Bringing the open source model to data

The battleground today is for users’ data. Google uses this to great effect and has now made a grab for users’ browsing data with Google Chrome.

The various rumours about social networking sites sharing data have proved unfounded. The data is core to their business model and not for sharing!

How about a product that is open source and captures  data on the community for the community. A product that is entirely open and transparent about what data is captured and how it is used? What if this product allowed users to determine how they shared their data? What if this product charged commercial vendors for use of this data with the money going back to the community? Watch this space!

Debt, commodity price increases and house price falls will drive down consumer spending

Over a decade since debt and property prices reached historically high levels they have been driven even higher by a financial system that just doesn’t want a recession. This has been a debt-fuelled delay to an inevitable recession. Just take a look at the savings ratio. Continue reading “Debt, commodity price increases and house price falls will drive down consumer spending”

Stop telling me the credit crunch is to blame

Criminal behaviour of the banking sector and the negligence of the Government and regulators is to blame. Together their behaviour fuelled a massive property price increase over a decade. Now that they have gorged themselves, the economy suffers and so does the man on the street.

Let the banks go down, prepare to nationalise the banking industry if the system fails, support those in financial difficulties and investigate the criminal behaviour and negligence at all levels.

David Smith of The Times – There was a boom but not in consumer spending!

This week I have had quite enough of apologists for the financial community and feel obliged to respond in the few articles on this blog. This article is about David Smith’s piece in The Sunday Times – that also appears on his blog.

As an aside, David allows debate on his forum – why not comments on his articles – see my blog article regarding old world journalists –

He develops mentions three themes that characterise peoples concerns in his article:

  1. People do not want to bail-out the bankers
  2. People want something to be done such that we avoid this in the future
  3. The theme that is the basis of this article, people are also to blame for wanting to borrow

Let’s have a look at what David says about these themes.

On the first theme, David says that there is a difference between bailing out bankers and preserving the banking system. He goes on to say that “If the banking system goes, everything else does too” – now this is just scaremongering. A Government would of course step in to ensure a basic natioansed banking system before we lose the whole thing. David has obviously been duped by George Bush’s retoric in support of the $700bn bail-out. It is not the only way to do it. Precisely because there must be a difference between a bail -out of the bankers and a bail-out of the system a solution must be found that gives NO potential for profit to any bankers from any Government action. The only way to achieve this is to let the banks that are under capitalised go down and if it takes the system down then Nationalise the banks.

The second theme David suggests is like bolting the door after the horse has bolted. No David, this is not what we are saying. Learning from the crisis is about understanding it then regulating to close the loop-holds that allowed the creation of this house of cards. David goes on to say that he doesn’t see how a banks board could be expected to know the state of each traders book – this is truly pathetic. Of course no one expects a Board member to have an interest in this level of detail. In fact such detail is completely useless. The important thing to understand is the strategy of the bank – how come we are making so much profit? Have we correctly valued the risk? How much do we depend upon the short-term money markets? How sensitive is our balance sheet to shocks? These are all questions that Board members and the CEO should be asking. Why didn’t they? Well, everyone was making money and none of them had the courage to ask those simple questions. How disgraceful but of course human nature.

The thrid theme is the main theme of the article. Consumers are to blame for wanting to borrow. Now this is extraordinary! I think that there are ample reasons to suggest that this is the last place to put the blame. Relatively ill-educated masses being told by Governments, regulators, financiers and journalists that “boom and bust” is finished, that house prices won’t drop but just plateau out (David was one of these) and that inflation is dead and then being sold debt like no tomorrow. In extreme cases the financial system invented amusing names for the type of punter who took out loans – Ninjas – no income, no job. Why was this done and why was it encouraged – everyone was making money.

David makes a final point suggesting that because we did not have a consumer spending boom that it is a financial recession not an economic one. He finally makes the point that the financial system will be more difficult to fix if the economy is weaker. There are two key points here:

  1. The last decade of consumer spending growth has been consistent but muted. Debt has increased to crazy levels both at a household level and a Government level. At the start of the decade it was already at historic highs. It is a major surprise that consumer spending grew at all. It did so for two reasons, people feeling wealthy due to house price increase and criminal behaviour perpetrated by the financial leaders, Government and regulators.
  2. The economy drives wealth overall, the financial market is a tool that oils the wheels of growth. In the last few decades the financial system has been a driver of wealth for the few whilst the masses now feel poorer than they have in at least a decade.

It is time for journalists to take stock and question more. I wonder who pays their bills though!