Source: Ambrosia Photography

After catching wind of the controversy from Daring Fireball, I’ve looked at two of the major opinions in this entire American Airlines and Mr. X debacle.

For those who don’t know what happened, a young designer, Dustin Curtis, wrote a sardonic post about the unintuitive nature of American Airlines’ website and created a mock-up for a better version of their site.

Surprisingly, a member of the American Airlines design team (codenamed Mr. X) actually responded, defending AA rather passionately and described the difficulties of trying to implement change when dealing with issues of huge scale and a sprawling bureaucracy.

An hour after Dustin posted the response, Mr. X was fired.

Ever since, there has been two sides to the issue. One side agreeing with Dustin that this is a disgusting lack of regard for both Mr. X and the customer experience, and the other commenting about how, in reality, it isn’t that simple to implement a redesign of a major corporate site. There are metrics, stakeholders, etc. to take into consideration—a similar line of argument taken by Mr. X, though with far more vitriol directed towards the “arrogant 21-year-old.”

Getting to the Heart of the Matter

I’m going to ignore the ad-hominem attacks on both sides, and put aside the issue of whether or not it was right for American Airlines to fire the designer (I think they were, even if it was a public relations disaster—not everything you can do is what you should do).

What I take issue with is the argument that both Mr. X (though less so) and Josh Blankenship on So Serious take in defending the sorry state of AA’s website.

The argument that there are obstacles in the way and that “it isn’t that easy” is more likely than not absolutely right.

However, that should hardly stand as an excuse for the state of affairs at American Airlines. Let me explain.

In arguing this way, defenders of AA’s current website (and by extension, their corporate policy, if all of their decision making follows a similar pattern) are saying that because of what those within AA have to work with (a large corporation with a huge bureaucracy) that they should accept certain realities of what is possible, at least within any sort of reasonable timeframe.

However, it’s one thing to acknowledge difficulties. It’s another to let it define your thinking.

Goal-Oriented Thinking

The Economist had a great profile recently on the late Russ Ackoff, describing mostly his conception of systems-based thinking—what I like to call goal-oriented thinking.

Neatly summed up: “An architect never starts by saying, ‘Here are the parts, what can I build from them?’”

You should not let what you have on hand define what end result you are looking to achieve. To do so inevitably means that you are “accepting” certain “realities” about your situation—compromising on where you want to go.

Thinking about where you are to decide where you should be—that is the absolute wrong way to go about solving problems.

It reminds me of a certain Daoist saying: “To obtain knowledge, you accumulate more every day. To obtain wisdom, you subtract more every day.”

If you have a hammer, everything looks like a nail.

If you go about with all of this “understanding of the situation” you inevitably limit yourself. You begin thinking not about where you want to be, and what SHOULD happen, and instead what you presume, within your present context, what you CAN do.

Giving an example of a story I heard from the founder of a burgeoning nonprofit that I’ve been working with as a consultant, this NGO was creating designs for low-income housing with shipping containers. A group of engineers from many of the most prestigious schools on the East Coast were trying to figure out how to create a door for these shipping containers.

The problem for these very smart engineering students was trying to figure out, after deciding that the door should open upwards, how to engineer the door so it could be hoisted up easily, how it could be kept from falling, how to minimize the danger of someone getting their fingers sliced off if it does fall…

Then someone walked into the room and asked why didn’t it open sideways instead, like a regular door?

It’s not that their combined engineering knowledge could make one acceptable, or even cost effective. It’s that they added onto their conception, putting more and more complexity on the problem to compensate for the obstacles they KNEW they faced.

They didn’t step back and ask what exactly the goal was for this door, nor did they simply subtract from their understanding. They didn’t step all the way back to 0, and rethink the decision about the orientation of the door to begin with.

Getting to Where You Need to Go

Back to the American Airlines case, Mr. X and Blankenship were both thinking more about what existed and what they “knew.” They could see where they ARE. Dustin, however arrogant or unintentionally, started from zero and saw where AA had to GO.

