A Networked World

Italian coup complete

With his announcement of his new cabinet for Italy, Mario Monti completes the bankers' takeover.

Monti, a respected economics professor and former European Commissioner, said he would take the crucial economy portfolio himself.

Corrado Passera, the CEO of Italy's biggest retail bank Intesa Sanpaolo, was given the infrastructure and industry portfolio.

But after disputes among the parties which complicated Monti's task, the new government contained no politicians, as he was reported to have wanted. Some analysts say this could make it more vulnerable to ambushes in parliament as it pushes through unpopular measures.

Monti said the lack of politicians would strengthen rather than weaken the government by enabling it to avoid political disputes and press ahead with vital reforms.

"The absence of political personalities in the government will help rather than hinder a solid base of support for the government in parliament and in the political parties because it will remove one ground for disagreement."

Yes, yes, it all has to go through Parliament but the reality will be that Italy now exists for the exclusive benefit of the banking fraternity. Its first, and only, task will be to ensure that people with too much money and no sense of responsibility continue to get paid their king's ransoms at the expense of everyone else.

Monti is an ex EU commissioner, it is exactly that cadre that has pushed Europe into its current situation, and his top finance guy is openly a banker. We know exactly where their loyalties will lie and who will suffer.

Given the competence the bankers have demonstrated in their own business, let alone everyone else's, I would expect the first italians to start dying of starvation within the year. As I said over on FB the other day, Sarkozy will be next, although according to this morning's Marketwatch, he may have to shove a bit to get to the top of the queue with holland, Finland and now Austria in the crosshairs.

Oh, and we have been to the well in Austria once before.

 

#NetHui Lessig on fire

I've been a huge fan of Larry lessig since I first found the net back in 1995. So when he was booked for NetHui I was a lot more determined to turn up on the Friday than I would otherwise have been.

While I expected most of what he had to say, albeit updated, the last 10 minutes were seriously unexpected.

I never expected to hear a guy with such a huge reputation who comes from the heart of the online world to stand up in Auckland and beg us to help rescue his nation from its evolving disaster driven by systemic corruption. Watch it.

The real Wikileaks secrets

Most of what we have seen from the Wikileaks cables is mere confirmation of what we suspected all along, mostly that our politicians and other leaders routinely lie to us about what they are doing and, especially, why they are doing it.

In some cases that leads to dead people as have illegal or unwinnable wars such as in Iraq and Afghanistan and it is seriously rich to have people with buckets of blood on their hands lecturing Wikileaks about the possibility that people may be compromised.

There is a difference between those who cause harm inadvertently while trying to out a criminal and those who commit the crimes in the first place. Ask any cop who has accidentally killed someone who walked into the line of fire at the wrong moment, for example.

But the real secret that is causing so much panic is not the diplomatic chitchat and scandal, schadenfreude-inducing though that may be; what is causing all the sturm und drang is the meta message that is coming down the line and will get much liuder and much clearer as the commercial and banking data comes out.

That message is this, the game is rigged. Like this, for instance

TORONTO (miningweekly.com) – A WikiLeaks cable indicates that BHP Billiton tried to sabotage a proposed investment by China's Chinalco in rival Rio Tinto, according to the Australian Broadcasting Corporation.

“The cables sent from Federal Treasurer Wayne Swan's chief of staff to US officials describe how BHP "played its cards with consummate skill" in lobbying the government to delay a decision on a deal between Rio Tinto and Chinalco,” the ABC report said.

In February 2009, Chinalco agreed to invest $19,5-billion in Rio Tinto and its operations to obtain an 18% stake in the world's third-biggest mining company, which at the time was battling to shift debt.

But Rio broke off the deal in June, opting instead for a big rights issue and a since-scrapped iron-ore joint venture in Australia with BHP.

The Chinalco agreement had followed an earlier failed hostile takeover bid by BHP Billiton for Rio Tinto.    

