financial architecture

Distortions leads to Cancerous Growth within Enterprise

Programmed Cell Death is very important function to understand to gain insight into the way Transformation need to occur. When distortions occur in Enterprise Engineering, then this leads into obvious cancerous growth, which does not have easy remedy.

How many CIO’s in the market inadvertently are responsible for distortions?! Countless.

The Case for Cautious Optimism – BusinessWeek

The Case for Cautious Optimism – BusinessWeek.

Leo Apotheker – SAP Executive

This lack of sustainability bothers me, and many business leaders have come to share it. My discussions with other CEOs reveal that we will not go back to our merry, pre-crisis ways of limitless consumption and exuberant investment fueled by excessive liquidity. The consensus is that we need better models for capitalism in the 21st century. This crisis has laid bare the need for more clarity in business practices, greater transparency in reporting standards, and above all, the dire need for more sustainable business models.

Mike Whitney: There is No Recession There is Demolition

Another Classic Example of Gaussian Distribution :

“During eight years of the Bush Administration, the 400 richest Americans, who now own more than the bottom 150 million Americans, increased their net worth by $700 billion. In 2005, the top one per cent claimed 22 per cent of the national income, while the top ten per cent took half of the total income, the largest share since 1928.

“Over 40 per cent of GNP comes from Fortune 500 companies. According to the World Institute for Development Economics Research, the 500 largest conglomerates in the U.S. “control over two-thirds of the business resources, employ two-thirds of the industrial workers, account for 60 per cent of the sales, and collect over 70 per cent of the profits.”

… In 1955, IRS records indicated the 400 richest people in the country were worth an average $12.6 million, adjusted for inflation. In 2006, the 400 richest increased their average to $263 million, representing an epochal shift of wealth upward in the U.S.” (“Wealth Inequality destroys US Ideals” Don Monkerud, consortiumnews.com)

via Mike Whitney: There is No Recession .

Game Theory : The essence of Enterprise Architecture is about establishing a “Dominant Strategy”

There is Darwinian in the below idea; however more congenial idea is Generative having more systemic congruent results

Same ideas can be repurposed in a better way.

The essence of Enterprise Architecture is about establishing a “Dominant Strategy”, that best achieves ‘economy of scale’. The economy of scale will apply to each of the architecture design decision selected. The set of design decisions that leads the architecture planning from strategy to tactical and from tactical to execution needs to converge to a dominant strategy engaging all the stake holders led by a cohesive mechanism of Governance.

Note: EA is about discussing the largest picture of the enterprise. Hence, any decision made must ensure that it lends sufficiently across the enterprise while increasing its “reuse”. This means ‘economy of scale’. All decisions, including the technical design decisions must yield a better ‘return on investment’ from optimized ‘performance vs cost’ perspective.

The main goal of the Governance, is to lead the dialogue that an enterprise riddled with complexities is engaged in,  towards a –“Dominant Strategy”. In many ways the array of events that Governance trigers, while working towards converging the decisions to a cohesive set of results, is similar to the behavioral probabilities  studied in Game Theory.

When a system is riddled with constraints, especially when  ‘money’ as  a resource is scarce, then it dominates the decisions needed to achieve the strategy. A system’s behavior  is governed by both micro and macro considerations. There is a threshold until which the system is probabilistically stable and is not affected by the micro behavior. After a certain threshold the micro behavior is unable to sustain the desired macro outcomes.

When Scarcity arises – Economics is Hot

Dominant Strategy

A strategy is dominant if, regardless of what any other players do, the strategy earns a player a larger payoff than any other. Hence, a strategy is dominant if it is always better than any other strategy, for any profile of other players’ actions. Depending on whether “better” is defined with weak or strict inequalities, the strategy is termed strictly dominant or weakly dominant. If one strategy is dominant, than all others are dominated. For example, in the prisoner’s dilemma, each player has a dominant strategy.

Introduction to Game Theory

Only Essential Matters – When IT Budget is shrinking

 

Architect will be forced to think economics first and then technology. Also, architecture will be about leveraging the existing infrastructure and then plan IT spending for only the essentials. ART in Architecture will still matter. The above curve looks like a bell curve. This is another example of extreme linearization resulting into gaussian distribution.

Extreme Linearization results into Extreme Disparities

Extreme linearization leads into extreme exponential distribution resulting into extreme disparities. Top 20% in US earn 50%  income and own 85% wealth. The rest of the 80% earn the rest of 50% and own only 15% of wealth. The question is what or who is EA serving. The 20% or the 80% of the population or is it the income or to the wealth. Or, all put together.

In the context of TARP and the percentages of tax paid by different demographics – who is paying whom? Those who shored up losses by the marginalizing the working class receiving the bail-out?  In other words, to the losses white collar contributed, how much is the blue collar paying in bailout.

