It’s been a long time since I’ve posted an entry. Part of the reason it’s been so long has to do with a significant amount of activity around end-of-year projects at work. The need to have several contracts done, dusted and in place by the end of the year has been driving my activity for the last month or so, and is likely to occupy much of my time in the weeks that remain in 2008.
I’ve also diversified my content creation pretty far and wide. I’ve been posting some entries to my internal blog within Verizon, which of course only those inside the company can see. I’ve also been posting a lot of short thoughts to my Twitter feed that also are posted on Facebook. Finally, more of my content is finding its way onto social networks as opposed to a stand-alone blog. I like the interaction, and it’s easier for people to read and comment on a site that gives them so many reasons to visit.
So much has been going on in the past few months, that several times I felt like I wanted to blog but couldn’t find the bandwidth to spend some time putting together my thoughts to say anything substantive. The turn of events in the financial markets actually kept me up several nights in September and October. The $700 Billion TARP plan seemed to me poorly considered and since inception poorly executed. The decision to use the funds to shore up banks as opposed to purchasing assets seems treating a symptom rather than trying to address the cause. It could also be said that we would have been better off letting the market adjust itself. I tend to agree with this sentiment, and our current approach encourages the very moral hazard that got us into this problem in the first place.
There is a great discussion happening on the Competitive Intelligence social network on the Ning social network platform. For my professional field of interest this has raised a question about whether or not the financial collapse is a failure of commercial intelligence. I tend to regard the situation as an inability to clearly evaluate the risk of new financial products and a faith in a fundamental assumption that “the price of real estate always goes up.” This unquestioned assumption led borrowers to buy more house than they could really afford (with little or no money down or even negative equity), lenders to disregard a borrower’s ability to pay and purchasers of asset-backed securities to vastly underestimate the likelihood of defaults and the magnitude of the damage from that possibility. I’m also convinced that greed and cognitive dissonance make it more difficult for groups of leaders to hear contrarian views and convince themselves that they’ll get out of a bubble market before it bursts– even after they recognize the bubble. People become like sinners convinced that they’ll repent on their deathbed, never considering that they might get hit by a bus.
Questions of risk and challenges to unquestioned assumptions are core to competitive intelligence. The real challenge is in communications and persuasion. Telling decision-makers what their options are or what they should do is often considered blasphemy by intelligence professionals. Recent national security and commercial intelligence failures are clear evidence that quality intelligence needs to have a perspective and needs to have teeth. An important question about this is whether or not intelligence professionals in government or commercial organizations can strike the right balance here and not truly over-step their bounds.
I’ve gone so far in conversations with fellow intelligence professionals to question whether or not the current financial crisis doesn’t show us that we are ready to turn a page on our economic model. I don’t mean to suggest the “End of Capitalism” that so many have suggested. Mainly I mean to hypothesize that we’ve seen the limits of how big companies are able to become under current management practices and technology. Certainly we’ve seen that there is a limit to the level of complexity we are able to grasp in our financial products and understand the inherent risk behind them. Subsequently we’ve seen a boundary to our current ability to calculate the real value of these financial vehicles as well as the ability to regulate their structure and trade.
Barack Obama’s election is another big news event from my blogging hiatus. The historical significance of the election is obvious. I hope that the election of such a thinker will re-establish the notions of debate and evidence in American culture. After the past few years Americans have become numb to “truthiness” pandered by “scientific” think tanks on the religious right. While I’m not so naive to think that political survival will trump rational policy decisions, I do believe Obama and his leadership team named so far represent a considerable improvement over the current cast of characters in the White House. A critical challenge for President Obama is going to be controlling some of the more extreme elements of the Democratic leadership, and we must all remain diligent that a Democratic majority doesn’t behave as the Republican majority did from 2001 – 2006.
Don’t even get me started on the bailout of the big three auto makers. That’s so much a non-starter. The best we should offer these companies is government-backed debtor financing under a major Chapter 11 restructuring. According to the Economist the auto industry is set for substantial growth in the next four plus years as the new middle class in China and India purchase more and more cars, including those produced by Ford and GM’s overseas units. That may very well be the case. A major restructuring now under Chapter 11 will help these companies get their operations and organizations in shape to reap the rewards of this potential market. All that said, the assumption that the new middle class in China and India will continue to grow and see income growth that affords them automobiles in large numbers is an assumption that needs to be questioned.