Mr. X said that he had many redesigns in his own archives. He said that change was on the way, gradually. From experience and from business history, much “gradual change” ends up becoming “indefinitely postponed change.” Most great realignments are radical shifts, even if they happen in multiple smaller bursts.

It’s too easy to put things off when you’re looking at what you have. You can see how much better it was from yesterday, after all.

It feels much more urgent when you are looking at how far from where you should be. And how much worse today is from where you want to go.

Putting Aside What You “Know”

My old rowing coach always demanded of our team when we began to lose our energy, and when we felt we couldn’t push any further, to “find a way.” He didn’t care what we knew about ourselves or how hard we FELT we could go. We just had to reach the goal—go harder, go faster.

We had to put aside what we felt we “knew” about ourselves. We had to go to zero, subtract from what we knew, to buy into his assertion that we could “go much harder than you think you can.”

It would have never worked had we simply kept thinking of ourselves in the way we always did, in terms of where we were.

In crew, in business, and in life, if you accept the predefined boundaries and “realities” of where you are, you’ll never reach the destination you want to go—you’ve already put aside where you truly should go to go somewhere you “can” go.

It’s one thing see and know the hurdles you must overcome to reach the goal. It’s another to let them, instead of the finish line, define your path.

If you always live in the present and see only what is, you’ll never “find a way.” You’ve already allowed one to assigned to you.

Most Commented Posts

• Google Being Evil: Knol and Beyond
• Foreign Aid to Africa? Just Say No
• Why the Media is Wrong About Chinese Democracy
• A Failing Mission in Afghanistan?
• Is Obama Jousting Windmills?

Steve Ballmer speaking at CES 2009.
Source: JD Lasica

“We don’t believe in coming to market like Apple – high margin, high quality, high price. We believe in high volume and low price,” – Steve Ballmer

Most companies spend millions attempting to promote the first and abolish the second.

Even the poster child of bargain-marketing, Walmart, has been struggling for the past few years to move upmarket with in-house “designer” brands and higher end goods. Cutting costs mean cutting margins. It means living lean—and having no brand loyalty.

If you compete on cost, the moment a cheaper competitor comes along, there goes your market.

But on the low end, Microsoft is not going to outcompete Linux on the low end—and if they do, the Microsoft of now is not going to much like the Microsoft it’ll have to become to do so.

That leaves the mid-market. Which is nothing.
How many restaurants can you identify as “mid-market” restaurants? Usually, there’s only the cheap ones and the really expensive ones.

You eat at the cheap ones because you have to, and you eat at the expensive ones because you can afford to. There isn’t really a stopping point in the middle.

The only markets that do are ones where the climb up to “high end” is a huge portion of your income—like the market for cars and houses. Mid-markets exist when it takes too long to get to the high market.

Is a computer/operating system on the same scale?

But if Microsoft does suddenly decide to turn around and fight for the high-end market, that’s a war that numbers say that it has already lost.

Fighting for specific markets is a realm that Microsoft seems to not understand. Their current model assumes they simply have all of it.

Will MSFT disappear completely from the grid? I doubt it. But I also doubt that Microsoft, a few years down the line, will look anything like it does now—specifically, a company of significance.

Most Commented Posts

• Google Being Evil: Knol and Beyond
• Foreign Aid to Africa? Just Say No
• Why the Media is Wrong About Chinese Democracy
• A Failing Mission in Afghanistan?
• Is Obama Jousting Windmills?

Tickle Me Obama: Lessons from Sesame Street on TIME.com is certainly an eye-catching title—truly an example of good headline writing, even if the content is less than insightful.

Considering how many things are going on in the world, I wouldn’t think that there’s a dearth of news stories, but maybe at least in the case of Obama, we’re running out of things to say.

