Hi Maurice, I am busy for this week ... lots to do and then a wedding to contend with. I was going to refrain from posting but cannot seem to stop.
On the <<warning>> of systemic failure, the design concept is not complicated. As in Jay designing (never did, except while in school) electronic systems, the design of the overall system (as opposed to individual transistors) is generally meant for taking inputs (exogenous variables) within a normal expected range of inputs and have the system respond with a linearly predictable response, and having the controlled feedback loop siphoning off a bit of the response to be used in fine-tuning subsequent responses. The components (transistors and such) used to constitute the system should preferably be of military spec, with wide environmental tolerances. The system should have redundancy for the most critical of sub-systems. All comes down cost and ease of access for repair. Satellite design is complicated not so much because what they do, but because of the conditions under which they must “do it” and the difficulty of repair if something goes wrong.
The key words to keep in mind are: normal expected range, linearly predictable, controlled feedback loop, wide environmental tolerances, redundancy, cost, ease of repair.
The same sort of folks who operated Globalstar are operating our collective financial system. We can certainly start to talk about the financial system in terms of the key words sighted above. There are a host of possible and probable events whose happenings can overwhelm the controlled feedback loop, magnifying the amplitude of further exogenous input signals, triggering non-linear responses in some sub-systems, creating failure in some non-redundant and previously non-critical sub-systems, placing the entire system under stress not envisioned by the original designers, cascading a high noise to signal event throughout, resulting in lost digital signals, creating havoc with the error control coding scheme, blowing up capacitors, melting epoxy packaging, and resulting in the partial collapse of the system, and sending folks racing to the neighborhood financial institution to test out the USD 100k deposit insurance program.
I put the probability of such a scenario at less than 5%, and thus accounting for my allocation to physical monetary and strategic precious metal.
<<Re Globalstar <It was the wrong focus, badly structure, incorrectly phased, with badly worked out economics, and no pilot marketing whatsoever, because the leaders were not leaders, oblivious to the risk they place shareholders’ money.
...Failure is generally setup by a combination of design, execution, and chance events going wrong.>
All true. But all those things were trivial. At any time, they could have decided to price the system correctly. They chose not to. It was very much a single-mode failure, though as you say, exacerbated by things such as bad luck [the Zenit crash], mismanagement [the exclusive service provider agreements], badly structured [too much debt and conflicts of interest] ... >>
The Globalstar experience, if duplicated by the financial system, will not be trivial. Any one of these developing stories has the necessary signal to noise ratio to send our system into a non-linear response mode, resulting in possible meltdown.
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Chugs, Jay |
