I was asked to write a book. It was the first time somebody asked me to do this. The person who asked me to write a book was the former director of a foundation called SMO, Wim de Ridder. SMO is a Dutch think tank paid by many big companies in the Netherlands.

Together with Wim de Ridder, Erik Vreedenburgh and Gerard Rijntjes a team was formed. We wanted to explore a concept called Open Form.

Open Form uses the principles of evolution. We organized the book as a process. We started to interview many scientists and artists about evolution and created an interaction between them. People in isolated field of science got together and created new combinations. The book was a picture of a certain state of the process but the process went on after the “book” was published.

Konstapel. J. Vreedenburgh E, Rijntjes G.J.P. De onvermijdelijke culturele revolutie. Den Haag, SMO, 1998.

Open Form became the method SMO wanted to use and the first project was a big one. Big companies in the “Stimulant” Industry like Heineken wanted to start a dialog with the Dutch Government about the prevention of addiction. They gave us a budget to explore an innovative approach. The new approach was based on the theory of Roger Schank. Roger was a friend of mine and he was asked to become an advisor. He adressed the so called Les Indes Meeting in the Hague and the participants were so impressed that they gave us a budget.

What we wanted to build was a game and the inputs of the game were “real life stories”. The story of the project is told in this book “Virtueel Genieten. Diekstra, Drs. J. Konstapel, J.G. van der Leij, Prof.Dr. J.B. Rijsman, Drs. M.A. Visse, K.B. Vos, Drs. N. van Geelen”.

The game was a success. It was such a success that many government paid institutions started to block the implementation of the game. They were producing brochures and employed many researchers. The blocking of the implementation was successful. Strangely enough the researchers never paid any attention at the theory of Roger Schank. Sadly enough they have not done this until now. Researchers always want to re-invent the wheel.

Later a new tool was developed to support people that were un-employed and mentally ill (Virtual Work). The story of the project can be found in this book INTERNETSTURING IN DE ZELFREDZAME SAMENLEVING, Prof.dr. J.B. Rijsman, Drs. N. van Geelen, Drs. T.J. Golder.

We still used the theory of Roger Schank but combined his theory with the theory of Will McWhinney. The same thing that happened with our former project happened again. The government agency that was paying for the tool was unable to use it. Until now they are unable to help people to find suitable work. The main reason is that they are blocking every innovative action of a person who wants to start all over again. There are many rules that prevent this.

The next project was called Time Out. The target of this project was to build the most advanced story-telling-engine ever made. All the experience we had gathered in the former project would be used and the budget was spectacular. Unfortunately the project was never started. SMO decided to do it their own way. This is the game they created: http://www.mazzle.nl/.

This is the book they wrote about the project. MAZZLE, Nieuw perspectief op gezondheidsvoorlichting, Jeroen Duijvestijn.

Have a look at our project plan (Dutch).

It this project we also used the theory of Emotions of Nico Frijda  and Interpersonal Theory.

Many people are now developing story-based websites but developing an effective story based game is something (I think) almost nobody has accomplished.

I will give you a two hints why all of them will fail.

The first thing is the collection of stories. Many people are telling stories but after a some time you realize that 80% of the people are telling the same story all over again. They are the victims. When you want to motivate people to “change their lives” stories about how people are not changing their lives are not helpful. This is also the problem with many self-help-cites. Victims always find places where they find other victims. The victims are entrained by the stories of the other victims. Nothing changes.

So when you want to find people that were successful you have to look elsewhere. This was the real problem with the project Virtual Work. The Dutch Government Agency that is taking care of the unemployed UWV , was unable to provide us with people with a success story. We used our own network to find them and they were rare.

The second problem is the Interview itself. You need a special gift to get the right story out of people. This gift is called empathy. You also need to know all the stories that are already told to know when the real important facts are “coming”.

Have A Look at this PowerPoint Presentation.

LINKS

My article in the book “De onvermijdelijke culturele revolutie” (in Dutch)

The book about the project “Virtueel Genieten” (in Dutch)

About Addiction

About Entrainment

About Crowds

 

About Boundary Spanners

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A big company hired a very expensive advisor to make more deals. The expensive advisor made a list of “highly important people” and for some reason I was put at the top of the list.

The advisor suggested to invite the most important person to a very important event, an Opera in the most important place of Music, in Amsterdam, the Concertgebouw. The event was so important that even The Queen would attend the Opera. I love Opera and the Opera (The Magic Flute) was of my favorite composer Mozart.

I was sitting next to the CEO of the Big Company. I did not know him and I also did not know I was selected as the most important person in the hierarchy of the big company I was working for. You can imagine this created a lot of confusion.

The CEO started to talk about all kinds of issues that were not of my “business”. I mentioned the names of the most important Managers and explained him how to get into contact with them. I enjoyed the Opera, thanked the CEO for the invitation and left home.

It will be clear to you that the very expensive advisor did not do his homework properly. At this moment it is very easy to do the homework. Just type “Hans Konstapel” and push the button and Google will show you many things “about me”.

But the homework you have to do to sell a product is much more than finding everything you need to know about an important person.

Understanding his Network is much more important. You could use Linked-in

The influence of a person in the Network is highly determinated by the the amount of bridges in his network. When the amount of bridges is high the person is able to connect to many other (Sub)-networks. He is a “boundary-spanner”. A boundary-spanner is related to other boundary-spanners. They are also bridging networks. So a boundary-spanner is able to connect You to almost everybody you want to connect with ease.

Boundary-spanners are highly influential in the informal network of a Company and the external network of the Company. They are almost invisible in the Hierarchy. Boundary-spanners advice people with a status in the Hierarchy. They are asked for their opinion. Most of the time their opinion is the most crucial factor in a decision.