Technorati Tags: Obama, media

Related Posts

• Is Obama Jousting Windmills?
• Break the Banks, Buy the Banks?
• The Hidden Purpose of Sarah Palin
• Why the Media is Wrong About Chinese Democracy
• The End of Hillary’s Victory Celebration

Source: Elizabeth Cromwell

Bank bailout? Auto bailout? Health care reform? Education reform? Ending the Iraq war? Total security review? International diplomatic push?

Is there any major, explosively controversial issue that Obama has not promised to tackle in his “State of the Nation” address? One particularly interesting aspect of Obama’s address is that he does not shirk from criticism at all. He takes the arguments of his strongest critics, calls them out, and rebuts then. This is not what recent American Presidents, especially the last one, have done.

In many ways, it was another fireside chat. It was another “Good Morning, America.” I think the media and blogosphere has described it as both at this point. He was blunt and treated Americans as fellow stakeholders, instead of obstacles to be dealt with.

But many of the points he made were also in his speech at the Fiscal Responsibility Summit that came before this particular speech. My feelings on his chosen set of Titans—and he’s chosen almost every single one—is that Obama is over his head.

His speech was impressive. I was impressed. Even the Republican lawmakers were impressed.

But Obama has always been impressive. And he has not been the first impressive politician to take on these issues. Health care reform. Social security reform. Education. And my own pet cause, American farm policy. These have been the millstones that have destroyed and wasted many a promising political career.

Obama trying to tackle even “unnecessary farm subsidies” alone so overtly gives me some hesitation. Make no mistake, I want these subsidies gone, and have wanted them gone for years. But it has been undeniably difficult, and, for the past decade, impossible to even weaken to any real degree. The politicians who have tried watched themselves become weakened in the process instead. Almost every single issue he has addressed has the same history behind it.

Hope. I really want to believe. But logic and history tell me that Obama succeeding is unlikely.

Regardless, he earned my respect through his straightforward and honest assessment of what we face. He called out and challenged all of the deadly political elephants in the room all at once, without pulling any punches. He has finally convinced me that he is honest. He has convinced me that we actually ended up with a genuine, altruistic individual in the White House.

I am normally wary of the level of power that can be wielded in a crisis. Obama can do a great deal of good, and a great deal of evil. But while I trust him with this power and responsibility more now, I also remember the stimulus bill—another terribly important measure that needed to be passed while in crisis.

He ultimately passed it, but with very little Republican support. Can he pull the same feat against all of these Titans… without either Republican or Democratic support?

He’s going somewhere where his party—both parties—will not follow. History has proven this time and time again.

The stimulus bill was a minor triumph for Obama. But it also demonstrated that in fighting these mystic political beasts, even with a crisis and popular opinion behind him, he is still all too human.

Related Posts

• Sesame Street and Obama?
• Break the Banks, Buy the Banks?
• The Hidden Purpose of Sarah Palin
• The End of Hillary’s Victory Celebration

Source: Dror Poleg

I’m really hoping that the Obama Administration’s recently announced “stress test”—where they will simulate Great Depression conditions by computer and see what would happen to each major bank in that scenario—is just an excuse to nationalize the banks.

I’m really hoping that the Obama Administration doesn’t ACTUALLY naively think that despite a wide consensus about the lack of soundness in these banks (and more significantly, the market’s complete lack of faith in them), that these banks will come out of the stress test even close to looking like they’re ready for such conditions. Or even solvent at all.

I’m hoping that since they are expecting it, they should have a plan (which has been curiously absent so far).

What I’m hoping for is that after the Treasury and Administration moan and groan about how much worse these banks are than anyone could have predicted, they now have no choice but to nationalize them. Gets rid of the political liability if you make crystal clear to everyone that these banks are underwater and effectively dead, in financial terms. Plus, you insulate yourself from objection to doing so if you hide it as an attempt to “save the banks” first.

