Five Ideas That Matter

Der Spiegel is running an English abstract and commentary on a German military preparedness study on Peak Oil. There’s been a little commentary around the web on it too.

It seems to me a sensible and responsible issue to be doing scenario analysis around. This what Der Spiegel says:

The issue is so politically explosive that it’s remarkable when an institution like the Bundeswehr, the German military, uses the term “peak oil” at all. But a military study currently circulating on the German blogosphere goes even further.

The study is a product of the Future Analysis department of the Bundeswehr Transformation Center, a think tank tasked with fixing a direction for the German military. The team of authors, led by Lieutenant Colonel Thomas Will, uses sometimes-dramatic language to depict the consequences of an irreversible depletion of raw materials. It warns of shifts in the global balance of power, of the formation of new relationships based on interdependency, of a decline in importance of the western industrial nations, of the “total collapse of the markets” and of serious political and economic crises.

To which the only sensible answer is: of course. Of course it is politically sensitive and of course it is a major game changer and of course we would prefer to be in denial.

The father of Peak Oil Colin Campbell point out that it doesn’t mean oil is running out fast, just that the economics of oil production, marketing and use changes because there are so few new barrels to discover. One implication is constantly rising prices, a phenomenon we are already witnessing which in turn brings marginal deposits into the market, so in a sense rising prices extend the life of oil as a resource.

We should expect oil at $200 a barrel and over. Not that Der Spiegel says that. Their take is on the political implications for Europe of oil dependence on Russia.

My view is those countries that think adopting electric vehicles at the rate of 10% by 2030 don’t have a solid enough grasp of our innovation needs. We need to be off oil as a major power source for transportation within fifty years. That’s part of the excitement right?

Ever since German IT and general electronics, power and component giant Siemens announced it was setting up its own bank I’ve been pondering changes in banking.

The FT explained that part of the rationale was, with a banking license Siemens could deposit some of its $9 billion cash pile at the German central bank, instead of with a commercial bank. But it also wants to do more with that money.

Like many of my peers I have a tendency to look for the new in the Web. Clearly Siemens’ action is not a web play and nor is it anything to do with the web. Peer-to-peer banking online is on the increase but total lending through P2P sites over the past three years doesn’t add up to 10% what Siemens has in its cash pile. So change is elsewhere.

In fact it seems to reside in leasing where many vendors (IBM, Microsoft, Sun, and of course Siemens) are ramping up their vendor finance programs. That means they are less and less dependent on banks agreeing leasing deals with large companies.

Here is the curiosity – they are also ramping up their cloud computing offers. The connection might be that banks will be hard pushed to throw a lease agreement over a cloud computing deal but then banks are not minded to lend anyway. IT companies, however, are dependent on a regular corporate equipment refresh. There is some needs and some musts here.

So in short machinations in IT are closely linked to cloud computing and computing finance. Here we witness, I believe, a bigger change in finance than we are seeing on the High St or Main St. In my view no sensible CFO will go forward without diversifying their funding sources for IT so lease will maintain a role but cloud is a financial portfolio necessity.

When Google was first released I took the view it was a poorish search engine with a fast interface.  Alltheweb had a better index, better returns too for a while, and was as fast as Google so I stuck with the Norwegians for quite some time before succumbing to Google mania, I guess partly because I became a blogger and saw an opportunity for revenues if I became more of a fan boy.

I picked this up today from Cnet in an article called “Drawing the battle lines”.

“Google has been known to tweak its search algorithm hundreds of times per year, or that the Facebook home page goes through major facelifts on a regular basis.”

The idea is that these two are multiple innovators going head to head in a struggle for dominance of the social web – in reality they both need to do more in mobile but I think Facebook has that won on the social networking side.

Why I was attracted to the article is because it provoked the contrarian in me. I don’t believe Google tweaks its search algorithms that much. Its index is quite poor and increasingly irritating because it is forever tweaking its ad sense algorithms, in effect neglecting its search platform.

