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Morbius Glass new blog address

Posted by Adrian on April 3, 2009

Please update links and RSS accordingly:


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Logic meltdown: a wrong decision may seem right.

Posted by Adrian on April 2, 2009

How does the mind cope with a ‘logic meltdown’, or mental fatigue? It makes analytical and judgment errors. More notably the ill fainted event surrounding the Korean airlines flight 007 that was shot down on September 1st 1983 by Russian jets. A slew of conspiracy theories, cover ups and the like emerged; although an article written by Micheal Brooks for New Scientist in December 2000 indicates that the pilots could have been suffering from mental fatigue or logic meltdown, as they flew off course and strayed onto Russian airspace. Even though their instruments said they had gone off course, they believed that they were flying the correct route. Other evidence of a logic meltdowns apparently occurred with the Chernobyl Nuclear power station disaster.

Princeton Professor of Psychology Johnson-Laird has researched logic meltdown extensively with various examples from testing his students. After a simple test to determine how the mind assumes a correct answer, in which 99% of the students got it wrong. It was determined that the mind attempts to find shortcuts to establish a correct answer. In other words the mind tries to establish an answer within the limited space of the brains working memory. Therefore the working memory part of the brain strips down analytical thinking to reach the best answer of it’s ability, which can prove incorrect and fatal in case of South Korean flight 007. As the mind is leaving out relevant information to reach a proper conclusion.

I am curious how a logic meltdown can also effect intuition or a gut instinct. Research is sparse and speculative at best, but despite the lack of research; there is still the underlying evidence that a gut feeling can almost be 100% correct.

Still the best way to determine a situation and event that requires logic, is to analyze without overloading the brain, nor looking for the quick answer.

A good example of a logic meltdown (in my opinion) is the Governments intervention and fiscal stimulus into economies and markets. Too me that fits the criteria, or test of a logic meltdown (albeit on a broader scale), in which a false situation is created. For example a policy decision is made on the premise of what it feels should be there (a result) even though it isn’t, which becomes an assumption. Poorly researched and analyzed, a belief that a right decision is made, that is reinforced in false flags (recent slight economic improvement and so on). So it continues onwards, going further and further into perilous territory (economically).

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The mind and it’s mental disorders. Depression the 21 century epidemic

Posted by Adrian on March 30, 2009


The other day I was going through a pile of old New Scientists, dating back to 2001 and 2003. I came across an interview with a psychologist by the name of Joe Griffin. I actually remember at the time reading this interview and the keys points from the interview stuck in my memory. The magazine was lost for five years (under a pile of other magazines), after some cleaning I found that issue of New Scientist and looked over the interview again.

I believe a lot that Joe Griffin says, I also believe that we are going to see massive depression and psychological problems in the coming years. So the World Heath Organization estimates could be correct, that depression in the 21st Century could rank 2nd to pan-epidemic diseases.

The human race is miserable, anxious and depressive. Trying to pinpoint the causes and the remedies has psychologists, psychiatrists and another professions that study the mind trying to reach an agreement of trying to cope with what could be an epidemic of depression.

“Emotional arousal is the handmaiden of tyranny – in the home and on the world stage. It stops clear thinking.”

Above is a quote from the interview and indication where Joe Griffin goes with his theory of managing depression. I especially like his theory on dreams as a clearing house for pent up arousal. In which it completes then you wake up to face a new day. It seems (according to his research) some people are stuck in a loop on unfulfilled cycle of emotional arousal, in which their dreams are just not completing and resolving that cycle of mental satisfaction and calm.

From New Scientist April 2003

How can you deal with serious depression in just a day?

The important thing is to know how depression is manufactured in the brain. Once you understand that, you can correct the maladaptive cycle incredibly fast. For 40 years it’s been known that depressed people have excessive REM sleep. They dream far more than healthy people. What we realised – and proved – is that the negative introspection, or ruminations, that depressed people engage in actually causes the excessive dreaming. So depression is being generated on a 24-hour cycle and we can make a difference within 24 hours to how a person feels.

But how is dream sleep responsible for depression?

My findings show that ordinarily dream sleep does a great housekeeping job for us. Each night it brings down our autonomic arousal level. Dreams are metaphorical translations of those waking introspections – emotionally arousing feelings and thoughts – that we don’t act upon while we are awake. Once aroused, our brain has to complete that cycle of arousal and, if we don’t complete it in the external world, we do so in our dream sleep. The patterns of arousal are metaphorically acted out and thereby deactivated. But depressed people do so much worrying and feel so stuck that the ruminations cause an overload of dreaming which uses up a lot of energy in the brain. They also have correspondingly less of the most physically recuperative element of sleep, so-called slow-wave sleep. Which is why they wake up exhausted and unable to focus their mind outwards and motivate themselves to get on with life.

This is a departure from the accepted view, isn’t it?

