I tried to oblige them with some insights onto why this kind of scandal keeps happening, and why. You can see the results of the interview in the segment below:

More on why the news business keeps getting hit with privacy scandals like this, and why it won’t stop after the jump…

I could tell in the pre-interviews that what CNN was really interested in was pretty much the same thing that the tabloids are: down & dirty tales about famous people doing Bad Things, and how tabloid reporters and paparazzi lie, cheat & steal in flagrant disrespect for the law.

Well, duh.

The deeper point, and one that it is difficult to do on television (although I did try to speak in TV-friendly sound bites) is that the real reason for the constantly recurring invasions of privacy, and for the generally rotten state of the news business (and not incidentally, society itself) is that the news business is no longer actually in the business of reporting news.

No, the business side of things now completely predominates, to the exclusion of just about every other consideration. This is because the last 30 years have seen newspapers, TV stations, radio stations and just about any other means by which reporters collect information and transmit it to the public at a large scale, bought up by increasingly larger corporations, who run things … well, pretty much the same way that every other Corporate America hellhole runs things. As cheaply as goddam possible, with utter contempt for the end consumers of their products (the whole “Make it just one tiny scootch about the level where people will vomit and refuse to buy it”) and complete & total hatred and fear of their employees and the (gasp!) prospect of those employees actually unionizing and demanding safe, sane and humane working conditions.

The fact that these statements are probably controversial says more about the nature of our denial of widespread reality than it does about the news business … although come to think of it, the fact that newspapers, network TV news (and the cable outlets that feast off them both) are so dysfunctional is probably in large part responsible for the “magical thinking” disease that has overrun politics and culture in America.

See, the problem is that every newspaper & TV station in existence (with a few exceptions) is part of a larger corporate behemoth. That corporate behemoth went deep, deep into debt to buy said newspapers and TV stations, back when the economy was sound and these media properties looked like no-brainer acquisitions. After all, newspapers had pretty much monopoly market positions in every city worthy of the name, while local TV stations were like owning your own mint. If you wanted to run a small-to-medium sized business in America, you had to advertise your products. And to advertise, you had to pay whatever the owner of the newspaper or TV station wanted to extract from you in this billing cycle. If you didn’t want to pony up … well, I’m sure your competitors did. And then they buried you, while your inventory grew cobwebs.

So with that long, flat, steady rate of return, all the projections for the future looked safe. And if there’s one thing that Corporate America loves more than anything else, it is the utter elimination of any hint of risk. A small rate of return over many years … well, they know how to make that dance. That’s how they turned home mortgages that pay 4-8% a year into financial instruments that paid 1,000% returns – by leveraging the living shit out of them. Borrowing huge quantities of loot, and putting it down on the Vegas craps table that is the U.S. banking system, meanwhile squeezing the budgets of these media properties to make the debt-service payments.

And to make those payments? Well, you gotta make sure that nothing disturbs that projected rate of return. That means for God’s sake, don’t do anything too daring or out of the norm. Second, bring in the efficiency experts to go over the budgets with a fine-tooth comb and start looking for any way possible to cut the budget. Fire people, delay buying new equipment, shrink the costs of the actual production of the news to the point that they can squeeze a couple more percentage points of profit out of the old Daily Beast.

These macro policies mean that the journalists who actually have to produce the content that goes into these media properties are running on the razor edge of make it/don’t make it; and the news editors are having to claw with every fiber of their being in the desperate attempt to make the quarterly numbers go up even a tenth of a ratings point.

And the way to do that … is to get the biggest possible audience. How do you get a huge audience without having to spend a lot of money on time-consuming, risky and potentially business-disrupting investigative reporting?

Why, lurid tabloid-style stories, of course.

That’s why the phone-hacking scandal at the News is only the latest iteration of what is a systemic problem. By that I mean, it is not the works of a few “Bad Apples.” It is the way that the whole goddam machinery is constructed. You could put the 12 Apostles into the modern Fleet Street newsroom and within a few months, they’d be doorknocking Amy Winehouse’s parents and rooting through Elton John’s trash. Or they’d be fired in favor of people who would actually do that.