Anyone wanting to do serious business research will be suffering credibility if they rely solely on Google for online data. The search for diversification has distracted them, the plaudits of the Google way have done something weird to their business acumen (call it vanity), and I think they’d be better getting back to being pretty good with search.

From BusinessWeek/Bloomberg:

Smartphones may soon displace some of the estimated 1 billion credit and debit cards in American wallets. AT&T (T), Verizon Wireless, and T-Mobile are planning a venture to develop a mobile payment system that works with smartphones, posing a new threat to Visa (V) and MasterCard (MA), three people with direct knowledge of the plan say.

I had a demo from Visa about a year back of their smart card payments systems (as there are more than one!). Of course Visa and Matercard customers are incentivised as well as punished for their use and overuse of their cards. Verizon and T-Mobile have to work out their customer relations strategies and all the pull and push that goes with it – and with the vast partner networks, and debt collection, that support M and V’s activities. I won’t be saying goodbye to my credit card just yet – not until someone works out a better way of the non-card activity.

I picked up this ppt from BusinessInsider. I’m not a regular there but maybe I should be. The ppt is from Richard Koo, Chief Economist at Nomura and it compares European and US economic conditions with the deflationary record of Japan since the early 1990s. They are eerily similar. The lesson for me is recessions mutate. You cannot expect one to be exactly like the past and policy has therefore to be imaginative rather than derivative. I still claim that dealing with people’s credit card debts would have been the best way out of this recession because it will freed people to spend and it will help the banks simultaneously.

Are we or are we not out of recession? If you live and work in the United States you can argue, of course we are, and have been for some time – though it’s a jobless one and we fear a double dip. And whatever’s happening nationally there are debt problems at State level that are making local decision making tougher and tougher.  This last point is what matters because once national policy stops, local policy makers have to tidy up. We are entering a new era for place management.

In contrast to American optimism, analysts around Europe – and I guess elsewhere – are gearing up for an anxious week. On Friday the European Union publishes results of the bank stress testing procedures. What is a stress test? The test seems to be a systemic one – what happens if bank (a) goes under? How will the system cope? Which banks might go under? We’re unlikely to hear an answer to the latter.

But but….. still, you might argue the big test should be what happens if a sovereign state defaults on its debts.

A legitimate answer to this is when Greece looked likely to default the European Central Bank stepped in. The question now though is whether there is any juice left in the tank if Spain or even the UK default. The UK Office for National Statistics last week announced that UK public debt is five times its published level at 5, not 1, trillion GBP. Spanish debt levels far exceed those of Greece.

So the answer to the question, are we out of recession probably comes down to – have we yet found out how deeply troubled the system really is?

The headline debt figures are a cause of unease. But there is an even bigger issue, the big idea if you like, which is what would life have been like these past twenty years if we had not been running a massive fiscal stimulus without telling anyone?

We need to imagine what we might have been prepared or forced not to do, what new structures would not have emerged, and what would have been a more natural trajectory for society during this period to give ourselves some sense of what a legitimate reordering might look like.

It seems certain that only a fraction of those Europeans who now have second homes in sun spots, would have taken that risk. Spain’s property debt is an indication of how that dream should have remained fantasy. I wonder also in the UK would people have paid over the odds for housing near to good schools and if not would these schools have been able to cement their reputations?

Britain’s spatial history changed over the past twenty years as parents paid not so much for the school but for the property near the school. Would this desperation over a child’s future have been more constructively channeled (and more cheaply channeled) into participation in the education or political system to ensure better schools all round, rather than parents specialising in urban geography? Where did the tipping point come, the one where parents decided that individual action should take precedence over participation.

And would the disaffection with taxation have become so well consolidated that in the USA they are now churning up roads rather than maintain them at taxpayer expense? Somewhere in the past twenty years we have redefined common good. Will stress test Friday change that?