Yes, it is. But we have filmed hundreds of cases and you can see time and time again that when depressed people start talking about depression, they talk about waking up tired and unable to motivate themselves. All day long they feel low and emotional. Many describe how they have difficulty getting off to sleep because of emotional thoughts going round and round in their heads. And when it is explained to them how they are doing this to themselves, the explanation alone helps – and then the therapy we do with them is primarily aimed at helping them to stop all the negative ruminating. The common explanation that their doctors give them is that there is a chemical imbalance in their brain. But that’s a half-truth: the other half is that their low serotonin level is an index that their life isn’t working – their needs are not being met and they feel stuck – not that they’ve got something ‘wrong’ with their brain chemistry. Brain chemistry is not a cause, it is an effect.

So you tell your clients how they’re generating their depression, then what?

We use an integrated approach combining behavioural, cognitive and interpersonal methods, relaxation, humour, suggestions for exercise – all based on what we call the “human givens”, our genetic endowment of needs and resources. Any skills the person already has that can help them reconnect with other people and the wider community are particularly important. Above all, we get them to use their imagination differently, and this is not as difficult as it might seem. Our job as therapists is to stop them worrying and dreaming excessively. We do all this in the first session, and for some people that is enough. Others will need a little more work.

What exactly are the human givens?

Human givens is a phrase psychotherapists, psychologists, educationalists and others are increasingly using to encompass some new, large organising ideas that are developing from what science is discovering about the workings of the brain.

We are all born with a rich natural inheritance – a partially formed mind containing a genetic treasure house of innate knowledge patterns. These patterns appear as physical and emotional needs that must be met if our minds are to unfold and develop to their fullest potential. How well they connect with, unfold and become enriched by the world determines our own particular character, our clarity of perception and our own and our family’s emotional health and happiness – as well as the maturity of the greater society we create around us.

In addition to emotional needs, nature has given us a range of resources to help us meet those needs in whatever environment we find ourselves in. Depression is usually caused by worry about needs not being met – needs for control, for security, for meaning, for intimacy, connection to the wider community etc. – and by misusing some of the innate resources. Worry, for example, is a misuse of one of our most powerful innate resources, that of imagination.

What other techniques do you use?

We also use metaphor and storytelling. People are used to hearing stories and anecdotes so they’re not threatening. An appropriate metaphor, contained in a story, can bypass the defensiveness of the conscious mind and go in as a seed to the right neocortex, which understands patterns. Later on, when the client thinks about the therapy, that pattern in the right neocortex will fire off and makes connections spontaneously, so they have an “Aha!” experience. They can then “own” the insight, and it is easier for them to work with it.

Here’s an example. A colleague’s elderly client was depressed about becoming incontinent. He began telling her about his uncle and aunt who had a lovely old country house, where some of the family lived and which everybody loved. He himself used to go there often as a child. And then gradually he started to introduce the metaphor – that as the house grew older, it got damper, and there were a few damp patches and plumbing problems, but nobody seemed to mind, everybody still loved the old house and they kept bringing their families and their friends there. She came out of her depression without even having known that she had had help. This is because her brain had now absorbed a bigger metaphorical pattern which could override the one that had depressed her.

Are there kinds of therapy that people suffering from depression would do well to avoid?

Research shows that any therapy or counselling that encourages people to introspect about what they were unhappy about in their past will deepen depression. This type of therapy is based on a misunderstanding going right back to Freud. He had a model of the unconscious mind that saw it as being very like an underground cesspit – he believed that emotions that weren’t fully expressed are held onto in this cesspit of repression, and the job of the therapist is to release the noxious emotions and thereby free the person. But this just does not work. Research has shown quite unambiguously that dreams do this for us every night. In other words, nature actually invented the emotional ‘flush toilet mechanism’ long before Freud tried to. These kinds of approaches to therapy, by encouraging emotionally arousing introspection, are actually working against nature.

You have also ventured into one of the biggest minefields of all, psychosis, where you suggest that schizophrenia is waking reality processed by the dreaming brain. How does that work?

First you need to separate out the REM state in which dreaming occurs from the content, which is the dream. The REM state has the same characteristics as the hypnotic state – the left neocortex is generally much less activated, we have instant access to metaphor and our emotions, and we are responding to our own emotional inputs much more than we are to external reality. Now imagine someone who has been so stressed and depressed that their dreaming process has broken down – their brain doesn’t properly click out of the REM state. They still have to try and make sense of the waking world but are stuck in the emotional right-hemisphere … whose only language is metaphor. It’s a frightening place to be. They are going to experience all kinds of weird things.

Such as?

Take hearing voices: left-hemisphere thoughts are still being generated in a psychotic person although they are overwhelmed by the power of the REM state that they are now largely operating out of. The only way the dreaming brain of the right hemisphere can make sense of left-hemisphere thoughts is to put it into a metaphor of ‘hearing voices’. And, as in the dream state, your sense of self is dissolved because you are now acting out a dream script.