Recent Article

Concentration of wealth in hands of rich greatest on record

Share on Facebook
BY DANIEL TENCER

Published: August 15, 2009
Updated 1 day ago

The wealthiest 10 percent of Americans now have a larger share of total income than they ever have in records going back nearly a century — an even larger amount than during the Roaring Twenties, the last time the US saw such similar disparities in wealth.

In recent years, the fact that differences between rich and poor are the greatest they’ve been since the Great Depression has become a popular talking point among liberal-leaning economists.

But an updated study (PDF) from University of California-Berkeley economist Emanuel Saez shows that, in 2007, the wealth disparity grew to its highest number on record, based on US tax data going back to 1917.

According to Saez’s study, which Nobel prize-winning economist Paul Krugman drew attention to at his New York Times blog, the top 10 percent of earners in America now receive nearly 50 percent of all the income earned in the United States, a higher percentage than they did during the 1920s.

“After decades of stability in the post-war period, the top decile share has increased dramatically over the last twenty-five years and has now regained its pre-war level,” Saez writes. “Indeed, the top decile share in 2007 is equal to 49.7 percent, a level higher than any other year since [records began in] 1917 and even surpasses 1928, the peak of stock market bubble in the ‘roaring’ 1920s.”

By comparison, during most of the 1970s the top 10 percent earned around 33 percent of all the income earned in the United States.

The contrast is even starker for the super-rich. The top 0.01 percent of earners in the US are now taking home six percent of all the income, higher than the 1920s peak of five percent, and a whopping six-fold increase since the start of the Reagan administration, when the top 0.01 percent earned one percent of all the income.

There is no consensus among economists on whether large disparities in income lead to economic disruption, but it is hard to ignore the correlation between rising income inequality and the onset of economic crisis. The last time the US saw similar differences in income was in 1928 and 1929, just before the start of the Great Depression.

Saez also broke the numbers down by administration, and found that while the wealthiest few saw their incomes rise as quickly during the Bush years as they did during the Clinton years, the same was not true for the rest of the population.

Saez suggests that the economic growth seen on paper during the Bush years was little more than an illusion for the vast majority of Americans, who saw their income grow much more slowly in the 2002-2007 period than they did during the Clinton years.

During both expansions, the incomes of the top 1 percent grew extremely quickly at an annual rate over 10.3 and 10.1 percent respectively. However, while the bottom 99 percent of incomes grew at a solid pace of 2.7 percent per year from 1993–2000, these incomes grew only 1.3 percent per year from 2002–2007. As a result, in the economic expansion of 2002-2007, the top 1 percent captured two thirds of income growth.
Those results may help explain the disconnect between the economic experiences of the public and the solid macroeconomic growth posted by the US economy since 2002. Those results may also help explain why the dramatic growth in top incomes during the Clinton administration did not generate much public outcry while there has been an extraordinary level of attention to top incomes in the press and in the public debate over the last two years.
Saez, who this spring won the prestigious John Bates Clark Medal for economists under 40, links this disparity to the Bush tax cuts, noting that “top income tax rates went up in 1993 during the Clinton administration (and hence a larger share of the gains made by top incomes was redistributed) while top income tax rates went down in 2001 during the Bush administration.”

TWO MORE RECESSIONS?

The economic crisis that has taken hold over the past year isn’t over, and the world could in fact see two more recessions before the crisis is finally over, says the chief economist of Germany’s influential Deutsche Bank.

Norbert Walter told CNBC that investors are worried about the health of the US dollar, and many countries are facing difficult financial problems because of overspending by governments on bailouts and stimulus. Those things combined could push the world economy downwards not once but two more times in the near future, he said.

“I believe that the rescue packages brought on have been so costly for so many governments that the exit from this fiscal policy will be very painful, very painful indeed,” he said. “Some of us are already talking about a W-shaped recovery. I’d probably talk about a triple-U-shaped recovery because there are so many stumbling blocks here to get out of this.”

“The world is in trouble,” Walter told CNBC.

TARP for White Collars and a Harp for Blue Collars

Is TARP a Trap?

TARP is not an inclusive system that addresses the blue collars. The auto industry still has to go begging, while the viscous white collared finance service sector gets blessed under TARP.

Hey! you poor blue collar insolent fool can’t you just twiddle on your HARP and sing your blues away. At-least as a rejoinder to the apathetic Nero who is happy fiddling TARP and stoking to your misery, despite having a amok run with your money, while you undeservingly did not dread the drudgery. Or, can you wake-up poor sloth fool, else the Machiavellians will drain you further clean.