I’m hoping for all of this since if it isn’t the case, the Administration will have shown the world that these banks are not solvent, they’ll have no plan to stop their now immediate collapse, and all the President’s men will not be able to put Humpty-Dumpty back together again.

After all, now that they’ve started this, they can’t go back. They already said they’d reveal the results. If they don’t, what do you think that everyone else will think the results say?

Related Posts

• Why Lawmakers and Experts are Wrong About the Financial Crisis
• Sesame Street and Obama?
• Is Obama Jousting Windmills?
• The Hidden Purpose of Sarah Palin
• The End of Hillary’s Victory Celebration

Source: NASA

The New York Times recently did a very interesting interview with a certain Dambisa Moyo on aid policy to Africa. She’s apparently an ex-Goldman Sachs banker who is trying to stop aid from being sent to Africa. The New York Times is calling her the “anti-Bono.”

She makes, in my opinion, a valid point that’s long overdue in getting coverage.
In response to what she feels had held back Africa:

“I believe it’s largely aid. You get the corruption — historically, leaders have stolen the money without penalty — and you get the dependency, which kills entrepreneurship. You also disenfranchise African citizens, because the government is beholden to foreign donors and not accountable to its people.”

Long overdue. Besides the points which she made, there’s also the issue of American and European farm policy (which is inseparably linked to aid policy) impoverishing Africa by wholesale annihilation of its agricultural sector. I wrote about this issue of farm policy in the Dartmouth Free Press (which is where the link goes) and other blogs, though haven’t gotten around to doing so here yet. Don’t worry, though, I intend to give you all an earful on it soon.

Regardless, it’s always rather ironic that so many of the things we do out of “kindness” turn out to be so terribly harmful in reality. The Law of Unintended Consequences, or perhaps of Good Intentions. Economics is sometimes counterintuitive. But sometimes, tough love is really the right thing to do.

I really wish American politicians begin to understand that someday.

Most Commented Posts

• Google Being Evil: Knol and Beyond
• Foreign Aid to Africa? Just Say No
• Why the Media is Wrong About Chinese Democracy
• A Failing Mission in Afghanistan?
• Is Obama Jousting Windmills?

Source: Oliver Spalt

People who know me can tell you that I don’t like Greenpeace.

It isn’t to say that I don’t find their grab-bag of causes important. It’s simply their methods, with the sensationalism, deliberate distortion of scientific facts, and knee-jerk reactionary conservatism (because it certainly isn’t progressive) that annoy me to no end.

However, there is one cause, above all others, that has caused me to personally hate the organization. GMOs, or genetically modified organisms (food in this case).

There was a recent CNN article describing a team of researchers’ work on genetically modified rice that caught my attention and reminded me of this. Basically, what these scientists did was take a specific gene from a low-yielding variant of rice, and splice it into the normal taste high-yielding breed of rice that is widely grown in India. And as the article points out, it’s already having an impact on the test fields that it has been seeded in. The farmers and their families have more food. They are economically more wealthy, and more importantly, not starving.

Despite the tangible value to humanity that these crops have, Greenpeace and their cousins (both more and less radical), consistently oppose them and have succeeded in turning more or less all of continental Western Europe against GMO crops. Fine. If these rich-world countries would like to indulge in “natural” (which, by the way, is highly misleading, considering human selection and domestication of crops)—so be it.

But I personally say that one can begin to argue the tangible human benefit if Greenpeace did not exist, especially when they go to the UN and various aid organizations to prevent GMO food from being distributed… and even worse, block these variants from being allowed on African, Indian, Southeast Asian, and whatnot fields. As said, if Western Europe, especially France in this case, would like to turn their collective noses upwards at GMO food, and indulge in their “organic” and “natural” food, fine. But do not tell me that you are doing good by helping starve third-world countries and keep them from being sustainable by barring the fruits of scientific research from them.