So if you are trying to process reality, you won’t have a sense of self with which to orient the experiences coming in, and you’re going to feel that somebody else must be controlling everything. We are not saying that this is a complete explanation for psychosis, but when it has been put to people who have experienced psychosis, they have told us, “thank goodness, that makes such sense to me”.

How do all these ideas go down with the psycho-therapeutic community? Are some people hostile?

When we first started it was relatively easy. We were getting people who were already open to our ideas. Later we met quite a significant bit of hostility. We’d get mass walkouts of people trained by the Tavistock Institute in London and places like that. This happens because schools of therapy tend to degenerate into ideologies and don’t work with real knowledge. They become cults, with sacred texts and high priests. Then they tend not to be open to new ideas. But the encouraging aspect was the response of people at the coalface – occupational therapists, social workers, psychiatric nurses, GPs counsellors working in the community and so on. They knew their training didn’t give them many real tools to help people. And they were totally willing to take on board new ideas and skills.

So how does the school of therapy you helped to found itself avoid becoming a cult?

Science is based on the idea that any knowledge that we currently hold is subject to revision in the light of further facts. We incorporate the latest findings from all the sciences and we accept and recognise that all the major schools of therapy have stumbled on pieces of the truth. But these are just bits of information. We don’t buy into their various ideologies. Instead we look at the information and put it in a bigger model and integrate what is of value within various approaches and discard what is not.

I must also say that perhaps one of the biggest bars to the advancement of therapy in Britain is the criterion used for recognising properly trained therapists. It is mainly based on ideology, not reality. For instance, research shows that it is absolutely irrelevant whether or not therapists have themselves had therapy, in terms of assessing their effectiveness, yet the British Association for Counselling and Psychotherapy (BACP) will not accredit counsellors unless they have had a minimum of 40 sessions of counselling (which they have to pay for) themselves. And some other schools of therapy require much more than that! So these power structures are more concerned with protecting their territory, how many hours training someone has had (not how effective that training is) and creating work for their members. Whereas I would say they should only concern themselves with what works and assessing how effective an individual counsellor or therapist actually is in practice.

And effective therapy is crucial given the alarming rise in mental illness. Has emotion spun out of control in our culture?

Our culture doesn’t really have a handle on emotions. An emotion is simply a ‘box’ in which the brain initially codes incoming stimuli. So each perception is ‘tagged’ in the anger box, or the anxiety box, or the sadness box. Our self-obsessed culture treats emotions as though they were something sacred and the most significant aspect of being human, rather than seeing them as a primitive classification system that usually needs further refinement. Refining perceptions is the job of the higher cortex, which can fill in the thousand shades of grey that usually exists between the black and white of emotional reasoning.

Does this explain how easily we become locked in conflicts?

Emotional arousal is the hand-maiden of tyranny – in the home and on the world stage. It locks attention. It stops clear thinking and facilitates the rise of psychopathic personalities who impose their will on others. The only long-term resolution of conflict is to devise a social order that enables more people to get their needs met.

And of course, conflict, whether it is on the battlefield or in the home, can result in people becoming traumatised…

Yes. Any brain can become traumatised if put under enough pressure from life-threatening events. It is not the amount of abuse, nor the length of the time the abuse went on, that is the key factor. It’s the amount of damage that has taken place to the development of personality, the failure to develop essential life skills among people who were extensively abused in childhood for example. It is when the whole of their life has become dysfunctional that there is usually a need for major long-term psychological and life-skills education. This is more likely when a close family member has done the abuse and thereby interfered with the unfolding of normal development.

What about victims of torture?

People who can retain an element of control during long-term torture or deprivation regimes are most likely to make a rapid recovery. Even if it is only control over when they scream – counting to ten, maybe, just before electrodes are applied. We have treated people who have experienced extreme trauma in conflicts in Eastern Europe, for example, and we found them very responsive. And we have trained a team in Northern Ireland, the Nova Project, which in the past 18 months has treated more than 300 victims of the violence from both sides of the community with amazingly good results.

How do you treat trauma?

We know that not everyone develops post-traumatic stress disorder. It is a proportion of people who are more vulnerable – very often those with good imaginations. When we are exposed to a life-threatening event, our initial reaction is to freeze to ascertain what is going on. Most of us will then activate our fight-or-flight mechanism. However, a proportion of people with good imaginations stay in the freeze state, which is essentially a hypnotic state, and an enormous amount of information from the traumatic event is programmed into their limbic system. Ever after, whenever anything at all remotely recognised as being similar to some aspect of what happened when they were initially traumatised occurs, panic and other symptoms are automatically triggered.

How do you deal with that?

