A Networked World

There's a reason that "Everything in your house is getting cheaper to buy"

The prices of durable goods have been falling pretty steadily since peaking in 1997, and now they are as cheap as they were in 1988, after adjusting for the constant improvements manufacturers have been making to their products.

What’s striking is how pervasive the price declines are. It’s not just a few items that are pulling down the average; prices are falling for almost every sort of durable good that consumers buy.

via www.marketwatch.com

There are 2 reasons that prices fall.

In times where efficiency or productivity or new processes or newly discovered, easily accessible resources are having their major effect, the prices of the products or services they provide will fall because the absolute cost of making them is being actually reduced, but this study accounts for those improvements. There are no new processes or massive new resources being discovered and put into service, especially not across the board.

And the lastest survey of American productivity show that it is falling, not rising.

There is another reason that prices fall and that is when the incomes of the customers fall. And in real terms, American incomes, except for the 1%, are about the same as they were in the 1980's. So prices have to fall to match them.

The reason they have not fallen earlier is that the difference has been made up with debt. But consumers have finally reached the point where they can no longer fool themselves into taking on more debt, or they are just plain maxed out, even by the corrupt standards of the banking system.

The second case has another facet; it is the indicator of a deflationary economy.

As wages fall, prices have to chase them down, but because each seller is still trying to maximise their profit, then their income, then finally their survival. Because they try to brake their fall, the prices always remain higher than the customer can actually afford so they inch down some more, preceded by the wages that companies pay their workers who are then supposed to be able to keep buying the products they make.

This is a deflationary spiral and the next phase is the failure of the companies that make this stuff. People like The Automatic Earth, Steve Keen, Chris Martenson etc have been predicting this for over a decade and the process is playing out pretty much according to their models. But those who are terrified of deflation, and that should be all of us, WILL NOT talk about it honestly.

If we refuse to talk about it, we can't even attempt to deal with it. So will will have to face it alone. NOT a good scene.

#NetHui and Digital Literacy

At last week's excellent NetHui, run by Internet NZ, I was asked to plug in 5 minutes worth on Digital Literacy. As usual, I tried to give it a bit of a spin. (starts at 41.12 and runs 6 minutes - the cut [poor sync] is Download Nethui_digital-literacy)

Here's the full version that probably takes a bit more than 5 minutes.

As one of the other presenters suggested, Digital Literacy means different things to different people and I want to pick up on some points raised by Mike Dickison and maybe be push them out a little, perhaps just shove them off the cliff.

For me digital literacy includes knowing when to take one of these and stick it in your mouth.

The reason for this is simple; in Miami Beach on Memorial Day this year, a bunch of out-of-control cops pumped over 100 shots into a private car in a public place, killing an unarmed black man inside (now there's a surprise) and wounded some bystanders.

A young man called Narces Benoit saw what was happening and whipped out his cellphone to record the scene. One of the cops noticed what he was doing, broke off his shooting gallery duties and came charging at Benoit, waving his gun and screaming at him to get out of his car and hand over the cellphone, which he did.

The cop them smashed the cellphone under his boot and arrested Benoit. Nevertheless, within a few hours, the video of the event was going viral on Youtube because, when he saw the cop rushing at him, Benoit had the presence of mind to take out of the phone his digital media storage card and put it in his mouth.

The difference between Benoit and the cop is what I call Digital Literacy.

A few months ago in the Australian Navy, a female recruit was having a sexual relationship with another recruit. The guy in question thought it would be terribly cool to capture the "action" with his webcam and broadcast it to his mates. She was not happy and complained to her commander about the breach of trust and privacy. He essentially told her not to be a spoilsport and swept the matter under the rug.

The young woman became even less happy and shared her experience on facebook. Within days her commander and his boss and his boss and HIS boss were all publicly on the mat, caps in hand, staring at their shoes and explaining HOW they were going to solve the problem of their appalling leadership.

The difference between the young woman and the Australian Navy is what I call Digital Literacy.

About the same time, footballer Ryan Giggs was having an affair with model Imogen Thomas and when it was discovered he sought the help of the UK Supreme Court which obligingly issued a "super injunction" forbidding the publication of the facts.

Within hours, over 70,000 Twitter users had turned the super injunction into a legal fiction.

The difference between the Supreme Court and Ryan Giggs fan base is what I call Digital Literacy.

And all over the Middle east and North Africa this year, people have risen up, trying to throw off a generation of oppression, corruption and violence against them. Now we have had revolutions for a long time, but in the past they have needed a core of intellectual, philosophical and operational leadership, surrounded by a cadre of activists willing to take the message into the community.

Those roles are now being taken over by the whole community using social media tools. It is that takeover and the loss of the privileged position of leadership that I call Digital Literacy.

In Christchurch's major earthquakes, at risk of their lives and while their buildings and their city crumbled around them people grabbed their cellphones and videoed the event as a way to record their own experience to share with others and possibly to provide evidence of what happened to them if they didn't make it out.

