Andrew WhiteQuite astonishingly the FT reported Friday (IMF slashes 2009 growth forecasts) that global trade fell during December 2008 at an annualized rate of 40%. That is just mind boggling – such contractions imply economy-stopping falls in demand, and supply. However, though this looks alarming the reality is that such falls cannot establish new (low) levels of global trade. If trade continued to fall, or remain at such low levels, lifestyles for many, many people would be impacted significantly. More importantly, firms that are profitable (or those that are not beholden to credit) would simply stop. I think this kind of data is just a signal to the huge, massive, knee-jerk reaction we have seen to the credit crisis. Of course, this won’t hold so global trade should pick back up if confidence can be restored.
Funnily enough an MDM-related (it’s a stretch) issue came to mind on Saturday. I read an Economist article (When a flow becomes a flood) which highlighted the oft quoted aggregation of the entire world’s trade data. When one adds up all the country trade balances, the total should add up to zero. However, it does not and currently adds up to $265 billion. Somewhere, somehow, one or more countries are not adding up the same data or not following the same calculation.
This highlights a very important MDM point: though the data is not “accurate” it is “good enough”. The general trends (such as the US with a huge trade deficit, Chine with a huge trade surplus) are known and policy is organized taking this into account. But the actual data is not completely accurate. The point is that data quality is dependent on context. Even though the data does not quite add up to 100%, policy decisions can still be effected.
Another article, a little more MDM-ish, came to my attention in the FT on Saturday (Wary lenders add to introspection). The article described one of the many meetings at the Davos World Economic Forum; this meeting highlighted the collective agreement that banking and finance initiatives need to be coordinated at a global level, but there is no global forum to do this.
“As Lord Turner, chairman of Britain’s Financial Services Authority, told delegates on Wednesday: “There is no equivalent of the World Trade Organization [in finance]. The people trying to drive through change are forced to use ad hoc arbitrary organizations without authority – it is a classic global governance problem. We do not have an [international] treaty but we still need to end up with clear global rules.”
This is little different to the challenge users experience when trying to set up governance organizations in their firms. No single owner stands out, yet everyone is impacted by the lack of governance. Since users are building MDM business cases in order to attract support of line of business leaders, let’s hope our financial leaders are able to do the same….
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Category: Economy Governance MDM Tags: Economy, Governance, MDM
