Commercial developers headed for bankruptcy, naturally asking for a bailout
The most important part of thinking about the future is systems thinking. In our Future Intelligence method, the first part of every project or exercise is to map out the system of any business, activity, or market. Thinking about the beer market? Don’t just stop at consumer tastes, think about packaging, trasnportation, distribution, leisure, sports, etc. That way, you think not just about one kind of change, but the relationships.
This financial crisis is one long lesson on the interconnected nature of all industry, governance, finance, and geopolitics. This is going to surprise you all, but now, since they are part of the whole system, the commercial developers are now asking for bailouts from the federal government.
Let us not consider the merits of such a proposal, but just marvel at how much all of these industries are interconnected. Every actor in the system requires certain behavior from the others in order to survive. When one actor changes (e.g. suddenly ballooning the amount of credit) all the others respond.
Subprime mortgages are now changing the dynamics of the construction of mini-malls around the world.
It’s a mess, but at the very least it’s interesting.
If retail and commercial development are melting down, what comes next?
City economies now collapsing: OK, let’s take a breath
You know, we spend our time on the long-term future here, but it seems like everybody needs to pay attention to the next few weeks.
Today, several American mayors went on record saying their finances are in shambles, and now THEY need a bailout too.
Did the bailout plan really take none of these repercussions into account? Can we maybe stop and do a little scenario planning about what the next two months could look like before acting with $700 billion in our pockets?
Note to the Treasury Dept: we’re only one block away.
Bretton Woods, part two: how will it shape the future of finance?
Interesting piece by Gideon Rachman in today’s Financial Times regarding the upcoming meeting of the G20, 
dubbed Bretton Woods 2. Given the shambles of world finance, established and emerging economies are given a chance to sort of remake the world financial system.
Rachtman makes a good point that in 1944, the destruction of the world let us start with a clean slate. This time, we seem much less willing to upset the established order. Really, bankers aren’t even willing to give up their bonuses in the face of disaster, so completely overturning the power structure seems unlikely.
It seems that a whole host of institutions are going to receive makeovers. Will they be superficial or substantive?
The end of giant corporations?
My intelligence buddy August Jackson just made an interesting point: given the fantastic new AUTOMOTIVE BAILOUT that’s flirting with us, will the world lose its taste for giant, conglomerated corporate entities?
Seriously, what’s the upside of having businesses so large that governments believe they shouldn’t fail? We’re spending ludicrous amounts of tax dollars to keep banks alive. The U.S. federal government is running a debt that would cause any individual to choose bankruptcy. Now, the car companies feel that they need more of (my) tax dollars to keep afloat, because letting them fail would be far too painful for all concerned.
What is the benefit of companies so big, we can’t let them fail?
And if consolidation is so bad, why is the pharmaceutical industry considering even more of it?
Questions for this new age.
Sarkozy warns bankers of their “moral pact” with the nation
It seems that other countries are seeing the risk in allowing national bailouts to be used, not for unfreezing credit markets, but for high-stakes mergers, dividends, bonuses, and other business-as-usual activities.
Yesterday, French president Nicolas Sarkozy called the nations bankers in a room and essentially started screaming warnings not to do likewise. Actually, quite amusingly clear, forceful language from a head of state.
Highlights:
“Bankers have signed a moral pact with the nation.”
“[To the media] When you see something that looks wrong…SAY SO!”
It’s interesting how much of the future of business seems to ride on our reactions to this crisis. In addition to trend analysis, we constantly recommend actor analysis, the examination of the motivation and decision making processes of major players in any industry or system.
France appears to be reacting to the meltdowns in other parts of the world economy and sticking with a slightly slower, much more disciplined interaction between the state and private industry. And their head of state is making this a moral argument, a sacred trust between individuals and institutions.
What about other countries? We’ll be watching.
Strategic illusions and imminent disaster
James Pethokoukis at U.S. News and World Report believes that this $700 billion (come on, at least a trillion) bailout is much cheaper than the $30 trillion cost of not bailing out Wall Street and allowing the free market to function.
$30 trillion.
Let me ask - are we saying that our economy could possibly be upside down by multiple trillion dollars without us knowing it?
If that’s so, is this illusory wealth? What is real? What is a social construct? How can managers know anything? Why then do we have leadership, management, and regulation of any sort?
Man, I feel like these questions are necessary, but they sound like Albert Camus after nine glasses of Bordeaux.
Is our economy really that much of a post-modern construction?
It’s times like these that you really miss Peter Drucker.
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