That too I call Digital Literacy.

Literacy of any kind is not just being able to read and write the words, it is understanding the meaning, the significance and the context of the communication, then knowing how to manipulate them.

The best example I can think of is the advent of film to entertainment. The first films were little more than stage plays with a camera placed in front of them to record the action. But it wasn't long before we saw the appearance of film literacy, using the unique language of the cinema to tell the story in its own way. The language includes backgorund music, closeups, tracking and pan shots, framing and the million other ways to use a camera that are not available to stage plays.

So we cannot expect that Digital Literacy will look in any but the most superficial ways, like hard copy literacy. In fact, by my definition Digital Literacy is happening all around us, all the time, with increasing frequency.

For 20 years we have talked about the ICT Revolution, blithely ignoring the fact that all revolutions break stuff, and the thing they break first and most irreparably, is the status quo, to expect the revolutionaries to restore the powers of the old guard is nonsense.

Digital Literacy does not consist in being able to write a CV in a word processor nor manage our accounts with a spreadsheet, they are far too often, a way for the old guard to try and force the revolution into a mould with which they feel comfortable.

Our problem is that digital illiteracy is rife in Government, business, education, health, justice and the NFP sectior, very often among those who are pushing hardest for solutions.

The real digital literacy challenge that we have is to shift the old guard into actual digital literacy so that our organisations, which have real, and vital, work to do, can engage with, communicate with, work with an increasingly digitally literate community; so that they can swim in that literacy instead of drowning in it as they are doing right now.

MY problem is that I   have no idea how the hell we are going to do that.

Digital Literacy does not consist in being able to write a CV in a word processor nor manage our accounts with a spreadsheet, they are far too oftten, a way for the old guard to try and force the revolution into a mould with which they feel comfortable.

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.

Mega

Lomania

The sooner this guy self destructs, the better for us all. Tamaki's 700 'sons' swear oath of loyalty

The leader of Destiny Church, Brian Tamaki, who not long ago anointed himself bishop of the church he founded, has now proclaimed himself the church's "spiritual father" and designated the male members of the church as "spiritual sons".

At a special service during the church's annual conference in Auckland at the weekend, about 700 male members of the church swore a "covenant oath" of loyalty and obedience to Mr Tamaki and were given a "covenant ring" to wear on their right hands.

A church document describes the covenant as "a solemn oath of commitment that is binding, enduring and unbreakable. You are bound to covenant ... Covenant is an irrevocable, undissolvable oath of commitment".

There's another word for that kind of relationship; slavery. And if these 700 "sons" don't wake up to their "father's" serious ego problem, they will become his shock troops next.

There's a time to stop this dangerous crap, and it is now, before it gets out of hand. He has feet of clay like the rest of us, someone needs to dig them up pronto, although he is as cunning as a fox, he already has the antidote in their veins.

"You will hear all sorts of statements and opinions but you must be
prepared to ignore them and consistently hold him in the same high
regard no matter what you hear."

Somewhat surprisingly, the protocol says that Mr Tamaki is human and does make mistakes.

However, the sons must "be prepared to defend against any problems arising out of his mistakes.

A
loyal man is supposed to 'cushion' the effect of a mistake on Bishop
and to protect him. NEVER intentionally expose his weakness."

Now, we know that he knows that there is something under the covers. All that matters is what that something is.

Retaining value - what exactly does that mean?

James West has an interesting piece at Midas Letter - Gold Price Prediction

When anything, be it stock, bond, currency or commodity, reaches a new high, the impetus for selling into strength and taking profit off the table are enhanced dramatically. With gold’s new record high, there are plenty of holders of bullion who started acquiring it in the first years of the millennium who are now sitting on profit equivalent to 3 times the money.

The question is, however, sell gold in exchange for what?

Certainly trading gold for U.S. dollars is akin to forward selling gold at an incrementally lower price. Anyone smart enough to own gold since 2001 is unlikely to be so silly.

Renmibi might seem like a good trade. The only problem with that is you can’t easily spend renmibi at Home Depot or Safeway or Nordstrom.

No, there’s really no substitute for gold at this point in the global currency landscape. And so, the normally present impetus to sell and take profit has been castrated by the lack of anything else capable of retaining its value.

OK. I get that. But the question then becomes, what exactly does he mean by retaining value? If there is nothing that you would accept in exchange for it, how much "value" does it have?

I always look at the extreme case such as me having the last plate of food on earth and you having all the gold. How much of that gold would you give not to starve to death? How much gold would I accept to commit suicide?

Since the person who survives gets all the gold anyway, the only thing that has "value" is the food and even that is losing value the longer I remains uneaten.

I completely agree that exchanging gold for fiat money is a fools bargain, but once you have the gold you too can get fooled by seeing its exchange rate (as distinct from its value) constantly rising against all other possible "stores of value". Storage of any kind only has value if it is able to be released. from water in a dam to grain in a warehouse to savings in the bank, the storage part only works if the release part can take place. So how do you release the value stored in gold?