All of the players involved knew what was going on, not one of them lacks the resources to know what the others are actually doing behind the scenes, the only people who must not find out that the pollies and the captains of industry are rigging the game is us.

As long as we can be convinced that we have to play the capitalist (or communist or theocratic) game and that there are rules which, if followed, can lead to "success" we will keep doing our best and blaming ourselves for any failures.

But once we see clearly that the whole game is rigged by those who have been playing longest, we will first withdraw our participation and, when they try to enforce play, out will come the torches and pitchforks.

THAT is what is getting so many panties in a bunch in the capitals of the world.

Joining the race to the bottom

Seth is one of my favourite thinkers, although I don't read him often enough and I'm catching up today. This one rang a bell.
Seth's Blog: It's no wonder they don't trust us

The digital world, even the high end brands, has become a sleazy carnival, complete with hawkers, barkers and a bearded lady.

Its more than that, much more. I knew the economy was in the can nearly a decade ago when I walked into my local Coles supermarket in Sydney and say adverts for a TV magazine on the little plastic bar that you use to separate the orders on the checkout conveyor.

I knew, for absolute certain, at that moment, that business was in trouble. I'm sure some bright spark was rewarded for "capturing the checkout bar marketing space" but the fact that they had to do that meant to me that there were no places left for companies to try and squeeze out a profit and that they were scraping the barrel.

That was the day, pretty much, that I started planning my urban homestead because when a big supermarket chains needs the few cents they would get for each checkout bar advert, and the TV mags need to spend it to prop up their sales, we had reached the end of the growth phase of business development and the thing that was about to change was the whole system.

More sustainability BS

I can't believe that we are still reading this stuff. We have secret to sustainable paint. Don't get me wrong, there is every reason to try new stuff and push the limits as far as they can go but where the hell was the journalist's mind here?

Resene believes it has identified the secret ingredient that will allow it to produce the world's first sustainable paint.

In August the paint-maker was the inaugural winner of What's Your Problem New Zealand?, a competition set up by the Crown research institute Industrial Research.

The prize was $1 million of research, and Resene has wasted no time in getting its project under way to develop a waterborne paint that is based on resins made up of 80 per cent sustainable ingredients.

Waterborne paints at present use acrylic as a resin, and existing environmentally friendly alternatives contain only 30 to 40 per cent sustainables.

The key is to find a substitute that will allow it to make a paint based on resins made of 80 per cent renewables.

The company will only say that the ingredient will be non-cropping (it won't compete with food crops for space) and is likely to come from existing industrial waste streams.

So lets go through that again shall we?

Resene believes it has identified the secret ingredient that will allow it to produce the world's first sustainable paint.

sustainable - Wiktionary
1. able to be sustained
2. able to be sustained for an indefinite period without damaging the environment, or without depleting a resource; renewable

OK? Simple; at the end of the day we have as much of the same quality of resources as we started with. So, how does it measure up?

The prize was $1 million of research, and Resene has wasted no time in getting its project under way to develop a waterborne paint that is based on resins made up of 80 per cent sustainable ingredients.

Weasel number one. to put it another way, this paint is 20% UNsustainable. Now, unless you can throw out of the formula the 20% that is not sustainable, then as soon as you run out of the unsustainable ingredients, you stop making the paint. Here, take enough food for a walk across the Nullabor plain and 80% of the water you will need. Have a nice trip. There is no such thing as percentage sustainability, your ability to produce anything is absolutely limited to the least available element. When that runs out, you are done.

Waterborne paints at present use acrylic as a resin, and existing environmentally friendly alternatives contain only 30 to 40 per cent sustainables.

See above, it doesn't matter whether your sustainable elements are 10% or 99%, its the non-renewables that will kill you. Now, not adding to the environmental load is in itself a good thing so 80% renewables is better than 30%, but sustainability it isn't.

The company will only say that the ingredient will be non-cropping (it won't compete with food crops for space) and is likely to come from existing industrial waste streams.

