Housing amplifiers

This page describes the organizational forces that limit change. It explains how to overcome them when necessary.

This page uses an example to illustrate how:

A business can gain focus from targeting key customers,
Business planning activities performed by the whole organization can build awareness, empowerment and coherence.
A program approach can ensure strategic alignment.

This page uses the example of HP's printer organization freeing itself from its organizational constraints to sell a printer targeted at the IBM pc user.
The constraints are described.
The techniques to overcome them are implied.

We are products of complexity, but our evolution has focused our understanding on the situation of hunter gatherers on the African savanna. As humanity has become more powerful we can significantly impact the systems we depend on. But we struggle to comprehend them. So this web frame explores significant real world complex adaptive systems (CAS): Assumptions of randomness & equilibrium allowed the wealthy & powerful to expand the size and leverage of stock markets, by placing at risk the insurance and retirement savings of the working class. The assumptions are wrong but remain entrenched. The US nation was built from two divergent political views of: Jefferson and Hamilton. It also reflects the development of competing ancient ideas of Epicurus and Cyril. But the collapse of Bretton Woods forced Wall Street into a position of power, while the middle and working class were abandoned by the elites. Housing financed with cash from oil and derivative transactions helped hide the shift. Most US health care is still operating the way cars built in the 1940s did. Geisinger is an example of better solution. But transforming the whole network is a challenge. And public health investment has proved far more beneficial. Helping our children learn to be effective adults is part of our humanity, but we have created a robust but deeply flawed education system. Better alternatives have emerged. Spoken language, reading and writing emerged allowing our good ideas to become a second genetic material. The emergence of the global economy in the 1600s and its subsequent development; It explains how the examples relate to each other, why we all have trouble effectively comprehending these systems and explains how our inexperience with CAS can lead to catastrophe. It outlines the items we see as key to the system and why. Example systems frame
Dietrich Dorner argues complex adaptive systems (CAS) are hard to understand and manage. He provides examples of how this feature of these systems can have disastrous consequences for their human managers. Dorner suggests this is due to CAS properties psychological impact on our otherwise successful mental strategic toolkit. To prepare to more effectively manage CAS, Dorner recommends use of: Effective iterative planning and Practice with complex scenario simulations; tools which he reviews. Complexity catastrophes
E. O. Wilson reviews the effect of man on the natural world to date and explains how the two systems can coexist most effectively. Adaptive ecology
Barton Gellman details the strategies used by Vice President Cheney to align the global system with his economics, defense, and energy goals. US vds alignment
Kevin Kruse argues that from 1930 onwards the corporate elite and the Republican party have developed and relentlessly executed strategies to undermine Franklin Roosevelt and the New Deal. Their successful strategy used the credibility of conservative religious leaders to: Demonstrate religious issues with the New Deal. Integrate the corporate elite and evangelicals. Use the power of corporate advertising and Hollywood to reeducate the American people to view the US as historically religious and the New Deal and liberalism as anti-religious socialism. Focus the message through evangelicals including Vereide and Graham. Centralize the strategy through President Eisenhower. Add religious elements to mainstream American symbols: money, pledge; Push for prayer in public school Push Congress to promote prayer Make elections more about religious positions. Following our summary of his arguments RSS frames them from the perspective of complex adaptive system (CAS) theory. Strategy is the art of the possible. But it also depends on persistence. Inventing Christian America
Charles Ferguson argues that the US power structure has become highly corrupt. Ferguson identifies key events which contributed to the transformation: Junk bonds, Derivative deregulation, CMOs, ABS and analyst fraud, Financial network deregulation, Financial network consolidation, Short term incentives Subsequently the George W. Bush administration used the situation to build a global bubble, which Wall Street leveraged. The bursting of the bubble: managed by the Bush Administration and Bernanke Federal Reserve; was advantageous to some. Ferguson concludes that the restructured and deregulated financial services industry is damaging to the American economy. And it is supported by powerful, incentive aligned academics. He sees the result being a rigged system. Ferguson offers his proposals for change and offers hope that a charismatic young FDR will appear. Following our summary of his arguments, RSS comments on them framed by complex adaptive system (CAS) theory. Once the constraints are removed from CAS amplifiers, it becomes advantageous to leverage the increased flows. And it is often relatively damaging not to participate. Corruption and parasitism can become entrenched. Financial WMD
Matt Taibbi describes the phenotypic alignment of the American justice system. The result he explains relentlessly grinds the poor and undocumented into resources to be constrained, consumed and ejected. Even as it supports and aligns the financial infrastructure into a potent weapon capable of targeting any company or nation to extract profits and leave the victim deflated. Taibbi uses five scenarios to provide a broad picture of the: activities, crimes, policing, prosecutions, court processes, prisons and deportation network. The scenarios are: Undocumented people's neighborhoods, Poor neighborhoods, Welfare recipients, Credit card debtors and Financial institutions. Following our summary of his arguments, RSS comments on them framed by complex adaptive system (CAS) theory. The alignment of the justice system reflects a set of long term strategies and responses to a powerful global arms race that the US leadership intends to win. Aligned justice
Jonathan Powell describes how the government of, the former UK Prime Minister, Tony Blair, actually operated. Powell was Blair's only chief of staff. Mechanics of power
H. A. Hayek compares and contrasts collectivism and libertarianism. Libertarianism
John Doerr argues that company leaders and their organizations, hugely benefit from Andy Grove's OKRs. He promotes strategies that help OKR success: Focus, Align, Track, Stretch; replaces yearly performance reviews, and provides illustrative success stories. Doerr stresses Dov Seidman's view that employees are adaptive and will respond to what they see being measured. He asserts culturally supported OKRs/CFR processes will be transformative. Following our summary of his arguments, RSS comments on them framed by complex adaptive system (CAS) theory. Doerr's architecture is tailored for the startups KPCB invests in. It is a subset of the general case of schematic plans, genetic operators and Shewhart cycles that drive all CAS. Doerr's approach limits support of learning and deemphasizes the association to planning. Startup PDCA
David Bodanis illustrates how disruptive effects can take hold. While the French revolution had many driving forces including famine and oppression the emergence of a new philosophical vision ensured that thoughtful leaders were constrained and conflicted in their responses to the crisis. Voltaire's disruptive network
An epistatic meme suppressed for a thousand years reemerges during the enlightenment. It was a poem encapsulating the ideas of Epicurus rediscovered by a humanist book hunter. Greenblatt describes the process of suppression and reemergence. He argues that the rediscovery was the foundation of the modern world. Complex adaptive system (CAS) models of the memetic mechanisms are discussed. Constraining happiness
Isaacson uses the historic development of the global cloud of web services to explore Ada Lovelace's ideas about thinking machines and poetic science. He highlights the value of computer augmented human creativity and the need for liberal arts to fulfill the process. Complex adaptive system (CAS) models of agent networks and collaboration are discussed. Arts technology & intelligence
Haikonen juxtaposes the philosophy and psychology of consciousness with engineering practice to refine the debate on the hard problem of consciousness. During the journey he describes the architecture of a robot that highlights the potential and challenges of associative neural networks. Complex adaptive system (CAS) theory is then used to illustrate the additional requirements and constraints of self-assembling evolved conscious animals. It will be seen that Haikonen's neural architecture, Smiley's Copycat architecture and molecular biology's intracellular architecture leverage the same associative properties. Associatively integrated robots
Good ideas are successful because they build upon prior developments that have been successfully implemented. Johnson demonstrates that they are phenotypic expressions of memetic plans subject to the laws of complex adaptive systems (CAS). Developing ideas
A government sanctioned monopoly supported the construction of a superorganism American Telephone and Telegraph (AT&T). Within this Bell Labs was at the center of three networks: The evolving global scientific network. The Bell telephone network. And The military industrial network deploying 'fire and missile control' systems. Bell Labs strategically leveraged each network to create an innovation engine. They monitored the opportunities to leverage the developing ideas, reorganizing to replace incumbent opposition and enable the creation and growth of new ideas. Once the monopoly was dismantled, AT&T disrupted. Complex adaptive system (CAS) models of the innovation mechanisms are discussed. Strategic innovation
Roger Cohen's New York Times opinion about the implications of BREXIT is summarized. His ideas are then framed by complex adaptive system (CAS) theory and reviewed. BREXIT
Scott Galloway argues that Apple, Amazon, Facebook and Google are monopolists that trade workers for technology. Monopolies that he argues should be broken up to ensure the return of a middle class. Following our summary of his arguments, RSS comments on these arguments assuming they relate to a complex adaptive system (CAS). While Scott's issue is highly significant his analysis conflicts with relevant CAS history and theory. Monopoly job killers
The IPO of Netscape is defined as the key emergent event of the New Economy by Michael Mandel. Following the summary of Mandel's key points the complex adaptive system (CAS) aspects are highlighted. New economy
Ed Conway argues that Bretton Woods produced a unique set of rules and infrastructure for supporting the global economy. It was enabled by the experience of Keynes and White during and after the First World War, their dislike of the Gold Standard, the necessity of improving the situation between the wars and the opportunity created by the catastrophe of the Second World War. He describes how it was planned and developed. How it emerged from the summit. And he shows how the opportunity inevitably allowed the US to replace the UK at the center of the global economy. Like all plans there are mistakes and Conway takes us through them and how the US recovered the situation as best it could. And then Conway describes the period after Bretton Woods collapsed. He explains what followed and also compares the relative performance of the various periods before during and after Bretton Woods. Following our summary of his arguments RSS comments from the perspective of Complex Adaptive System (CAS) theory. Conway's book illustrates the rule making and infrastructure that together build an evolved amplifier. He shows the strategies at play of agents that were for and against the development and deployment of the system. And The Summit provides a key piece of the history of our global economic CAS. Bretton woods
Housing amplifiers
Satyajit Das uses an Indonesian company's derivative trades to introduce us to the workings of the international derivatives system. Das describes the components of the value delivery system and the key transactions. He demonstrates how the system interacted with emerging economies expanding them, extracting profits and then moving on as the induced bubbles burst. Following Das's key points the complex adaptive system (CAS) aspects are highlighted. Derivative systems
Johnson & Kwak argue that expanding the national debt provides a hedge against unforeseen future problems, as long as creditors are willing to continue lending. They illustrate different approaches to managing the debt within the US over its history and of the eighteenth century administrations of England and France. The US embodies two different political and economic systems which approach the national debt differently: Taxes to support a sinking fund to ensure credit to leverage fiscal power in: Wars, Pandemics, Trade disputes, Hurricanes, Social programs; Starting with Hamilton, Lincoln & Chase, Wilson, FDR; Low taxes, limited infrastructure, with risk assumed by individuals: Advocated by President's Jefferson & Madison, Reagan, George W. Bush (Gingrich); Johnson & Kwak develop a model of what the US government does. They argue that the conflicting sinking fund and low tax approaches leaves the nation 'stuck in the middle' with a future problem. And they offer their list of 'first principles' to help assess the best approach for moving from 2012 into the future. They conclude the question is still political. They hope it can be resolved with an awareness of their detailed explanations. They ask who is willing to push all the coming risk onto individuals. Following our summary of their arguments RSS frames them from the perspective of complex adaptive system (CAS) theory. Historically developing within the global cotton value delivery system, key CAS features are highlighted. National debt
Robert Gordon argues that the inventions of the second industrial revolution were the foundation for American economic growth. Gordon shows how flows of people into difficult rural America built a population base which then took the opportunity to move on to urban settings: Houses, Food in supermarkets, Clothes in department stores; that supported increasing productivity and standard of living. The deployment of nationwide networks: Rail, Road, Utilities; terminating in the urban housing and work places allowing the workers to leverage time saving goods and services, which helped grow the economy. Gordon describes the concomitant transformation of: Communications and advertising Credit and finance Public health and the health care network Health insurance Education Social and welfare services Counter intuitively the constraints introduced before and in the Great Depression and the demands of World War 2 provide the amplifiers that drive the inventions deeply and fully into every aspect of the economy between 1940 and 1970 creating the exceptional growth and standard of living of post war America. Subsequently the rate of growth was limited until the shift of women into the workplace and the full networking of voice and data supported the Internet and World Wide Web completed the third industrial revolution, but the effects were muted by the narrow reach of the technologies. The development of Big Data, Robots, and Artificial Intelligence may support additional growth, but Gordon is unconvinced because of the collapse of the middle class. Following our summary of Gordon's book RSS frames his arguments from the perspective of complex adaptive system (CAS) theory. American growth
Carl Menger argues that the market induced the emergence of money based on the attractive features of precious metals. He compares the potential for government edicts to create money but sees them as lacking. Following our summary of his arguments RSS frames his arguments from the perspective of complex adaptive system (CAS) theory. With two hundred years of additional knowledge we conclude that precious metals are not as attractive as Menger asserts. Government backed promissory notes are analogous to: Other evolved CAS forms of ubiquitous high energy transaction intermediates and Schematic strategies that are proving optimal in supporting survival and replication in the currently accessible niches. Emergence of money