The point is that the problems with the news business bear surprising resemblance to the problems of society as a whole. We’ve tied our fate to the unfettered free-market economic forces, without really taking notice of the fact that there are a few industries, at least, that are not prepackaged Cheetos. Where diluting quality and streamlining production schedules and all the other tricks of modern corporate management may work in the short term … but in the long term are not only killing the industry, but harming … well, basically putting Western Civilization in danger of collapse. If all we have are “Twinkie” news reports from chirpy, easy-on-the-eyes blondes, and the only way for politicians to prosper is to get on TV … and the way to get on TV is to spout lunatic jackassery … then we wind up talking about destroying the basic financial security of every person in the United States because a bunch of nitwits on talk radio need to keep their numbers up for Q3. 

Being able to add people to the circles is an absolutely frickin’ brilliant move! The little animations are absolutely killer. I have been wanting this and talking about this and boring the living shit out of my tech-dw33b friends about how the one big problem STILL with social media is that it’s damn near and all-or-nothing game.

No longer. Someone at Google “got it,” and this is a killer feature that Facebook DOES NOT HAVE.

Also: Google+ aggregates my information from all manner of sources, so I don’t have to go through that goddam tiresome “OK, let’s fill in all the blanks on this profile page yet again … wait, what? … it timed out? (long cursing session)”

Check out the screen cap below – this is after only a few minutes of cursory work:

I kinda disagree with this post on AllFacebook, where they focus in on how Google has made it “compulsory” to be part of Google+, and that the key to all this is “time on site.”

While tech pundits are widely praising Google’s new Plus product, I’ve found the one feature that could take away from Facebook where it’s most dominant: Time on the site.

Facebook users are known for staying on the site for over half an hour a day, something no other site could compete with… until now.

To be honest, my gut reaction after using Google Plus was initially, “Why on earth would anybody switch to this from Facebook?”

However, when I loaded up Google Finance as I do every morning, I suddenly realized that I was asking the wrong question. The reality is that users won’t have the option of not using Google Plus.

However, later on, they kinda stumble into something interesting, that’s also come up recently in the kerfuffle over the “Open Letters to RIM” – that is, that tech companies are starting to realize that what will really make them successful, is making it easy for developers & propellorhead-types like, well, us … to come and play in their sandbox.

Add to that this very insightful dissection of what was at the core of MySpace imploding – the same thing at work, i.e. pissing on indie developers – and you start to see something fascinating emerging in corporate thinking … for those intelligent enough to read the tea leaves (or Cheeto crumbs, if you will).

I’ve been in Addis Ababa, Ethiopia, for the last week, training the local journalists and government information officers (aka PR flacks) on how best to take advantage of the way that “New Media” is creating new ways of connecting with each other, and the world at large. I’m here as part of the same US Embassy program that has sent me to places like Chile, Kazakhstan, Georgia, Costa Rica, etc., to try to bring people the benefits of experience (aka the way newspapers & TV news has imploded in the U.S.), so they can start planning for the Great Digital Migration.

This is my class of TV journalists at Addis Ababa University (AAU). I tried to cram as much about online video and sharing into my short sessions as I could. Here, I'm showing how to use both professional tools like Adobe Premiere Pro CS5, as well as free alternatives like Windows Movie Maker.

The one thing that everyone here agrees on is that Ethiopia desperately wants to change its international image – c’mon, admit it. When you think of Ethiopia, what images come to mind? Deserts, starving people, vultures, Live Aid, right?

Well, it’s not like that any more. In fact, if you look around at the Addis Ababa skyline, you’ll mostly see cranes and highrise towers under construction. The real-estate bubble that burst and devastated the rest of the world never took hold here.

There are still many reminders that the ancient ways of living are still very much in existence here in Addis, but please also note all the other markers of modernity in this shot.