We use guided imagery to produce a deeply relaxed, dissociated, trance state, then we use a technique involving the metaphor of a video, “replaying” the memories very fast to give the person control. This pulls the trauma pattern out of the limbic system into narrative memory. Of all the methods for detraumatising people we looked at this was the most effective. All the therapists we train can do this. It works because the limbic system is encouraged to replay the memories whilst the body is physiologically relaxed. This sends a different message to the amygdala, saying this event isn’t dangerous any more, so it doesn’t have to maintain the person in a state of hyper-vigilance. This technique will be invaluable in the aftermath of wars, which traumatise so many soldiers and civilians. “

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The wrongs of Government intervention in the free markets, biology and survival of the fittest – Governments may become totalitarianism based.

Posted by Adrian on February 11, 2009

The biggest errors made in this current economic crisis, or also known as the severe global recession or depression, is intervention into the free markets. Not only was there an exasperation of financial bubbles attributed by loose monetary policies, in the last 11 years of global economics; but an environment of excess that was created and fed into markets. We have all lived through a time of easy money and credit, the debt burden of society increased and therefore became the biggest credit bubble in history. When markets contract and shed their liabilities they do this for one reason to survive. The stimulus plans that all the governments of the world have shoved onto the public and the dreadful ad hoc way of using tax payer funds to buy the toxic junk from financial institutions is causing more problems. As the companies put their hands out for government or tax payer bailouts, a distorted view of survival of the fittest in the free market’s is perpetuated.

In the history of capitalism or free market interaction is the collapse of old to be replaced with new efficient industries and innovation. This is now being avoided by all costs (literally) by the governments around the world and their central banks. Which in turn has not only distorted aspects of the market it has also caused stock markets around the world to become very volatile and uncertain. I remember reading an essay by a biologist the mentioned he felt that we live in a ‘fitness fake’ world, his assertion was based on the evolution biology that fitness has been fabricated with a form of biological faking, in other words communicating, interaction has been effected by the internet and electronic mediums. His argument was the humans could no longer in an evolutionary sense pick out the fittest mate, access threats and advantages, instead the fitness fake environment was perpetuated by online dating, myspace and other social interaction networks that faked millions of years of human interaction. We no longer could really tell the overall fitness of someone (in his opinion in a biological sense). Of course this is a theorized topic, and at times seen as a dubious way of looking at human interaction. But the point I am making is with natural organic cycles of life, is it possible that interference can actually cause a greater problems. Whether biologically or environmentally based. It is now harder to determine advantages and disadvantages due to modern meddling. So to equate that form of meddling in the markets, as opposed to biological meddling in human determinism, it could be asserted that the markets are trying to factor in a global depression, but they can’t per se as governments are delaying the inevitable. A pre fabricated ‘fake’ screen of money printing and intervention. The argument of organic flows within the financial markets could also show up as survival of the fittest regardless of intervention. Meaning that even though government intervention allowed businesses that should have disappeared, say large aspects of the car industry, have now been zombified by government bail out packages. This has kept the top management in place and shareholders happy. As we now know General Motors now wants to sack staff and cut back staff salaries and other benefits all to survive as a company. The wrong picture here is the survival mechanism of the company has kicked in, even though General Motors shouldn’t exist in free markets terminology, the incompetence that was shown to markets has now been saved by the taxpayer via government. But with survival mode now kicking at General Motors, the company is now restructuring or shrinking down operations. To add insult to injury for the taxpayer, the company will obsessively want more cash lifelines from the US government.

But eventually governments that have left themselves extremely vulnerable by running massive deficits and carrying a lot of toxic assets that they required from bailing out the banking sector (namely the US government). Also a survival mode will kick in as they will need to raise capital on long term treasuries, to do this and to avoid going bankrupt they will need to have inflation return. Either way, us (the public), the private sector and the government are all going to be fighting to survive; at this point the government is causing massive amounts of long term problems with the stupidity in printing money and bailing out out banks. The hypocrisy will be complete when the average person in the street gets no benefit from a decayed financial system kept alive by government intervention. Rather, we will attempt to survive too, which means a retraction from consumption. The banks won’t lend in earnest, even under the assumption that ‘bailouts will get credit flowing’ which is a huge fallacy by out of touch and delusional policy makers. Instead they (banks) also will aim to survive, the private sector will continue to shrink down operations with governments desperately trying to avoid going bankrupt will ensure that inflation will return in a brutal way.

I strongly believe that environments contribute to human/societies well being. I am not entirely convinced that we are completly hardwired to our genes, so the fitness fake argument holds degree of validity as far as creating a (fake) environment that may be more detrimental than helpful. But whether this is meddling with our instincts of human interaction is disputable, especially if based solely on the belief of gene determinism. But I believe that blinding excess and naivety have caused our own mental perception of risk, instincts and calculations to cloud our ability to access risk/gain in our environments. Although now with the financial market crash in 2008 and 2009, excess has been stripped away and the easy money has been removed. In saying that, as mentioned before, a survival instinct has been activated; hence the current recession.

