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S U M M A R Y


DIARY: March 20, 2009 08:57 AM Friday; Rod Welch

Madoff illusion worldwide Ponzi scheme economy crumbles.

1...Summary/Objective
2...Enabling Forces Foster Perspective for Change, Improvement
3...Too Many People Having Too Many Problems Needs Culture of Knowledge
........After shock, Madoff fraud victims struggle to cope


..............
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CONTACTS 

SUBJECTS
Intel Reduced Earnings
Implode Cannot Buy-off Mistakes Sunshine Profits Innovation Monopoly
Communication Biggest Risk of Mistakes
Bumbling Email Constant Mistakes
Complexity Requires Integrate Objectives, History, Resources, Need SD
Computers Reduce Productivity Management Focus on Analysis Because At
Productivity IT Declined Last 10 Years Info Highway Requires Ergonomi
Productivity Reduced by Information Overload
Too Many People Having Too Many Problems
Imploding Too Many People Having Too Many Problems Management Implodi
People Pay a Price that is Saved Using SDS to Avoid Meaning Drift fro

6413 -
6413 -    ..
6414 - Summary/Objective
6415 -
641501 - Follow up ref SDS B0 0000. ref SDS 86 0000.
641502 -
641503 -
641504 -
641505 -
641506 -
641508 -  ..
6416 -
6417 -
6418 - Background
6419 -
641901 -    1.  On 890809 poor listening causes problems for leaders with good
641902 -        communication skills who get people to say "yes." ref SDS 2
641903 -        CJ9J
641905 -         ..
641906 -    2.  On 920229 technology firm begins to fail because feel good
641907 -        management "cooked the books," ref SDS 5 6632, to avoid
641908 -        accountability for too many problems from feel good management,
641909 -        reviewed on 920229. ref SDS 7 4567
641911 -         ..
641912 -    3.  On 921127 executive frustrated small details later cause major
641913 -        problems, needs proactive management. ref SDS 9 0674
641915 -         ..
641916 -    4.  On 011109 Enron implodes forced into bankruptcy poor management
641917 -        top people "cooked the books." ref SDS D0  006L
641919 -         ..
641920 -    5.  On 920110 engineers "cannot keep head above water" because
641921 -        expediting by taking short cuts on good management, hoping to
641922 -        save time and money by avoiding paperwork, instead caused too
641923 -        many problems. ref SDS 6 8400
641925 -         ..
641926 -    6.  On 950204 Com Metrics for proactive management is "overkill."
641927 -        ref SDS 19 5932
641929 -         ..
641930 -    7.  On 960103 executives don't have time to understand content, so
641931 -        decisions are based on style. ref SDS 27 8409
641933 -         ..
641934 -    8.  On 970222 Larry Ellison, CEO of Oracle, reported that people
641935 -        and enterprise need a more productive use for personal
641936 -        computers. ref SDS 45 3967
641938 -         ..
641939 -    9.  On 970910 executives do not have time to think, because
641940 -        information overload from handling too many problems makes
641941 -        management a comedy of errors, i.e., continual bumbling,
641942 -        instead of continual learning. ref SDS 63 3479
641944 -         ..
641945 -   10.  On 970916 information overload causes continual problems, but
641946 -        nobody has a solution. ref SDS 64 0001
641948 -         ..
641949 -   11.  On 970919 investment in IT has caused productivity to decline.
641950 -        ref SDS 65 4739
641952 -         ..
641953 -   12.  On 990527 powerful cultural forces resist intelligence support;
641954 -        when people are busy attending meetings, making calls, and
641955 -        handling documents, there is no demand to improve the work;
641956 -        ignorance, fear, and denial make good management seem like
641957 -        unnecessary overkill. ref SDS 88 1233
641959 -         ..
641960 -   13.  On 990625 Fortune article says successful executives "...grab a
641961 -        pen and start writing..." to understand what happens at
641962 -        meetings, ref SDS 89 1024; but "psyche" prevents most
641963 -        executives from using good management, because they don't feel
641964 -        like "wasting time writing everything down," since talking
641965 -        seems faster and easier. ref SDS 89 4914]
641967 -         ..