At some point you have to exchange it for something in the certain knowledge that you will never be able to get it back at that price, it will always go higher.

Well it will until all those left holding all the gold realise that it can't be eaten, worn, lived in, burned or used as medication, and if all anyone else wants is food, shelter, clothing, fuel or medication, how exactly do you sell your "assets" in exchange for something you actually need.

In complex societies the location of value is seriously camouflaged, and we can get carried away by the idea that, just because gold is durable and unchanging it has some kind of intrinsic value that can be locked away. I don't believe it.

Show me the mechanism.

Expertise and analysis

This in Marketwatch today. U.S. job losses accelerate to 263,000 in September

Nonfarm payrolls fell by a greater-than-expected 263,000 in September, the Labor Department reported. It marked the 21st consecutive month of job losses.

None of that is a surprise to anyone paying attention to what is happening in the world but something that troubles me is beautifully shown in the attached graphic.

The orange marker is what the experts and analysts agreed would be the number. But it was wrong, not just a bit wrong, but badly wrong. Its been happening all over the map; the only thing that experts these days appear to agree on is something that is wrong. How come they are still experts? I'm a bunny, I dropped out of University in my first year but not only did I see all this coming, I took actions to prepare for it and I now work on the assumption that my analysis of the situation is pretty good - supported, led, guided etc by other people for sure, but people I have chosen because they appear to have a realistic understanding of the world, ie, my analysis of their performance is also good. So I have to wonder what the hell these experts are looking at and how they are able to reach their inevitably erroneous conclusions. And when it comes to analysts, what in hell are they, in fact, analysing, and what kind of analytical tools are they using on these data?

And above all, why don't they seem able to learn that what they are doing is SNAFU? seems to me that the only part of their title that is valid is the anal part, they seem to be pulling a lot of their work from there.

The only answer that I can come up with is corruption. There's almost certainly some of the "if you give me the words I want I'll pay you lots of money" kind of corruption, but I think it goes further. I think we have reached the point of "this file cannot be opened because it is corrupted". Somewhere deep in the workings of our system, things are not right, the DNA appears to have been corrupted, mutated into a form that may not be compatible with survival. Convince me I'm wrong

Updated responding to Brane and Robin below

Pretty much agreed with both of you.

It seems to me there has been a marriage (make that a prostitution) between mathematics and magic called economics.

But what really gets me is that we are all dealing with pretty much the same data and drawing such hugely divergent conclusions. Which means that there is something seriously wrong with the psychological algorithms governing their thinking.

You and I look at the entrails of a dead chicken and we see entrails, and maybe dinner, they see things that make their owners happy.

There is a market for economic theories and those that feed the preferences and predilections of those already in power will get the attention, regardless of how wrong they may be.

Or to use the infamous words of Tony Blair and co, they "fit the facts around the policy"

Unfortunately, this works pretty well for a long time (the universe appears to be very tolerant of stupidity and corruption) right up till the moment when it fails completely.

No doubt the Roman divines managed to read endless success for their owners until the barbarians smashed down the gates of Rome. If only those smashing our gates were no more than a more successful tribe. They are not, we have pushed our habitat to its limits and now we are hard up against the laws of physics and genuine mathematics.

BTW, I tried to post this in the comments field and got the response "We're sorry we cannot accept this data. Anyone else experienced that?

On the one hand

This is a brilliant example of the power of Internet tools, creativity and our willingness to act swiftly and decisively when we are committed to something. Vegemite

Who would have thought that tampering (which is how the crowd saw it) with a "low involvement' product such as a salty yeast extract spread could provoke such outrage. Clearly not Kraft, or not initially anyway. The volume of blogs, the venting of spleens and the sheer energy poured into the protest as it spilled out to every corner of the internet should confirm one thing: social media has the power to make or break a brand or product like no other medium.

By yesterday morning a Hitler parody video clip had been viewed 46,000 times, making it the No. 1 comedy clip on YouTube this week, according to analysis by the online risk and reputation consultants SR7, which also logged more than 60 Facebook groups that had been formed expressly for the purpose of getting Kraft to dump the name. One such group, "Australia says no to iSnack 2.0" had more than 2500 members by yesterday morning.

The SR7 director James Griffin goes as far as to label this a "watershed" in marketing. "Regardless of whether or not this is a marketing ploy by Kraft, this is an example of social media determining the outcome of a marketing campaign."

Within five days of announcing a new name, Kraft had done a corporate about-face the likes of which we have not seen in a while...

Kraft is now faced with a very pumped up and aggravated bunch of Aussies who have already brought it to heel and will be watching the company's next move. Any hints that the entire exercise was a conspiracy could sink the new product and damage the Vegemite brand itself.

On the other hand, we are surrounded by pollution, dangerous ignorance, corruption, financial criminality, abuse, exploitation, slavery, intergenerational theft and a panoply of human-created catastrophes and failures that need exactly this level of attention and our response is what?

Re-naming the friggin vegemite.

Some days I despair.