Andrew White

It was another one of those weeks – a “love in” with the Economist.  A bunch of articles peaked my interest this week and thankfully I happened to travel to/from Indianapolis which provided the time.  I rarely open up my laptop when I travel this year (thus impacting productivity) unless I get upgraded.  Due to last years fall in demand (in general), I dropped for the first time to “silver” (on the Delta scale) and have only been upgraded a few times this year.  As of June this year, I can tell I will be “gold” again next year – so upgrades (and more notes) for 2011 – here we come.

Anyway, here is my pick of some very interesting articles for the print edition dated July 24^th-30^th:

• Baghot: Europe and the Trojan Poodle – Britain’s “special relationship” with America makes it modest, not arrogant.  Short article exploring, once again, the so-called special relationship but this time from the perspective of Britain and Europe.  It is clear that the relationship between America and Britain means different things to each country, but it is very interesting to explore how Europeans view it.  Historically it must have been seen as a legacy of Empire that gave the British the chance to claim a special seat at the top table; but does that legacy still exist in the mind of the British?  It seems less so now than in the past; as time passes and the time of Empire moves further back into history, its potential impact on how Britain’s view their place in the world changes.  But it seems some Europeans still think “legacy”.  It seems that some Europeans are stuck in their own historical viewpoints.  My favorite quite from the entire magazine is this: “In the words of one senior figure, a posting in America is the best way to teach the British how “fundamentally European” they are.”  I have lived in America for 15 years, and this point has got me thinking…
• Schumpeter: In Search of Serendipity – Success in business increasingly depends on chance encounters.  Interesting article exploring the background to a new book, “The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things In Motion”, by none other than John Hagel and others.  I would read the article – but my one take away from it is this.  Spend time trying to rub up against smart folks, from all walks that are obvious to you, and add to this walks of like that are not.  The more you mix with smart folks – period – the more likely something good, and unexpected (such as a new idea) emerges.  Sounds obvious I guess.  But how often do we do this explicitly?
• Finance and Economics: Fannie Mae and Freddie Mac – Unfinished Business.  The leader to this piece said it all – get rid of them; they are a cancer on the market that forces risky distortions into the market for social reasons only.  The premise is that these government backed organizations were largely to blame for the economic crash we just experienced since, being backed by the government, and encouraged by certain governments to offer loans to people who could  not pay them off, we created a layer of the market that was going to fail.  The financial market tried to hide the risk, as any risk manager does, but eventually there was too much dross in the system.  However ,the newly signed financial regulation bill does NOT address this cancer.  It persists.  It needs to be excised. 
• Buttonwood: Losing Confidence – Looking at the dollar in the old-fashioned way.  Short piece exploring the relationship between the gold standard and the dollar, and how the dollar has been valued over the last 40 years.  Alan Greenspan is taking more and more criticism for his actions as Fed Chairman, and his involvement in creating, and sustaining, bubbles and specifically the housing price bubble, is now fair game.  His decisions’ in setting interest rates has impacted how external agents (investors of all kinds) view the dollar, and it would seem that recent actions by the US have undermined the confidence in the world’s research currency.  A must-read.
• Banking and IT: Computer says no – Big Banks need IT reform almost as badly as regulatory change.  An article on “single view” of customer and product/service, which does not mention Master Data Management.  Shame – come on Economist!!!
• Economics Focus: Agents of Change – Conventional economic models failed to foresee the financial crisis.  Count agent-based modeling do better?  Interesting piece that explores again the weaknesses of the general models used by the Red to model how the economy is supposed to work.  Firstly there are several models, and each model has assumptions.  Outcomes expressed can be tested for accuracy in terms of expected output (did the economy work as expected) and also by resting the assumptions (did the causal factors fairly represent the endogenous factors of the model).  The Economist has written at length about the models used by the Fed, and other models that could be used, but here explores more fully the idea of an agent based model.  Such models take more granular views on stake-holder activity, and more importantly, on agent to agent interaction.  Such models help express how you and I behave when one of us decides to default on a loan.  Of course a conclusion drawn asks if we can built an uber model of the economy  Wel, I would ask Will Wright (SimCity, The Sims, Spore) or maybe Peter Molyneux, (Black and White, Populous) to help.

Did you see any interesting articles?

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