Eric Beinhocker sets out to answer a question Adam Smith developed in the Wealth of Nations: what is wealth? To do this he replaces traditional economic theory, which is based on the assumption that an economy is a system in equilibrium, with complexity economics in which the economy is modeled as a complex adaptive system (CAS). He introduces Sugerscape to illustrate an economic CAS model in action. And then he explains the major features of a CAS economy: Dynamics, Agents, Networks, Emergence, and Evolution. Building on complexity economics Beinhocker reviews how evolution applies to the economy to build wealth. He explains how design spaces map strategies to instances of physical and social technologies. And he identifies the interactors and selection mechanism of economic evolution. This allows Beinhocker to develop a new definition of wealth. In the rest of the book Beinhocker looks at the consequences of adopting complexity economics for business and society: Strategy, Organization, Finance, & Politics & Policy. Following our summary of his arguments, RSS explores his conclusions and aligns Beinhocker's model of CAS with the CAS theory and evidence we leverage. Economic complexity
Sven Beckert describes the historic transformation of the growing, spinning, weaving, manufacture of cotton goods and their trade over time. He describes the rise of a first global commodity, its dependence on increasing: military power, returns for the control points in the value delivery system(VDS), availability of land and labor to work it including slaves. He explains how cotton offered the opportunity for industrialization further amplifying the productive capacity of the VDS and the power of the control points. This VDS was quickly copied. The increased capacity of the industrialized cotton complex adaptive system (CAS) required more labor to operate the machines. Beckert describes the innovative introduction of wages and the ways found to mobilize industrial labor. Beckert describes the characteristics of the industrial cotton CAS which made it flexible enough to become globally interconnected. Slavery made the production system so cost effective that all prior structures collapsed as they interconnected. So when the US civil war blocked access to the major production nodes in the American Deep South the CAS began adapting. Beckert describes the global reconstruction that occurred and the resulting destruction of the traditional ways of life in the global countryside. This colonial expansion further enriched and empowered the 'western' nation states. Beckert explains how other countries responded by copying the colonial strategies and creating the opportunities for future armed conflict among the original colonialists and the new upstarts. Completing the adaptive shifts, Beckert describes the advocates for industrialization in the colonized global south and how over time they joined the global cotton CAS disrupting the early western manufacturing nodes and creating the current global CAS dominated by merchants like Wal-Mart pulling goods through a network of clothing manufacturers, spinning and weaving factories, and growers competing with each other on cost. Following our summary of Beckert's book, RSS comments from the perspective of CAS theory. The transformation of disconnected peasant farmers, pastoral warriors and their lands into a supply chain for a highly profitable industrial CAS required the development over time: of military force, global transportation and communication networks, perception and representation control networks, capital stores and flows, models, rules, standards and markets; along with the support at key points of: barriers, disruption, and infrastructure and evolved amplifiers. The emergent system demonstrates the powerful constraining influence of extended phenotypic alignment. Globalization from cotton
The structure and problems of the US health care network is described in terms of complex adaptive system (CAS) theory. The network: Is deeply embedded in the US nation state. It reflects the conflict between two opposing visions for the US: high tax with safety net or low tax without. The emergence of a parasitic elite supported by tax policy, further constrains the choices available to improve the efficiency and effectiveness of the network. The US is optimized to sell its citizens dangerous levels of: salt, sugar, cigarettes, guns, light, cell phones, opioids, costly education, global travel, antibacterials, formula, foods including endocrine disrupters; Accepting the US controlled global supply chain's offered goods & services results in: debt, chronic stress, amplified consumption and toxic excess, leading to obesity, addiction, driving instead of walking, microbiome collapse; Is incented to focus on localized competition generating massive & costly duplication of services within physician based health care operations instead of proven public health strategies. This process drives increasing research & treatment complexity and promotes hope for each new technological breakthrough. Is amplified by the legislatively structured separation and indirection of service development, provision, reimbursement and payment. Is impacted by the different political strategies for managing the increasing cost of health care for the demographic bulge of retirees. Is presented with acute and chronic problems to respond to. As currently setup the network is tuned to handle acute problems. The interactions with patients tend to be transactional. Includes a legislated health insurance infrastructure which is: Costly and inefficient Structured around yearly contracts which undermine long-term health goals and strategies. Is supported by increasingly regulated HCIT which offers to improve data sharing and quality but has entrenched commercial EHR products deep within the hospital systems. Is maintained, and kept in alignment, by massive network effects across the: Hospital platform based sub-networks connecting to Physician networks Health insurance networks - amplified by ACA narrow network legislation Hospital clinical supply and food production networks Medical school and academic research network and NIH Global transportation network Public health networks Health care IT supply network Health care
Deaton describes the wellbeing of people around the world today. He explains the powerful benefit of public health strategies and the effect of growth in material wellbeing but also the corrosive effects of aid. Following our summary of Deaton's arguments RSS comments from the perspective of complex adaptive system (CAS) theory. The situation he describes is complex including powerful amplifiers, alignment and incentives that overlap broadly with other RSS summaries of adaptations of: The biosphere, Politics, Economics, Philosophy and Health care. Improving wellbeing
Donald Barlett and James Steele write about their investigations of the major problems afflicting US health care as of 2006. Problems of US health care
Glenn Steele & David Feinberg review the development of the modern Geisinger healthcare business after its near collapse following the abandoned merger with Penn State AMC. After an overview of the business, they describe how a calamity unfolding around them supported building a vision of a better US health care network. And they explain: How they planned out the transformation, Leveraging an effective governance structure, Using a strategy to gain buy in, Enabling reengineering at the clinician patient interface. Implementing the reengineering for acute, chronic & hot spot care; to help the patients and help the physicians. Geisinger's leverage of biologics. Reengineering healing with ProvenExperience. Where Geisinger is headed next. Following our summary of their arguments RSS comments on them. We frame their ideas with complex adaptive system (CAS) theory. E2E insured quality care
Robert Pearl explains the perspectives of a health care leader and son who know that the current health care network interacts with human behavior to induce a poorly performing system that caused his father's death. But he is confident that these problem perceptions can be changed. Once that occurs he asserts the network will become more integrated, coordinated, collaborative, better led, and empathetic to their patients. The supporting technology infrastructure will be made highly interoperable. All that will reduce medical errors and make care more cost effective. Following our summary of his arguments RSS comments on them. We frame his ideas with complex adaptive system (CAS) theory including synergistic examples of these systems in operation. The health care network is built out of emergent human agents. All agents must model the signals they perceive to represent and respond to them. Pinker explains how this occurs. Sapolsky explains why fear and hierarchy are so significant. He includes details of Josh Green's research on morality and death. Charles Ferguson highlights the pernicious nature of financial incentives. Bad medical models
US healthcare is ripe for disruption. Christensen, Grossman and Hwang argue that technologies are emerging which will support low cost business models that will undermine the current network. Applying complex adaptive system (CAS) theory to these arguments suggests that the current power hierarchy can effectively resist these progressive forces. Disrupting health care
Atul Gawande writes about the opportunity for a thirty per cent improvement in quality in medicine by organizing to deploy as agent based teams using shared schematic plans and distributed signalling or as he puts it the use of checklists. With vivid examples from a variety of situations including construction, air crew support and global health care Gawande illustrates the effects of complexity and how to organize to cope with it. Following the short review RSS additionally relates Gawande's arguments to its models of complex adaptive systems (CAS) positioning his discussion within the network of US health care, contrasting our view of complexity, comparing the forces shaping his various examples and reviewing facets of complex failures. Complexity checklists
Friedman and Martin leverage the lifelong data collected on 1,528 bright individuals selected by Dr. Lewis Terman starting in 1921, to understand what aspects of the subjects' lives significantly affected their longevity. Looking broadly across each subject's: Personality, Education, Parental impacts, Energy levels, Partnering, Careers, Religion, Social networks, Gender, Impact from war and trauma; Friedman and Martin are able to develop a set of model pathways, which each individual could be seen to select and travel along. Some paths led to the traveler having a long life. Others were problematic. The models imply that the US approach to health and wellness should focus more on supporting the development and selection of beneficial pathways. Following our summary of their arguments RSS comments from the perspective of CAS theory. The pathways are most applicable to bright individuals with the resources and support necessary to make and leverage choices they make. Striving to enter and follow a beneficial pathway seems sensible but may be impossible for individuals trapped in a collapsing network, starved of resources. Promoting longevity
Gawande uses his personal experience, analytic skills and lots of stories of innovators to demonstrate better ways of coping with aging and death. He introduces the lack of focus on aging and death in traditional medicine. And goes on to show how technology has amplified this stress point. He illustrates the traditional possibility of the independent self, living fully while aging with the support of the extended family. Central planning responded to the technological and societal changes with poorly designed infrastructure and funding. But Gawande then contrasts the power of bottom up innovations created by experts responding to their own family situations and belief systems. Gawande then explores in depth the challenges that unfold currently as we age and become infirm. He notes that the world is following the US path. As such it will have to understand the dilemma of integrating medical treatment and hospice strategies. He notes that all parties involved need courage to cope. He proposes medicine must aim to assure well being. At that point all doctors will practice palliative care. Complex adaptive system (CAS) models of agency, death, evolution, cooperation and adaptations to new technologies are discussed. Agent death
Sonia Shah reviews the millennia old (500,000 years) malarial arms race between Humanity, Anopheles mosquitoes and Plasmodium. 250 - 500 million people are infected each year with malaria and one million die. Malaria
Peter Medawar writes about key historic events in the evolution of medical science. Medical science events
Using John Holland's theory of adaptation in complex systems Baldwin and Clark propose an evolutionary theory of design. They show how this can limit the interdependencies that generate complexity within systems. They do this through a focus on modularity. Modular designed systems
Lou Gerstner describes the challenges he faced and the strategies he used to successfully restructure the computer company IBM. Compartmented systems
Grady Booch advocates an object oriented approach to computer software design. Object based systems
Bertrand Meyer develops arguments, principles and strategies for creating modular software. He concludes that abstract data types and inheritence make object orientation a superior methodology for software construction. Complex adaptive system (CAS) theory suggests agents provide an alternative strategy to the use of objects. Software construction
Tools and the businesses that produce them have evolved dramatically. W Brian Arthur shows how this occurred. Tools
Matt Ridley demonstrates the creative effect of man on the World. He highlights: A list of preconditions resulting in Additional niche capture & more free time Building a network to interconnect memes processes & tools which Enabling inter-generational transfers Innovations that help reduce environmental stress even as they leverage fossil fuels Memetic trading networks
E O. Wilson argues that campfire gatherings on the savanna supported the emergence of human creativity. This resulted in man building cultures and later exploring them, and their creator, through the humanities. Wilson identifies the transformative events, but he notes many of these are presently ignored by the humanities. So he calls for a change of approach. He: Explores creativity: how it emerged from the benefits of becoming an omnivore hunter gatherer, enabled by language & its catalysis of invention, through stories told in the evening around the campfire. He notes the power of fine art, but suggests music provides the most revealing signature of aesthetic surprise. Looks at the current limitations of the humanities, as they have suffered through years of neglect. Reviews the evolutionary processes of heredity and culture: Ultimate causes viewed through art, & music The bedrock of: Ape senses and emotions, Creative arts, language, dance, song typically studied by humanities, & Exponential change in science and technology. How the breakthrough from our primate past occurred, powered by eating meat, supporting: a bigger brain, expanded memory & language. Accelerating changes now driven by genetic cultural coevolution. The impact on human nature. Considers our emotional attachment to the natural world: hunting, gardens; we are destroying. Reviews our love of metaphor, archetypes, exploration, irony, and considers the potential for a third enlightenment, supported by cooperative action of humanities and science Following our summary of his arguments RSS frames these from the perspective of complex adaptive system (CAS) theory: The humanities are seen to be a functionalist framework for representing the cultural CAS while Wilson's desire to integrate the humanities and science gains support from viewing the endeavor as a network of layered CAS. Evening campfire rituals
Brynjolfsson and McAfee explore the effects of Moore's law on the economy. They argue it has generated exponential growth. This has been due to innovation. It has created a huge bounty of additional wealth. But the wealth is spread unevenly across society. They look at the short and long term implications of the innovation bounty and spread and the possible future of technology. Following our summary of their arguments RSS comments from the perspective of CAS theory. Brilliant technologies