641968 -   14.  On 990912 the high cost of medical mistakes caused by poor
641969 -        communication, ref SDS 91 0960, and fear of accountability that
641970 -        impacts competence, foster a culture of denial. ref SDS 91 3416
641971 -        see, also, analysis showing communication problems escalate
641972 -        into a crisis of continual bumbling. ref DIP 1 0001, on 990924.
641973 -        ref SDS 92 5576
641975 -         ..
641976 -   15.  On 000324 SRI reported that projects trying to create knowledge
641977 -        management have failed. ref SDS 94 4877
641979 -         ..
641980 -   16.  On 000504 Jack Park reported to OHS/DKR team at SRI that SDS
641981 -        makes Knowledge Management an effective practice for improving
641982 -        daily work. ref SDS 95 XD5M
641984 -         ..
641985 -   17.  On 001004 Eric Armstrong's letter cited huge needs for Doug
641986 -        Englebart's vision to develop technology, at that time calling
641987 -        for OHS/DKR, but impending needs do not create incentive for
641988 -        tools and practices that support good management, because
641989 -        concern about future problems is never high enough to overcome
641990 -        fear of accountability, which is the essence of good
641991 -        management. ref SDS A1 0001
641993 -         ..
641994 -   18.  On 001013 time is running out on IT; need transition to culture
641995 -        of knowledge, ref SDS A3 Z5W8, presents KM dilemma:  not enough
641996 -        time to save time and money. ref SDS A3 UA3G
641998 -         ..
641999 -   19.  On 001017 executives charged with investing resources to
642000 -        improve earnings, don't have time to understand SDS works
642001 -        better than other methods. ref SDS A4 SH6O
642003 -         ..
642004 -   20.  On 001101 projects fail when management fails to use good
642005 -        management practices, because overwhelming desire to use bad
642006 -        management; examples Linux, Netscape creating version 5 called
642007 -        Mizolla. ref SDS A5  MX6H
642009 -         ..
642010 -   21.  On 001207 report on economy showed widespread fear about losing
642011 -        jobs and not paying the mortguage, which for some comprises
642012 -        enabling forces sufficient to overcome overtake fear of
642013 -        accountability. ref SDS B0 MZ7G  Submitted ref DIP 3 0001
642014 -        linked to this record to provide analysis showing growing
642015 -        demand for knowledge capabilities may arise from need for
642016 -        increased competence to handle a complex environment.
642017 -        ref SDS B0 0001
642019 -         ..
642020 -   22.  On 001207 two separate articles by Reuters reported the economy
642021 -        is slowing, because productivity and earnings are declining,
642022 -        causing stock prices to fall precipitously. ref OF 8 0001  This
642023 -        impacts a lot of people, which is an enabling factor in forming
642024 -        a new market. ref OF 9 0001
642025 -
642026 -            "There is a ripple effect, said one analyst.  Just too many
642027 -            people having too many problems." ref SDS B0 V54M
642029 -         ..
642030 -        Information overload devestates productivity, and requires
642031 -        proactive management enabled by SDS to save time and money, as
642032 -        explained in POIMS. ref OF 4 OF6N
642034 -         ..
642035 -   23.  On 001219 SDS new way of working improves productivity,
642036 -        earnings and stock prices. ref SDS B1  QT6F
642038 -         ..
642039 -   24.  On 010223 Intel worries there is no "killer application" for
642040 -        computers; nobody knows what cusomters want; telecom wireless
642041 -        industry going bankrupt, need to give customers something that
642042 -        improves productivity. ref SDS B5  FM6J
642044 -         ..
642045 -   25.  On 010403 Curt Carlson, CEO at SRI, does not have enough time
642046 -        to consider SDS opportunity for improving competence that
642047 -        reduces problems, improves productivity. ref SDS B8  0001
642049 -         ..
642050 -   26.  On 010425 SDS intelligence support for "connecting the dots" is
642051 -        a utopia compared to using other tools. ref SDS B9 EP7F
642053 -         ..
642054 -   27.  On 010622 alphabet technology makes people superhuman, "killer
642055 -        app" of the ages. ref SDS C0  N668
642057 -         ..