Tell me, Greenpeace, if you actually went out there and asked these families, if they would like to have GMO crops or (in many case) be malnourished or even starve, what do you think the response would be? This isn’t a straw-man. It isn’t a “false” choice. I personally saw these sorts of farming families when I traveled in Asia—it’s all too real.

It isn’t a matter of us “foisting” these crops on them. Or forcing it on them. These countries, the governments and the people, genuinely want them. They want to have a better life—they want to not be constantly on the edge of starvation in their subsistence-level farming existence.

I’ll grant that we should closely monitor what we do with genetics, but there is no controversy, there is no “unknown factor” in these genetic sequences that we have to fear. We’ve been modifying our plants and animals since the beginning of the agricultural revolution (the one about 10,000 years ago). We can just do it more precisely and faster now.

Here, where we can clearly better people and make this a better world to live in… these “activists” would instead prefer to continue to perpetrate a human tragedy. Perhaps these sheltered, rich-world, and probably rich, “idealists” should actually go out there and take a look at what is actually out there. Maybe then, they might realize that ideology isn’t everything (how ironic) and that their juvenile posturing has real consequences, especially when they succeed in shutting these life-saving innovations away from those who truly need them.

Most Commented Posts

• Google Being Evil: Knol and Beyond
• Foreign Aid to Africa? Just Say No
• Why the Media is Wrong About Chinese Democracy
• A Failing Mission in Afghanistan?
• Is Obama Jousting Windmills?

Source: U.S. Air Force Master Sgt. James M. Bowman

“If the Taliban were still here, that rapist would have already been executed by now. It would have been a lesson for all,” she says. “If there is no law, and the government does not listen to people’s complaints, then it is better to go back to the Taliban era. At least then we had justice.”
- An Afghan woman, reported by TIME

One should hope that we have not yet forgotten our campaign for the hearts and minds of the Middle East. And although I hate to simply add to the pile-on of criticism for what is occurring in the military campaign there, overall, what we have seen is a resounding failure.

Afghanistan’s version of the the “Sahwa” or Awakening movements in Iraq, where the indigenous people fight alongside the U.S. against insurgents and terrorists, is the alliance between NATO forces and Afghanistan’s warlords. Unfortunately, instead of respected tribal heads (or, at least, leaders who can pass as that), we have lawless tyrants who were part of the very reason the Taliban gained support from regular Afghans—at least, before the religious movement imposed its own brand of tyranny once in power.

As a wonderful result, the current government, headed by Hamid Karzai, is riddled with corrupt warlords who are too valuable to get rid of—we need their militias to keep order—but too lawless to continue relying on, if we want any sort of happy conclusion to this entire venture.

The Need to Step Up

One of the primary problems in Afghanistan is that coalition forces are mainly those of the warlords, who provide local police and militia support, and the United States. Although there are a few other countries who maintain a strong contingent in Afghanistan, all are basically dwarfed by the U.S.’s commitment, which is basically four times that of the second most committed nation, Britain, who itself dwarfs the next most committed, Germany.

Each of these countries can, although not happily, commit more troops to the battle. The United States only has so much political will, and has to still deal with the quagmire of Iraq, even though there is improvement. Afghanistan is a far more worthy cause, in terms of legitimacy and importance to future international security. However, that doesn’t seem to be encouraging too much help from the other nations as of yet.

Without this help, we will continue to rely on the warlords to patch up what security holes there are, slowly becoming more and more indebted to them—and further alienating an angry population that helped throw them out of power in the first place.

One would hope that President-elect Obama’s influence can get more attention to Afghanistan, as he’s consistently pushed for the cause. However, so far, we’ve seen far more disorder and stubborn—even self-destructive—insistence on not coordinating internationally.

Just as it was our downfall in the financial world—turning a bad situation into a catastrophe—it will be in the very “real” world this time, if nations that like to consider themselves “Great Powers” still do not step up to take the responsibility bestowed upon the title.

Blaming the United States does not, in fact, solve a pressing problem that affects everyone. Let’s hope the European countries have learned that lesson by this point with the financial crisis.