Salman Khan argues that the evolved global education system is inefficient and organized around constraining and corralling students into accepting dubious ratings that lead to mundane roles. He highlights a radical and already proven alternative which offers effective self-paced deep learning processes supported by technology and freed up attention of teams of teachers. Building on his personal experience of helping overcome the unjustified failing grade of a relative Khan: Iteratively learns how to teach: Starting with Nadia, Leveraging short videos focused on content, Converging on mastery, With the help of neuroscience, and filling in dependent gaps; resulting in a different approach to the mainstream method. Assesses the broken US education system: Set in its ways, Designed for the 1800s, Inducing holes that are hidden by tests, Tests which ignore creativity. The resulting teaching process is so inefficient it needs to be supplemented with homework. Instead teachers were encouraging their pupils to use his tools at home so they could mentor them while they attended school, an inversion that significantly improves the economics. Enters the real world: Builds a scalable service, Working with a real classroom, Trying stealth learning, At Khan Academy full time, In the curriculum at Los Altos, Supporting life-long learning. Develops The One World Schoolhouse: Back to the future with a one room school, a robust teaching team, and creativity enabled; so with some catalysis even the poorest can become educated and earn credentials for current jobs. Wishes he could also correct: Summer holidays, Transcript based assessments, College education; Concludes it is now possible to provide the infrastructure for creativity to emerge and to support risk taking. Following our summary of his arguments RSS frames them from the perspective of complex adaptive system (CAS) theory. Disruption is a powerful force for change but if its force is used to support the current teachers to adopt new processes can it overcome the extended phenotypic alignment and evolutionary amplifiers sustaining the current educational network? Education versus guilds
Amy Chua and Jed Rubenfeld's New York Times opinion based on The Triple Package is summarized. Their ideas are then framed by CAS theory and reviewed. What drives success
Peter Turchin describes how major pre-industrial empires developed due to effects of geographic boundaries constraining the empires and their neighbors' interactions. Turchin shows how the asymmetries of breeding rates and resource growth rates results in dynamic cycles within cycles. After the summary of Turchin's book complex adaptive system (CAS) theory is used to augment Turchins findings. Warrior groups
Through the operation of three different food chains Michael Pollan explores their relative merits. The application of complex adaptive system (CAS) theory highlights the value of evolutionary testing of the food chain. Natural systems
E. O. Wilson & Bert Holldobler illustrate how bundled cooperative strategies can take hold. Various social insects have developed strategies which have allowed them to capture the most valuable available niches. Like humans they invest in specialization and cooperate to subdue larger, well equipped competitors. Insect superorganisms
Computational theory of the mind and evolutionary psychology provide Steven Pinker with a framework on which to develop his psychological arguments about the mind and its relationship to the brain. Humans captured a cognitive niche by natural selection 'building out' specialized aspects of their bodies and brains resulting in a system of mental organs we call the mind. He garnishes and defends the framework with findings from psychology regarding: The visual system - an example of natural selections solutions to the sensory challenges of inverse modeling of our environment; Intensions - where he highlights the challenges of hunter gatherers - making sense of the objects they perceive and predicting what they imply and natural selections powerful solutions; Emotions - which Pinker argues are essential to human prioritizing and decision making; Relationships - natural selection's strategies for coping with the most dangerous competitors, other people. He helps us understand marriage, friendships and war. These conclusions allow him to understand the development and maintenance of higher callings: Art, Music, Literature, Humor, Religion, & Philosophy; and develop a position on the meaning of life. Complex adaptive system (CAS) modeling allows RSS to frame Pinker's arguments within humanity's current situation, induced by powerful evolved amplifiers: Globalization, Cliodynamics, The green revolution and resource bottlenecks; melding his powerful predictions of the drivers of human behavior with system wide constraints. The implications are discussed. Computationally adapted mind
The stages of development of the human female, including how her brain changes and the impacts of this on her 'reality' across a full life span: conception, infantile puberty, girlhood, juvenile pause, adolescence, dating years, motherhood, post-menopause; are described. Brizendine notes the significant difference in how emotions are processed by women compared to men. Complex adaptive system (CAS) theory associates the stages with the evolutionary under-pinning, psychological implications and behavioral CAS. Evolved female brain
The complexity of behavior is explored through Sapolsky developing scenarios of our best and worst behaviors across time spans, and scientific subjects including: anthropology, psychology, neuroscience, sociology. The rich network of adaptive flows he outlines provides insights and highlight challenges for scientific research on behavior. Complex adaptive system (CAS) theory builds on Sapolsky's details highlighting the strategies that evolution has captured to successfully enter niches we now occupy. CAS behavior
Carlo Rovelli resolves the paradox of time. Rovelli initially explains that low level physics does not include time: A present that is common throughout the universe does not exist Events are only partially ordered. The present is localized The difference between past and future is not foundational. It occurs because of state that through our blurring appears particular to us Time passes at different speeds dependent on where we are and how fast we travel Time's rhythms are due to the gravitational field Our quantized physics shows neither space nor time, just processes transforming physical variables. Fundamentally there is no time. The basic equations evolve together with events, not things Then he explains how in a physical world without time its perception can emerge: Our familiar time emerges Our interaction with the world is partial, blurred, quantum indeterminate The ignorance determines the existence of thermal time and entropy that quantifies our uncertainty Directionality of time is real but perspectival. The entropy of the world in relation to us increases with our thermal time. The growth of entropy distinguishes past from future: resulting in traces and memories Each human is a unified being because: we reflect the world, we formed an image of a unified entity by interacting with our kind, and because of the perspective of memory The variable time: is one of the variables of the gravitational field. With our scale we don't register quantum fluctuations, making space-time appear determined. At our speed we don't perceive differences in time of different clocks, so we experience a single time: universal, uniform, ordered; which is helpful to our decisions Emergence of time
Consciousness has confounded philosophers and scientists for centuries. Now it is finally being characterized scientifically. That required a transformation of approach. Realizing that consciousness was ill-defined neuroscientist Stanislas Dehaene and others characterized and focused on conscious access. In the book he outlines the limitations of previous psychological dogma. Instead his use of subjective assessments opened the window to contrast totally unconscious brain activity with those including consciousness. He describes the research methods. He explains the contribution of new sensors and probes that allowed the psychological findings to be correlated, and causally related to specific neural activity. He describes the theory of the brain he uses, the 'global neuronal workspace' to position all the experimental details into a whole. He reviews how both theory and practice support diagnosis and treatment of real world mental illnesses. The implications of Dehaene's findings for subsequent consciousness research are outlined. Complex adaptive system (CAS) models of the brain's development and operation introduce constraints which are discussed. Conscious access
Reading and writing present a conundrum. The reader's brain contains neural networks tuned to reading. With imaging a written word can be followed as it progresses from the retina through a functional chain that asks: Are these letters? What do they look like? Are they a word? What does it sound like? How is it pronounced? What does it mean? Dehaene explains the importance of education in tuning the brain's networks for reading as well as good strategies for teaching reading and countering dyslexia. But he notes the reading networks developed far too recently to have directly evolved. And Dehaene asks why humans are unique in developing reading and culture. He explains the cultural engineering that shaped writing to human vision and the exaptations and neuronal structures that enable and constrain reading and culture. Dehaene's arguments show how cellular, whole animal and cultural complex adaptive system (CAS) are related. We review his explanations in CAS terms and use his insights to link cultural CAS that emerged based on reading and writing with other levels of CAS from which they emerge. Evolved reading
Read Montague explores how brains make decisions. In particular he explains how: Evolution can create indirect abstract models, such as the dopamine system, that allow Life changing real-time decisions to be made, and how Schematic structures provide encodings of computable control structures which operate through and on incomputable, schematically encoded, physically active structures and operationally associated production functions. Receptor indirection
Daniel Goleman and Richard Davidson describe a scientific investigation of meditation's impact on the brain. They introduce the book by describing their experiences with meditation, science and the research establishment, their friendship, how meditation is now used in two distinct ways: deep - leading to altered traits & wide - that can reach the multitudes; which the book reviews as it critiques the claims and research used to back them up. Goleman and Davidson describe meeting as Harvard psychology graduate students, interested in consciousness, and how minds work. They rebel against the behavioral orthodoxy, visit Asia and discover the Eastern tradition of exploring and altering the mind. Goleman had travelled to Sri Lanka to understand an Asian model of the mind, which he presented to the undergraduates at Harvard. Goleman and Davidson developed it into a shared vision of consciousness. It took over twenty years for scientific theory and experimental data to catch up and align with this model. Much of the prior experimental data had to be abandoned. They introduce meditation's impact on the amygdala responding to pain and stress. They look at the changes in: Stress Compassion Attention Self-awareness; and the potential for use of mediation in psychiatry. And they warn of the occurrence of dark nights. They detail how scientists were able to study the brains of Tibetan meditation masters, starting with Mingyur Rinpoche, and detect meditation altering traits. Finally they discuss the potential benefits of meditation and strategies to distribute it broadly to a busy America. Meditating neurons
Tara Brach was worried from a young age that there was something terribly wrong with her: she like many others felt unworthy. She responded by developing Radical Acceptance. Brach then explains the steps in applying it: pause, greet what happens next with unconditional friendliness; allowing us to: Initially attend to the sensations of our body, Accept the wanting self and discover its source of boundless love. Welcome fear with a widening attention, accept the pain of death and become free. Use adversity as a gateway to limitless compassion for ourselves and others. Focus on our basic goodness to counter Western culture turning anger, at being betrayed, towards ourselves. Extend observing this goodness in everyone. This enables the use of loving-kindness. Leverage friendships to understand more about our shared nature and strengthen Radical Acceptance. Realize our Buddha nature. Complex adaptive system (CAS) theory describes the emergence of the dualistic self and the tree of life linked by the genetic code and machinery. It provides an analog of the Buddhist presence. Compassionate CAS
The influence of childhood on behavior is significant. Enneagrams define personality types: Reformer, Helper, Achiever, Individualist, Investigator, Loyalist, Enthusiast, Challenger and Peacemaker; based on the impact of childhood driven wounds. The Enneagram becomes a tool to enable interested people to transform from the emotionally wounded base, hidden within the armor of the type, to the liberated underlying essence. Childhood leaves each of us with some environmentally specific Basic Fear. In response each of us adopts an induced Basic Desire of the type. But as we develop the inner observer, it will support presence and undermine the identification that supports the armor of the type. The Enneagram reveals three sets of relations about our type armor: Triadic self revealing: Instinctive, feeling, thinking; childhood needs that became significant wounds Social style groupings: Assertive, compliant, withdrawn; strategies for managing inner conflict Coping styles: Positive outlook, competency, reactive; strategies for defending childhood wounds Riso and Hudson augment the Enneagram with instinctual distortions reflected in the interests of the variants. The Enneagram also offers tools for understanding a person's level of development: unhealthy, average, healthy, liberation; including their current center of gravity, steriotypical social role, wake-up call, leaden rule, red flag, and direction of integration and disintegration. Complex adaptive system (CAS) theory associates the models presented by the Enneagram with evolved behaviors and structures in the mind: feelings, emotions, social behaviors, ideas; driven by genetic and cultural evolution and the constraints of family and social life. Emergent evolved amplifers can be constrained by Riso and Hudson's awareness strategies. Enneagram strategies
Antonio Damasio argues that ancient & fundamental homeostatic processes, built into behaviors and updated by evolution have resulted in the emergence of nervous systems and feelings. These feelings, representing the state of the viscera, and represented with general systems supporting enteric operation, are later ubiquitously integrated into the 'images' built by the minds of higher animals including humans. Damasio highlights the separate development of the body frame in the building of minds. Damasio explains that this integration of feelings by minds supports the development of subjectivity and consciousness. His chain of emergence suggests the 'order of things.' He stresses the end-to-end integration of the organism which undermines dualism. And he reviews Chalmers hard problem of consciousness. Damasio reviews the emergence of cultures and sees feelings, integrated with reason, as the judges of the cultural creative process, linking culture to homeostasis. He sees cultures as supporting the development of tools to improve our lives. But the results of the creative process have added stresses to our lives. Following our summary of his arguments RSS frames his arguments from the perspective of complex adaptive system (CAS) theory. Each of the [super]organisms discussed is a CAS reflecting the theory of such systems: Damasio's proposals about homeostasis routed signalling, aligns well with CAS theory. Damasio's ideas on cultural stresses are elaborated by CAS examples. Emergence of feelings
Alfred Nemeczek reveals the chaotic, stressful life of Vincent van Gogh in Arles. Nemeczek shows that Vincent was driven to create, and successfully invented new methods of representing feeling in paintings, and especially portraits. Vincent worked hard to allow artists like him-self to innovate. But Vincent failed in this goal, collapsing into psychosis. Nemeczek also provides a brief history of Vincent's life. Following our summary of his main points, RSS frames the details from the perspective of complex adaptive system (CAS) theory. Vincent creates
Richard Dawkin's explores how nature has created implementations of designs, without any need for planning or design, through the accumulation of small advantageous changes. Accumulating small changes
Russ Abbott explores the impact on science of epiphenomena and the emergence of agents. Autonomous emergence
Terrence Deacon explores how constraints on dynamic flows can induce emergent phenomena which can do real work. He shows how these phenomena are sustained. The mechanism enables the development of Darwinian competition. Constraint based phenomena