642058 -   28.  On 010703 PC industry seeking compelling application.
642059 -        ref SDS C1 GM4N
642061 -         ..
642062 -   29.  On 010705 lower earnings continue to cause stocks to decline,
642063 -        increasing demand for better productivity and earnings.
642064 -        ref SDS C2  0001
642066 -         ..
642067 -   30.  On 010727 mergers acquisitions failing, $50B loss. ref SDS C3
642068 -        0001
642070 -         ..
642071 -   31.  On 010819 problems with world economy more serious and
642072 -        long-lasting than expected. ref SDS C4 0001
642074 -         ..
642075 -   32.  On 010911 gaps in intelligence weaken national security exposed
642076 -        when four (4) planes were hijacked by terrorists, many of whom
642077 -        were known to US authorities, but the plot escaped detection
642078 -        because not enough time is invested for analysis to understand
642079 -        correlations, implications and nuance from information
642080 -        collected by surveillance technology. ref SDS C5 UP5K  US soil
642081 -        suffered the most devastating attack by foreign powers in over
642082 -        200 years, with loss of over 3,000 lives, destruction of the
642083 -        World Trade Center in New York, and damage to the Pentagon,
642084 -        estimated to cost over $100B to repair, plus disruption of
642085 -        American life and the economy.  Some authorities call for
642086 -        increased intelligence capability. ref SDS C5 H452
642088 -         ..
642089 -   33.  On 010911 executives feel ad hoc "problem handling" using good
642090 -        communication skills solves information overload, instead of
642091 -        investing intellectual capital, called out in POIMS,
642092 -        ref OF 4 1101   The feeling information overload is caused by
642093 -        not working hard enough, reported on 980808, ref SDS 83 4140,
642094 -        reflects denial that when.....
642096 -                       ..
642097 -                      too many people are having too many problems
642098 -
642099 -        ...complexity overwhelms competence, which Doug Engelbart wants to
642100 -        solve, as reported in the citation for his award of the "National
642101 -        Medal for Technology," reported on 001114. ref SDS A6  SU3L  On 001204
642102 -        Doug planned a presentation to NSF on the challenge of competency in
642103 -        the face of expanding complexity. ref SDS A7  QR6K
642105 -         ..
642106 -   34.  On 010916 SDS enables amazing memory, methods obviously work,
642107 -        but worry about user interface is polishing brass as Titanci
642108 -        sinks. ref SDS C6  P64L
642110 -         ..
642111 -   35.  On 011003 IT using popular programs everyone loves to use
642112 -        causes hopeless quagmire information overload, causing
642113 -        complexity that paralizes analysis. ref SDS C7  EC5N
642115 -         ..
642116 -   36.  On 011031 economy suffers steepest decline since 1991,
642117 -        following terrorist attacks on 010911. ref SDS C8 0001
642119 -         ..
642120 -   37.  On 011102 job losses biggest in 2 decades. ref SDS C9 0001
642122 -         ..
642123 -   38.  On 020116 connecting dots shows economy imploding, needs
642124 -        intelligence. ref SDS D1 0001
642126 -         ..
642127 -   39.  On 020204 Enron's collapse into bankruptcy reflects problems in
642128 -        economy of failing to use good management. ref SDS D2 0001
642129 -
642130 -
642131 -
642132 -
6422 -

SUBJECTS
Default Null Subject Account for Blank Record

6503 -
650401 -  ..
650402 - Enabling Forces Foster Perspective for Change, Improvement
650403 - Too Many People Having Too Many Problems Needs Culture of Knowledge
650404 -
650405 - Follow up ref SDS B0 V54M, ref SDS A7  QR6K.
650406 -
650407 - On 001207 recession was reported caused by "too many people having too
650408 - many problems." ref SDS B0 V54M
650410 -  ..
650411 - US and world economies began to crumble again about 2 years ago,
650412 - largely because deals were made that yielded less than the cost.  Lax
650413 - credit practices allocated funds for projects that were not
650414 - economical.  In the same way that email presents an illusion of
650415 - productivity getting things done quickly working spontaneously, rather
650416 - than invest time for research to verify accuracy and deliberation to
650417 - "connect the dots," bad loans gave the illusion of earnings on the
650418 - books of major banks, particularly in the derivitive finance markets,
650419 - with multiple cross-collateralizations that were only backed by
650420 - uneconomic deals, which nobody took time to investigate, because
650421 - everybody expected to sell them to somebody else.  This is a classic
650422 - Ponzi scheme.
