In case you aren’t an avid weekend of the Weekend FT (you should be) there was a good article on 27/28 December by Niall Ferguson called ‘Chronicle Of A Decline Foretold’. The article is essentially a look back at 2009 from the position of 31 December 2009. Nice idea.

As he says: “It was the year when people finally gave up trying to predict the year ahead. It was the year when every forecast had to be revised – usually downwards – at least three times. It was the year when the paradox of globalisation was laid bare for all to see, if their eyes weren’t tightly shut.”

http://www.ft.com/cms/s/0/c7804616-d3b7-11dd-989e-000077b07658.html

Another entry from the rather strange blog set in 2049 (sorry I’ve missed a few days). If you want to read this on a daily basis I suggest that you go direct to www.p40y.com….

“Spent the morning playing in the Softparkâ„¢ with Julie. No dramas although I did receive a platinum pmail in the afternoon from an organization that claimed to own the patent for “pushing a child to and fro on a seat attached by two or more chains, wires or ropes linked to a horizontal cross-member.” It looked like phone spam but its reliability rating made me think it could be for real so I passed it on to Jim.

The sea is unusually warm so I went for an early evening swim. It was lovely except for the trillions of tiny mirrors floating around in giant swarms. I know these are for the good of the planet but they don’t taste very nice when you get them in your mouth.

Had an interesting thought over dinner: If the human brain can remember and re-experience the past why can’t it pre-experience the future? I’m not even sure what this means but it made perfect sense at the time. Meaningless scribble. Can I really keep writing this stupid diary for another 363 days? I’m running out of things to say to myself already. Still, as the late, great Brian Eno once said of his own diary many years ago, anyone reading this will at least know a lot about the month of January.”

I know I’m supposed to be finishing off The Black Swan by Nassim Nicholas Taleb but I picked up something else yesterday by accident and I haven’t been able to put it down as they say in book reviews. The book is called How To Be Free by Tom Hodgkinson and it is quite possibly the best thing I’ve read in ages. Here’s a bit from a chapter called Submit No More to the Machine, Use Your Hands:

“ The future is always about machines. But I don’t think about the future; I think about the present. The future is a capitalist construct. The past teaches us that the future has let us down, and let us down many times. Dreaming of some kind of technological utopia in which machines will do all the work has failed us before, and it is failing us now, with our new faith in digital technology.

‘When we speak of the future, we speak of man’s hope for the future, which he is living now’, is a line I heard repeated once on a pop record. The ‘future’, so called, is in fact part of the anti-life system; we are essentially kept quiet by means of the idea that at some point in the ‘future’, things are going to get better, as per the theme song of the labour Party’s victory over the Conservatives.

The future is part of the classic Protestant notion of deferral of pleasures. Pensions, for example are sold with the idea of a brighter future. I believe that things can get better from the present moment, right here, right now….

…the problem with ideas of the future is that they are untested; they are all speculation, fantasy. The future has not happened yet. So it is, in fact, less woolly minded to look to the past for inspiration than to look to the future.”

I’m not convinced about the value of blogs. As Groucho Marx once said, I don’t want to be a member of any club that would have me as a member. Nevertheless, one thing about blogs that I do like is that they give me something to do when I’m wide awake at 4am in a hotel room in New York.

I don’t know if anyone has seen the movie Groundhog Day but I’m having a bit of a Ground Hog moment myself. A few years ago I stayed in a hotel in Miami where you needed a postgrad degree to operate the lights. I also had a spot of bother accessing my email because my wonderful ISP had upgraded things “for my added security and convenience.” But the problem was that they had emailed me a new password and I couldn’t access it remotely because I didn’t have the new password to access the email containing the new password. Brilliant.

Well not only have they done it again but I’m staying at another hotel where you need a degree in theoretical physics to work out how light travels from the control panel to the lights on the other side of the room. Furthermore, I can’t work the phone. When I checked in they kindly told me to “dial 0 if you have any problems…and have a nice day.” I would, but obviously the phone isn’t working so I can’t call them to ask how it works. And then there’s the hotel mini-bar.

A mini-bar used to be just a small fridge. Not much could go wrong. If you were feeling thirsty you opened it, had a look around, and maybe drank something. Not anymore. Now the mini-bar is a momument to high technology and high stupidity. The fridge is fully wired and so security conscious that I’m afraid to open it. If you think I’m kidding I have apparently already been charged for something I haven’t done. There is a (very small) sign on the fridge that says: ” Please note that any items removed from the mini-bar and snack tray for longer than 20-seconds will automatically post to you room account…thank you and have a nice stay!”

I’m a bit speachless about this to be honest. What the fridge seemed to be saying to me was: “We don’t trust you so we’ve used technology to ensure that you don’t walk off with anything without paying for it you scumbag…thank you and have a nice stay!” Doesn’t exactly enhance the user experience does it? I opened the fridge, grabbed a diet coke, had second thoughts and went for the juice, changed my mind again, went for the nuts and…you probably get the picture.

