Off to Korea

I’m off to Korea for the week to shoot the opening of a new Frontline documentary on Digital Natives. Should be interesting, exciting, and exhausting. The only shoot I know about for sure right now is one focusing on a two-week camp experience designed to “cure” kids who are addicted to video games.

Our future? I guess that’s what I’m supposed to figure out.

I probably won’t be able to post much or anything from there. I have to finish a graphic novel in my spare time and on the planes, too.

Also, get ready for the first installment of what will eventually be my weekly radio show. It’ll be starting as a series of experiments broadcast through an NPR station in Point Reyes, CA, and streaming online. More on that when I have the details, but the first show will be November 6, 8pm Eastern. Be ready to call in. I want to hear what people want from a radio show, and develop it as a group as we go.

In the meantime, be safe and enjoy friends.

Get Back in the Box, Now.

This is not exactly an “I told you so,” but I did tell you so.

My book, Get Back in the Box, looked at how business in America was about to fail because of its dependence on markets over innovation. I argued that only a return to basic competence could rescue business from its impending decline.

Now that most businesses have come to realize that outsourcing is quickly discounted by futures markets, and that balance sheet manipulation and mergers/acquisitions are no substitute for innovation, I think they might be ready to read this book.

Yes, I’d love to sell more copies. But more importantly, I’d love for businesspeople who feel all is lost to recognize that this is such a perfect moment to return to core competency, to remember what it was about their industries that excited them to begin with, and to reconnect with the processes and attitudes that make work fun and meaningful again.

It’s not too late.

The Secret Super-Simple Truth Behind the Stock Surge

I’m on my way to a talk and must be brief. But that means I’m forced to explain the global bailout and stock surge in just a few easy words.

When all the G7 finance ministers met – the reason they all had to meet – is not because they need to coordinate a bailout. It’s because none of them wants to be the only one bailing out his banks. Why? One way or the other, “injecting” cash into banks means printing more money. Whether the central bank buys a bank, invests in a bank, or purchases a bank’s assets, it needs money to do it. The bank may call the injection a “loan,” but that’s the way central banks print all of their money. The central bank lends money into existence.

The problem with central banks guaranteeing as much cash as is needed to capitalize the entire banking system is that this might well require printing a whole lot of money. And when a bank prints a whole lot of money, the value of the currency goes down. At least in comparison with other currencies. This makes investors leave that currency and go to others that are more scarce and valuable.

If all the major banks agree to save their equally bankrupt banking industries and if they all engage in massive currency printing, then all their currencies will go down at essentially the same rate. They will all go down together. Money gets less expensive for ailing banks, but it also becomes less valuable for everyone.

What are investors to do at this point? Most of the big investors I know – the multimillionaire investor types – have been sitting on cash for the past year. (They all knew the market was going to crash, even if they were keeping their clients in the market.) They kept a majority of their savings in cash instruments of one kind or another. But now the central banks have given plenty of notice that they’re going to devalue cash by printing a whole lot more of it. What are the investors to do? Get out of cash, and quickly buy all these cheap stocks.

If it were me, I’d probably go and buy gold. Almost none of these guys are. They all learned in business school that gold is not a “productive asset.” It’s not like investing in a factory that makes stuff, or a drug company that might innovate some new chemical. It just sits there.

But in a contracting global economy, I think the object of the game is to find things that are going down in value less rapidly than everything else. Gold may not be productive, but it may have certain ‘brakes’ on its decline in value that declining, formerly productive assets don’t.

In any case, the smart money knows that money is about to get cheaper. That’s why they’re getting out of it.

New MacBook Pro

The new MacBook pro is going to have flat, spaced keys, like Air and iBooks, instead of the usual high-quality beveled keyboard.

This will be the final push for me to go completely Ubuntu with my computing. The only thing I’ll miss is Scrivener.

Did You Give Money to Arthur?

I just got this from Jay Babcock, editor of Arthur magazine, on whose behalf I posted an appeal for emergency funds this past Spring. In the spirit of community, he’s offering to pay back those in desperate need of cash now that the overall economy is skidding to a halt.

From Jay:

DID YOU LOAN US MONEY?

Thanks to all who donated cash to Arthur when we really needed it back in June. Arthur is doing better now, but times are getting scarier for many of us with each passing day. In the spirit of generosity that you showed to us, we would like to make this offer: if you gave to Arthur back in June and are now in real financial jeopardy, please let us know by sending a money request to us via the same PayPal account you used to send us money in June. We will get your money back to you as soon as possible. As Lewis Hyde says in his book The Gift, we’ve got to keep the money moving. Even if all we’ve got are credit cards…

Stay strong, generous and peaceful,

Jay Babcock
Arthur Magazine

Bottom?

This week we witnessed the collapse of all the bubbles. This is really just the echo of the dot.com crash, and happens after the birth of any new technology. There’s a great book on this – I have to find it so I can tell you who wrote it.

In any case, if there’s a new bubble we have to think of it as the bubble of government itself.

Not that I’ve got money to back it up, but my prediction is that this is a medium-term bottom and that people who buy stocks of good depressed companies at the current levels will be very happy in a couple of years.