Boundary-spanners almost never buy a product. They don’t have the budget or the authority to do this but when you are related to the boundary-spanners in a company you will always know “when the need for a product is arising”, “what products are on the short list” and “who is in favor for what”. When the boundary-spanners don’t know anything about your product you will probably never sell anything.

Later I realized that the very expensive Advisor perhaps did his Homework properly. I was one of the Boundary-Spanners in my Company and because of the names I mentioned the Big Company was introduced in the Network of my Company with a very low budget.

How to make a Big Deal or How Bribing Changed the Games We Played

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I have negotiated many contracts in my life. The biggest contract had a value of about 60 million Euros. In this blog I want to share some of my experience with you.

I want to start with a funny story. I start with a funny story because buying and selling has to be fun to both of the parties involved. If you don’t see it as a game you will never sell anything.

One day we wanted to make a world-wide deal with a big American Company. Because it was a deal between a Dutch and a US-company the deal was very complicated. We used legal advisors that knew a lot about US Law to help us. US Law is and was very different from Dutch Law. A US contract is ten times bigger than a Dutch contract because of all the liabilities the US-company wants to exclude.

When the contract was almost finished we had to make the Final Deal. To make the Final Deal an ESVP of the US Company came to Amsterdam with his private plane.

We prepared this meeting keeping in mind that we wanted to negotiate the lowest price possible. The first thing we did was to create the Magical Manager behind the scene. We were not the final decision-makers. Somebody, Our Boss, a very high level executive had to say Yes. He was not available to talk but when we were finished one of us could contact him.

The next thing we did was prepare a beautiful environment to eat. We knew the ESVP was from another time-zone so a little bit of alcohol (wine) could change his attitude.

The next thing we did was create tension. When he arrived we kept him waiting in a room for more than half an hour.

When the meeting started the ESVP was surrounded by five advisors. At that moment he was still not aware of ‘what the contract was about”. We knew every detail.

His first question was “What are we talking about”? His advisor whispered the amount in his ear. “Only twenty M?” he said (The contract was 20 million dollars). “Ok lets make a deal!”.

For some reason twenty millions dollars was nothing to him.

The fact that that he was not informed about anything gave us the oportunity to negotiate a dream contract. We asked him to have a talk in private and his advisors had to leave the room.

We took him to the beautiful restaurant in the Centre of Amsterdam and gave him a glass of wine. After some time the conditions of the contract changed in our favor. When we used our last “act”, the mystery manager, we even got a better price.

The ESVP left Amsterdam with a good feeling. He had negotiated the contract “on his own” and he never (!) heard about the effects of the contract because his plane left to another “important” meeting with an “important ESVP”.

What happened was something that is called “gunnen” in the Dutch language. “Gunnen” can be translated into “doing a favor” but this is not what “gunnen” means.

“Gunnen” means “I buy something from you because I like you and you like me” and “I buy something because you will do what you promise to do” and “I know that some how you will be buying something from me” and “you will tell your friends that it is a good thing to buy something from them” and “last but not least” “we have negotiated a fair price” and “we will never need the contract because when we will be in trouble we are able to sort things out” because ” I just have to phone you and you will solve our problems immediately”.

When you are a salesperson and you have a relationship with somebody that is able to “gun”, “to do you a favour” you are able to sell everything with ease.

For some reason “gunnen” is not possible anymore or better you have to “hide” “doing a favour” because “doing a favor” looks like “bribing”.

When I was responsible for big contracts salespersons tried to “bribe me” in many ways. I was invited to brothels, was offered presents (Christmas), was invited to have a beautiful and of course very interesting trip to a beautiful place, visit a concert etc… I was put under high pressure by using the “we know the big boss-trick” and some people even tried to block my career by telling dirty stories about me. I never gave in to these tricks.

Because others accepted bribes things went wrong. The others that accepted bribes were not removed out of the company. They staid and slowly the limits of what was “acceptable” were widened. In the end things went really wrong and to prevent (!) that these things would happen again the buying process was “formalized”.

We had to write RFP’s (Request for Proposal) and the Vendors had to respond to the RFP with a very detailed document. In the end one vendor was chosen and the other lost a lot of money because they had to spend a lot of time to write the proposal.

Sometimes the whole process was a fair process but many times it was already clear who would get the deal because “behind the scene” the process of “gunnen” just went on.

Now we are in the Final State called Compliance. Everything You are doing has be registered to show that You are doing the Right Thing. This is blocking almost everything Activity in a Big Company. It certainly blocks Innovation.

Believe me If People want to Bribe they always find a new trick. The only people that are the Victims of this almost Paranoid reaction are the people who were HONEST.

Strange how Honest people are always the Victims.

Why Weapons are Unable to Enforce Peace or How We Create our own Enemies

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You don’t need to be a scientist to understand that hostile behavior always attracts hostile behavior. So if you want to Enforce Peace with Violence you will always attract Violence.

Perhaps if you could eliminate the Cause of Violence it would be possible to stop the Violence.

If you could eliminate Saddam Hussein or Adolph Hitler you end it all. Sadly enough those people are not the only cause of the violence. They are the Symbol of Something that is creating the violence. Behind those people are other people who support the Leader, the Followers.

They support the Leader because they believe in his cause or they support the Leader because they are afraid to show that they don’t agree with what he is doing. There are also people who don’t do anything (the Silent Majority). They “Wait and See”.

If you eliminate the supporters of the Leader (The Taliban, The Nazi’s) the Others will stop the Violence and Peace will come.

If you use extreme violent weapons you will always make a mistake. Sadly enough you will always kill innocent people. Because of the first rule some of them will be attracted by hostile behavior and join the followers.

When Extreme Violent Weapons are used a small amount of violent people is able to destroy many people. This is called A-Symmetric Warfare.