Related Posts

• Resurgent Russia? Try a Distracted U.S. Instead

Source: Colin Gregory Palmer

Although some might argue that the point is moot at this point, it appears that the broader financial analyst/reporter community has suddenly decided to adopt collective amnesia and paint financial regulation as the boogeyman that brought the financial industry to its knees. Of course, this is the same community that happily declared the beginning of a “new era” in investment and stocks during the tech boom (which busted), along with enthusiastically invented reasons why the real estate market could never go down even though it has gone both up and down throughout all of human financial history.

Overall, I suppose it shouldn’t come as that much of a surprise, given that track record and the relative ease that one can blame recent changes in the regulatory framework. Especially given that it comes with a very easily swallowed “us versus them” story of greed, corruption, and all those bad things. However, they’ve been wrong before, and I’m going to relatively confidently say they’re wrong again about the reason for the financial crisis—and why, ultimately, all of this hubbub about regulation, for better or worse, is mostly hot air.

But why does it matter?

But first, why bother with this question at all? After all, the credit markets have already frozen, and lack of liquidity along with massive bank runs/shorting have already driven under some household names, Wachovia, Washington Mutual, and—among the high-rolling investment banks—Bear Stearns and Lehman Brothers.

The problem with just ignoring this now is that the bailout plan and future regulatory framework is being based on the erroneous assumption that it was purely deregulation that, coupled with the ever-popular “Wall-Street greed,” blew up the markets.

Putting aside the fact that economic markets and companies in that market are supposed to be pursuing profit and the most efficient ways of allocating their resources (given that it’s how our economy as a whole functions effectively), it simply isn’t the whole story.

Financial deregulation played a proximate cause to the entire crisis, but is only the final chapter in an industry that was spinning problems for itself because lawmakers had distorted its incentives.

The Regulation that Came Before Deregulation

The public loves easy explanations. Politicians love it even more, because it allows them to feed it to a receptive public who promptly turns into a mob that demands that heads roll—a demand that is far easier to fulfill than actually solving anything.

So what was the beginning of this story of financial disaster?

One can argue that the very beginning was in 1988, in Basel, Switzerland after a series of global financial disasters throughout the entire world. Central bankers convened and by 1992 had created a global framework of risk management for banks (at least in the G10 countries) that threw the first bit of tinder that would one day turn into the conflagration that now engulfs the U.S. financial market (and Europe’s, but they haven’t written it down yet—watch for even more financial turmoil in Europe to come), and is spilling over onto the rest of the world.

It did what seemed so logical at the time. It put risk management policies into place which classified various assets on a bank’s balance sheet and regulated the amount of reserves banks had to hold to make up for it.

Although there were some changes in Basel II, the essential idea was intact. Sarbanes-Oxley put together even more tinder under the financial powder-kegs that the banks and “non-banks” would soon pile up on top of it.

But what’s wrong with risk-management?

Nothing. Except when it’s forced upon an institution and regulated in a competitive market.

The problem with expecting these regulation to really reduce any appreciable risk in the market is that laughable idea that banks and other financial institutions can simply sit back, reduce risk, and not have any negative consequences come about it.

It’s blindingly obvious enough for other types of companies. What happens if one day, an auto manufacturer decides that it is simply going to stop investing as much into new models and cut customer service, for instance? Obviously, it’s going to lose business and eventually either go out of business, or get bought up by another company for cheap. The company that becomes complacent, when there is competition, is simply not going to survive.

The same is true with banks and other financial institutions.

Their input and output, however, is money. If you got paid a lower interest rate on your savings deposit, or got a higher interest rate on your loan, would you do business with that bank? It’s all the same concept.

By imposing reserve requirements, the reserved money is essentially sitting around doing nothing. Thus, the bank would effectively be slacking off. The bank that does this the most either goes out of business, being out-competed, or bought out by a rival. No bank is going to sit around and just take the fact that it has now been severely regulated—not if it wants to survive.