I have one other jet-lag induced thought to share with you. Why do airlines weigh bags but not people? I’m in the land of the 24-hour donut shop where some people just rip open the mini-bar and snack tray regardless. So why do airlines weigh your bags and impose strict limits and excess weight for bags but allow people of all weights to pay the same? Given that oil will eventually hit $200+ a barrel, why Can’t I pay for a plane ticket based on the combined weight of myself and my luggage?

Like I say, I’m jet lagged and have nothing much else to think about…

I keep getting on planes (I’m in Singapore right now) and the person in the seat next to me keeps asking me what I do. When I tell them the next thing they ask, half seriously, is whether or not the world is coming to end. It’s the worst crisis in a generation right?

Well yes and no.

It is the worst financial crisis we’ve seen since 1987 but it’s not (yet) 1929. Moreover, it’s a banking crisis not an economic crisis, although the two are obviously linked.

Let me explain.

First, I don’t see a global recession just yet for the simple reason that there’s too much liquidity (cash) around. China is sitting on something like US $1.4 trillion and the Gulf States were sitting on another US $2 trillion the last time I looked. What is happening is that asset prices are collapsing in the US (and elsewhere) and the Gulf States, China, India and Russia are buying them at bargain basement prices. Hence assets are moving Eastwards.

It’s possible that declining consumer demand in the US could pull China down but I don’t think so. More likely, the US will fall into a proper recession but the rest of the world — more or less — won’t. This is the de-coupling argument to some extent and reminds me of Japan’s ‘lost decade’ in the 1980s.

But even if this happens some parts of the US economy could be OK. This is the 2-speed economy argument, which says that some industries will slow down but others (for example, high-tech companies that are export orientated) are OK.

Another thought is that we have swung from a period of irrational exuberance to one of irrational pessimism. Most of the trouble has been caused by banks (bad loans, networked risk etc) and it is the banks (and bankers) that are suffering.The view of bankers will necessarily be rather pessimistic as a result.

Did I see any of this coming? Yes actually. First I was involved with a series of scenarios for a bank way back in 2005 and what is happening is exactly what one of the scenarios that Oliver Freeman, Ross Dawson and myself predicted.

I also pretty much got it right in my book. Here are a couple of extracts from the chapter on money:

“In the US the level of debt owned by low-income households has soared by over 180% over the last decade, while the figure for older people was close to 150% over the same period. This is not a debt mountain; it’s an avalanche waiting to descend”.

“The problem, of course, is that many of the people with gigantic loans are living right on the economic edge. When interest rates rise by a couple of per cent they will be in very serious trouble — or perhaps the banks and other financial institutions that lent them the money (or bought the debt) in the first place will be”.

“There are some people who still believe that we have entered an indefinite economic boom: hence, major cycles of boom and bust have ended. I don’t agree”

So, what’s next? I don’t know. My gut feel is that we haven’t reached the end of the beginning yet. I think credit card related debt could be the next trigger.

To quote the rock band REM:

“It’s the end of the world as we know it.
It’s the end of the world as we know it.
It’s the end of the world as we know it and I feel fine”.

Actually it isn’t the end of the world but it is the end of the world as we knew it. And I do feel fine.

Social shopping or ‘crowdsumption’ is what happens when social networking principles meet the vagaries of fashion. It’s what happens when the fickle facebook crowd meets the faddish fashion industry. There is even a new word for this — shopcasting — that describes people that look at what other people are looking at or wearing right now. Narcissism? More like Narcissism 2.0. Sites like Osoyou.com and ThisNext.com connect people with similar interests and tastes and represent what some observers are calling a new ‘referral economy’. There is definitely something interesting going on here, especially sites like Nethaggler that tap into the purchasing power of large groups of individuals. Also interesting are sites that represent a merger or hybrid between media and retail. However, we shouldn’t get too carried away with the wisdom of the masses, because all to often the wisdom of crowds seems to think very short-term and often exaggerates the importance of the new.

A decade or so ago, many exuberant e-experts were predicting the death of bricks-and-mortar stores due to the rapid emergence of online stores and e-tail. It didn’t happen. Instead the Internet has complimented physical stores and given customers the choice of how and where they shop. The Internet has also fundamentally changed consumer behaviour because it has shifted power in the form of information from the retailer to the customer.

Shoppers are now increasingly well-informed and increasingly impatient thanks to the speed of the Internet and the control it gives them. However, while convenience is important, it’s not the only factor. Customers also like physical stores because they are sensory and in some instances highly personal. As a result, physical stores are investing in the best of both worlds, which means superfast information access and superfast delivery. For example, Bloom Supermarkets in the US (owned by Food Lion) has installed scanning technology that allows customers to scan items as they pick them up, thus allowing them to keep a tab on their final bill, but also speeding up the final checkout. In a similar vein, Circuit City (US) is promising that any item ordered over the Internet will be available in-store within 24 minutes or the customer will get a US$24 gift card to soothe their lack of instant gratification. Interestingly, Circuit City reports that 50% of online orders are now picked up from one of their stores.