More weasels. If the sustainable elements comes from existing waste streams then they are absolutely dependent on the continuance of those waste streams in sufficient quantity to feed the sustainable paint mix. If those waste streams are legislated out of existence, or if they are generated by non-renewables, they too are going to stop and the sustainable paint is wholly dependent on the least renewable constituent of the other company's waste stream.

Furthermore, if the recovered ingredients are themselves composed of non-renewable atoms, Resene has shifted the problem exactly one step and, while they may have reduced some costs by being able to discount the waste content of their providing industries, they have exposed themselves to all the uncertainties that those industries have to deal with. I would bet they have increased their business risk by 50% or more.

I'm all for safer paint, I'm all for products that remove anything from the waste stream that can be reused as something else, but I'm 100% against misrepresenting this as sustainable, it's not even close.

Reality checks and data points

This piece from CIO.com is a nice reality check and the general principles apply to everyone, not just IT people. Retire? How About Never?

Overall, the recession has had far more of an economic impact on late-middle-aged adults. In an April Pew Research Center study of 2,969 adults aged 50 to 64, nearly 75% said the nation's economic problems are making it difficult to afford retirement.
Click here to find out more!

Nearly two-thirds of those surveyed in that age bracket said their 401(k) accounts or individual stocks have been clobbered, with two in 10 claiming that their investments have lost 40% of their value and another four in 10 saying nearly 20% to 40% of their retirement funds have been erased.

I have never believed that I would be able to retire, not just because I could not save enough to do so, but because I have known half my life that when the moment came to kick back I would be doing it with millions of other boomers whose removal from the "productive" economy would shrink that economy and make it too small to support us.

I've also been pretty much convinced that rule number one of investing is "never give your money to someone else to play with on your behalf, never, ever, no, I really mean it, never"

So I have paid off my mortgage and I'm building an urban homestead where we are aiming to be able to live, not just survive, on about $200 a week in current dollars.

While most of the rest of my peers have spent their lives trying to get rich enough to retire, I've spent mine learning to live poor.

My wife is a teacher on a 4 year contract and she has 2 years to go. Here's how I rate that contract.

• Chances of it being renewed on similar terms - 20%
• Chances of being significantly cut on renewal - 40%
• Chances of not being renewed 20%
• Chances of being bought out before the end 20%
• Chances of surviving any of those otucomes, pretty good.
  

Now eher are some more data points.

1. 56 year old family member on contract for a company that provides training to large insurance and financial companies. Unpaid for several months, yesterday asked me for a loan to get through Christmas
2. 58 year old CFO for several medium sized north American companies. Laid off in march, 10 months on global search for new job. Nothing
3. 58 year old former exec and successful business man. Lost his company 3 years ago, still no job and about to run out of money

Just people close enough to hear about their actual problems and 2 of those in the last 4 days. Interestingly, all three are still in denial about their real situation, still looking for the silver lining that tells them all is going to come back to what they fondly believe is normal.

Economic recovery? Not close.

This thing hasn't even cleared its throat yet and as the CIO peives goes on to say, "there is no place to hide in this economy"

Too good to be true

I have a rule. If someone calls me or comes knocking at my door with a special deal for anything - anything at all - I send them away or hang up on them. And that goes double for the deals that are too good to be true. Like this.
Crossed lines: phone scam dudding small business

For Mr Holroyd it began late last year when a well-dressed man in his 30s appeared at his car parts and plumbing business in Ingleburn offering a package of cheaper phone calls with the added incentive of $5000 worth of free equipment for the workshop.

Mr Holroyd signed up and took delivery of a phone system and a bandsaw that did not work, and an air compressor that did.

Two months later he took a call from Macquarie Bank telling him he was in arrears and owed them $30,000. Mr Holroyd, who was not even aware he was in business with Macquarie, pleaded for more information. Finally he discovered that the documents he signed had left him tangled in a lease agreement with two other companies he had never heard of, who had taken out finance with Macquarie.