If the Enemy looks like “a normal person” they are able to do what they want. If you want to stop the violence of people that look like a normal person you have to suspect everybody is a violent person. This will increase the amount of mistakes and because of the first rule it will attract hostile behavior.

When Extreme Violence is used a new Level of the Human is opened the Level of the Reptile. The Human starts to react with violence but he is not able to control this actions anymore. He is dissociated. Dissociations can stay for many years. You can observe Dissociation when you have a look at the Eyes of People. They Stare.

I hope you see the problem. Every time you kill a follower with Extreme Violence a new follower will take his place. The violence will never stop.

Is there Solution to this Problem?

When people of two different World Views meet they are unable to understand the Other.

When they don’t start a dialogue the mis-understanding will lead to a conflict. The conflict can be resolved when they generate Ideas, Act and Learn from their Mistakes. They start to Innovate.

To do this we need two World Views, Mythic (Ideas, Artists) and Sensory (Act, Sense, Facts).

The World View Unity (Rules, Control) is always blocking Innovation because Innovation leads to Chaos.

A person is mentally ill when he is only able to handle one World View (Interpersonal Theory). A mentally disabled Unity is called a Paranoid. If we observe people like Hitler or Saddam Hussein I think many of you will admit that they were Paranoid.

The Social World View is Easy to manipulate by a Paranoid. They are influenced by Status and always “Do What others Do”.

Soldiers in the Western Armies are recruited from two categories Social and Unity. The Unity is trained to become a Manager. They always obey the Rules. The Socials are trained to become Soldiers. They will always do what the Managers are telling them to do. They can be easily forced by Status and Violence.

What we need to solve a conflict are Mythics and Sensories. Both of them almost never join an Army. They are not violent and it is also very difficult to get them into a violent state.

To build a bridge to the Unities we need the Unity/Mythic or the Unity/Sensory-combination.

A Unity/Mythic (Transform Ideas into Models) is an Architect, A Designer. A Unity/Sensory (Put Models into Action) is A Maker, A Builder. A Mythic/Sensory (Put Ideas into Practice) is an Entrepreneur and An Inventor.

So a Conflict is solved when people start to Build and to Trade in the Social Ecology, The Context, where the Conflict Takes Place. When People build and trade the context moves to new levels of Culture by itself. This what happened in Western Civilization. It took about a 1000 years to move from the level of the War Lords to the level of the State.

A Conflict Never Stops when “the Context is Killed” (Bahktin) by Extreme Violent Weapons. People are able to rebuild their environment but when the environment is totally demolished this is a very complicated process. The US created a special program (The Marshall Program) to help Europe after the Second World War. It took more than 20 years to rebuild Europe.

Unity People really believe (!) Violent Weapons will end a Conflict. They believe this because their World View is aimed at Controlling Others.

Unity People also believe in catagories. They believe in the Good and the Bad. Sadly enough the Bad believe they are the Good and vice-versa. Both of them will endlessly go on fighting each other. This is not a real problem. The real problem is that the Unities make mistakes. They kill innocent people (Collateral Damage). Unities don’t believe in Mistakes. They believe they are always Right. They believe in the Absolute Truth.

They also believe they are able to develop new weapons that reduce Collateral Damage. That is why the Arms Race goes on and on.

When the War Lord were in power battles were fought at the battlefield at a certain time and a certain date. Soldiers wore uniforms so everybody could see “who’s who”. Most of the weapons where used in a man-to-man fight. There were also rules for combat. These rules were improved all the time and are now worldwide applicable (The Geneva Convention).

When the Rule Systems went UP the battlefields went DOWN to the level of the Human again. Soldiers are now playing the guerilla game and ignore all the rules. We are back at square one again. We are now in the stage of the 1 Soldier-to-many Civilians combat.

This is an innovation the World Wide Legal System cannot handle. It can only be resolved at the Local Level. People that are part of the Culture of the guerilla-fighter have to convince him that Extreme Violence will not solve their problems. This is the only solution. Inspirational Leaders (Mythics) like Nelson Mandela and Gandhi were able to do that.

The Weapon Systems also moved UP. Weapons were and are able to destroy the World. Strangely enough nobody was able to stop the development of Arms by International Law. Only the EFFECTS of weaponsystems were “forbidden”.

Many people believe this is easy to explain by the theory of “The Evil Weapon Industry“. “They are behing Everything that is Happening“

The US en the Sovjet Union are the biggests Users and Exporters of Arms in the World.

Personally I don’t think the explanation is so simple. My feeling is that many factors are at work and if we are unable to move to the right level of observation we will always ignore something. If we ignore something we will interfere on the wrong level. Instead of solving a conflict we will create a new conflict.

My feeling is we have to Observe at the Level of the World but ACT at the lower level of a Country or Culture according to the State of the Cycle this level is in.

The Arms Industry shows the same behavior as any Industry. Industry is the place where the Sensories are developing new tools (technology). They are the Experts, the Technicians. When a Sensory has developed a Model he wants to put the Model into Practice. When they have build new technology somebody (A Social) starts to Sell to a Unity. When a Unity has bought a new tool he HAS TO use it (Don’t Waste the Money!).

Many Scientists (Mythics and Unities) spend all their time and enthousiasm to develop the Atomic Bom and the Hydrogen Bom. Much later they awoke and saw with their own eyes what they had given to the World.

The problem here is the Process of Creation. When an Idea takes you you HAVE TO DO something with the Idea. The only thing that could happen was that the Creators took some time to have a look at what could be the effects of their creation. The Mythics had to take some time to reflect but time was running out.

