2009: The Status Quo versus The Long Emergency
Again, stop whatever elese you were doing, like reading things I wrote about 2009, and read Jim Kunstler’s forecasts about 2009. The author of The Long Emergency is experiencing the unenviable task of seeing dire structural change ahead, change that won’t be mollified by new gadgets, and being right about its consequences.
Some highlights:
He’s not a fan of techno-solutions. (not unlike yours truly)
The various tech industries are full of MIT-certified, high-achiever Status Quo techno-triumphalists who are convinced that electric cars or diesel-flavored algae excreta will save suburbia, the three thousand mile Caesar salad, and the theme park vacation. The environmental movement, especially at the elite levels found in places like Aspen, is full of Harvard graduates who believe that all the drive-in espresso stations in America can be run on a combination of solar and wind power. I quarrel with these people incessantly. It seems especially tragic to me that some of the brightest people I meet are bent on mounting the tragic campaign to sustain the unsustainable in one way or another.
He sees Dow 4000:
A consensus in the blogoshpere says that the stock markets will rebound strongly during the first Obama months. This is possible just on the basis of pure “animal spirits,” but the Obama Bounce will occur against a background of continued dismal business and financial news. It will appear to defy that news. By May of 2009, the stock markets will resume crashing with the ultimate destination of a Dow 4000 before the end of the year.
He believes that you’ll actually need positive cash flow to make a business run (old-fashioned, but radical!):
We’ll turn around early in 2009 and discover that we are a much poorer nation than we thought because from now on credit will be extremely hard to get for anyone for anything. The businesses that survive will have to keep going on the basis of accounts receivable…Giant enterprises requiring giant loans to get from quarter to quarter will tend to not make it. Borrowing from the future will become a practical impossibility as past bad debts from previous borrowings continue to unwind, cease performing, and get written off.
Real change. Not new technologies for old philosophies. Nobody will save the day. We’ll need to make workable solutions for many different types of people.
And still - people will need things. Goods and services will be required, perhaps just different types.
Business development will need to be on its toes! Are you ready?
“Nobody could see it coming,” schadenfreude edition
One of the most outrageous things I heard about this current financial crisis was that “Nobody could see it coming.” Early warning was written all over this systemic collapse - and people actively made fun of this view.
Watch this video of economist Peter Schiff and the ridicule he must endure for accurately predicting the systemic weaknesses in the economy.
Think about this kind of dynamic the next time you need to spread news of a systemic disruption in your organization.
Executives must re-establish their strategic radar
Tim Powell, a colleague and expert in competitive intelligence, sees the financial crisis as a complete failure of scientific management. We use numbers all the time because measurement is better than superstition. Numbers aren’t perfect. but if we don’t restore confidence in these techniques, the whole economy will suffer.
When people—and I include institutions here, they’re run by people—can’t trust the numbers, they can’t trust the capital markets. When they can’t trust the markets, they will not invest in those markets. If they don’t invest in the markets, the markets will freeze up. When the markets freeze, business can’t operate and will itself freeze—and that is exactly what is happening.
Without honest, quantifiable management techniques, our economy will look like the Soviet block - based on raw power, cult-of-personality warlord leadership.
Metrics can get onerous, but without them, we’re in the Stone Age.
Early warning: credit card debt shows fundamentals of the economy changing
We speak often about the need for early warning when it comes to business intelligence. Usually, after something really bad has happened, leaders say “Oh, if only we had known sooner. Let’s get more interested in early warning.” This is also accompanied by observations like, “This was a failure of imagination” and “we’ve got to think out of the box.”
I submit that most times, people don’t want to see the most important changes. Such tectonic shifts mean that precious institutions (and assumptions) might be shaken to their foundations.
For example, have you ever seen this chart of American credit card debt?
It matches housing prices perfectly, matching real economic growth for twenty years, then skyrocketing after 2001.
But these together, and you can clearly see the fundamentals of the American economy changing in a radical fashion. Something about the largest economy in human history changed dramatically, and nobody really stopped to make a comment.
If we want a prosperous sane economy and functioning government institutions, leaders have got to get serious about the deep philosophical and analytical dialogues that need to accompany these kinds of changes.
The last thing we want is to watch an even bigger catastrophe than the past month, followed by the all-too-typical chorus of “we should be interested in early warning,” and “nobody could have seen it coming.”
You can see it coming as long as you are willing to watch what’s really happening.
It’s time.
The financial crisis and what it means for leaders
With everything that has happened in recent days, we here at Competitive Futures are really examining what we do as trend analysts.
Trends are the result of decisions human beings have made. Track them all you want - it’s the leaders that count.
What kind of leader are you? Are you thinking about the future?
Yes, it’s a marketing message for our firm, but more than ever we realize that the answer to those questions impact us all.
Mark Penn: I guess macrotrends are the new microtrends
It’s amazing how shaving a few trillion off the global economy can change things. It can even completely flip your view of the world. Just ask Mark Penn.
Penn was brought to most people’s attention as Hillary Clinton’s chief strategist, for better or for worse. This 
probably isn’t a fair introduction to the man, since tenure as a campaign consultant was more due to his work as CEO for public relations giant Burston-Marsteller. There, he specializes in extremely granular market research, defining people by tiny variances in beliefs and purchasing habits. He refers to this as microtrends, saying that tiny movements within a demographic add up to real change. He points to professionals with tattoos, “pet parents,” and protestant Latinos as burgeoning interest groups who will one day cause larger changes.
Pretty reasonable stuff. The only problem has been his tendancy to declare “the era of the megatrend is over.” Penn’s last several years have been dedicated to pushing the notion that these microtrends have primacy over the megatrends, that megatrends were so 1980s.
This made me discount most of what Penn had to say, because to assert that macrotrends in society and technology wouldn’t change the future is horrible, horrible analysis. Water shortage, healthcare expense, immigration, surveillance technology, global warming, skyrocketing national debts, the list of 20 - 50 year macrotrends goes on, and all of them trump the fact that 30 year-old analysts in Mark’s office were getting back tattoos.
It’s been a long couple of weeks, of course, and the effects are readily seen. For example, now Mark Penn is trumpeting the effects of megatrends in today’s Politico. It seems the impact of a collapsing world economic system does reach as far as political campaigns. (That is, if you think that Obama’s lead in NORTH DAKOTA has any significance.) Yes, but Penn unfortunately covers his most recent view of the world with a Monty Python quote, “Nobody expects the Spanish Inquisition!” meaning that nobody could have expected the world economic system to collapse.
Normally, a Python reference would warm my heart, but this is just a cover for the fact that some people would rather study what kind of Starbucks coffee people prefer instead of examining the underpinnings of our economic system.
Mark, since you’re now into megatrends ,check this out. There’s lots more where this came from:
And welcome to the club. We need a hand figuring this stuff out.
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