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UCD-STAFFORDBEER  January 2008

UCD-STAFFORDBEER January 2008

Subject:

Re: Risk Management: International Banking

From:

Nick Green <[log in to unmask]>

Reply-To:

Forum dedicated to the work of Stafford Beer <[log in to unmask]>

Date:

Sat, 26 Jan 2008 12:23:37 -0000

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (92 lines)

I've added a reference to Gordon Brown's remarks at the World Economic Forum 
in the Wiki on UK's budget
http://en.wikipedia.org/wiki/United_Kingdom_budget#Criticism
calling for better regulation.
----- Original Message ----- 
From: "Arthur Dijkstra" <[log in to unmask]>
To: <[log in to unmask]>
Sent: Saturday, January 26, 2008 9:33 AM
Subject: Re: Risk Management: International Banking


> Hi,
> Maybe I speak before others with more VSM knowledge reply, but my guess is
> that the banking systems is by definition unstable (uncontrollable). Given
> the complexity of the system and the minimal number of control (influence)
> options such as interest and 'money injection' I would say there is lack 
> of
> requisite variety. See Stafford's Designing freedom about this subject.
> On the level of accident models the past stock market fluctuations
> (financial accidents) are comparable with aviation accident (or in 
> principle
> every accident in a complex system). Unexpected (coincided) interactions
> which have nonlinear interdependencies as a consequences of variability in
> the environment that is how these events can be described.
> For any judgement on how the trader for the French bank could cause such a
> critical situation we better wait for the investigation report. Although 
> the
> financial world is not so safety oriented organised as aviation and
> therefore we might never hear the whole story. For me it is a systems
> failure.
>
> Arthur
>
>
>
> -----Oorspronkelijk bericht-----
> Van: Forum dedicated to the work of Stafford Beer
> [mailto:[log in to unmask]] Namens Roger Tessier
> Verzonden: zaterdag 26 januari 2008 3:19
> Aan: [log in to unmask]
> Onderwerp: Risk Management: International Banking
>
> I have been intrigued by the discussions of safety in air travel, but
> the front pages of my newspaper over the last few days make me wonder
> what deep (or even obvious) insights the VSM offers with respect to
> the immediate disaster at one of the world's largest banks, and the
> world economy.
>
> As I understand it, a junior trader at Societe Generale SA (apologies
> for missing accents) managed to lose his employer some $7 Billion
> through fraudulent trades over an extended time. The story points out
> that he had previously spent 5 years in the back offices, where he
> learned all about the "six-layer security system" that prevented such
> things, but then he switched jobs and became a trader, at roughly
> $150K per year.
>
> The story also suggests that the drastic drop in world stock market
> values over the last few days was caused, or at least triggered, by
> the French bank desperately dumping its holdings for cash, rather
> than the credit collapse related to the pathological US sub-prime
> mortgage market.
>
> How could such a person with so little authority cause such massive
> disruption? Wasn't this all supposed to be fixed after Leeson/Barings
> and Kidder Peabody and Sumitomo and WorldCom and Enron and so on?
>
> So what's really going on here?
>
> The system seems to be deeply flawed, and that's scary, given its
> scope. Are we afraid?
>
> For more information go to: www.metaphorum.org
> For the Metaphorum Collaborative Working Environment (MCWE) go to:
> www.platformforchange.org
>
> For more information go to: www.metaphorum.org
> For the Metaphorum Collaborative Working Environment (MCWE) go to: 
> www.platformforchange.org
>
>
>
> -- 
> No virus found in this incoming message.
> Checked by AVG Free Edition.
> Version: 7.5.516 / Virus Database: 269.19.11 - Release Date: 24/01/2008 
> 00:00
>
> 

For more information go to: www.metaphorum.org
For the Metaphorum Collaborative Working Environment (MCWE) go to:  www.platformforchange.org

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