If they would have a look at the Context they would realize that Worldwide Weapons of Destruction will always have a negative effect. They were “blinded” by the Enemy (Japan, Germany). They were Idealists and really believed the Bom would create a better world for everybody. This was the Final War. After the Final War Democracy would Rule the Earth. This proved to be wrong.

The most important factor that influenced the final decision to drop the Atomic Bomb was Russia. Japan was in the state of surrender and the bomb did not influence their decision. Everybody agreed that it was very important to stop the expanding Russian Empire ruled by Stalin.

The dropping of the Bomb was a signal to Stalin to show the Power of the US. Again innocent people outside the context of the “upcoming” conflict were the victims. The most important effect of the decision was the Cold War and the Atomic Arms Race. Nobody at that time was aware of this.

Let us have a look at the local level of the Conflict in Afghanistan.

The Culture of Afghanistan is “way behind the European Culture”. It is dominated by the War Lords. Afghanistan looks like Europe in the Middle Ages.

If the War Lords and the Taliban would use their old tools (the Jezail, Guns) nothing would happen. They would fight their battles on the battlefield. After some time one of them would become King and later the Renaissance would start. Just what happened in Europe. The big difference is that this process of Cultural Development would not take a thousand years.

The big business of the Warlords in Afghanistan is opium. Everybody is trying to change the attitude of the farmers. They have to grow wheat. Wheat is not what the War Lords want. Opium is paying 15 times more money. When the Warlords stay in power nothing will ever change the situation. When the people in the West keep on buying and using opium the market will also not disappear.

Afghanistan was already in the stage of the King. This stage was stopped by the Russians. They wanted to create a Socialistic (Read Paranoid) State. To stop the Russians (The Bad Guys) the US Secret Service (CIA, The Good Guys) started to support the Warlords and the Taliban. They supplied them with weapons to fight the Sovjet Union. They had a rule that no weapon in Afghanistan could be traced back to the west, so they supplied Soviet designed equipment from Egypt and China. Unfortunately the Soviet Technology was Inferior (!!!!) so they gave them the American Stinger. When the war with the Russians ended the CIA tried to buy the Stingers back from the Taliban. They wanted to pay $150,000 each. It is almost certain that the Taliban still have a few left.

The US and NATO are fighting their Own Weaponsystems. They are fighting their Own Creation, the War Lords and the Taliban. They are fighting a Market while they promote the Free Market. Many of the consumers of this market are living in their own country. They are fighting their own consumers in their own country. The consumers are addicted. Addiction is a problem of Socials. They get addicted when they are highly stressed. Many soldiers are addicted because of all the stress they have experienced in the War against the Enemy the Unities (or the Paranoids??) of their own Country have created.

How can we resolve this conflict?

It sounds strange but my feeling is by doing nothing in Afghanistan but doing something in Western Civilization itself. If We Solve our Own Problems first this will have a huge impact on everything that is happening in the World.

Observe at the World Level but Act Locally in your Own Context. This is the only Context You Understand.

Start a Dialogue with the other Contexts and accept their Local Culture. Try (!) to understand Why they are doing the Things they are doing.

This can be done by looking at your own Cultural History.

Somewhere in the past You were doing the same things they were doing. Find out what happened that made your culture move to the Next Level. Now you have a common ground to talk. Accept that the others are trying to find a solution of their own. Perhaps this is also something that will help you in your own culture.

Start to innovate and collaborate.

About Acupuncture

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Christopher Alexander wrote many beautiful books about Architecture. His book about Pattern Languages had a huge impact on Architectures in IT. When I searched the Internet I found a review of the books A Pattern Language, The Nature of Order and The Phenomenon of Life written by Dr. Mae-Wan Ho.

The review appeared in the Journal of her own Foundation “Science IN Society”. I visited her website and I became very exited about every document I read. Here are a few statements of her about Beauty and Harmony.

“A breaking wave in the sea has a kind of life that moves us, so does the ripple on a tranquil pond. A clear mountain pool has life, as opposed to a stagnant pond. Marble feels alive, as wood does, more so than polymerized stone dust or chipboard“.

“There’s degree of life in human events, and it correlates with the quality of freedom. Or should I say spontaneity: an unplanned, unpremeditated coherence of action“.

“Alexander captures the ideal of spontaneity and freedom that describes the sublime moment of creation in Chinese art and poetry, that I identified with the state of perfect (quantum) coherence with the universe; but he sees it also in the most ordinary living transactions”.

“The freedom which arises when life is at its most spiritual, and also most ordinary, arises just when we are “drunk in God”, as the Sufis say – most blithe and most unfettered. Under these circumstances, we are free of our concepts, able to react directly to the circumstance we encounter, and least constrained by affectations, concepts, and ideas. This is the central teaching of Zen and all mystical religions.“

Now I want to move to one of the many articles that are available on her website. The article is about Acupuncture. Again a few citations. If you don’t want to read them move to the end where I will give a brief summary.

“Practically all living processes are organised in cycles. The organism is thick with biological rhythms ranging from periods of split seconds for electrical activities of brain cells to seconds such as the heart-beat and respiration, to periods which are circadian and circannual. But no one has ever been able to explain why that should be.

The answer is provided by thermodynamics. It turns out that symmetrically coupled cycles are the key to both the conservation of coherent energy and compensation (or cancelling out) of entropy within the system so that living organisation is maintained.

As one cycle of activity is running down, it is charging up a second cycle, so that the role can be reversed later. Similarly, as disorder is created in some part of the system, a kind of superorder appears in elsewhere, which can restore order to the first part”.

“The connective tissues of our body include the skin, bones, tendons, ligaments, cartilege, various membranes covering major organs and linings of internal spaces. We tend to see them as serving purely mechanical functions to keep the body in shape, or to act as packing material. Actually, connective tissues may also be largely responsible for the rapid intercommunication that enables our body to function effectively as a coherent whole, and are therefore central to our health and well-being.