If we look at the free markets and our behaviors within the markets, it has to be realised that essentially it is perpetuated by the desire of gain. I actually think that we (humans) are good at determining value and gain, especially when we have to work hard to obtain it; this of course allows the pursuit of value or gain in innovation. I also believe the markets when allowed to operate unobtrusively or without intervention from governing bodies actually correct themselves very well. This is the argument that world allow a recession to continue through, allow the system to clean out and then begin anew. As dramatic as that may sound it a recession may not need to be as harsh; but when a system or monetary policy has been as excessive (like our current one), the recession can be more painful. If we then look at a survival of the fittest example, from the biological definition, the markets would factor in the surviving business as the fittest and hence they would survive a recession. What is going to occur now is the survival of the fittest definition will be more extreme, more than it need to be; this can be blamed on the environment that is now be laid down from government monetary policy of printing money and bailing out companies. If anything it will show a more brutal side to the survival of the fittest in economic sense, as it will be the government that will eventually fight to survive, sans the people who have been forced to bail out everything. So in other words the government and it’s policy makers now in survival mode will literally sell out it’s citizens.

This may lead to civil unrest on a global scale, as governments will then ignore the average person needs and become totalitarianism and dictatorship based as they try and hold onto power and attempt to survive.

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Future event forecasts

Posted by Adrian on December 31, 2008

Back in November 2007 I wrote a blog post on morbius glass titled Forecasts and Risk assessments. Can we predict the future? The post it’s self was written in light of the mortgage market collapse in the US, forecasts before and after (to the point of the wider credit crisis and so on). The post also went onto to discuss theories on prediction of future events, whether mathematically or instinctively based. One theory is the Chonesthesia, established as a theory of certain regions of the brain the uses past events to articulate future events, hence it’s popular known phrase of ‘mental time travel’ or MTT.

I haven’t given the theory much notice recently as it is relativity new and somewhat untested in the scientific sense. Still some everyday events that occur (non economics) gets me thinking about the validity of MTT in human mental perception.

One example is situation that occurred recently, a friend of mine was walking his dog (a small Shelty – gorgeous dog by the way) with his girlfriend in park. The park is situated in an area that both these people live in. A few months back they were walking the dog in this park, when a bigger dog a cross between a Staffordshire and some other dog ran towards my friends dog. In which it was roughly playing with the smaller Shelty. Of course the bigger dog was not on a lead and was out of control, both my friend and his girlfriend proceeded to tell the owner off; who happened to defend his dog actions. Some verbal aggression occurred as the owner of the other larger dog was completely unreasonable and irrational. Later after this incident, I spoke to my friend in regards to what occurred. He explained to me that certain ‘character’ has moved into the area, usually in their early to mid 20’s, in relationships and very insecure. Upon asking why they are insecure, he explained it was because a lot of younger people that have left home have decided to move into this area, that essentially is an area of established 30+ couples with young children. It is also an expensive and overvalued area, with high rents and property prices. In that sense it has created a divide between the younger couples and older ones, all grappling with high house prices for the area, yet the insecure younger couples feel ‘outside’ within that area. Of course I would argue that excess and over leverage have created a sociological problem, a deflation in prices may equalize imbalances and have a lot of the over leveraged and stressed move back out. Still, my friend after that incident mentioned to me that he could envision a similar incident occurring again, as he as correctly assessed that social dynamics in that area. His assessment was of a different person, but under almost the exact same circumstances.

Which it did. Again he was walking his dog and it was attacked by a bigger dog; same verbal dialogue to the owner who also fell into that category of early 20’s, male, insecure and predictable (aggressive). This incident could have become potentially more violent, as the aggressor was completely unreasonable. Still this was forecasted (by my friend) to the point of the guy’s tank top and look, except this guy was apparently taller 6 foot than my friends physical assessments of a pending similar incident. But then again, this isn’t clairvoyance, this is assessment and observation of the males in that area – drawing from a past event to project to a future one.

Even though it is a new theory, I hope more research is done into brain regions that utilize pass events to secure future ones

More information here

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Recession’s and society change.

Posted by Adrian on October 21, 2008

When I was at school they never taught children the concept of adaptation. Of course I am not a big fan of modern day schooling, if fact the education system is a shambles – and I still think there is that left over late 1970’s and 1980’s psychometric and behavioral biology, that still lingers in the schooling system. Which I believe caused a huge amount of harm to child development in education. The rigid schooling system, ala disciplinary grading and ‘survival of the fittest’ doesn’t really prepare children for the future. Although the education system is intrinsically locked into this current capitalistic system that is amidst a change; a change into the unknown. Could this effect education too? Hard to say, but I have heard certain commentators mock the ‘education system’ commenting on every second student wanting to graduate university with an MBA, or become a CFA, or CPA, in other words work in finance and become a captain of industries. Although the huge recession that is about to hit the world globally is going to ‘mock’ that romanticism of upper schooling and it’s migration to the high paid jobs in the finance industry.