 

Unemployed Harpist

Unemployed Harpist

Bailout is (was) an Attempt to Saddle a Dead Horse

A Metaphor for Proffering a Dead System as a Solution

A Metaphor for Proffering a Dead System as a Solution – Pls Buy Picture from Devian Art

2013

Fast-forward Forbes reports dismal growth in small business sector

http://www.forbes.com/sites/joelkotkin/2013/03/13/wall-streets-hollow-boom-with-small-business-and-startups-lagging-employment-wont-pick-up/

2013 March – from above link 

<<Since big companies largely have recovered, and government employment has grown, at least at the federal level, clearly the real problem lies with the poor performance of smaller, and most critically newer, firms. In the past, young businesses bailed out the economy and spurred innovation. Yet today fewer than 8% of U.S. companies are five years old or younger, down from between 12% and 13% in the early 1980s, another period following a deep recession.>>

Also I am tempted to add that big business in their own motivation for fortune increase are also cause for demise of many small businesses. The coveting democracy and capitalism often times corroborate  at the cost of destroying free enterprise, while advancing their own schemes, as we have seen in awesome Movie Tucker – The Man and His Dreams

2008

Elusive Enterprise Darwinism (Nov 2008)

By saddling a dead horse the system cannot be changed. Resurrection is not change and it is best left to those who are above humans. The system pertaining to human will ever remain in the bondage of life and death. And, this system is governed by entropy. By merely doling out money to dying mechanisms newer mechanism do not appear. Only when a non-working system dies by a process of generative transformation newer system emerge. Bailout has the hazard of creating cancerous areas in the system. Studying programmed cell death it is evident that nature has desired that divine ‘death by design’ a willing suicide be a necessary intervention for regulating organism’s life-cycle. As the older mechanism dies it imparts newer properties and characteristics to the emerging mechanism. In the newer mechanisms the older parts that prove not to be useful to the newer function become the vestigial organs and they die. If the older mechanism is forced to perform in the newer paradigm requiring completely newer set of rules, they create stress within the existing structure and eventually the system will implode.

Some of the bail out money could have been directly be invested in the lower denomination who are suffering, while allowing for some of the institutions to undergo its natural decay. It must be borne in mind what bailout means to different sectors. Manufacturing sector and such employs more blue collar workers, while the Service sector employs more white collar workers. Among the two, it is the blue collar who are more in denial and it is these people who work tireless to render the system more economic.

Rising Like a Phoenix

Rising Like a Phoenix

What has to rise is not the dysfunctional economic system, but the existing mass with newer modes of making a living and a just-ful process of compensation. All most all the corporates have turned into a feudalistic system giving rise to machiavellian personalities that is useful to only handful of the masses. The hedge funds etc were to be used as instruments to an investment that would protect one from the future fluctuations.  Instead, it was deviously turned into instruments to be used for investing in abstract and complicated risks.

Change is difficult and needs bold moves from the masses. In the past land reform occurred and the feudalistic system was removed by passing land reform act ‘ land for the tiller’.  Moving forward, more such systemic development needs to occur especially newer economic system has to be planned that accelerates the micro-finance  distributing small and quick money that promotes small businesses.  What is needed is a syndication mechanism that promotes development at the grass root level. Furthermore, stringent rules have to be put into place that governs individual contracting. The existing laws are full of holes that exploits the vulnerable individual contractors. In this 21st century any notion of emancipation is a far fetched concept. But certainly there will be CHANGE as it has always happened. It is an entropic property of the system in which dwells both order and disorder. When change happens it will be a ‘step function’ – ferocious, fast and ruthless.

Refer Following Article Why Demise of Ill Conceived Business Should Fall:-

http://blogs.harvardbusiness.org/haque/2009/03/heres_why_we_should_let.html

When System is a Spaghetti – The Cartesian System Breakdown

Spaghetti – Metaphor for Complexity

Enterprise (System) in reality is a complex interweaving mass. Architecture is a mere attempt to represent the complex entity via a systematic process while relying on some sense of an Ontology’, which has classically relied on the Cartesian System. The dynamics emerging from the complex interplay among the various resources, with People being the most prominent – contributes to energy that is responsible for any work done. All-together in some sense the enterprise can only be best visualized as a spaghetti. Each strand being an instance of any ‘thing’ that the mind is capable of envisioning at that time. For instance a ‘business process’, or a ‘procedure’, or a technology enabler. More larger the enterprise the spaghetti depiction becomes that much more complex and so the dynamic interplay experiencing Cartesian Dilemma, eventually contributes to the break-down of the  classical ontological model. And as always, an enterprise has a complex co-existence with other enterprises. This means a simple mathematical models can no longer be applied. Especially when the complexity compounds, the degree of freedom reduces (Theory of Constraints). This is the real reason for the present mess that wall-street and consequently the main-street is in.

