EUCOM Economic Analysis - Part I

[Steve the Planner]

Beetle:

Thanks for the great post, which has obviously inspired much discussion and debate.

I guess I am getting too old when, after reviewing many of these articles and ideas, I am taken back to the De-Industrialization issues of the mid-1990s, wherein we referenced backward to Drucker, etc... and the Marshall Plans, and the older industrial systems and structures. Not much new in the macro-world except re-arrangements of assets, and re-assessments of what makes which assets important at the moment.

Rare Earth? Re-opening the Inland Silk Road? Russia having resources on which Europe is critically dependent? Oil empires fighting for nuclear technology so that they can free up export capacity by generating domestic power from something other than oil?

Manufacturing chopsticks in Georgia (USA) for the chinese market due to availability of wood, minimal mechanization, cheap labor and cheap transport (empty reverse haul containers). Go figure?

Comparative advantage is in real-time flux, and the dynamic and interactive market complexities remain beyond the limits of command planning at the macro level.

The downfall of all this stuff is not the failures of complex market systems to track, control and project past activity into the future, but their inability to grasp what the actual future will be defined by.

Thanks for making me rethink about this stuff.

[Surferbeetle]

Beetle:

Thanks for the great post, which has obviously inspired much discussion and debate.

Hey Steve,

Thanks; a long motorcycle ride followed by a couple of cold beers somehow always seems to help with the writing process on this end.

I guess I am getting too old when, after reviewing many of these articles and ideas, I am taken back to the De-Industrialization issues of the mid-1990s, wherein we referenced backward to Drucker, etc... and the Marshall Plans, and the older industrial systems and structures. Not much new in the macro-world except re-arrangements of assets, and re-assessments of what makes which assets important at the moment.

It sometimes seems that I regularly hit the airport just so that I can catch a copy of the latest HBR. Drucker is good, and a staple of HBR articles. Speaking of HBR did you catch the Jan-Feb 2011 Double Issue Creating Shared Value: How to reinvent capitalism, and unleash a new wave of growth by Michael Porter & Mark Kramer?

From the idea in brief rollup:

The concept of shared value-which focuses on the connections between societal and economic progress-has the power to unleash the next wave of global growth.

There are three key ways that companies can create shared value opportunities:

*By reconceiving products and markets

*By redefining productivity in the value chain

*By enabling local cluster development

...and deeper in the article:

Strategy theory holds that to be successful a company must create a distinctive value proposition that meets the needs of a chosen set of customers. The firm gains competitive advantage from how it configures the value chain, or the set of activities involved in creating, producing, selling, delivering, and supporting its products or services

However, companies have overlooked opportunities to meet fundamental societal needs and misunderstood how societal harms and weaknesses affect value chains

It's interesting to compare his latest concept with his five forces model.

Rare Earth? Re-opening the Inland Silk Road? Russia having resources on which Europe is critically dependent? Oil empires fighting for nuclear technology so that they can free up export capacity by generating domestic power from something other than oil?

Reminds me of talk I was able to attend regarding the British East India Company; if we were to ignore the technological changes, how much have the underlying business models really changed?

Comparative advantage is in real-time flux, and the dynamic and interactive market complexities remain beyond the limits of command planning at the macro level.

The downfall of all this stuff is not the failures of complex market systems to track, control and project past activity into the future, but their inability to grasp what the actual future will be defined by.

Perhaps along similar lines, from another talk that I was able to attend:

'The Globalization Engine' consists of:

*The production of change

*New conditions for the creation of value

[Steve the Planner]

The Porter stuff, too, all harkens back to the Structure of Scientific Revolutions: First, there is a new technological driver; Second, the implementation and dispersion.

So many technological drivers emerge from that Toynbee-esque challenge/challenge-faced stuff: sign companies in Iraq, Syria and Turkey that made a living changing out signs while the Arabization movements in the 1990s eliminated Kurdish, Aramean and Christian town names.

Otherwise, who could imagine that anyone could make money making new signs for ancient areas.

I keeping hearing about local clusters, and creative urban centers as if they were something new and magical, but its all just Jane Jacobs and David Bowie (Ch-ch-ch-changes...): that marvelous interaction that occurs between people, communities, ideas, problems and their interactions.

Hanover, MD c. 1995. We built a business park near NSA and BWI Airport, attracted a lot of defense contractors, which attracted more defense contractors, which attracted techno headhunters, then restaurants, hotels, retail, college satellites, which led to Arundel Mills Mall and a new casino under construction. Go figure?

[slapout9]

Link to a BBC interview of a market trader......Euro will crash no matter what because governments do not control the world, big financial institutions like goldman sachs do


http://www.youtube.com/watch?v=aC19f...ayer_embedded#!

[Surferbeetle]

Link to a BBC interview of a market trader......Euro will crash no matter what because governments do not control the world, big financial institutions like goldman sachs do


http://www.youtube.com/watch?v=aC19f...ayer_embedded#!

Hey Slap,

Good news and bad

For my 0.02 cents Goldman Sachs is the most formidable investment bank on the planet and perhaps in history. 38,300 employees generated 44.28 billion over the trailing twelve months. Their tangible book value [(total tangible assets-liabilities)/# of shares)] is $132.26 vs todays share price of $99.14. This share price is partially indicative, IMO, of the social penalty for crafting investment tools which have exited the investment arena (where it's a no holds barred fight to the death) and into the retail arena (civilians saving for retirement, weddings, and getting car loans, mortgages, small business loans, etc).

Jamie Dimon's complaints about how, that one time when he was walking to his limo from the bank lobby and that snow flake almost hit him and he thought he was going to freeze...uh, I mean about Basel III and the Vickers report are worth watching. These two particular items might be enough to keep the investment banking soldiers from fighting in the retail banking neighborhoods of the civilians. We will see...

Quantum physics (atom bombs) vs newtonian physics (civil engineering) is similar to investment banking vs. retail banking. Gotta have both, but it's generally not a good idea to mix the two...

[slapout9]

Quantum physics (atom bombs) vs newtonian physics (civil engineering) is similar to investment banking vs. retail banking. Gotta have both, but it's generally not a good idea to mix the two...

Yep, we made a big mistake by getting rid of the Glass-Steagall act

[Steve the Planner]

Slap:

That was the beginning of the end.

Steve