There is no suggestion that Macquarie had engaged in any wrongdoing, although the bank was unmoved by Mr Holroyd's predicament. It hired the debt collection agency, which came banging at his door.

Which bit of "we will give you $5,000 worth of equipment as a sweetener for a cut-price phone deal" failed to ring any of this bloke's warning bells? How does he imagine the world actually functions? Does he believe in magic?

These scammers are no different from the Nigerian money scams or the NZ Finance company scam or most superannuation scams, they offer something for nothing. Whenever anybody tells me that something is free I know they are lying to me and that's pretty much the end of the conversation.

Nothing is free. Somebody always pays and the problem is that everyone involved in these deals, including the banks, don't actually care who that is. It can be you, it can be the slaves that work in some Northern Marianas sweatshop, it can be the whole communities living in the midst of vile pollution that shortens their lives and damages their genes, it can be our grandchildren who will find their climate untenable. But somebody always pays. Without exception, ever.

What these con artists depend upon is that you and I are basically corrupt, we all want something for nothing and if they tie it in the appropriate bow we will look away long enough for them to profit.

I don't actually blame the scammers that much, there is plainly a market for their business, if nobody ever accepted anything for "free" it would stop.

We need to teach our kids from kindergarten the simplest of rules; if it looks too good to be true, it is, someone is laying to you and someone, probably you, is going to get hurt. How hard is that to learn?

Do we still have the leisure to be "creative"?

As usual, Johnnie points to some interesting ideas that kick me off. Change and diversity

Jack Ricchiuto has some thoughts on how change happens in networks.

...the possibility space for change opens up when we connect different people who can begin resonating together around shared stories, opportunities, and dreams. It’s a process of liberating people from the confines of clusters of sameness and ideological colonialism so they can move toward more diverse connections and pragmatic alignments.

The phrase clusters of sameness resonates for me and I think organisations often clog up with those. He continues:

the fusion of difference and resonance is a powerful approach because in that space, people move away from trying to change each other, which opens the space for the possibilities of creating innovative.. changes.. Resonant listening to one another’s differences allows us to join in both-and innovations that could never be possible in an either-or constrained world

I agree about the processes, but I think the crucial thing that gets left out of all this is that there is no way to steer the process towards a "desirable" (for whomever) outcome, nor can we determine the result in advance.

We live in a control-oriented mindset, change that we do not initiate frightens us and we try to reassert whatever control we thought we had, change that we do initiate gets out of control very quickly and we waste more resources trying to get back in control.

In every case we resist any change that we don't think we can determine in advance. But we live in a real world where change is permanent and uncontrolled. Hell I remember writing in an essay in high school something to the effect that "in order to maintain a constant relationship with a constantly changing world, we have to change, constantly".

I thought it was pretty cool then and I still agree with its foundation, the only thing I'd add is that the constant relationship is itself impossible, that changes too.

The whole idea of change management is a crock. Change, like shit, happens. Our biggest problem is that we are not inclined, nor do we learn, nor are we taught as part of our education, to understand, adapt, participate in or benefit from the changes that happen. Still less are we able to abandon changes that are short term wins but long term failures.

For me, this is about opening space so that we can explore experiences fully, without the pressure to problem-solve.

I'd love that to be true but I think we are running out of the lleisure we've had to be purely creative. The number and urgency of problems that we are going to have to solve, on a personal and daily basis, as well as a community and national one, is getting bigger, faster. Those of us, like me, who have had it damned easy all our lives and had the luxury of being able to invent, innovate and think about the world rather than get our hands dirty in it are going to spend the rest of those lives working much harder for much less money and often less return of all kinds.

With dwindling resources, the small problems that we simply threw some money at are going to become harder to deal with and the big problems such as climate change and PO are starting to cause medium sized problems such as landslips and crop failures that just wont go away. We've had 2 generations of cruising on the capital, from here on we will be paddling like hell to stay afloat.

If anything we need tools like open space and theatre sports as a form of rapid prototyping; spaces where we can bring hard problems, trial a bunch of possible solutions and take them away to work on them.