Primary Navigation

In this page we:

Introduce some current problems of complexity for humanity
Explain how to use the site.

There are two main starting points:

The example systems frame and
The presentation frame.
And then there is how we use the site.

The site uses lots of click through. That's so that you can see the underlying principles that are contributing to the system being discussed. We hope that as you internalize and reflect on the principles the system should appear in a new light. At this site clicking is good!

Opportunities

This page introduces the complex adaptive system (CAS) theory frame. The theory provides an organizing framework that is used by 'life.' It can be used to evaluate and rank models that claim to describe our perceived reality. It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents.
John Holland's framework for representing complexity is outlined. Links to other key aspects of CAS theory discussed at the site are presented.

Theory

We are products of complexity, but our evolution has focused our understanding on the situation of hunter gatherers on the African savanna. As humanity has become more powerful we can significantly impact the systems we depend on. But we struggle to comprehend them. So this web frame explores significant real world complex adaptive systems (CAS):

Assumptions of randomness & equilibrium allowed the wealthy & powerful to expand the size and leverage of stock markets, by placing at risk the insurance and retirement savings of the working class. The assumptions are wrong but remain entrenched.
The US nation was built from two divergent political views of: Jefferson and Hamilton. It also reflects the development of competing ancient ideas of Epicurus and Cyril. But the collapse of Bretton Woods forced Wall Street into a position of power, while the middle and working class were abandoned by the elites. Housing financed with cash from oil and derivative transactions helped hide the shift.
Most US health care is still operating the way cars built in the 1940s did. Geisinger is an example of better solution. But transforming the whole network is a challenge. And public health investment has proved far more beneficial.
Helping our children learn to be effective adults is part of our humanity, but we have created a robust but deeply flawed education system. Better alternatives have emerged.
Spoken language, reading and writing emerged allowing our good ideas to become a second genetic material.
The emergence of the global economy in the 1600s and its subsequent development;

It explains how the examples relate to each other, why we all have trouble effectively comprehending these systems and explains how our inexperience with CAS can lead to catastrophe. It outlines the items we see as key to the system and why.

Examples

This page presents a search result list covering each linked region of rob's strategy studio.

Search

Rob's Strategy Studio aims to celebrate and illuminate complex adaptive systems (CAS) just as an art studio does art.

By way of introduction it notes the complex interactions that led to the partnership that discovered the DNA double helix and genetic code.

The page introduces the RSS vision 'I act, therefore I think' approach and the RSS mission.

It describes how many key aspects of the world are CAS including businesses.

Finally the page explains each of the framed pictures displayed at the studio including the other aspects explored in this vision frame.

Vision

This page introduces the programs that the Adaptive Web Framework (AWF) develops and uses to deploy Rob's Strategy Studio (RSS).
The programs are structured to obey complex adaptive system (CAS) principles. That allows AWF to experiment and examine the effects.
A production program generates the web pages.
A testing system tests the production program. It uses a framework to support the test programs. This is AWF's agent programming framework as described in the agent-based programming presentation.
An example of the other AWF agent-based programs that are also described in the frame is the virtual robot.
Finally a strength, weaknesses, opportunities and threats assessment is presented.

Perl

This page introduces a series of asymmetries which encourage different strategic approaches.
The differences found in business, sexual selection, gamete structure, as well as in chess encourage escalations in the interactions.
And yet the systems including these asymmetries can be quite stable.

Asymmetries

This web frame includes a set of presentations about complex adaptive systems (CAS)

Presentations

The US economy's housing amplifiers and their implications

Summary

A key

Plans are interpreted and implemented by agents. This page discusses the properties of agents in a complex adaptive system (CAS).
It then presents examples of agents in different CAS. The examples include a computer program where modeling and actions are performed by software agents. These software agents are aggregates.
The participation of agents in flows is introduced and some implications of this are outlined.

agent in the 1990 - 2008 housing expansion Countrywide is linked into the residential mortgage value delivery system (

The complex adaptive system (CAS) nature of a value delivery system is first introduced. It's a network of agents acting as relays.

The critical nature of hub agents and the difficulty of altering an aligned network is reviewed.

The nature of and exceptional opportunities created by platforms are discussed.

Finally an example of aligning a VDS is presented.

VDS) by Paul Muolo and Mathew Padilla. But they show the VDS was full of amplifiers and control points. With no one incented to apply the brakes the bubble grew and burst. Following the summary of Muolo and Padilla's key points the complex adaptive system (

CAS) aspects are highlighted.

Chain of Blame

In Paul Muolo and Mathew Padilla's book 'Chain of Blame' they detail the results of investigating the US is the United States of America. Economy is a human SuperOrganism complex adaptive system (CAS) which operates and controls trade flows within a rich niche. Economics models economies. Robert Gordon has described the evolution of the American economy. Like other CAS, economic flows are maintained far from equilibrium by: demand, financial flows and constraints, supply infrastructure constraints, political and military constraints; ensuring wealth, legislative control, legal contracts and power have significant leverage through evolved amplifiers.
's residential housing

value delivery system (VDS) outlined below.

Muolo and Padilla are journalists who have long focused on the impact of

This page discusses the physical foundations of complex adaptive systems (CAS). A small set of rules is obeyed. New [epi]phenomena then emerge. Examples are discussed.

changes in law on the detailed strategies and operations of businesses in the housing VDS. They had concluded that the Savings and Loan system of the late 1980 - early 1990s (transformed by the 1982 Garn-St. Germain act of 1982 was signed by President Reagan in response to the 1979 oil shock inflation driven collapse of the US S&L industry. The S&Ls had previously only been allowed to offer depositors fixed rate loans on fixed length mortgages which could not adapt to the rapid inflation. The S&L depositors responded by switching to higher interest bearing money market funds. The 1982 act deregulated the savings and loan associations and allowed banks to provide adjustable-rate mortgage loans.
) inherently induced criminality. However, key players in the housing system like Angelo Mozilo, CEO is chief executive officer.
of Countrywide Home Loans, had argued that residential mortgage banking was effectively regulated by the capital is the sum total nonhuman assets that can be owned and exchanged on some market according to Piketty. Capital includes: real property, financial capital and professional capital. It is not immutable instead depending on the state of the society within which it exists. It can be owned by governments (public capital) and private individuals (private capital). markets. The assumption was that Wall Street

Flows of different kinds are essential to the operation of complex adaptive systems (CAS).
Example flows are outlined. Constraints on flows support the emergence of the systems. Examples of constraints are discussed.

controlled the mortgage bond business and the regulation was in their best interest. Even in 2003 Muolo doubted that assertion. In retrospect they could not regulate. (Mozilo was cleared of criminal and civil acts by the department of justice but NYT Gretchen Morgenson is unimpressed Jun 2016).

Mozilo had made Countrywide the largest public company originating home mortgages. Mozilo was interested in the detail of the business and identified the

This page discusses the effect of the network on the agents participating in a complex adaptive system (CAS). Small world and scale free networks are considered.

key network connections required for success. He focused his staff on these connections. He had designed the company to become number one in every market it entered. He had followed his competitors into the sub-prime market and by 2007 dominated that too. When he admitted to analysts in 2007 that a falling mortgage market would not turn around until 2009 he added "We are experiencing a huge price depression, one we have not seen before--not since the Great Depression". The stock market plunged 226 points. A few days later two Bear Stearns mortgage focused hedge fund is an investment fund that accepts investments from a limited number of accredited individual or institutional investors. Hedge funds are able to use investment methods that are not allowed for other types of fund.
s collapsed. The stock market collapse expanded and went global. Countrywide stock was part of the collapse.

The subprime and prime residential mortgage value delivery system

The early recipient of a subprime mortgage was usually a home owner with credit issues that constrained access to prime lenders. The home had typically gone up in value during the borrower's

Carlo Rovelli resolves the paradox of time.
Rovelli initially explains that low level physics does not include time:

A present that is common throughout the universe does not exist
Events are only partially ordered. The present is localized
The difference between past and future is not foundational. It occurs because of state that through our blurring appears particular to us
Time passes at different speeds dependent on where we are and how fast we travel
Time's rhythms are due to the gravitational field
Our quantized physics shows neither space nor time, just processes transforming physical variables.
Fundamentally there is no time. The basic equations evolve together with events, not things

Then he explains how in a physical world without time its perception can emerge:

Our familiar time emerges

Our interaction with the world is partial, blurred, quantum indeterminate
The ignorance determines the existence of thermal time and entropy that quantifies our uncertainty
Directionality of time is real but perspectival. The entropy of the world in relation to us increases with our thermal time. The growth of entropy distinguishes past from future: resulting in traces and memories
Each human is a unified being because: we reflect the world, we formed an image of a unified entity by interacting with our kind, and because of the perspective of memory
The variable time: is one of the variables of the gravitational field. With our scale we don't register quantum fluctuations, making space-time appear determined. At our speed we don't perceive differences in time of different clocks, so we experience a single time: universal, uniform, ordered; which is helpful to our decisions

time of ownership. Subprime borrowers compared the rates favorably to those of their credit cards. During the 1970s Southern California had been the hot market for primary & secondary mortgages, representing a quarter of the total US is the United States of America. market and with a growing population driving up the demand and price of housing.