However, they are facing many of the same challenges as the rest of the world, at least when it comes to the emergence of the internet, and the struggles of newspapers, radio and TV stations to come to grips with social media, and the ability of anyone to become a publisher/broadcaster/internet troll.

The very first place I visited was Sheger FM, the one independent radio station in Ethiopia. This is the courageous owner, who is really struggling to walk the razor's edge here in Addis.

I’ve found many of the same behaviors and attitudes I’ve encountered in the other places that I’ve done web/online video/social media training sessions – stubborn insistence that things will never change, toxic skepticism, and even outright hostility.

After a bit of a rocky start, these guys really came around and appreciated the hands-on lessons I gave them on how to do live video stand-up reports and how to compress video into the best codec to upload to YouTube. The Nelson Mandela building is a challenge, though; between the thin air at this 8000-foot altitude, and having to haul my big carcass up 5 (five) steep flights of stairs, the first few minutes of every class were mostly spent huffing and puffing, and hoping that someone in the class had a particularly insightful comment.

This latest cramdown seems to center around the whole subscription issue – one that mag publishers have been screaming about for the last year.

It’s interesting to see the actual breakdown of how stealing your passwords and compromising your bank accounts can pay off for fraudsters. I was surprised to see that bank account passwords are not as valuable as I thought – only a 1% return, because of “risks for withdrawing the money.” Woulda thought the scammers were better than that – a couple years ago, my accounts were drained using withdrawals from ATMs at casinos out in the No-Man’s-Land between LA and Vegas. Guess they must’ve patched that particular security hole.

Anyway, this is one of the more interesting (and frequently alarming) flow charts I’ve run across in a while.

Infographic by Computer School

Malware, avoid viruses, trojans, passwords stolen

Welcome to Disintermediation 2.0, where the content is video. It’s
entertainment not news. And the stakes (at least the monetary ones) are
much higher.

While everyone in online video is challenged by the reality that digital
presents to any media — measurement, targeting, accountability —
traditional “editors” are also being squeezed by the very same process
that beset news in the late 90′s.

The article goes on to (correctly) identify the growth of highspeed broadband as the catalyst for the coming collapse of the traditional broadcast video model. I’d add to that the increasing popularity of DVRs, which are teaching the audience that we don’t necessarily all have to gather at 9 o’clock Eastern, 8 o’clock central, to begin our nightly turn-off-the-Alpha-waves sessions. Instead, the time-shifting that in the 80s had David Letterman jokingly producing a “morning Late Night show” because so many of his fans were using VCRs to watch him while scarfing their ham&eggs — that has become commonplace.

From econtent:

This has led to a new
rating system, called either “C3” or “live-plus-three”; instead of only
counting viewers who watch shows live, Nielsen counts anyone who records
and plays back the program up to 3 days later. This captures more of
the time-shifted viewing audience. By the end of 2010, McDonough says,
Nielsen’s ratings will combine both DVR’d and online streaming content.

Kate
Sirkin, executive vice president and global research director for
Starcom MediaVest Group, sees the DVR, particularly the TiVo, as
fundamentally changing the way Americans view television. “We have three
in our house,” Sirkin says. “My 5-year-old doesn’t understand live TV;
she’s always had a DVR.”

The other effect of DVRs, of course, is the commercial-skipping. Used to be that you had to hack your TiVo to be able to skip 30 seconds at a time. Now that comes programmed directly into the remote on the DirecTV HD controller (but I still prefer the TiVo, since it skipped you automatically 30 seconds forward in time, rather than making you watch blurred fast-forwarded action).

But the biggest eye-opener for me is that articles predicting that broadcast TV, the cash cow for so long for the advertising industry, is about to head into the abyss … well, that’s news. Because what took down newspapers was not that nobody was reading them anymore – in fact, the stats show that more people are reading newspaper content than ever before.

What has laid print newspapers low is that the revenue streams from traditional print advertising have dried up & blown away.

