Economics & Finance

Not Good

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Financial Times, 2/4:

Moody’s Investors Service fired off a warning yesterday that the triple A sovereign credit rating of the US would come under pressure unless economic growth was more robust than expected or tougher action was taken to tackle the country’s budget deficit.

and

Crucially, projections of the overall debt-to-GDP ratio for the US are seen as rising from 53 per cent in 2009 to 73 per cent in 2015 and 77 per cent by 2020. Moody’s, shopantibioticsonline however, says this understates the US debt level.

“Using the general government measure, including state and local governments as well as the federal government, which is used internationally, this ratio would be well over 100 percent in 2020.”

Mini-Book Review — Easterbrook — Sonic Boom

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Easterbrook, Gregg, Sonic Boom: Globalization at Mach Speed, Random House: 2009, 243pp.

Sonic Boom falls within the genre of the quick-reading airport business book. Using a series of places as exemplars (Shenzhen, Waltham MA, Yakutsk, Erie PA, etc.), the author shows how a globalized economy can create prosperity from swampland, and restore prosperity to Rust-Belt and 19th century industrial hubs. The writing is crisp and smooth. The manner is often witty, and occasionally wise-ass. It’s anything but turgid … which is a great relief from many of the “big think” books which come and go on the bestseller lists.

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The Post-COIN Era is Here

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Learning to Eat Soup with a Spoon Again……

There has been, for years, an ongoing debate in the defense and national security community over the proper place of counterinsurgency (COIN) doctrine in the repertoire of the United States military and in our national strategy. While a sizable number of serious scholars, strategists, journalists and officers have been deeply involved, the bitter discussion characterized as “COINdinista vs. Big War crowd” debate is epitomized by the exchanges between two antagonists, both lieutenant colonels with PhD’s, John Nagl, a leading figure behind the U.S. Army/Marine Corps Counterinsurgency Field Manual and now president of the powerhouse think tank CNAS , and Gian Gentile, professor of history at West Point and COIN’s most infamous arch-critic.

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The Superstition Known as Economic Forecasting and the Trophy Wife Metric

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Deuteronomy 18:10-12 (KJV):

10. There shall not be found among you any one that maketh his son or his daughter to pass through the fire, or that useth divination, or an observer of times, or an enchanter, or a witch.

11. Or a charmer, or a consulter with familiar spirits, or a wizard, or a necromancer.

12. For all that do these things are an abomination unto the LORD: and because of these abominations the LORD thy God doth drive them out from before thee.

If an economic forecaster found himself plying his trade in ancient Israel, it wouldn’t be long before an outraged community dragged him kicking and hollering to the outskirts of the village and stoned him to death.

Especially if they followed his investment advice.

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Innovation of Institutional Cultures

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John Hagel is in a small category of thinkers who manage to routinely be thinking ahead of the curve ( he calls his blog, where he features longer but more infrequent posts than is typical, Edge Perspectives). I want to draw attention to the core conclusion of his latest:
Challenging Mindsets: From Reverse Innovation to Innovation Blowback

Innovation blowbackFive years ago, John Seely Brown and I wrote an article for the McKinsey Quarterly entitled “Innovation Blowback: Disruptive Management Practices from Asia.” In that article, we described a series of innovations emerging in Asia that were much more fundamental than isolated product or service innovations. We drew attention to a different form of innovation – institutional innovation. In arenas as diverse as motorcycles, apparel, turbine engines and consumer electronics, we detected a much more disruptive form of innovation.In these very diverse industries, we saw entrepreneurs re-thinking institutional arrangements across very large numbers of enterprises, offering all participants an opportunity to learn faster and innovate more effectively by working together. While Western companies were lured into various forms of financial leverage, these entrepreneurs were developing sophisticated approaches to capability leverage in scalable business networks that could generate not just one product innovation, but an accelerating stream of product and service innovations.

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