One cannot argue that mortgage is the main contributor to the current financial systemic mess. It is is but one iota. Overall it is a complex systemic issue. Probably some theory that works in explaining the microcosms and its interdependency on the behavior of the other systems can best explain the ‘logic’ if any where the mechanistic ’cause and effect’ has a diminishing role to play. This is where the notion of ‘implicate order’  becomes important to understand the ontology behind the ‘Enterprise Architecture’.

Note: Cartesian System inherently promotes extreme linearization. These results into gaussian distribution and hence disparities in the system. Such a system is considered to be containing systemic fault owing to Cartesian Dilemma.

Economics: – The Enterprise, Autonomy for an Enterprising Individual, Sovereignty and Road to Fiefdom

Article by – Srinidhi Boray

Anti- Thesis to John Galt from Atlas Shrugged. Was  John Galt part of Wall Street meltdown? Nope. Could he work towards Health for All through Collective efforts. Nope. He, then can be Apple, that which has no real systemic benefit to mankind’s alleviation, although is the wealthiest (2012). Nope, maybe …probably…in such hesitation….men….mind….and machine..of what higher cause can they ever serve. Many such perplexing questions has been pondered timeles !!!

Also, much misunderstood and much flouted are habeas corpus and one’s prerogatives in the context of an individual, enterprise (collection of individuals) and sovereignity.

An enterprise presumes that it has a behavior. Meaning there is an input of resources, it is processed and then there is an output. All these works against the competition for a commercial company and for the government against the shrinking budget. Overall the behavior of the enterprise is measured by outcome, which is a cumulative and analytical result of the input, the process and the output. All these together perform under the system. Lets call it Sovereignty. It is the sovereignty which introduces the policy and the logic for the system to behave in a certain way. Mostly guided by the socioeconomic criteria.

In the past century there have been two starkly different Sovereignty Systems. One was based on Keynesian Economics developed by British economist John Maynard Keynes – The general Theory of Employment, Interest and Money . Thiswas very popular post world war for nearing three decades. In the Keynesian theory, the sovereignty played a dominant role by constantly regulating the market diminishing the role of  individual businesses. Meaning macroeconomics preceded microeconomics. During this time there also existed another theory proposed by Friedrich August von Hayek. The economics theory lead by  Hayek contrasted that with Keynesian by arguing for lesser intervention by the sovereignty and unleashing the creative individuals in the market place and allowing for market to correct by itself by process of self-regulation. In contrast to Keynesian economics Hayek laid more emphasis on microeconomics & de-regulation rather than sovereignty determined macroeconomics. As an anti-thesis to Keynesian economics, Hayek published ‘Road to Serfdom’. This publication iconoclastically argued that the Keynesian economics inevitably would lead into serfdom (cartoon representation). Hayek’s economics influenced the era beginning with Margaret Thatcher and Ronald Reagan. It was based on Hayek’s theory that globalization was fiercely sought.

For any Enterprising Professional, it is difficult not to acknowledge that in either of the economic theories, Fiefdom was thriving at its hilt. In Hayek era the intrusive state of the Keynesian was replaced by domineering Oligarchy business houses in which domineering and Machiavellian managers manipulated and schemed non-existing business market to advance their own careers . The effect of both the state and oligarchy on the enterprising and ethical individual was to stifle. Although in the Hayek, the individuals certainly did thrive, but then the ‘economy of scale’ lead the small businesses subsequently  to become behemoths and introduce hegemony into the system where creative individual went into oblivion.

Coming back to Enterprise behavior, it can be concluded that the dysfunctional behavior in either of the economics era, was introduced by  the chicaneries that underpins fiefdom. This led to eventual doom in the Wall Street. Today we have both the systems intermingled as evident by the bail out plan and one should wonder with a  shudder about the amok run that is to compound, should fiefdom be allowed un-arrested.

Also, it is but evident that pluralistic framework is emerging where both Keynesian’s sovereign led macroeconomics and the Hayek’s free enterprise microeconomics are blending to form a heterogenous system The sovereignty provides the macrocosm while the individual ingenuity provides impetus to the dynamic microcosm. This means as an Enterprising Individual, one needs to incorporate inclusive perspectives where both the macro and micro coexists, as not being disjointed, rather both being deterministic of each others behavior. ‘Implicate Order’ provides basis for such a scheme of things. And, ‘Syndication’ as a mechanism will prevail providing the needed impetus to the grass root level.

Few years later after writing the above article, came across this soul searching documentary by Jamie Johnson, lineage of Johnson and Johnson family. He talks about 1 Percent who control pretty much everything in America. Very well made and well intioned documentary. In the documentary After hearing President Bush pay tribute “To a hero of freedom – Milton Friedman, he has used a a brilliant mind to advance a moral vision”, Only thing that is left to said is this, now an individual is a soul lost forever in the concrete wilderness of capitalistic corporate that democratic government we create protects. Continue to remain in a straight jacket, at least for now, autonomy for an individual is cause lost forever.