We now face a short term future that is orienting us towards resolving systemic problems at the institutional level. Getting banks in order, reducing quangos, reducing debt, when in fact the future needs addressing at an individual and moral level. Individual in the sense that we are less likely to be participants than we were; moral in the sense that Governments need to address how individuals behaved and what decisions they made, partly to relieve their debt burden and partly to ask big questions again of them NOT about whether or not we can and should reduce the role of Government but instead about how we can improve the decisions of people.

Little written about or talked of, or am I missing it all, the German professors who are challenging the legality of the European bail out in the German courts.

A quintet of professors – Wilhelm Hankel, Wilhelm Nölling, Joachim Starbatty, Karl Albrecht Schachtschneider, and Dieter Spethmann (ex Thyssen CEO) – have just broadened their complaint over the Greek part of the bank rescue to include the new €440bn Stability Facility, which breaks EU law at every turn.

My US friends have been talking confidently about an economic upturn for about a year now, though I see plenty of wise folks also reminding the blogosphere that the recovery is largely jobless – and where there are jobs they are low paid. We have all, except Germany, created economies with little employment multiplier built in (manufacturing jobs used to support 3 jobs in the wider economy whereas a retail job won’t support 1 additional job).

So it is with new respect that American commentators are looking at how Germany has maintained a stable and prosperous economy. A very large clue lies in the actions of the good professors.

In their latest broadside the professors said the rescue fund “self evidently” violates the no-bailout clause of the Lisbon Treaty.

They have seized on comments by France’s Europe minister Pierre Lelouche, who admitted after the summit deal on May 7 that EU leaders had carried out a constitutional coup. “It is expressly forbidden in the treaties by the famous no-bailout clause. De facto, we have changed the treaty,” he said.

Transferring bank debt to sovereign debt and then adding sovereign debt to bank debt, in order that it too can become even more sovereign debt…. that is the circle we are chasing in right now.

And as everyone who has not been rushed into this knows, it really isn’t right.  I’m not qualified to say whether a few big bank failures would be better. The problem in Germany is the small savings banks seem to be most exposed, or too exposed anyway. One way or another the German citizenry is in for a savings hit.

Who, I wonder, believes we are on the road to recovery with these problems still in the system (Spain’s sovereign and property debt apparently equals Euro 2 trilllion!). Yesterday the IMF called on the European Central bank to lend more money. The IMF is normally, and famously, the cutter in chief. Who, I wonder, feels like we are re-running the worst of the 1970s and early 1980s?

I picked this up via Dave Cushman’s 90:10 site – great to see Dave and his team growing so fast, and staying true to an innovative view of social technologies.

This is from Gerd Leonhard. Not an area I get involved in so much – selling. But I recently signed off as a consultant to Symbian and keep mobile front of mind, having just got to an important landmark on my mobile ecosystem analysis. Part of that of course is how the ecosystem evangelizes for a core set of products, relationships and reputations.

Being poor at web ontology, I still believe the web creates much meaning. Every time someone posts, something changes, even if that change is greater affirmation of a belief or opinion.

Two initiatives that will make meaning more interesting to track and assess came my way this week.

The first is Nokia’s protoype instant community which I picked up on via my Facebook feeds. I guess this is going to make it more difficult to track and interpret behavior.

Nokia Instant Community is a research concept developed by NRC Helsinki in collaboration with Tampere University of Technology. Its a new, instant way for communities to socially interact when in close proximity, without the need for WLAN infrastructure or cellular or Bluetooth connections.

The second is Giovanni Rodriguez’s latest project. I’m always excited by stuff Giovanni does and I am sure this is going to give us a great focal point for business discussions. This might make meaning easier to come by. Take a look at the Clearvale blog.

Semanticweb.com points out that one casualty of the coalition cuts is the proposed/planned Institute of Web Science. Yes the UK needs budget cut-backs but cutting back on the future seems a little bit dim.