The clue to the intercommunication function of connective tissues lies in the properties of collagen, which makes up 70% or more of all the proteins of the connective tissues. Connective tissues, in turn form the bulk of the body of most multicellular animals. Collagen is therefore the most abundant protein in the animal kingdom“

“But collagens are not just mechanical fibres and composites. Instead, they have dielectric and electrical conductive properties that make them very sensitive to mechanical pressures, pH, and ionic composition and to electromagnetic fields. The electrical properties depend, to a large extent, on the bound water molecules in and around the collagen triple-helix“.

“A major factor contributing to the efficiency of intercommunication is the structured, oriented nature of collagen liquid crystalline fibres. Each connective tissue has its characteristic orientation of fibrous structures which are clearly related to the mechanical stresses and strains to which the tissue is subject. This same orientation may also be crucial for intercommunication. Aligned collagen fibres in connective tissues provide oriented channels for electrical intercommunication, and are strongly reminiscent of acupuncture meridians in traditional Chinese medicine“.

“The special energy relationship in the organism, therefore, is what enables it to mobilize energy at will, whenever and wherever required and in a perfectly coordinated way. In the ideal, the organism can be conceived as a quantum superposition of coherent activities, with instantaneous (nonlocal) noiseless intercommunication throughout the system. The flow of qi in meridian theory corresponds rather well to the mobilisation of coherent energy. Coherent energy is vital energy, and it is arises because the organism is especially good at capturing energy, storing and mobilising it in a coherent form“.

“I have argued that a body consciousness possessing all the hallmarks of consciousness – sentience, intercommunication and memory – is distributed throughout the entire body. Brain consciousness associated with the nervous system is embedded in body consciousness and is coupled to it“.

“Traditional Chinese medicine based on the acupuncture meridian system places the emphasis of health on the coherence of body functions which harmonizes brain to body. This makes perfect sense if one recognizes the brain as part of the body. Western medicine, by contrast, has yet no concept of the whole, and is based, at the very outset, on a Cartesian divide between mind and brain, and brain and body. Because there is no concept of the organism as a whole, there is, in effect, no theory of health, only an infinite number of disease models, each based on the supposed defect of a single molecular species. There is an urgent need to develop a theory of health for proper delivery of healthcare in the next millenium“.

What Mae-Wan Ho is explaining in all her articles is (more a less) that the old Scientists (!) in the East were right. She uses the new terminology of Physics and Mathematics to explain the same thing.

The Body is an “Electro-Magnetic Field” (A Whole) and connected to all the other Electro-Magnetic Fields (Wholes) in the Universe by “Symmetrically Coupled Cycles“. The Cycles balance the Wholes.

A Human Being is able to connect to every Whole by something called “quantum superposition“. It is a term used in Quantum Mechanics and it defines a state of “Harmony“, “Coupling” or “Entrainment”. When we are entrained to the Whole of the Wholes or or the Web that was never Woven (the Tao, Chinese) or the Centre of the Centres (Alexander) we are “drunk in God” (Sufi). We experience Oneness.

The Body stores something called “Coherent energy“. The Chinese call this Qi (The Force of Life). This coherent energy is transported in the Body by the Tissues. The Tissues consist of Collagen.

Collagen is organized in liquid crystalline Fibres. The Fibres are the Meridians of Acupuncture. The collagens are highly influenced by Electromagnetic fields. When the fields are “too strong” the System breaks down.

The System is also highly dependent on the special structure of the water molecules (the Hydrogen Bond). That’s why we have to drink a lot of water to get rid of the negative effect of the current Electro-Magnetic Fields. Water is also the Carrier of Information.

In many places she is warning us about the huge impact of electro-magnetic fields on the Body and the Mind. The effects are felt in the Body and the Mind because the Body IS the Mind or The Mind Is the Body. They are a WHOLE and the WHOLE is connected to other WHOLES. Just like the Centres of Christopher Alexander. Both of them are telling the Same Story.

LINKS

About Acupuncture

About Themodynamics and Intelligent Design

About Thermodynamics and Radical Innovation

About Plato and Collagen

About Social Cohesion

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Ecosystem resilience is the capacity of an ecosystem to tolerate disturbance without collapsing into a qualitatively different state that is controlled by a different set of processes. A resilient ecosystem can withstand shocks and rebuild itself when necessary.

Resilience in social systems has the added capacity of humans to anticipate and plan for the future. Humans are part of the natural world. We depend on ecological systems for our survival and we continuously impact the ecosystems in which we live from the local to global scale.

Resilience is a property of these linked social-ecological systems. Resilience as applied to ecosystems, or to integrated systems of people and the natural environment, has three defining characteristics:

  • The amount of change the system can undergo and still retain the same controls on function and structure
  • The degree to which the system is capable of self-organization
  • The ability to build and increase the capacity for learning and adaptation

When we translate Resilience in the Dutch language it is translated in “veerkracht“. A “veer” is a spring (a spiraling ring).

When we pull at the end of the spring it will expand and when we stop the pull the spring will spring back into its original state.When the spring is pulled too much it looses its elasticity. It slowly turns into a line. In the end it will break because of almost nothing.

In the old times partners married and promised to stay together for the better and the worse. The ceremony was concluded by exchanging iron rings. The ring was used by the Egyptians, the Greeks and the Romans. The ring was put upon the left hand, on the finger that was connected to the heart by the “Vein of Love“. It was a symbol to remember them of the season “to fall in love”, Spring.

Resilience shows itself in all kinds of relations when “things go wrong“. When everything “works fine” we accumulate wealth, we are happy and the relation is a success. The partners are “Playing the Infinite Game of Creation and Cooperation“. Their relationship is Self-Organizing and they learn from each other. They adapt their relationship all the time.

