Nine Shift

What do the college scandals mean?

Seems like there have been a lot more college scandals this year.
Not just one-campus-scandal, but across the board.

* Student loans scandal.
  Uncovered by a recent female college graduate (good going), the loan scandals cover the entire country.

* Study abroad scandal.
  Apparently, some companies provided benefits or other perks to college officials to support their own study abroad programs.

* MIT admissions counselor.
  This was just at one campus, but it ranks with the other scandals in my opinion.  For 28 years, the head of admissions at MIT was misleading in her credentials. 

What do you think of the college scandals? Business as usual? Or a sign of an out of date education system in bad need of reform?

   

Panic Postscript

The BBC did a story on the market crisis two days ago. They also used the word "Panic."

Two interesting points:
1. In the past, market crises have originated in less stable or less central economic areas, like Asia. This crisis originated in America, the world's largest economy.  And spread out.  Very different having the genesis of the economic problem in supposedly the world's most stable economy.

2. The crisis is so bad that the news of the Federal Reserve infusing money into banks is a positive sign. In the past, this necesity or intervention would be a bad sign of market instability. Now things are so instable that the news is a help.

The Panic of 2007 +

So, here's my guess as to what is behind the current mortgage finance "panic" of 2007.

The system of borrowing and financing is not sufficiently based on cash reserves. Instead, we can borrow and finance based on hypothetical assets, instead of cash or "liquid" assets. This is the case at the individual, company and societal levels.

For example, at LERN we used to say our assets included $24,000 worth of furniture. But realistically there's no way we could sell the stuff for that.  Our computers were worth tens of thousands as well, but a 3 year old computer is worthless, regardless of what somebody tells you.

LERN started moving from accrual accounting to cash accounting several years ago. Our family started moving from credit to debit cards a couple of years ago as well.  Individuals, companies and nations will still borrow in the 21st century, but the collateral will be based more on cash, and less on desks and computers. Get ready for a rocky financial ride America.

What do you think the root cause of the current mortgage-financial-stock market crisis is?

The Panic of 1907

There was a financial panic in 1907, 100 years ago, that shook the financial foundations of the U.S.

It was so severe, even the U.S. government couldn't deal with it. Only the world's richest man, J.P. Morgan, could (and did) step in financially to stop the panic. 

Behind the panic, we believe, was the outdated 19th century financial infrastructure unable to cope with the new financial issues of the 20th century. As society moves from one economic age to another, the infrastructure is outdated, including the financial infrastructure.  The inevitable result is a financial collapse and the need for a new financial infrastructure to cope with the new financial realities.
   100 years later, we probably have another financial "panic" on our hands. Coincidentally, the Treasury Secretary came from MORGAN & Stanley.  (phone of JP Morgan)

The Panic of 2007

Are you personally anxious about the financial markets and the implications of the mortgage payment crisis on your own personal or work finances?

Nine Shift was quoted in the NY Times last year as predicting a decline in the Dow Jones Average caused by a financial collapse similar to the Panic of 1907, and for the very same reasons. Some of you have granted me a one year extension on the prediction, and I appreciate you allowing me to be one year off.

But this is probably it. The word "panic" was mentioned twice on NBC in the last two weeks. The global markets are affected. The central banks (Federal Reserve in the U.S.) has had to intervene several times already. The worst of the mortgage defaults is forecast to be this October. And of course the stock market has ceased its gains this year.

What do you think? And are you personally anxious by it all?

Top nine Nine Shift books of 100 years ago

This week we are featuring our picks for the top nine books of 100 years ago that both describes the 19900-1920 transition the best, but also sheds light on the current 2000 - 2020 Nine Shift occuring.

3. THE GREAT GATSBY, by F. Scott Fitzgerald.
  The first novel that takes place totally in the Industrial Age of the 20th century, with women smoking, working and driving cars, with suburbs, and 'modern life' as we knew it.

2. MAIN STREET, by Sinclair Lewis.
   Written just a year before Great Gatsby, the "last" novel of the agrarian age, showing how people had no idea they were going through this great transition and all of life was changing.

1. LADY CHATTERLY'S LOVER, by D. H. Lawrence.
  Gut wrenching in the agony of those who did not want cars, suburbs, factories and all the materialism that went with it. The loss of values, the angst, denial, surrender. Beatuifully written.

Numbers 1, 2, 3, 4, and 9 are referenced in Nine Shift.
Numbers 5, 6, 7, and 8 were read after Nine Shift appeared.

OK, have you got any other books to add to the list? Please share.

Top nine Nine Shift books of 100 years ago

6. THE AGE OF INNOCENCE, by Edith Wharton
   The values, mores, morals and ethics of the previous century are explored in light of the changing times. Wonderful reading.

5. THE 42nd PARALLEL, by John Dos Passos.
  The best book to give you a feeling of the people of the times from 1900 - 1910, the wandering, not just geographically but emotionally, as the perplexing new century poses new challenges for the kids of 100 years ago.

4. THE MUSIC MAN, by Meredith Wilson & Franklin Lacy.
   Written in 1957, but taking place 100 years ago, the music sets the times as well as the words. The opening scene is priceless, with the two salesmen debating whether the times are really changing.

Top nine Nine Shift books of 100 years ago

This week we're featuring the top nine Nine Shiftish books of 100 years ago, describing the transition back then from the agrarian age to the industrial age.  And giving us great insight into the current Nine Shift transition.  You get to add your favorite books related to Nine Shift too!

9. WIZARD OF OZ, by L. Frank Baum.
   Too much fun, too good, with the theme of "no place like home," just like the values of the agrarian age.

8. SONS & LOVERS, by D.H. Lawrence.
   Great description of a boy growing up in the agrarian world, entering the industrial age at the very beginnings.

7. MAGNIFICENT AMBERSONS, by Booth Tarkington.
  Made into a classic movie by Orson Welles, it tells of the decline of a wealthy family of the agrarian age, swept away not only in finances but values and attitudes by the 20th century.

Will Toyota be the last car company?

What do you think, will Toyota be the last car company in the world?

Last week's news:
* Sales of American autos fell below 50% of all U.S. auto sales last month for the first time in history. Detroit will probably never get above 50% market share in this country again.
* Within the next year, there will be more computers than cars in the world.

Some 100 years ago, there were lots of circuses. They were the major entertainment for many if not most Americans. With the decline of the circus, all the circuses merged until there was just one major one left.  As cars decline, do you think the same thing will happen? And what car company do you think will still be here 50 years from now?

Is Thomas Friedman kinda a whiner?

What do you think? Is Thomas Friedman kinda a whiner?

One week he was complaining that a lady accused him of getting in front of her in a line. Friedman worried that, in the future, he would have to yield to everyone with a web camera and a blog, or else get the wrong end of some bad publicity.

The next week Friedman was in London during a foiled bomb attack, where he said he was inconvenienced by the whole thing in getting a cab.  What led to some of the arrests, and possibly preventing one of the attacks, were cameras that the British police have put everywhere for this exact reason. 

Last week British Prime Minister Gordon Brown was on American television explaining that video cameras would soon come to America if we wanted a safer society as well. 

So, is Thomas Friedman kinda a whiner, or am I missing something? Tell us your thoughts on Mr. Friedman.