Realtors are the most significant link between borrowers and mortage initiators. TV advertising also directed potential borrowers to loan originators. Loan brokers subsequently also linked borrowers to mortgage originators.

Non-bank loan originators, like Countrywide, and S&Ls is savings and loan association. These S&Ls were deregulated by the 1982 Garn-St. Germain act.
initially focused on prime rate mortgages. S&Ls were initially legally constrained to pay a maximum 5.5 percent on deposits. When US inflation was above this level the S&L business model collapsed. S&Ls typically kept their loans on their books. When Congress & President Reagan acted to free the S&Ls to offer higher deposit rates savers returned, but the mortgage portfolio payment streams were 30 year fixed rate and generally didn't match the new higher deposit rates the S&Ls offered. The business model again collapsed. Non S&Ls had a choice of business structure. Some became REITs reducing their tax commitments, but constraining them to pay large dividends each quarter. In the commercial property market cash flows from rents can finance a REIT is a real estate investment trust. . Residential is a cyclical business making this a dangerous commitment, but some investment banks, such as Friedman Billings Ramsey (FBR), suggested they could toggle between REIT and non REIT. Becoming a REIT provided access to investment capital is the sum total nonhuman assets that can be owned and exchanged on some market according to Piketty. Capital includes: real property, financial capital and professional capital. It is not immutable instead depending on the state of the society within which it exists. It can be owned by governments (public capital) and private individuals (private capital). , and allowed loan originators to hold bonds on their balance sheets. By early 2000 that was important since it had become cheaper to use deposits to fund mortgages than to use warehouse loans, is a loan extended from a large bank or Wall Street firm to a nonbank to originate mortgages. . Indeed at this time Countrywide purchased a bank.

Loan officers initially constrained the origination of subprime loans

Originally specialists lent to the subprime market, obtaining a higher interest payment, but having to manage a higher potential of default by ensuring the borrower had equity in the house and by their expertise in repossession. That meant foreclosing the house and then working with the local marshal to throw the defaulter out of the house and then boarding it up and chaining it off.

The decision to proceed with offering a loan was made by a loan officer. Some companies paid these agents a reward for each loan they closed.

The equity estimate depended on accurate valuation of the house's value, from an independent appraiser.

Non-bank loan originators borrowed the money they loaned since they did not have deposits. Most competitors were S&L is savings and loan association. These S&Ls were deregulated by the 1982 Garn-St. Germain act.
s who had deposits. While loan origination created revenue flows, compliance was necessary to ensure the company could obtain finance. But market share strategies and compliance requirements counteract.

The S&L is savings and loan association. These S&Ls were deregulated by the 1982 Garn-St. Germain act.
s could keep the loan on their books or sell them on to the Government chartered investing companies Fannie Mae is the coloquial name for the FNMA which is:

The federal national mortgage association, a GSE. It was made a publically traded company by the HUD act of 1968 to remove its debt from the federal budget.
In 1970 FNMA was authorized to purchase conventional mortgages. FHLMC was setup to ensure competition for FNMA in this task.
In 1981 FNMA issued its first designated MBS.
In 1992 the Democratic Congress and President Bush established HCDA which gave FNMA affordable housing goals set annually by HUD with Congressional approval.
In 1999 the Clinton administration put pressure on FNMA to expand loans to low and moderate income borrowers. FNMA took on additional subprime risk.
In 2000 HUD placed anti-predatory lending rules on the affordable housing goals, but these constraints were dropped in 2004. In effect they just pushed mortgage originators to Wall Street finance.
Once mortgage originators started to use warehouse loans, the GSEs lost visibility and control of origination.
The GSEs purchased AAA mortgages from commercial banks. Many of these classifications were fraudulent leaving the GSEs with bad debt. In 2008 to maintain the stability of the global economy the George W. Bush administration seized the GSEs and placed them in conservatorship under the FHFA, ensuring they could not collapse.
In 2010 FNMA's stock was delisted from the NYSE. They still trade over-the-counter.

and Freddie Mac is the Federal home loan mortgage corporation (FHLMC), a GSE. . Non-bank loan originators could also sell A rated loans to Fannie and Freddie. Fannie and Freddie would not purchase non-conforming mortgages (subprime) in the 1970s. Fannie Mae and Freddie Mac obtained special low rates on finance from the government, but since they legally couldn't accept subprime or jumbo mortgages Wall Street traded them into the market for a commission. During the Clinton administration Andrew Cuomo relaxed the charters to allow more types of mortgages to be purchased. The George W. Bush administration encouraged Fannie Mae and Freddie Mac to go further and buy subprime based mortgages. Being the owners of huge amounts of residential mortgage debt Fannie and Freddie had cyclic businesses dependent on low interest rates. To make their business results appear less cyclic both companies falsely reported earnings that they had hedged, which became public by 2007.

For large non-S&L is savings and loan association. These S&Ls were deregulated by the 1982 Garn-St. Germain act.
s the loans were supplied as lines of credit by larger money centered banks. Small non-S&Ls initially obtained finance from Doctors and Dentists. At that

Carlo Rovelli resolves the paradox of time.
Rovelli initially explains that low level physics does not include time:

A present that is common throughout the universe does not exist
Events are only partially ordered. The present is localized
The difference between past and future is not foundational. It occurs because of state that through our blurring appears particular to us
Time passes at different speeds dependent on where we are and how fast we travel
Time's rhythms are due to the gravitational field
Our quantized physics shows neither space nor time, just processes transforming physical variables.
Fundamentally there is no time. The basic equations evolve together with events, not things

Then he explains how in a physical world without time its perception can emerge:

Our familiar time emerges

Our interaction with the world is partial, blurred, quantum indeterminate
The ignorance determines the existence of thermal time and entropy that quantifies our uncertainty
Directionality of time is real but perspectival. The entropy of the world in relation to us increases with our thermal time. The growth of entropy distinguishes past from future: resulting in traces and memories
Each human is a unified being because: we reflect the world, we formed an image of a unified entity by interacting with our kind, and because of the perspective of memory
The variable time: is one of the variables of the gravitational field. With our scale we don't register quantum fluctuations, making space-time appear determined. At our speed we don't perceive differences in time of different clocks, so we experience a single time: universal, uniform, ordered; which is helpful to our decisions

time California medical professionals were cash rich and seeking good rates of interest. They were paid 13%, while the non-S&L kept 1%, of the 14% interest charged on the loan. Once the subprime market became established Wall Street lenders such as Prudential Securities offered even the small non-S&Ls warehouse loans, is a loan extended from a large bank or Wall Street firm to a nonbank to originate mortgages.   which it would pool and securitize as mortgage backed securities (MBS is mortgage backed security, a bond backed by the monthly payments homeowners make on their residences. It was initially developed by Lew Ranieri at Salomon Brothers.
). The attraction for Prudential was that subprime mortgages were a sustained stream of interest. The mortgage owners did not historically refinance since they had limited access to other credit. The lack of refinancing was important since while the A-rated parts (90%) of each MBS were purchased by hedge fund is an investment fund that accepts investments from a limited number of accredited individual or institutional investors. Hedge funds are able to use investment methods that are not allowed for other types of fund.
s, the other 'B' piece was required to be held by the lender. This 'B' part was risky, is an assessment of the likelihood of an independent problem occurring. It can be assigned an accurate probability since it is independent of other variables in the system. As such it is different from uncertainty.
, since it was structured as the piece with all the interest payments. If the borrower refinanced the holder of the 'B' piece would still have to repay the rest of the interest payments. How much risk, uncertainty is when a factor is hard to measure because it is dependent on many interconnected agents and may be affected by infrastructure and evolved amplifiers. This is different from Risk.   and reward the lenders had on their books was open to the lenders, and their stock investors, interpretation of how long the borrowers would maintain the loan.
The 1977 original MBS had securitized prime mortgages which had a forty year history of default rates to define the risk associated with the bond. Bond investment banks, like Salomon and Bear Stearns, used statistics on the history to understand the rate the mortgages would prepay. That information was a key edge their traders had when selling the bonds in the market. The subprime loans were only ten years old and were changing in attributes rapidly. The subprime securities should not have been viewed as similar to the original MBS.

Prudential and the Wall Street firms use sales reps to obtain parcels of originated loans. These are then reviewed by a quantitative analyst. The decision to accept and underwrite the loans is made by a mortgage banker, who then trades the packaged bonds on the secondary markets.

Wall Street bundled an offer of no cost warehouse loans, is a loan extended from a large bank or Wall Street firm to a nonbank to originate mortgages.   with an agreement to securitize the loans at the investment bank, under cutting the money center banks that also offered warehouse loans, is a loan extended from a large bank or Wall Street firm to a nonbank to originate mortgages.   for interest.

Wall Street packaged the loan pools into ABS is an asset-backed security defined as backed by nonconforming loans rather than Fannie Mae or Freddie Mac quality loans used in original MBS or CMO.
s (to differentiate them from original MBS) and further packaging of the subordinated tranches of subprime securities into Collateralized Debt Obligations (CDO)s which allowed them to transfer the uncertainty associated with the loans to institutional investors hungry for high yield bonds to offset low short term rates. The CDO is a:

Care delivery organization in health care.
Collateralized debt obligation in finance. The idea is to transfer the credit risk rather than the loan itself. The bank enters into a CDS on the loans with a SPV. The CDO allows the bank to shift its loans outside the reach of regulators. The CDO also can distribute the risk unevenly by tranching. Equity is most at risk. Then any subordinated debt.

s were not transparent. The CDOs were sold through private placements and the underlying

Satyajit Das uses an Indonesian company's derivative trades to introduce us to the workings of the international derivatives system. Das describes the components of the value delivery system and the key transactions. He demonstrates how the system interacted with emerging economies expanding them, extracting profits and then moving on as the induced bubbles burst. Following Das's key points the complex adaptive system (CAS) aspects are highlighted.

derivative contract details were not disclosed to the buyers. The loan originators, the securitization process and the hedge fund is an investment fund that accepts investments from a limited number of accredited individual or institutional investors. Hedge funds are able to use investment methods that are not allowed for other types of fund.
s that purchased the bonds were all outside the control of banking regulators. Since CDOs had originally been packages of different corporate bonds, credit card receivables and aircraft loans designed to diversify risk the new opaque CDOs were likely to be poorly understood in the market. The value of the new CDOs really depended on the continued increase in residential house prices in the US. Once Deutsche Bank analysts concluded that prices must start to drop in the years ahead they began shorting is a multi part transaction where:

A borrowed tradable asset (this part of the transaction is not performed in the naked version) is sold under the assumption that the asset is going to fall in price during the period when it has been borrowed.
Once the asset falls in price it is then purchased.
The asset is returned to the lender, with any additional risk premium.
The short seller keeps any profit. If the asset gained value during the period of the short then the seller makes a loss.

the ABS index.

The Wall Street firms typically outsourced the assessment of loan compliance to a specialist, such as Clayton Holdings. The investment banks typically requested audits of only 5 - 20% of loans. The lower the figure the more likely the bank was to win the loan pool from the originator. Further as long as the loan ended up in a CDO it would contribute to revenue but not present a risk to the investment bank! Since the banks paid for the underwriting and their profits were correlated with the volumes of loans securitized there was pressure on the mortgage underwriters to pass as many loans as possible. With discressionary factors loading the underwriting the demand for revenue was going to raise the loan pools ratings.

Countrywide traded jumbo loans and Community Reinvestment Act (CRA) loans, needed by banks and S&Ls to conform with federal law directly competing with Wall Street. Its traders made multi-million dollar commissions. Soon Wall Street traders were employed at the trading desk.