The real strength of a relation shows itself when critical events happen. A good relationship is able to handle a lot of them but every critical event takes away a little bit of the accumulated wealth and decreases the elasticity of the relationship. At a certain point in time the spring breaks and the partners are “on their own” again.

Hierarchical organizations are highly organized. Self-organization is something the System cannot stand. It creates “(P)Anarchy“. Hierarchical organizations are focused on aquiring economic wealth. When they are managed with care they reserve funds to use when “things go wrong“.

What they don’t do is accumulate “social wealth“. When the economy is in its downfall they reduce the amount of people they employ. They keep the “strong” and release “the weak“. The weak are moved to another Ecology called “the Social Security System“. This Ecology is also a hierarchical structure and unable to accept Self-Organization and Play.

At the end of the line something called Social Cohesion is going down rapidly. The Resilience of Society is decreasing with a high speed. The amount of divorces is rising exponentially. The iron ring of marriage is corroded and easy to break. Many people live on their own are left alone and are even bowling alone.

Bowling Alone is a book of Robert Putnam. Putnam shows how we have become increasingly disconnected. We are disconnected from family, friends, neighbors, and our democratic structures. People sign fewer petitions, belong to fewer organizations that meet, know their neighbors less, meet with friends less frequently, and socialize with their families less often.

All of this is an indication that the were are in The Break, a step in the Panarchy Cycle. The Break is followed by a fast Reorganization. The disconnected parts of the relations connect again on a new scale. The new Scale is based on a old foundation that is stored in the Collective Memory, the Unconsciousness.

LINKS

About Quanxi

How the Baby Boomers stopped their own Revolution

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When I started to work in 1976 I never heard of something called HRM. My boss hired me.

He discussed my salary and gave me the assignments.

The salary of my colleagues was a secret. I also did not know why my salary was raised. It just happened.

Three years later I was promoted to manager (group leader). I was very surprised this happened.

My new manager (called a section leader) handed me the files of my employees. I had to take care of them.

They contained many secret documents about what the former managers thought about the employee. At that time the managers talked about the employees in complete secrecy.

We, the New Managers, did not like that. We opened up the secret files, destroyed the “not-objective” data, standardized the data and put the data in a Database later called a HRM-System.

Suddenly I was the one who was responsible for hiring and firing. Every group-leader was different. I was always very open to my employees. We worked as a team to create and maintain software-systems.

I loved to program and design and I never felt the need to stop this. Managing my group was simple. It took about 1 day a week. In this day I had to attend meetings with other managers.

Other group-leaders (mostly much older) were spending all of their time managing their group. I soon found out that they were really managed by their group. They were unable to resist the informal power of some of their employees. When the new salaries were fixed some of them got a lot of money. This became known in my group and I got into trouble.

Why is he paid more than I am paid? He is really doing nothing!

I went to talk with my colleague but he did not want to talk. I talked with my section-leader and I found out that my colleague was his personal friend. He “covered his ass“.

At that time there was a big difference between an employee and a manager. When you became a Manager you became part of an Elite with its own Privileges and Culture. The most important Rule was that people of this Elite always covered the ass of the other members. We, the New Managers, did not like that and we started to destroy the Old Management Culture.

The other group-leaders experienced the same situation. We started to talk about this issue at our Section-meeting. After many discussions we went to talk one level higher (the director). The end result of all our actions was a revolution. We removed all the old powers and took over.

This also happened when I was a student. I was part of the baby-boom-generation that reorganized society. We were the revolutionaries that wanted to create a better society based on the principles of the new age of Aquarius.

Now almost 30 years later my old colleagues and I have created a System that is blocking everything they stood for. Just like my section-leader they want to stay in power.

The big difference between 30 years ago and now is that the New Revolutionaries have to change a (Software) System. It is impossible to detect the Human Cause of all Evil.

We,  the Baby-Boom Managers have standardized almost everything. The Systems have taken over Control and the Sad Thing is that almost nobody knows what the Systems are really doing. They live a Life of their Own.

It is almost impossible to reach consencus because many many specialized managers are involved and they all defend their own territory. The Sad Thing is that almost nobody knows what their Territory really is about.

Everything is Magically connected to Everything Else by the PatchWork of Overlapping Systems. A Problem in One Area suddenly comes back in a completely different Area.

The only way to accomplish something is to play the Game of Politics. To play the Game of Politics you need to make friends and you have to stay in the right coalition.

To do this you sometimes have to abandon your friends to reach the Goal. The effect is that nobody trusts nobody anymore or friends are covering the Ass of their friends. The effect is that many incidents are covered up. The effect of the cover up is that many people don’t know what is really happening or (worse) many people know what is happening but discuss the issues in a secret place.

The effect of this is that many people are not working at all. They are gossiping all the time. The effect is a loss of productivity and the only Solution we can think of is to implement more Systems.

The most important effect is a Change of Focus. The focus is directed inside the Company and not outside the Company. Outside the Company somebody is providing the money to play the Game. He or She is called the Customer.

The Systems have transformed the Customer into a Standardized Object stored into a Computer.

The Systems have completely Blocked the View on the most important Asset of a Company, the Human.

What Happened?

We developed a system that wanted to treat Everybody the Same Way.

How did we do that?

Step 1: Classify what everybody is doing (programming, designing, project-management …).

Question: When somebody is capable of everything (a talent) what do you do?

Answer: Always start with the lowest classification in this way people believe work is moving Up.

Step 2: Define a Career Path.

Step 2.1. Define Low (junior), Normal and High (senior). Take care that this is a normal distribution. If you do that people keep the believe that a Senior is better than a Junior!