So when I use the term adaptation, I mean it in the sense that life is unpredictable, there is no straight plan or structure. This is the problem, because schooling, education doesn’t allow flexibility. Since you lean and develop problem solving (based on a ‘programming’ from traditional style schooling), it is also essentially to have that ability of adjusting to change – which is not taught, how could it be? Our educational systems prepare slots for children to fit into; the system can’t handle a break or divergence in the educational structure. So therefor children after leaving school find it hard to adapt to change in the workplace. The intrinsic ability in oneself (cultural and/or biological) to change and adapt, especially when taught one way of thinking, is in the small minority.

For the most part, if we are talking about business structure and employment, we tend to believe in the authoritarian solution (refer to the the current fiasco of our financial ‘leaders’ and their ‘plans’). We hope that somewhere at the top they have got it sorted, they will develop the strategy to implicate change and adaption. Sadly if you believed that the leaders have got the master plan, you will most likely see the veiled betrayal instead. My ears bleed when I hear the clueless, inept and blind (leaders) spew out some crazy talk.

So with a return of the robber barron’s and government’ looking out for the rich (almost too blatantly), does that mean that our old nemesis of the free markets Communism will come into play? Highly unlikely. But still a change is there somewhere, maybe something we haven’t seen before a development of a new economic, free market model.

How our recessionary society will react is hard to predict as far as trends (survival or otherwise) in an economic depressed economy. But history has shown what occurs in economic down-times. Yes there will be less money going around, although no this may not be a deflationary recession. So there are so many variables in this ‘slump’. One meaning that some prices will continue to rise. The survival aspect is hearsay, but the outcome after a harsh recession (especially the unfolding present one) could be dramatic and unclear.

There a good article on the changes of lifestyle in an economic downturn, mostly negative (lifestyles), written in the New York Times. Although the article doesn’t discuss in detail adaption when things go south economically and it’s widespread social implication. It does talk about the various trends that occur, people are generally healthy (physically), they lose weight, although mental illness becomes a widespread proplem.

Regardless it’s an interesting read, despite the fact there is a lot of unknown aspects to what this recession may have in store for us all. Article here

Recently on the BBC there was an re-enactment of an discussion with a London Banker, who wanted to remain anonymous. It was an actor that had a transcript (possibly from an interview), the banker went onto say ‘yes we were responsible for the mess’, ‘but so was everyone else’ and he also said ‘we knew deep down something wasn’t right with the whole market (CDO’s, CDS – mortgage related securities and derivatives) but we didn’t stop’.

The point I am trying to make here is the continued equilibrium in everything just doesn’t exist, for some reason we don’t accept that things will come to end. I discussed this in an older post I wrote at the end of 2007 called Forecasts and Risk assessments. Can we predict the future?

Old Models become obsolete, new ones are born. But the question is asked do we learn from our mistakes this time? Or continue to make them?

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Nanotech update. Clothes that will produce electricity

Posted by Adrian on February 15, 2008


Clothing that one day could produce electricity to power an ipod or iriver mp3 player. Clean energy created from friction/movement. Link: BBC News/Technology

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Forecasts and Risk assessments. Can we predict the future?

Posted by Adrian on November 28, 2007

Over the last year some of the biggest losses in financial history have occurred within the banking sector, especially the investment banks, hedge funds and larger retail banks. As discussed on morbius glass “finance and economy strategy and society”, the majority, if not all of these losses have occurred from mortgage debt. Attributed by the massive loan defaults of the American mortgage market in the last 12 mths from 2006 through into late 2007.

The question is could this crisis in the banking sector be avoidable? I have briefly discussed this topic in ‘Wall Street risk management and judgment comprised by blindness, madness and greed’, and also ‘The complexities of Wall Street and the simplicity of the boom bust cycle’; the easiest answer to give, in respect to the huge errors, overestimations and over enthusiasm, especially in rating investment debt, selling various SIV’s (Structured Investment Vehicle’s) from the mortgage market, was greed. It would seem that greed blinded everyone involved in the packaging of investment vehicle’s like CDO’s (Collateralized Debt Obligations). The greed that occurred, seemed to be an arrogant optimism of ‘boom’ economics, a convenient mental removal of boom bust cycles, in which risk management went out the door, literally. Replaced by a bizarre mix of blind optimism, arrogance and a detachment from reality. But, if that was the case, and the human flaws were somewhat calculated into a mathematical formula, from a risk management team – why didn’t the computer mathematical models pick up what humans may conveniently have overlooked?