Companies could obtain help with becoming publicly owned from Investment banks. One decision was whether the company should become a REIT is a real estate investment trust. . FBR was particularly focused on the techniques for doing this. FBR, promoted the option to toggle between REIT and non REIT. In 2003, with interest rates low, investors, including hedge fund is an investment fund that accepts investments from a limited number of accredited individual or institutional investors. Hedge funds are able to use investment methods that are not allowed for other types of fund.
s, were keen to gain access to shares of subprime loan originators and REIT investment grew. By 2005 the Fed raised short term rates but the prior bubble had driven up the numbers of loan originators. This competition kept the mortgage rates low and profits dried up. By the end of 2007 most FBR sponsored lenders had failed or been sold. The problem was that as subprime loans went delinquent Wall Street would ask the originators for extra funds, or to buy back the mortgages. REITs had paid out 90% dividends, so they had little retained earnings to respond with.

Washington consulting firms, particularly those headed by the politically connected and aware, provided network connections between business groups, investment banks, civil servants and politicians. The agents employed by these firms move in and out of roles in the presidential administration and departments.

Bond rating agencies associated a value and risk, is an assessment of the likelihood of an independent problem occurring. It can be assigned an accurate probability since it is independent of other variables in the system. As such it is different from uncertainty.
profile with the collateralized mortgage bonds for a fee from the bank creating the derivative contracts. The AAA ratings they gave to CDO is a:

Care delivery organization in health care.
Collateralized debt obligation in finance. The idea is to transfer the credit risk rather than the loan itself. The bank enters into a CDS on the loans with a SPV. The CDO allows the bank to shift its loans outside the reach of regulators. The CDO also can distribute the risk unevenly by tranching. Equity is most at risk. Then any subordinated debt.

s were in part based on the insurance reduces volatility in standard of living by compensating for losses of income during periods of unemployment, for catastrophic losses from disaster, or death of a family income earner as described by Gordon. Insurance companies must set aside reserves to handle such claims. Britain initially required that insurance buyers also have an insurable interest. That is required in insurance markets to ensure buyers of insurance don't destroy their asset just to obtain the insurance. Health insurance is treated separately being unusual, since the subscriber is likely to know more about their state of health than the insurer is and the subscriber is more likely to purchase the health insurance when aware of their increased risk. This behavior collapses the risk pool by: forcing the insurer to increase the premiums, and encouraging healthy individuals to opt out of health insurance coverage. that the bonds carried from the three big bond insurance companies. It totally ignored the uncertainty is when a factor is hard to measure because it is dependent on many interconnected agents and may be affected by infrastructure and evolved amplifiers. This is different from Risk. implicit in the interconnections of the US is the United States of America. housing and financial markets.

Press, TV shows and analysts provided investors with a conduit to the originator's public relations framed judgments of their executives.

While hedge fund is an investment fund that accepts investments from a limited number of accredited individual or institutional investors. Hedge funds are able to use investment methods that are not allowed for other types of fund.
s purchased the subprime mortgage bonds 'A' parts and borrowers paid the interest streams lenders made huge profits. However, when that wasn't true subprime lenders would generate huge losses.

Hedge fund is an investment fund that accepts investments from a limited number of accredited individual or institutional investors. Hedge funds are able to use investment methods that are not allowed for other types of fund.
s are opaque operations which provide investment vehicles. Initially value investment strategies were followed by managers like Warren Buffett, but quantitative strategies leveraging computing power to apply options models became popular over

Carlo Rovelli resolves the paradox of time.
Rovelli initially explains that low level physics does not include time:

A present that is common throughout the universe does not exist
Events are only partially ordered. The present is localized
The difference between past and future is not foundational. It occurs because of state that through our blurring appears particular to us
Time passes at different speeds dependent on where we are and how fast we travel
Time's rhythms are due to the gravitational field
Our quantized physics shows neither space nor time, just processes transforming physical variables.
Fundamentally there is no time. The basic equations evolve together with events, not things

Then he explains how in a physical world without time its perception can emerge:

Our familiar time emerges

Our interaction with the world is partial, blurred, quantum indeterminate
The ignorance determines the existence of thermal time and entropy that quantifies our uncertainty
Directionality of time is real but perspectival. The entropy of the world in relation to us increases with our thermal time. The growth of entropy distinguishes past from future: resulting in traces and memories
Each human is a unified being because: we reflect the world, we formed an image of a unified entity by interacting with our kind, and because of the perspective of memory
The variable time: is one of the variables of the gravitational field. With our scale we don't register quantum fluctuations, making space-time appear determined. At our speed we don't perceive differences in time of different clocks, so we experience a single time: universal, uniform, ordered; which is helpful to our decisions

time.

The 1998 Russian debt crisis and related Long-Term Capital Management was Long-Term Capital Management, a hedge fund that used Black-Scholes quantitative models to trade in derivatives. The hedge fund's bets failed during the Asian and Russian debt crisis of 1998 and it had to be rescued by the Federal Reserve.
collapse reduced hedge fund interest in debt. Investors in public subprime lenders lost hundreds of millions of Dollars.

As bad for holders of 'B' pieces of loans was the appearance of loan brokers. These free-lancers, often laid off experienced S&L is savings and loan association. These S&Ls were deregulated by the 1982 Garn-St. Germain act.
loan officers, identified candidates for loans and then got paid a fee if the loan package looked good to the lender. With no linkage to the 'B' piece of the loan the brokers convinced borrowers to refinance to capture more fees.
Still the margin on subprime loans was so high that once the initial crisis finished the remaining loan originators were able to capitalize on the amplifying value delivery system. To gain access to these profits Wall Street firms began buying the loan originators. That introduced a conflict of interest since the same firms also financed and securitized loans from other loan originators. As the retail housing market soured investment banks issued margin calls and required loan buy backs against the originators - but was that good finance or a business strategy? The Clinton Administration struggled with the Russian debt crisis and refused to regulate the derivatives process. With the

The IPO of Netscape is defined as the key emergent event of the New Economy by Michael Mandel. Following the summary of Mandel's key points the complex adaptive system (CAS) aspects are highlighted.

bursting of the dot com bubble the George W. Bush Administration looked to the housing market to pull the economy is a human SuperOrganism complex adaptive system (CAS) which operates and controls trade flows within a rich niche. Economics models economies. Robert Gordon has described the evolution of the American economy. Like other CAS, economic flows are maintained far from equilibrium by: demand, financial flows and constraints, supply infrastructure constraints, political and military constraints; ensuring wealth, legislative control, legal contracts and power have significant leverage through evolved amplifiers.
out of recession. Chinese finance officials aiming to keep their currency is legal tender which provides no interest payments to the holder. It is a central aspect of money and in CAS is an analog of a short term potential energy token such as the high energy phosphate bond of the base ATP. But the interaction of the geometric breeding and deaths of agents that perform actions and the linear increase in real resources, described by Turchin, results in the correspondence between energy and currency being complex and adaptive.
weak helped by purchasing US is the United States of America. treasuries. The capital is the sum total nonhuman assets that can be owned and exchanged on some market according to Piketty. Capital includes: real property, financial capital and professional capital. It is not immutable instead depending on the state of the society within which it exists. It can be owned by governments (public capital) and private individuals (private capital). flowed into the finance system. The Federal Reserve of 1913 was a response to a series of banking panics with the goal of responding effectively to stresses. It setup:

At least 8 and not more than 12 private regional Federal Reserve banks. Twelve were setup
Federal Reserve Board with seven members to govern the system. The President appointed the seven, which must be confirmed by Congress. In 1935 the Board was renamed and restructured.
Federal Advisory Committee with twelve members
Single US currency - the Federal Reserve Note.

cut short term interest rates, making subprime margins especially attractive.

Non subprime primary mortgages were typically insured by government agencies. For bonds to sustain a high rating they needed to be insured. Berkshire Hathaway and AIG both offered insurance reduces volatility in standard of living by compensating for losses of income during periods of unemployment, for catastrophic losses from disaster, or death of a family income earner as described by Gordon. Insurance companies must set aside reserves to handle such claims. Britain initially required that insurance buyers also have an insurable interest. That is required in insurance markets to ensure buyers of insurance don't destroy their asset just to obtain the insurance. Health insurance is treated separately being unusual, since the subscriber is likely to know more about their state of health than the insurer is and the subscriber is more likely to purchase the health insurance when aware of their increased risk. This behavior collapses the risk pool by: forcing the insurer to increase the premiums, and encouraging healthy individuals to opt out of health insurance coverage. on mortgage bonds.

Vertical Integration of the mortgage industry

Many sub-prime mortgage originators had been vertically integrated into major Wall Street firms. That hugely increased Wall Street's profit and uncertainty is when a factor is hard to measure because it is dependent on many interconnected agents and may be affected by infrastructure and evolved amplifiers. This is different from Risk. and undermined the regulatory process Mozilo promoted. Initially Bear Stearns had launched EMC Mortgage to buy delinquent loans from the 1989-1990's S&L is savings and loan association. These S&Ls were deregulated by the 1982 Garn-St. Germain act.
collapse held by the Resolution Trust Corporation. By 1996 EMC was starting to issue sub-prime loans, and even benefited from the mortgage originator consolidation of 1998-1999. Bear Stearns further integrated into hedge fund is an investment fund that accepts investments from a limited number of accredited individual or institutional investors. Hedge funds are able to use investment methods that are not allowed for other types of fund.
management including subprime debt based funds in which the bank itself invested increasing profits and uncertainty for the bank from 'B' loan refinancing and loan defaults. The Federal Reserve of 1913 was a response to a series of banking panics with the goal of responding effectively to stresses. It setup:

At least 8 and not more than 12 private regional Federal Reserve banks. Twelve were setup
Federal Reserve Board with seven members to govern the system. The President appointed the seven, which must be confirmed by Congress. In 1935 the Board was renamed and restructured.
Federal Advisory Committee with twelve members
Single US currency - the Federal Reserve Note.

Chairman Alan Greenspan, resisted calls for government regulation of the system and early bursting of the subprime bubble.

Complex adaptive systems (CAS)s have a number of aspects which can be used to classify the key aspects of the US is the United States of America. residential housing VDS:

This page describes the consequences of the asymmetries caused by genotypic traits creating a phenotypic signal in males and selection activity in the female - sexual selection.
The impact of this asymmetry is to create a powerful alternative to natural selection with sexual selection's leverage of positive returns. The mechanisms are described.

Sexual selection: Wall Street banks re-packaged high-risk tranches of mortgage backed securities into
CDO
is a:
- Care delivery organization in health care.
- Collateralized debt obligation in finance. The idea is to transfer the credit risk rather than the loan itself. The bank enters into a CDS on the loans with a SPV. The CDO allows the bank to shift its loans outside the reach of regulators. The CDO also can distribute the risk unevenly by tranching. Equity is most at risk. Then any subordinated debt.
s. With an opaque packaging process and a good understanding of the rating models they were able to obtain AAA ratings for senior tranches of these CDOs. Regulators had required institutional investors to limit their investments to high rated products, and encouraged banks to invest by increasing the collateral they must hold against default for lower rated products. Institutional investors responded as required, and
Agents use sensors to detect events in their environment. This page reviews how these events become signals associated with beneficial responses in a complex adaptive system (CAS). CAS signals emerge from the Darwinian information model. Signals can indicate decision summaries and level of uncertainty.

signalled, purchasing the CDO tranches based on the associated ratings rather than the properties of the underlying assets. Wall Street banks, aware of the ratings model disconnects, and knowing the properties of the underlying assets, leveraged their superior position placing bets against the success of the institutional investments.
This page reviews the strategy of setting up an arms race. At its core this strategy depends on being able to alter, or take advantage of an alteration in, the genome or equivalent. The situation is illustrated with examples from biology, high tech and politics.