Step 2.2. Define importance. A designer is more important than a programmer. Manager is more important than designer.

Question: Why is a something more important than something else?

Answer: Something is more important when we pay a higher salary. If we do that people start to believe that money is the most important motivator.

Effect: Everybody wants to become a manager because a manager is the best! The negative effect is that a manager does not like the employees in his department who are better. They are his competitors.

Step 3: Define a test to prove you are allowed to move to the next level.

Question: What defines a talented programmer?

Answer: He has finished his training.

Effect: Employees have to spend a lot of time to pass exams. Training becomes more important than experience. People start to act out of the book.

Step 4: Create specialized departments (Training, Security, Data Management, ..).

To save money we started to train people outside the company. The teachers did not have any experience. They knew what was written in the books that were written by people that did not have any experience in the field they were teaching.

Later the teachers changed into consultants and started to tell the employees and the managers how to do it. Doing the trick is easy. Inventing new tricks and implementing the new tricks becomes very difficult. You have to convince many managers.

Effect: Innovation is tricky bussiness. You have to take a risk and when you fail you are out of the carreer-race. Old approaches are implemented with a different name.

Step 5: Create departments that are testing if the employees are doing what the trainers told them to do (Quality Management). When they don’t do what the trainers told them to do we just don’t promote them.

Effect:

Everybody is Equal.

I hope you see what I am trying to show you. By treating everybody the Same Way we finally have created the Same People.

The top (talent) and the bottom (sick, problems at home …) are gone.

We have Equalized the Population.

The steps 1 to 5 are not the only steps. The System has improved itself all the time.

Before the division employees took care of other employees. We have designed a special approach to take care of the sick and other causalities. This has given them a negative status.

The effect is that some of them deteriorate and others are afraid to tell what the matter is. They go on when they are sick or they ignore the problems at home.

The effect is more problems at home and/or stress-related diseases (Burn-Out).

We have divided managers in groups. Some of them manage resources (!) other use the resources.

The effect is the loss of the team-mentality.

We have divided resources into internal and external resources. We hire them from a specialized company.

The effect is a loss of company-pride a higher level of the team-mentality.

We have automated almost everything to speed up efficiency. The effect is that we have to know the number (the unique identifier) to know about people. We are unable to enter unique information about a person. They are standardized on a higher level.

We have created a special department called HRM. They are managed top-down.

The effect is that at every level we are unable to create a unique solution for a unique situation.

What To Do?

Work in teams.

Start to talk with the employees again.

Be honest and open.

When you feel somebody is special give him a special treatment. Explain this to everybody.

Don’t be afraid to take responsibility for what you have done. Admit mistakes.

Don’t store everything in a database. Forgetting something is a positive thing. It makes is possible to start all over again.

Don’t specialize too much. Get rid of all the departments that are too far away from your primary process, servicing the customer.

Rotate. Don’t keep a person too long in a specialized job. Give experienced people a change to teach or to specialize but never keep them in this job for long.

Stop politics. Never allow that people are playing games with people. Fire people who are playing dirty games.

Surprise people. Don’t plan careers. Give everybody the idea that everything is possible.

Stop the gossiping. Give everybody a change to tell what they don’t like and listen.

Demote. When somebody is incapable to do his job give him the job he is capable of and give him the salary of the job. This stops the expectation that everything always has to move up. When somebody gets into trouble when he is demoted make an exception.

Give employees a chance and the time to help other employees.

Don’t hire too much people outside your company. Give priority to teach your own employees to learn the trick of the outside specialists.

Give your own people the time and the tools to innovate.

Hire outside specialists to do the things that are already stable and repeatable or better automate these activities. They are most of the time very boring. This is a very usefull indication to use IT.

Why the Finance Gurus Get Risk All Wrong (18-9-2007).

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When I read the news I feel the Worldwide Financial System is slowly moving into the disaster zone.

The main reason is the absence of Trust. For almost 25 years I have been active in the Banking Industry.

I started my career as a mathematical analyst doing Operations Research. Our most important client was the International Money Market. The next 25 years I was in many roles involved in this area.

Banking is in its essence very simple. A bank buys and sells money. All the products of a bank are sometimes very complicated structures where the flow of money (the cash flow) is regulated. A bank has to balance its cash flow every day. When the cash flow is unbalanced it has to buy or sell money from other banks or the National Bank.

The money market is the most complicated market. The most important person in this market is called a Dealer. To balance the activities of the Dealers a Manager gives them all kinds of Limits. The sum of all the Limits has to be zero on a daily basis.

When they buy and sell money it is very easy to manage the dealers. You just have to add all the cash flows and compare them with the given number.It became much more complicated when the dealers created new products.

In these new products they started to trade Expectations (Options). An expectation is a statistical construction. To calculate the Limit a new way of calculation had to be developed. Not only a new way of calculation had to be developed we also needed a new way to keep the books.

Everytime when we were able to find a way to solve the problems the dealers invented a new product. They started to trade in expectations of expectations and many other very complicated combinations of other products. In the end we were not able to keep the book anymore.

This was the moment when things went totally wrong. Perhaps you remember the end of Barings where a dealer called Nick Leeson was able to fool almost everybody. He wanted to regain his losses and to do this he had to take more risk in every step he was taking. He was gambling with the money of the bank. I don’t want to offend dealers but I think GAMBLING is the best way to describe the current situation in the financial industry.

Not only the bank is gambling but also Companies and Customers are gambling in every aspect of their lives. Customers buy a house and hope the price of their house will rise. Companies buy a company and hope the merger will make a profit.

Gambling is a zero sum game. Gambling is a very complicated way to distribute a whole. The sum of all the chances is one. To state it simple when one person wins the other has to lose. We created a very complex system that hides the fundamental laws of gambling. An example is inflation. Inflation changes the value of a currency. To compensate the ups and the downs of the currencies money flows from one country to the other.