Meanwhile, Best-Buy (US) is investing in staff training so that its staff know at least as much about the products they are selling as their customers, many of whom are using cell phones in-store to search the Internet for product information or to compare prices via sites like frucall.com. Bloomingdale’s have gone one step further by installing technology that allows customers to try on clothing in front of an interactive mirror and then email images to their friends for comments and suggestions. A final example of the merger between bricks and clicks is Barnes & Noble. The bookseller is installing kiosks that allow customers to search for obscure and out-of-stock items. So what are the takeaways for retailers here? First, customers want more information and control. Second, they want delivery and payment to speed up, and third, they want more service. The latter obviously clashes with the need for low prices but the modern customer is nothing if not demanding and contradictory.

Sales of books in Japan are in decline but a novel idea — the ‘phone book’(keitai bunko) — is enjoying spectacular sales success. People — and especially women in their 20s and 30s — are reading love stories and mysteries on their mobiles while sitting at home or travelling to work. Indeed, in 2006, four of the top ten best selling hard copy books in Japan began life as mobile phone books and several of these cellular stories have notched up sales well in excess of a million copies. There are roughly 100 million mobile phones in Japan (out of a total human population of 127 million) and according to one estimate the size of this market is ¥ 9.4 billion (Euro 60 million) a year in Japan, up from zero in 2002. Why is this happening? Data transmission speeds are now fast and screen are bigger and easier to use, however, there may also be another particularly Japanese explanation. Many Japanese commute very long distances to work and there is often a need for some form of mobile-based distraction, be it phone shopping or mobile literature. Interestingly, perhaps, what typically starts off as a serialised or instalment-based phone book sent out to subscribers is often transferred to a traditional hard copy. The reason for this could be that young readers first read these instalments on their phone and send in suggestions and criticisms direct to the book’s author. Thus the reader feels that she or he has contributed to the development of the novel and therefore wants a copy of the final (hardcopy) book as a physical keepsake or memento. So what are the implications of this trend? First the distinction between e-books and phone books will erode to the point where the distinction is meaningless. Second, language and literature will evolve to fit these new formats, which will mean that simple, short sentences and words will be the order of the day.

If you thought user-generated content was limited to the media and entertainment industries you’d be wrong. The medical industry has recently seen an outbreak of cancer videos, wellness wikis and bulimia blogs that borders on a epidemic. In many ways this is nothing new. Online support groups have been around for at least 15 years and the distribution of material related to specific medical conditions via physical meetings has been around much longer than that. What is changing is content. The reason for this shift is pretty straightforward. Increasing connectivity allows patients to access what other people think and feel and tools for creating and filtering content are more widely available and easier to use. Add to this the popularity of Web 2.0 or user-generated and user-filtered sites such as YouTube, Facebook and Wikipedia and it’s easy to see why some people are getting very excited about the prospects for ‘Health 2.0’. Moreover, user-generated content allows patients to control their own destiny and not be beholden to medical professions, many of whom are themselves suffering from information fatigue caused by the sheer amount of medical information now being created and distributed through more traditional channels.

But does user-generated medical content really have a future? On the one hand, you’d think that privacy issues alone would prevent any meaningful exchange of knowledge but this doesn’t seem to be an issue. Equally, you might suspect that the information itself would be unreliable, or even harmful, but a study in the British Medical Journal found that just 6% of such information was factually inaccurate. According to Jupiter Research, 20% of US Internet users have now generated some kind of health-related information for the Internet and according to a PEW Internet & American Life study almost 1/3 of the 100 million Americans that have used the web to find medical information say that such information has been helpful.

Late last year there was a cartoon in the Daily Telegraph (UK) showing a bank cashier pointing a gun at a customer and saying ‘Leave your money where it is’.The sign above the cashier said ‘Northern Rock’. If you don’t live in the UK the fiasco surrounding Britain’s fifth largest mortgage lender may have gone unnoticed, but in Britain this was the first run on a bank since 1866. So what went so wrong?As recently as July, Northern Rock’s Chief Executive was publicly talking about a ‘robust’ credit book. Two months later the bank was effectively insolvent.But there were warning signs well before all this. For example, Business Week warned about the consequences of cheap money in February 2007 while in early March The Economist magazine commented that there might be trouble ahead when you can buy a book called ‘House Flipping for Dummies’ (‘Flipping’ being the American colloquial term for ‘doing up’ a property quickly, in order to sell it on). The issue with regard to Northern Rock is essentially that the bank used the global wholesale money markets to fund its growth rather than relying on the slower method of using its own local deposits. Interestingly, the bank did little or no business overseas but the connectivity of global lending meant that it was still exposed to far-away risk, specifically the complexity and confusion surrounding securitisation (that is, the process of turning debt into marketable securities). Implications? Securitisation and ‘structured’ financial products aren’t going away any time soon but what is likely is that there will be demands for greater transparency surrounding the securitisation process.