Evolutionary amplifiers: Loan brokers encouraged borrowers to refinance and loan originators to provide loans, even though the refinancing was damaging to the owner of the 'B' piece of each mortgage bond. Subprime loan originators offering borrowers mortgages at less than credit card rates by leveraging warehouse loans, is a loan extended from a large bank or Wall Street firm to a nonbank to originate mortgages. . As the market matured loan originators also reduced the requirements for borrowers to get a loan. The leaders aims to develop plans and strategies which ensure effective coordination to improve the common good of the in-group. John Adair developed a leadership methodology based on the three-circles model.
of Loan originators provided significant donations to political campaigns, while lobbying for removal of constraining state laws. Loan officers when paid a reward for completing a loan had a material interest in getting the contract closed. Investment banks valuing originating subprime lenders for public stock offering provided an interpretation of the sub-prime loan repayment rates to stock investors. REIT is a real estate investment trust. creating investment banks captured clients who became dependent on further transactions is an operation which guarantees to complete a defined set of activities or return to the initial state. For a fee the postal service will ensure that a parcel is delivered to its recipient or will return the parcel to the sender. To provide the service it may have to undo the act of trying to deliver the parcel with a compensating action. Since the parcel could be lost or destroyed the service may have to return an equivalent value to the sender. , whatever the business climate. Wall Street banks also created the derivative contracts which supported the collateralization of subprime loans as high grade debt, and financed the rating agencies activities. Trade groups including the National Association of Home Builders, Realtors, S&L is savings and loan association. These S&Ls were deregulated by the 1982 Garn-St. Germain act.
s, commercial banks and
Fannie Mae
is the coloquial name for the FNMA which is:
- The federal national mortgage association, a GSE. It was made a publically traded company by the HUD act of 1968 to remove its debt from the federal budget.
- In 1970 FNMA was authorized to purchase conventional mortgages. FHLMC was setup to ensure competition for FNMA in this task.
- In 1981 FNMA issued its first designated MBS.
- In 1992 the Democratic Congress and President Bush established HCDA which gave FNMA affordable housing goals set annually by HUD with Congressional approval.
- In 1999 the Clinton administration put pressure on FNMA to expand loans to low and moderate income borrowers. FNMA took on additional subprime risk.
- In 2000 HUD placed anti-predatory lending rules on the affordable housing goals, but these constraints were dropped in 2004. In effect they just pushed mortgage originators to Wall Street finance.
- Once mortgage originators started to use warehouse loans, the GSEs lost visibility and control of origination.
- The GSEs purchased AAA mortgages from commercial banks. Many of these classifications were fraudulent leaving the GSEs with bad debt. In 2008 to maintain the stability of the global economy the George W. Bush administration seized the GSEs and placed them in conservatorship under the FHFA, ensuring they could not collapse.
- In 2010 FNMA's stock was delisted from the NYSE. They still trade over-the-counter.
& Freddie Mac is the Federal home loan mortgage corporation (FHLMC), a GSE. ; influenced Congress to pass favorable legislation.

Gordon notes that the G.I. Bill is the Serviceman's Readjustment Act of 1944 (G.I. Bill) which provided benefits to soldiers returning from the Second World War: tuition payments and living expenses, low-cost mortgages, low-interest loans to start businesses and one year of unemployment compensation; acting as a major catalyst in generating human capital.
supported low cost financing of house purchase for white soldiers returning from the Second World War. This supported a wealth is schematically useful information and its equivalent, schematically useful energy, to paraphrase Beinhocker. It is useful because an agent has schematic strategies that can utilize the information or energy to extend or leverage control of the cognitive niche. based separation between whites and non-whites within the US. Additional financial evolved amplifiers reinforced the strategy:

Mortgage interest deduction, initiated in 1913 and focused by the TRA is the Tax Reform Act of 1986. President Reagan followed supply-side economic theory reducing the top tax rate from 50% to 28% and removed loop holes in the tax code. The act resulted in a slight increase in tax revenue.
, which pulls income back to the wealthy, as noted by Princeton's Matthew Desmond.
HUD is the US department of housing and urban development. has worked with private equity is the pooling of commitments from fund investors, to: buy assets that are not publicly traded: companies, real estate, and debt; improve their acquisition's value and sell them again, returning the sale cash to the fund investors. Private equity companies gain competitive advantage from being lightly regulated, and wealth from the fees and special tax privileges. Private equity companies were initially corporate raiders.
to transfer the ownership of forclosed housing units to the private sector.

Congress had also set the comptroller of the currency is the Office of the Comptroller of the Currency, a bureau within the Treasury.
in conflict with state regulators. While the states were tightening rules to limit predatory lending, the federal bank regulator offered federal control with limited constraints on lending. The US comptroller collected fees for any banks that switched to Federal regulation.

By Jun 2017 financial regulators were seeing indications that they needed to increase protections, but were responding to political pressure to relax the regulations setup after 2008. (Dec 2017)

This page reviews the catalytic impact of infrastructure on the expression of phenotypic effects by an agent. The infrastructure reduces the cost the agent must pay to perform the selected action. The catalysis is enhanced by positive returns.

Infrastructure amplifiers: Loan originators and Wall Street financiers acted as catalysts, an infrastructure amplifier. . The Wall Street banks: removing loans from the originators books, securitizing them as collateralized mortgage obligations and selling the securities in the financial markets. The
Federal Reserve
of 1913 was a response to a series of banking panics with the goal of responding effectively to stresses. It setup:
- At least 8 and not more than 12 private regional Federal Reserve banks. Twelve were setup
- Federal Reserve Board with seven members to govern the system. The President appointed the seven, which must be confirmed by Congress. In 1935 the Board was renamed and restructured.
- Federal Advisory Committee with twelve members
- Single US currency - the Federal Reserve Note.
kept short term interest rates low. It minimized government regulation of Wall Street's derivative operations, of Wall Street's integration of loan originators and of hedge fund is an investment fund that accepts investments from a limited number of accredited individual or institutional investors. Hedge funds are able to use investment methods that are not allowed for other types of fund.
activities. Automated loan assessment tools speeded up the qualification process. As the bubble finally burst, the amplifiers went into reverse. Low interest rates limited the Federal Reserve's ability to constrain the reversed flows.
QE
is quantitative easing, a monetary policy used by central banks. It:
- Stimulates the economy by
- Creates money to purchase financial assets including government bonds from commercial banks
- Helps central banks to keep inflation positive.
- Results in easy money that can be leveraged by markets and companies to purchase assets with cheap debt. But by suppressing long term interest rates it encourages investors to move into real estate, land and equities. Owners of assets have benefited, while renters and people on pensions have become relatively poorer.
used the Fed's printing press to induce 'demand' for assets, setting up a contragrade flow resisting the collapse.
This page discusses the physical foundations of complex adaptive systems (CAS). A small set of rules is obeyed. New [epi]phenomena then emerge. Examples are discussed.

Rule creators: State and Federal law makers developed laws which supported the
This page discusses the mechanisms and effects of emergence underpinning any complex adaptive system (CAS). Physical forces and constraints follow the rules of complexity. They generate phenomena and support the indirect emergence of epiphenomena. Flows of epiphenomena interact in events which support the emergence of equilibrium and autonomous entities. Autonomous entities enable evolution to operate broadening the adjacent possible. Key research is reviewed.

emergence and amplification of the subprime industry. The 1970
Fannie Mae
is the coloquial name for the FNMA which is:
- The federal national mortgage association, a GSE. It was made a publically traded company by the HUD act of 1968 to remove its debt from the federal budget.
- In 1970 FNMA was authorized to purchase conventional mortgages. FHLMC was setup to ensure competition for FNMA in this task.
- In 1981 FNMA issued its first designated MBS.
- In 1992 the Democratic Congress and President Bush established HCDA which gave FNMA affordable housing goals set annually by HUD with Congressional approval.
- In 1999 the Clinton administration put pressure on FNMA to expand loans to low and moderate income borrowers. FNMA took on additional subprime risk.
- In 2000 HUD placed anti-predatory lending rules on the affordable housing goals, but these constraints were dropped in 2004. In effect they just pushed mortgage originators to Wall Street finance.
- Once mortgage originators started to use warehouse loans, the GSEs lost visibility and control of origination.
- The GSEs purchased AAA mortgages from commercial banks. Many of these classifications were fraudulent leaving the GSEs with bad debt. In 2008 to maintain the stability of the global economy the George W. Bush administration seized the GSEs and placed them in conservatorship under the FHFA, ensuring they could not collapse.
- In 2010 FNMA's stock was delisted from the NYSE. They still trade over-the-counter.
's government charter was amended to extend the types of loan it could purchase from just S&L is savings and loan association. These S&Ls were deregulated by the 1982 Garn-St. Germain act.
initiated to other nonbank lenders. By changing blue-sky laws around 1977 state legislators allowed MBS is mortgage backed security, a bond backed by the monthly payments homeowners make on their residences. It was initially developed by Lew Ranieri at Salomon Brothers.
securities backed by mortgage bonds to become legal investments in each state of the US. This finally provided a means for S&Ls to remove low yield loans from their books. The 1982 Garn-St Germain Depository Institutions Act of 1982 was signed by President Reagan in response to the 1979 oil shock inflation driven collapse of the US S&L industry. The S&Ls had previously only been allowed to offer depositors fixed rate loans on fixed length mortgages which could not adapt to the rapid inflation. The S&L depositors responded by switching to higher interest bearing money market funds. The 1982 act deregulated the savings and loan associations and allowed banks to provide adjustable-rate mortgage loans.
was signed by President Reagan to give a life line to S&L is savings and loan association. These S&Ls were deregulated by the 1982 Garn-St. Germain act.
s. To stop donations shifting to federal politicians California state legislators responded with the Nolan Act. The Nolan act allowed anyone to buy an S&L, attract federally guaranteed deposits and then invest all the deposits in any 'direct investment' such as commercial real estate activities! Congress passed the Tax Reform Act is the Tax Reform Act of 1986. President Reagan followed supply-side economic theory reducing the top tax rate from 50% to 28% and removed loop holes in the tax code. The act resulted in a slight increase in tax revenue.
of 1986, signed into law by President Reagan. Law makers hoped to limit a growing budget deficit by eliminating tax deductions. Federal law in the 1990s required banks and S&L is savings and loan association. These S&Ls were deregulated by the 1982 Garn-St. Germain act.
s to have a certain percentage of their assets invested in loans backed by real estate within a few miles of their offices. Congress, with advice from Clinton Administration officials and the Fed chairman limited regulatory oversight and control of derivative markets and hedge fund is an investment fund that accepts investments from a limited number of accredited individual or institutional investors. Hedge funds are able to use investment methods that are not allowed for other types of fund.
operations. Federal law allowed companies (REIT is a real estate investment trust. s) with articles that required them to pay large guaranteed dividend (90%) every quarter, to avoid paying taxes. It seems little has improved in the government's housing regulatory strategies after 2008 (Jun 2016, Aug 2017, Dec 2017).
Flows of different kinds are essential to the operation of complex adaptive systems (CAS).
Example flows are outlined. Constraints on flows support the emergence of the systems. Examples of constraints are discussed.