650424 -  ..
650425 - The problem was most acute in the housing market, where loans were
650426 - made for $500K on $100K properties, and there were no requirements to
650427 - show abilty to pay inflated prices.  A frenzy of bad loans from people
650428 - bidding up the price on properties without regard to ability to pay,
650429 - because everybody figured they would sell the property in a month or a
650430 - year.  This was a classic Ponzi scheme on a world scale, mostly in the
650431 - US and Europe.
650433 -  ..
650434 - Another aspect of the Ponzi scheme was financial management.  Warren
650435 - Buttett is the most notable example.  At this time, Buffett seems to
650436 - have performed legitimate investment management for his customers.
650437 - Many, however, did not.
650438 -
650439 -        [On 090502 1355 Reuters reports Buffett's firm suffered losses
650440 -        in derivitive transactions. ref SDS D3 V54M
650442 -  ..
650443 - Bernard Madoff is a case in point.
650445 -  ..
650446 - He recently pleaded guilty to fraud for accepting customers money and
650447 - never making any investments that increased value for customers.
650448 - Madoff merely paid earlier investors generous returns using funds
650449 - received from recent investors.  This gave the illusion of successful
650450 - investing, which then attracted more custmers to invest in the Madoff
650451 - fund.
650452 -
650453 -        [On 090709 2020 HP selling computers for $2K that don't work
650454 -        with Ponzi bait and switch selling computer for $4K that
650455 -        actually works. ref SDS D4 1C4K
650457 -  ..
650458 - Eventually, when new investors began to decline due to weakening
650459 - economy, per above, ref SDS 0 V54M, Madoff could not maintain the
650460 - illusion by continuing to make payouts to older customers.
650461 - Disgruntled customers reported Madoff to authorities, and his
650462 - financial empire of $50B crashed.
650464 -  ..
650465 - A few months ago on 081218 Reuters published an article explaining the
650466 - ripple effect of the Madoff case, which is instructive for revealing
650467 - how fragile the world's economic system has become...
650468 -
650469 -    1.  Yahoo News
650470 -
650471 -        After shock, Madoff fraud victims struggle to cope
650473 -         ..
650474 -        By Svea Herbst-Bayliss Svea Herbst-bayliss Thu Dec 18, 5:32 pm
650475 -        ET
650476 -
650477 -           http://news.yahoo.com/s/nm/20081218/ts_nm/us_madoff_psychology;_ylt=AjPicfsSIuwhnrhmvTevB3pZ.3QA
650479 -         ..
650480 -    2.  BOSTON (Reuters) As the shock wears off, hundreds of angry
650481 -        individuals are struggling to come to grips with how they fell
650482 -        victim to disgraced financier Bernard Madoff's allegedly $50
650483 -        billion fraud, according to psychologists.
650485 -         ..
650486 -    3.  "People are horrified. They are frightened of being exposed.
650487 -        They don't know how to go on," said a Boston-area psychologist
650488 -        who asked not to be identified because he works with many
650489 -        wealthy patients who said they were afraid of being identified
650490 -        in public.
650492 -         ..
650493 -    4.  Experts said that with so many millionaires, charity directors
650494 -        and hedge fund managers trusting their fortunes -- often for
650495 -        decades -- to a man that many top-tier endowments and advisers
650496 -        had avoided, the case could become a classic study in
650497 -        groupthink.
650499 -         ..
650500 -    5.  Many duped investors have been left with a sense of betrayal so
650501 -        strong that it will cause severe psychological scars, said Dr.
650502 -        James Grubman, a psychologist who counsels wealthy families in
650503 -        the Boston area struggling with the emotional issues of having
650504 -        money.
650506 -         ..
650507 -    6.  There are separate questions about Madoff himself and his
650508 -        psychological makeup, experts said.  For one, how could a man
650509 -        who operated what prosecutors have called the world's biggest
650510 -        Ponzi scheme, easily cheat friends -- people with which he
650511 -        celebrated birthdays and weddings.