In my opinion it would appear that there was too much reliance on a streamlined computer models to gauge the markets, in other words the technicality of the financial markets became supreme as far as risk evaluation. From “Greed, analytics and the mortgage lending crisis”:

“If you had to pinpoint one area where analytics really was a factor, it would be the rating agencies” that rated mortgage-backed securities, says Beardsell (Mike Beardsell, director of risk model analytics at Loan Performance). These “innovative” mortgage products presented a challenge. The agencies’ statistical models, which relied on historical records of how traditional mortgage loans performed, had to be adjusted. But “the market was changing faster than the models could keep up,” argues Beardsell. And the users of those models made a fatal assumption “

Technical analysis is extremely helpful tool, but it still relies on your own judgment and assessment outside from a mathematical formula. For stocks, FX, option and other derivative trading, 50 day and 100 day averages, overbought and under bought signals play an important role, more particularly the CCI type gauges. But all technical gauges and analysis can show a limited, non emotional and at times subjective indicator of the markets. Subjective in the sense, you can by human intervention overly manipulate technical signals. I have seen this in FX trading and Option trading, more particularly I have seen time frame shifts (on trading platforms) from 1 min to 15 mins to one day, on a broad perspective this can make a trading platform look different to other trading platforms trading the same derivatives, at the same time with the same risk. This can cause a messy overestimation of markets, especially when one can pick and choose the ‘platform’, as traders do jump from time frames to gauge the markets. This is a risk and in someways they are trying to conceptualize their own perspective, which is possibly clouding good objective judgment. This is from a traders perspective, but what of the Subprime mortgage defaults. Why was risk so broadly overlooked from their analytical programs and platforms? From: “Greed, analytics and the mortgage lending crisis“:

“In the subprime market, many borrowers could not afford the payments on adjustable rate loans two or three years later, once the low teaser rates expired. The reset rates on those loans created large rises in monthly payments, and some borrowers are now seeing their monthly payments increase by $1,000 or more. Lenders were fully aware that borrowers could not afford those payments. But in a booming housing market where values were increasing at double-digit rates, lenders just assumed that borrowers would always have more than enough equity to refinance later.”

“The value was determined by statistical models. And those models assumed that home values would continue to rise. In fact, such an assumption was critical to the marketing of the structured securities based on those mortgages. “The economics of the securitisation would be negatively impacted by a zero growth assumption,” Beardsell says, never mind a negative one.”

My point is, statistical models and graphs can show you what you want to see, thus deceptively convincing one that the process is correct. This was caused by a blinding greed factor which tuned off natural risk assessment in a person. If there wasn’t such a mad race for profits, the natural risk assessment in a person would in turn reevaluate the data. This didn’t happen.
So, it appears the computer models did get it wrong and in some ways have increased the likelihood of a wider economic crash, from “The anatomy of a crash: What Market upheaval of 1987 say about today”:

“Markets are different now. Average daily volumes on the New York Stock Exchange alone have increased tenfold since 1987, the venues on which stocks can be traded have proliferated and the speed of trading is unimaginably faster. The range of hedging opportunities using derivatives is much larger than it was.

The view from the floor is that the improvements in technology will not prevent crashes. “But it will help them happen that much faster,” says Mr Cashin, the veteran broker.

Andrew Lo, an economist at the Massachusetts Institute of Technology, argues that these developments have also made crashes more likely. “We have a much more well-integrated and well-connected set of financial markets. Disruption in one market can very easily spill over into other financial markets.”

He draws comparisons with recent events, which saw a number of quantitatively managed hedge funds – which use complex mathematical algorithms to trade swiftly among different stocks and asset classes – suffer huge losses in August amid the fall-out from the credit crisis. Portfolio insurance, Mr Lo suggests, was “a microcosm of what we see today, writ large”.

But what if it is impossible to predict anything, let alone predicting the rise and fall of financial markets. According to Nassim Nicholas Taleb, the author of The Black Swan: The Impact of the Highly Improbable. You can’t predict the world, or the changes that occur in it. It is a pure random set of errors and luck, and how one applies their luck when presented with opportunity. I have not read The Black Swan, but I have visited his website and I have read many articles about his philosophy. Which I believe holds some merit, but unfortunately does not convince me that we live in complete uncertainty, to the point that risk analysis is, according to Taleb “charlatans” who think they can map the future.”

I believe as I suspect Taleb does, that people generally are unprepared for a crisis, possible relying on too much ‘order’, or a comfortably believing that an inflexible strategy is the right path. But never the less, learning from history and anticipation of events is what human beings are good at; but unfortunately any intuition or a learned ‘gut instinct’ (from life experience) has been removed at an early age of a child’s development and replaced by a belief structure, or power structure of authority and ‘their’ analysis and forecasts. Which every human is capable of doing, if taught and encouraged – which in turn is likely to give rise to strong independent thought and decision making. So in that sense we would not rely on an analyst that works at Merill Lynch. In fact we would probably dispute it and re-analyze his or her data, and look at it with a degree of skepticism, due to the fact the analyst is working for an investment bank, and he/she works with the banks interest coming first.