Flows and control:
Federal Reserve
of 1913 was a response to a series of banking panics with the goal of responding effectively to stresses. It setup:
- At least 8 and not more than 12 private regional Federal Reserve banks. Twelve were setup
- Federal Reserve Board with seven members to govern the system. The President appointed the seven, which must be confirmed by Congress. In 1935 the Board was renamed and restructured.
- Federal Advisory Committee with twelve members
- Single US currency - the Federal Reserve Note.
control of the short term interest rates provided it with the mechanism to slow or reverse the amplified flows within the residential housing VDS. The investment banks used derivatives to repackage unattractive tranches of mortgage backed securities, in ways that obtained sterling ratings, and required them to hold little matching reserves. As flows expanded competition by regulators to host the investment banks ensured controls on the expansion were minimized. Insurance reduces volatility in standard of living by compensating for losses of income during periods of unemployment, for catastrophic losses from disaster, or death of a family income earner as described by Gordon. Insurance companies must set aside reserves to handle such claims. Britain initially required that insurance buyers also have an insurable interest. That is required in insurance markets to ensure buyers of insurance don't destroy their asset just to obtain the insurance. Health insurance is treated separately being unusual, since the subscriber is likely to know more about their state of health than the insurer is and the subscriber is more likely to purchase the health insurance when aware of their increased risk. This behavior collapses the risk pool by: forcing the insurer to increase the premiums, and encouraging healthy individuals to opt out of health insurance coverage. giants, such as AIG with carefully managed credit ratings, offered an insurance like product enhancing investors interest in the derivatives. Since the
insurance swaps
is a credit-default swap, nominally insurance where the buyer of the CDS gets paid if the subject of the swap can't meet its obligations. It appears to be insurance but insurance companies must set aside reserves to handle such claims. Britain initially required that insurance buyers also have an insurable interest. That is required in insurance markets to ensure buyers of insurance don't destroy their asset just to obtain the insurance. CDS were not required to do the same, because it was decided they were not insurance which encouraged such abuses and risk taking. Stocks could be sold short when they were backed by CDS. And the swap market is limited making it easy to undermine its liquidity. They carry considerable risk because:
- They are governed by the CFMA, which ensures they are unregulated and opaque
- The incentives encouraged problems - the more CDS you own the more you benefit from [causing] problems with the 'insured' assets. And unlike traditional insurance you could buy as many CDS as you could afford.
were not classed as insurance they also had minimal reserve requirements enabling further expansion of flows.
Rule breakers: It's a general facet of adaptive in evolutionary biology is a trait that increased the number of surviving offspring in an organism's ancestral lineage. Holland argues: complex adaptive systems (CAS) adapt due to the influence of schematic strings on agents. Evolution indicates fitness when an organism survives and reproduces. For his genetic algorithm, Holland separated the adaptive process into credit assignment and rule discovery. He assigned a strength to each of the rules (alternate hypothesis) used by his artificial agents, by credit assignment - each accepted message being paid for by the recipient, increasing the sender agent's rule's strength (implicit modeling) and reducing the recipient's. When an agent achieved an explicit goal they obtained a final reward. Rule discovery used the genetic algorithm to select strong rule schemas from a pair of agents to be included in the next generation, with crossing over and mutation applied, and the resulting schematic strategies used to replace weaker schemas. The crossing over genetic operator is unlikely to break up a short schematic sequence that provides a building block retained because of its 'fitness'; In Deacon's conception of evolution, an adaptation is the realization of a set of constraints on candidate mechanisms, and so long as these constraints are maintained, other features are arbitrary.
systems where the costs and impacts of detecting cheating become self-limiting. Cheating eventually has significant costs too but in a highly amplified network the initial benefits sustain a percentage of cheats.
This page discusses the benefits of bringing agents and resources to the dynamically best connected region of a complex adaptive system (CAS).

Centralization: With the creation of Fannie Mae and Freddie Mac politicians brought residential housing to the center of the political economy is a human SuperOrganism complex adaptive system (CAS) which operates and controls trade flows within a rich niche. Economics models economies. Robert Gordon has described the evolution of the American economy. Like other CAS, economic flows are maintained far from equilibrium by: demand, financial flows and constraints, supply infrastructure constraints, political and military constraints; ensuring wealth, legislative control, legal contracts and power have significant leverage through evolved amplifiers.
. Reagan, Clinton and George W. Bush each leveraged home sales as a generator of demand. The government agency chartered Resolution Trust Corporation was chartered by Congress to liquidate $300 billion of failed S&L is savings and loan association. These S&Ls were deregulated by the 1982 Garn-St. Germain act.
assets. Bargain prices attracted Investors, including Bear Stearns, into the mortgage market.
This page discusses the effect of the network on the agents participating in a complex adaptive system (CAS). Small world and scale free networks are considered.

Network effects: Guardian S&L is savings and loan association. These S&Ls were deregulated by the 1982 Garn-St. Germain act.
s successful entry into a new niche, subprime first lien mortgages financed through Wall Street drives other local agents, such as Ameriquest and New Century, to respond by copying the strategy and network linkages. Washington consulting firms provide positions,
This page discusses the benefits of geographic clusters of agents and resources at the center of a complex adaptive system (CAS).

geographic clustering, and network connections between the political elite and the housing VDS.
This page reviews Christensen's disruption of a complex adaptive system (CAS). The mechanism is discussed with examples from biology and business.

Disruption: The constrained business rules, and historic contracts of the S&L is savings and loan association. These S&Ls were deregulated by the 1982 Garn-St. Germain act.
s presented the agents in the residential housing VDS with a survival challenge. The emergence of non-bank loan originators presented an alternative hub to link too. Practically
Fannie Mae
is the coloquial name for the FNMA which is:
- The federal national mortgage association, a GSE. It was made a publically traded company by the HUD act of 1968 to remove its debt from the federal budget.
- In 1970 FNMA was authorized to purchase conventional mortgages. FHLMC was setup to ensure competition for FNMA in this task.
- In 1981 FNMA issued its first designated MBS.
- In 1992 the Democratic Congress and President Bush established HCDA which gave FNMA affordable housing goals set annually by HUD with Congressional approval.
- In 1999 the Clinton administration put pressure on FNMA to expand loans to low and moderate income borrowers. FNMA took on additional subprime risk.
- In 2000 HUD placed anti-predatory lending rules on the affordable housing goals, but these constraints were dropped in 2004. In effect they just pushed mortgage originators to Wall Street finance.
- Once mortgage originators started to use warehouse loans, the GSEs lost visibility and control of origination.
- The GSEs purchased AAA mortgages from commercial banks. Many of these classifications were fraudulent leaving the GSEs with bad debt. In 2008 to maintain the stability of the global economy the George W. Bush administration seized the GSEs and placed them in conservatorship under the FHFA, ensuring they could not collapse.
- In 2010 FNMA's stock was delisted from the NYSE. They still trade over-the-counter.
& Freddie Mac is the Federal home loan mortgage corporation (FHLMC), a GSE. needed to build robust flows from companies like Countrywide to replace the collapsing flows of the S&Ls.
This page reviews the inhibiting effect of the value delivery system on the expression of new phenotypic effects within an agent.

Extended phenotypic alignment: The agents in the network can reinforce each other. Loan originator Countrywide avoided commercial equivalents to the government backed Fannie Mae providing positive returns, W. Brian Arthur's conception of how high tech products have positive economic feedback as they deploy. Classical products such as foods have negative returns to scale since they take increasing amounts of land, and distribution infrastructure to support getting them to market. High tech products typically become easier to produce or gain from platform and network effects of being connected together overcoming the negative effects of scale.
to the hub and limiting risk, is an assessment of the likelihood of an independent problem occurring. It can be assigned an accurate probability since it is independent of other variables in the system. As such it is different from uncertainty.
for Countrywide. New Century, a major sub-prime loan originator, under pressure from the stock market and its warehouse lenders, is a loan extended from a large bank or Wall Street firm to a nonbank to originate mortgages. after the Russian debt default sold its loans to U.S Bankcorp who invested in New Century's preferred stock. Loan originator's loan assessment tools supported mortgage brokers work for the originator. Fannie Mae & Freddie Mac is the Federal home loan mortgage corporation (FHLMC), a GSE. placed their guarantees on MBS is mortgage backed security, a bond backed by the monthly payments homeowners make on their residences. It was initially developed by Lew Ranieri at Salomon Brothers.
bonds, encouraging investors to treat the bonds as backed by the US treasury is the department of the treasury. It is a federal government executive department created by Act of Congress in 1789 to manage government revenue. The Secretary of the Treasury is a Cabinet officer. With monetary policy devolved to the Federal Reserve, treasury manages fiscal policy. To support funding of high cost investments: Disaster recovery, Wars, Famines; the treasury can issue debt instruments and manage the national debt.
, and encouraging more investment banks to issue and trade in MBS.
This page reviews the strategy of bundling multiple products within a single offer in a complex adaptive system (CAS). The mechanism is discussed with examples from biology and business.

Bundling: Wall Street bundled together zero interest warehouse loans, is a loan extended from a large bank or Wall Street firm to a nonbank to originate mortgages. with agreements to securitize the originators mortgage loans. As the profits rose on securitizing the loans some investment banks also transferred the risk attached to the 'B' loans to themselves after a period of 60 to 90 days.

These powerful forces ensured for a

Carlo Rovelli resolves the paradox of time.
Rovelli initially explains that low level physics does not include time:

A present that is common throughout the universe does not exist
Events are only partially ordered. The present is localized
The difference between past and future is not foundational. It occurs because of state that through our blurring appears particular to us
Time passes at different speeds dependent on where we are and how fast we travel
Time's rhythms are due to the gravitational field
Our quantized physics shows neither space nor time, just processes transforming physical variables.
Fundamentally there is no time. The basic equations evolve together with events, not things

Then he explains how in a physical world without time its perception can emerge:

Our familiar time emerges

Our interaction with the world is partial, blurred, quantum indeterminate
The ignorance determines the existence of thermal time and entropy that quantifies our uncertainty
Directionality of time is real but perspectival. The entropy of the world in relation to us increases with our thermal time. The growth of entropy distinguishes past from future: resulting in traces and memories
Each human is a unified being because: we reflect the world, we formed an image of a unified entity by interacting with our kind, and because of the perspective of memory
The variable time: is one of the variables of the gravitational field. With our scale we don't register quantum fluctuations, making space-time appear determined. At our speed we don't perceive differences in time of different clocks, so we experience a single time: universal, uniform, ordered; which is helpful to our decisions

time that subprime loan originated debt would provide huge returns for value chain participants and investors, leaving non-participants as relative losers. The lower the Fed set the short term interest rate the more profitable and extensive the flows became. Given the obvious implications the other agents were drawn into the cycle, helping to guarantee success. A bubble was developing. Still this highly amplified system was unstable, being very sensitive to the interest rate. If it rose flows would diminish driving job losses and company failures.

As with the

The IPO of Netscape is defined as the key emergent event of the New Economy by Michael Mandel. Following the summary of Mandel's key points the complex adaptive system (CAS) aspects are highlighted.

tech bubble the seeds of failure are present in the forces of success. More loans mean more profits, but the pool of legitimate borrowers is finite. As it depletes less robust borrowers were selected to keep the pipe line full. The result was a growing mountain of debt with a book value far greater than its revenue and profit streams. Eventually poor performance became obvious and market values dropped precipitously.

The US's expansion around the globe and its reengineering of its financial constraints had broad impacts on the economy's performance. It also supported misjudgments by many agents based on their local models of the economy that did not account for the changes.

Market Centric Workshops

Politics, Economics & Evolutionary Psychology

Business Physics
Nature and nurture drive the business eco-system
Human nature
Emerging structure and dynamic forces of adaptation

integrating quality appropriate for each market

This page looks at schematic structures and their uses. It discusses a number of examples:

Schematic ideas are recombined in creativity.
Similarly designers take ideas and rules about materials and components and combine them.
Schematic Recipes help to standardize operations.
Modular components are combined into strategies for use in business plans and business models.

As a working example it presents part of the contents and schematic details from the Adaptive Web Framework (AWF)'s operational plan.

Finally it includes a section presenting our formal representation of schematic goals.
Each goal has a series of associated complex adaptive system (CAS) strategy strings.
These goals plus strings are detailed for various chess and business examples.

Strategy | Design |

This page uses an example to illustrate how:

A business can gain focus from targeting key customers,
Business planning activities performed by the whole organization can build awareness, empowerment and coherence.
A program approach can ensure strategic alignment.

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