When a bank is unable to reach zero (balance) it has to lend money. There are many arrangements between banks to make this possible. Most of the time banks operate in clusters or networks. They use preferred partners to do so. When you are playing in the lower league you have to pay more. You are playing in the lower league when the chance that you become unbalanced is high. You are a risk and to compensate the risk you have to pay a higher price because the bank has to reserve money to compensate for the risk. The money the bank has to reserve is not making money.

A very long time ago I was responsible for a project called Global Limits. We used the GEIS (General Electric)-network to connect all the dealing centers in the world. The system operated on a real-time basis. Every transaction with a bank was stored in the central database. With one button a central manager could block a bank. If the bank was blocked the dealers were unable to deal with this bank.

The system was created because of the Oil Crisis. The management of the bank was very afraid the Domino-effect would take place. The Domino-effect happens when a bank goes broke and influences the next one. We calculated this effect on a daily basis.

At that time the banking network was not too complicated. Many banks worked in alliances (ABECOR) and the alliances could stop the cascade.

At this moment we are in a totally different situation. The banking network is worldwide, highly interconnected and the transactions between banks are based on expectations. When a worldwide expectation fails the system is almost unable to stop the cascade.

Most of the time expectations are also balanced. When many expectations fail at the same time the Insurance Industry calls this an Act of God. Acts of God (or Destiny) are outside the reach of statistics. They are so rare that it is impossible to predict them.

It looks like the world is hit by many Acts of God at the same time. The System is able to take one blow and a second blow but at a certain point in time the System is down. The money that was reserved to compensate is gone. At that time only Governments are able to help.

They are able to create (!!!) money to help the System to survive. Creating money is a temporary solution. In the end the balance has to be restored. The total System gets out of balance when very big or world-wide disasters occur. When the System is unbalanced for a long time the system is permanently vibrating and is basically unpredictable (volatile).

The creation of money creates Inflation. There is an end to this Support System when the Inflation rises to an unexceptable level.The only way to solve this problem is to change the value of the Currency or to hide the Inflation. This a trick many countries apply. It buys them some time.

The effect is a change of the flow of money from one country to the other country. The most terrible situation arises when the Economy is going down and Inflation is going up (Stagflation). Stagflation is something the brightest economists are unable to handle. You have to stimulate and stop the System at the same time.

The current system is still highly dependent on the Dollar. When the US is unable to manage the flows of money the Worldwide System is in big problems. Currently the World Economic Power is the cause of many Acts of God and experiences many Acts of God.

Yesterday the former president of the independent financial autority in the US(FED) Alan Greenspan predicted a financial disaster in the US. He explained that the US does not have the financial buffers to handle a crisis. When this crisis comes (the baby-boomers) they have to lend the money elsewhere.

What we see now is a very dangerous situation. The banks are afraid to help their colleagues. They don’t trust anybody anymore. When a bank is unbalanced it has to ask the Government for help. When the Bank has to ask the Government for help the customers that have given the bank a loan demand their loans back. The Bank is unable to survive this. When the first bank has fallen the other banks want their money back. When the money is gone the next bank falls and the next bank falls. An endless cascade starts to move like an avalanche.

In 1996 Per Bak wrote the book How Nature Works: The Science of Self-Organized Criticality.

Self-organized criticality is one of a number of important discoveries made in statistical physics and related fields over the latter half of the 20th century. Per Bak used the metaphorical visualization of a “sandpile” on which new sand grains were being slowly sprinkled to cause”avalanches”. The Domino-effect takes place when the last grain falls and all the sandpiles start to move.

What Per Bak discovered was a Power Law. The Acts of God are predictable by a mechanism that underlies the natural phenomenon in question. The Power Law is fractal which means that the rules of the system come back at every level and behave like the tones and overtones of music. Sometimes the disaster is repeated at every level of enfolding of the system and creates a multi-level avalanche.

What Per Bak discovered was that the sand-pile system is fractal. It is a self-reference. Old fashioned statistics, used by Banks, are unable to handle fractals.They are not able to predict the “sudden disaster“.

Benoit Mandelbrot (the inventor of fractals) and Nassim Nicholas Taleb wrote an article called “How the Finance Gurus Get Risk All Wrong“

“Conventional finance theory treats big one-day market jumps or drops as anomalies that can be safely ignored when gauging risk or forecasting returns. But if you remove the ten biggest one-day moves (both up and down) from a chart of the S&P 500 over the past 20 years, you get a picture very different from market reality. The big moves matter“

“In market terms, a power-law distribution implies that the likelihood of a daily or weekly drop exceeding 20% can be predicted from the frequency of drops exceeding 10%, and that the same ratio applies to a 10% vs. a5% drop. In bell-curve finance, the chance of big drops is vanishingly small and is thus ignored. The 1987 stock market crash was, according to such models, something that could happen only once in several billion billion years. Another aspect of the real world tackled by fractal finance is that markets keep the memory of past moves, particularly of volatile days, and act according to such memory. Volatility breeds volatility; it comes in clusters and lumps. This is not an impossibly difficult or obscure framework for understanding markets. In fact, it accords better with intuition and observed reality than the bell-curve finance that still dominates the discourse of both academics and many market players“.

What they are telling is that disaster breeds disasters. What they are also telling is that INTUITION is the best tool to use when you want to besuccessful in the financial market.

Alan Greenspan explained yesterday what he experienced when he was trying to convince the Government to stop to destroy the Country. He also told the reporter that he was convinced they would not stop the process and he was also convinced the process could not be stopped. I hope he is wrong.

LINKS

About Fragile & Anti-Fragile Systems