The fact is when risk is presented and put on the table, one should anticipate how that is going to effect them. In a sense forecast that risk, or the problems associated with it. According to Taleb no one could anticipate September 11 2001 terrorist attacks on the World Trade Center in NYC, I agree to a point. But, one could assume that attack was going to occur eventually. In fact I remember the day it happened and a family member said at the time, ‘I am not surprised’. With growing provocative policies from neo conservatives in the West, mixed with a reemerging of Islamic fundamentalism, something was going to give – when it was going to occur was the ‘guess’. Although it could be argued the arrogance of ‘it can’t happen’ here mentally , created a lapse of real threat analysis of potential attacks on US soil. Also a bad habit of short memories occurred too when the World Trade Center was targeted once before in 1993 by an Islamic terrorist group, quote from BBC ‘on this day article’,

A suspected car bomb has exploded underneath the World Trade Center in New York killing at least five people and injuring scores more.The bombing has shocked America which had seemed immune from acts of terrorism that have plagued other parts of the world.”

Maybe the ‘guess’ or ‘assumption’ of a another pending attack could have been narrowed to specifics, due to the fact the building was targeted again with the devastating September 11 2001 attacks.

But as a review of The Black Swan (in the indicates, Taleb refers to events like September 11, and my relative who saw it coming (on a broad perspective) as a Black Swan event in which the human mind then normalizes the events,

“The trouble is, we can’t cope with these Black Swans, and so we normalise them in our minds. When something bizarre happens, we tell ourselves, retrospectively, that it was bound to happen. We just didn’t see it coming. And then we brace ourselves in case it happens again. But then something else happens, again completely out of the blue. Taleb says: ‘the sources of Black Swans today have multiplied beyond measurability. In the primitive environment they were limited to newly encountered wild animals, new enemies, and abrupt weather changes.’

The problem with that assertion, in context to the September 11 WTC attacks, is that the event did happen before in 1993 albeit a smaller event, but nevertheless a possible precursor or indicator to a larger attack (it happened again in 2001). Could the event of 1993 WTC attacks have been memorised, or at least registered in my relatives brain. So he drew a correlation to the bigger, far more destructive event of 2001 attack. In which constituted to his ‘lack of surprise’?

I am more inclined to believe in the recursion theory, or Chonesthesia (Mental Time Travel). A relatively new theory based in psychology, in which our mind records data from the past to project possible futures. As our minds are constantly returning to the past to see what outcomes could be made in future events. According to Endel Tulving, PhD from “What makes mental time travel possible?” “…allows people to update information critical to surviving, thriving and dealing with changes in their world.”

The recursion aspect of the Chonestheisa theory is the repetitive mental visits of past events to project a future outcome. I remember once when I was younger and I was going to start at a new school, the night before starting at the new school I dreamt of the school, the kids, the teachers and how I thought the first day was going to be like – as I was nervous the night before and according to the chronesthesia theory, the human mind collects past events and tries to formulate a future scenario. This is needed, according to the theory, so that you can prepare for situations that may lie in front of you in the future event.

From “What makes mental time travel possible”?

“You don’t need mental time travel to remember a chemical formula or your mother’s maiden name,” he explained. “You can know a lot of things without mental time travel, but you can’t remember events from your past, or anticipate your future, without it.”

Tulving went on to explain how and why humans have adapted chronesthesia–a learned capability absent in other animals and human infants–to advance their survival. And he urged other psychologists to help build a research base on its workings.”

An interesting theory and one worth looking into further in regards to cognitive and theory of the mind studies. I’ve always remembered that quote from Taoist teachings, “know before knowing” and the classic Sun Tzu Art of War quote, “Know your self, and don’t know the enemy, you win one and lose one. Know yourself and know the enemy you will win every time”.

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“Why women are changing their minds about men” – New Scientist April 2006

Posted by Adrian on November 1, 2007

“Fhionna Moore and colleagues at the University of St Andrews, UK, analysed questionnaires from 1851 heterosexual women between the ages of 18 and 35. They found that as a woman’s level of “resource control” increases – in other words as they become more financially independent – so does their preference for physical attractiveness in potential partners.

Women who had low levels of control over their cash rated the financial status of a man over his looks.”


“We recommend that men who aren’t already there get down to the gym, and moisturise.” New Scientist April 2006

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Self help programs and social anixety

Posted by Adrian on October 18, 2007

Some promising research into self help programs and social anxiety and social phobia.

ScienceDaily: Self Help treatment for social anxiety can ease burden

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