Some days I despair of the media

Read this and tell me if I'm nuts. House prices too high, warns expert

Auckland's house price surge has prompted a warning that over-valuations are creating a bubble that will burst and cause a painful property recession.

Barfoot and Thompson's November figures, out yesterday, showed a 23-month price high in the city of $550,217 although the number of sales was fairly low.

Institute of Economic Research principal economist Shamubeel Eaqub said the trend could have far-reaching and damaging effects.

"House prices are showing renewed over-valuation," he said. "This will intensify as interest rates rise. A correction in the housing market is necessary to reduce the economy's vulnerability to house price movements. The sooner there is a change, the less the likelihood of a larger and more painful recession further down the track."

Prices were now near the previous peak, suggesting valuations were also becoming very stretched.

"While prices are rising, sales volumes are slowing after adjusting for seasonal patterns," he said.

So, while prices have reached their all time high again, the number of houses being sold is falling. Lets take a limit case; 3 houses only are sold in the city during December. All three sell for exactly a million bucks. Will we see a headline saying that the average house price in Auckland has now reached a million? And will there be further warnings about an unsustainable bubble?

A bubble happens when two things align, too much money in circulation and a mania for a single type of object (tulips, houses, gold - anything in relatively, but not absolutely, limited supply).

We had a housing bubble and, as it deflates, there will be periods when the prices rise again for a variety of highly local reasons - including someone sells their Brisbane house at last and moves back to NZ where they buy a bit over the odds just to get the family settled etc.

But the fact is that banks are not lending if they can avoid it, people are feeling unsafe as their jobs look increasingly shaky and aren't going to take on new debt, in fact they are trying to unload their overpriced assets when they can.

I have a mate who was looking for an apartment in the city. The news reported a few weeks ago that real estate prices were rising again and 2 days later about 400 properties hit the market.

Tell you anything?

Apparently not our ever-boosting media who seem to see their job as "keeping our chins up" in tough times, mostly so we don't look down and, like Wile E. Coyote, realise that there is a gaping hole under our feet.

Bunnies.

Jim Kunstler asks the question

While he can go over the top a bit, Kunstler is definitely on my team when it comes to the reality-based life. And once again, in Self-jiving Nation he asks the question that nobody else seems to have thought of:

I'd like to know what folks imagine we are recovering to. To a renewed orgy of credit-card spending? To yet another round of suburban expansion, with the boys in the yellow hard-hats driving stakes out in the sagebrush for another new thousand-unit pop-up "community?" For a next generation of super-cars built to look like medieval war wagons? That's the "hope" that our officials seem to pretend to offer.

Exactly, the talking heads all talk about this recovery, but its always a recovery "from" the crash and never, ever, about what our lives and communities and economies will look like once we have "recovered".

It's completely inconsistent with any reality-based trend-lines, by the way.

When the Australian Government commissions a report that says nearly a million homes are in direct danger of rising sea levels and that it should consider compulsory acquiisition and demolition of some homes as an option, the destination of the recovery looks a lot less sunny than most of the discuission would have us assume.  Make evacuation plans

Urgent action to cope with the impact of rising sea levels needs to start now, including improving evacuation routes for coastal communities during extreme storms and flooding.

As well, a sweeping federal parliamentary report calls for an overhaul of the building code to make homes more resilient and for the legal liability for future property losses to be sorted out.

Warning that ''the time to act is now'', the bipartisan report brought down last night states that thousands of kilometres of coastline have been identified as at risk from the threat of rising sea levels and extreme weather events caused by climate change.

The only note of compulsory cynicism I can muster for this one is that, coincidentally, the coastline is disproportionately owned by the wealthiest members of society who would probably be handsomely bailed out by such legislation.

A few years ago they were squawking about their properties being protected and told they would have to suck it up and take the hit because the community could not afford to protect coastal landscape to that degree. Looks like they may have found a good fairy after all.