650513 -         ..
650514 -    7.  For years, Madoff moved effortlessly among the moneyed elite in
650515 -        Palm Beach, Boston, New York and the French Riviera, discreetly
650516 -        talking business at clubs, and charming dowagers at charity
650517 -        balls, according to people who know him.
650519 -         ..
650520 -    8.  Believing in the 70-year old investor, long revered for
650521 -        delivering steady, consistent returns, was easy, lawyers and
650522 -        psychologists agreed.
650524 -         ..
650525 -    9.  "He gave his investors a lot of intangibles," Grubman said. "He
650526 -        allowed people to feel they were part of an exclusive club,
650527 -        part of the 'in crowd' and ultimately deemed worthy of
650528 -        investing with him."
650530 -         ..
650531 -   10.  One family who Grubman counsels lost $12 million with Madoff,
650532 -        and will now have to sell their mansion in an affluent Boston
650533 -        suburb and take three children out of private school, he said.
650534 -
650535 -   11.  "EVERYONE ELSE"
650537 -         ..
650538 -   12.  Armed with a long list of references, Madoff carefully created
650539 -        an aura of demand that distinguished him from other investment
650540 -        advisers who often bullied investors for money.
650542 -         ..
650543 -   13.  Wealthy families jockeyed for a chance to invest their money
650544 -        with Madoff, the man who, in one example, helped increase
650545 -        clothing manufacturer Carl J.  Shapiro's fortune.
650547 -         ..
650548 -   14.  Shapiro, an icon in the Jewish philanthropic community, pledged
650549 -        $27 million to support cancer care at the Dana-Farber/Brigham
650550 -        and Women's Cancer Center this year, making his latest gift to
650551 -        local hospitals and museums.
650553 -         ..
650554 -   15.  Shapiro has lost about half a billion dollars through Madoff's
650555 -        funds, people familiar the matter said.
650557 -         ..
650558 -   16.  "It didn't matter that Madoff didn't have Harvard University or
650559 -        Duke University as clients," said Dr.  Gary Tobin, president of
650560 -        the Institute for Jewish & Community Research, a think tank.
650561 -        "He had everyone else."
650563 -         ..
650564 -   17.  Now, "people feel duped, violated, and hysterical. Those are
650565 -        the emotions I am seeing," said Scott Berman, a partner at law
650566 -        firm Friedman Kaplan, who is representing people whose money
650567 -        vanished when hedge fund firm Fairfield Greenwich invested with
650568 -        Madoff.
650570 -         ..
650571 -   18.  "I have been asked by investors, 'Was this guy insane?," said
650572 -        Grubman.  While he never met Madoff, Grubman said he suspected
650573 -        "this was likely not a mental illness but is rather more
650574 -        consistent with being a sociopath."
650575 -
650576 -   19.  "AN EVIL GUY"?
650578 -         ..
650579 -   20.  Madoff also apparently succeeded in compartmentalizing the
650580 -        different parts of his life, psychologists said, noting that
650581 -        people who mastermind long-running frauds can often split off
650582 -        their outward person from internal stress.
650584 -         ..
650585 -   21.  "I don't think anyone knows what really made Madoff tick,"
650586 -        Tobin said.
650588 -         ..
650589 -   22.  "Either he operated from the delusions of pathological gambler
650590 -        who thought he could make it up in the next round and wasn't
650591 -        really cheating anyone, or the other explanation is that he
650592 -        really is an evil guy," Tobin said.
650593 -
650594 -   23.  (Reporting by Svea Herbst-Bayliss; editing by Jeffrey Benkoe)
650596 -         ..
650597 -   24.  Copyright +© 2008 Reuters Limited. All rights reserved.
650598 -        Republication or redistribution of Reuters content is expressly
650599 -        prohibited without the prior written consent of Reuters.
650600 -        Reuters shall not be liable for any errors or delays in the
650601 -        content, or for any actions taken in reliance thereon.
650602 -
650603 -
650604 -
650605 -
650606 -
650607 -
650608 -
650609 -
650610 -
650611 -
6507 -