Thus, upon this happening, it was a free-for-all scramble to invest in any many assets that weren’t under regulation, and couldn’t be—because they didn’t exist when the regulation was made. Hence, in large part, complex derivatives, mortgage-backed securities, and other packed financial products, which didn’t have to be put on a balance sheet forcing institutions to have to leave reserves for them.

It’s impossible to regulate everything, in large part because the only way to do so is to forbid everything except a few selected financial products—in essence, doing the same thing as forbidding the technology industry from creating anything new.

Given that it is their job, the highly-paid bankers, most picked out of the cream of America’s college crop every year, will always be able to find some way to work around the inadequate regulation set up by overworked, hourly regulatory employees. Unfortunately, the way they find ways around this regulation might be far riskier than the original investments. Like with this current crisis, and the previous quickly-forgotten by foreshadowing crisis in SIVs (structured investment vehicles). Regulation drove banks away from the safe investments.

Deregulation also brought us to our financial knees, of course. Why? Simple, now that banks are pursuing these incredible risky investments, the SEC and other financial regulatory authorities suddenly removed many of the hampering regulation that prevented them from diving even deeper into these “financial weapons of mass destruction” as Warren Buffet’s now popular quote termed them.

That was the nail in the coffin and what brought us to our sorry situation now.

Permanent Restructuring in Regulation? Please.

Now comes to the crux of the problem: regulations trying to clamp down on everything will not succeed.

Admittedly, it is true that given the nature of any regulation in distorting incentives in the market, such as the previously mentioned Basel requirements driving financial institutions into pursuing risky investments, you either choose to not regulate much at all, or regulate extremely heavily to prevent all the disastrous consequences of your regulation from occurring.

So what’s wrong with regulating now?
Nothing, of course, as long as Congress is willing to accept America losing its status as the world’s foremost financial superpower and see its banks bought out by the rest of the world, most likely Asia’s, since Europe’s banks are also in quite a bit of trouble (though they refuse to admit it/write it down for the most part).

Suddenly, in the current crisis, everyone seems to have forgotten the original reason there was such a push towards deregulation—because the rest of the world was beating our financial system with their looser rules and consolidated banks! America’s banks failed miserably in competition with the rest of the world because of the U.S.’s arcane rules and stifling restrictions on financial institutions. We had tiny, regional, high-cost and inefficient banks trying to compete with multinational conglomerations that came in and easily stomped our own quaint money-lenders and depository institutions.

Regulating now will still have a competitively deleterious effect now if we institute tight regulations, as have been floated currently. In case Congress failed to notice, the rest of the world is not following suit with the regulations. It is mouthing regulation, and will probably pass it, with massive concessions to the financial industry due to lobbying connections, but immediately upon it being politically convenient, will scramble to reverse it to keep the financial industry competitive globally.

Though, probably not before doing some sort of damage to incentives and setting us up for the next financial crisis. If you want the solution to financial crises and these boom-bust cycles once and for all, it’s simple: give the media and regulators a longer memory than roughly a decade.

Given the fact that the previous sentiment is more or less even more difficult to pricing these exotic derivatives, I suggest one watch what will be happening within the next year. My wager is that this “death of Wall Street” and this new “age of regulation” will be short-lived, at most.

Related Posts

• Break the Banks, Buy the Banks?

For at least the first part of the program, my internet access has been on-and-off, and for at least a period of time, dePolitik was blocked by the Chinese government firewall.

Given the limitations, I’ve decided to try to at least post short segments, if not the long articles I normally do, just to comment on the rapidly developing/devolving situation in the U.S. financial market.

Most Commented Posts

• Google Being Evil: Knol and Beyond
• Foreign Aid to Africa? Just Say No
• Why the Media is Wrong About Chinese Democracy
• A Failing Mission in Afghanistan?
• Is Obama Jousting Windmills?