Most, if not all, of the major media buyers that I’ve run into over the last three years at various ad industry events, have all admitted that they know that advertising on TV really doesn’t work the way that it used to. The profusion of channels on cable and satellite, the DVRs, the growth of internet, all mean that they are getting less reach than they used to. Meanwhile, they’re getting charged through the nose for that same 30-second spot.

This relationship is inherently abusive, much like the relationship was between newspapers and their advertisers. When a viable alternative comes along, and you’ve managed to piss off your customers, guess what they do?

Anyone who’s traveled around the world has probably noticed what Janine and I have these last couple of years: we can usually access the internet much faster in other countries than we can here in the good ol’ US of A, where the internet was invented (take a bow, Al Gore!). When we were in Costa Rica, even in a hotel lobby, web pages just zoomed into view; we attributed the speed to the massive online gambling infrastructure that’s been built in Costa Rica recently. (It’ll be interesting to see what happens long-term to Costa Rica; it’s my hope that the law of unintended consquences will kick in, and the somewhat sordid gambling biz will actually result in more legit businesses using that bandwidth to grow & flourish.)

Anyway, a report this week from the FCC is, in the suble-bordering-on-inscrutable language known as “Bureaucratese” a cattle prod to the backsides of all the various carriers, cablers, telcos and gougers currently charging fat fees for puny bandwidth. Herein a sample:

“The report points out the great broadband successes in the United States, including as many as 290 million Americans who have gained access to broadband over the past decade,” FCC Chairman Julius Genachowski said. “But the
statute requires more. It requires the agency to reach a conclusion about whether all — not some, not most — Americans are being served in a reasonable and timely fashion.”

That’s not happening, he added.

Additionally, it appears that the revenues from the tax on long-distance service that we all grit our teeth and pay each month, and that was supposedly earmarked for improving service just like this has been instead diverted to Plain Old Telephone service (POTS).

More and more, we’re seeing governmental agencies starting to recognize that bringing high-speed internet to communities is an essential ingredient to lifting the local economy. This might have particular impact in the rural areas of the U.S. where coverage is lagging (and where the challenges are most severe), because the farmers/loggers/fishermen might be able to circumvent the supply bottlenecks that are eating up any hope of profits.

Still, I am reminded of the statistic that was widely quoted early last decade, where AT&T got the “gulp-adjust-your-collar” number of $90 billion just for the landscaping costs of stringing fiber-optic in the Western U.S. So what’s the solution?

Well, an interesting experiment was featured on Scobelizer – and the genesis was the big skyward-pointing light atop the Luxor Casino in Las Vegas. As I understand it, a giant laser system in the purple band could provide more than five (5) times the bandwidth than even the fiber-optic lines (Fiber To The House or “FTTH”) that are the fervent dream of all us techno-nerds still being held captive by Time-Warner Cable/Adelphia/Comcast/whatever. Basically, the information is streamed up into the sky, and

A purple laser which is almost invisible to the human eye and which is
inexpensive to buy (they are the lasers inside every Blu-Ray disk player
— the lasers are actually purple light, the “blu” in the name is
marketing) is aimed at the sky and an array of sensors reads data from
the beam of light. Readable due to scattering of light due to the
atmosphere. He showed me how this works: you aim a laser at the sky and
everyone can see the beam. If your human eye can see it, sensors can see
it too and due to some tricks can get massive amounts of bandwidth out
of the laser.

What would this mean for mobile bandwidth? Plenty. The problems I’ve seen with cell coverage in rural areas have less to do with the bandwidth coming from the towers than they do with the capabilities of the radios in the handsets to make the connections. Or, to put it another way, if you make the transmitter in your mobile strong enough to send a signal to a tower 4 miles away, it’s also strong enough to make the hair on the side of your head warm from the microwaves (anyone else remember this phenomenon?). Or to cook your retinas.

But if the bandwidth/connectivity issues can be solved by having some cheap Wi-Fi routers spaced around, connected to sensors pointing at the purple laser beam, then all of a sudden, we have a lot faster, cheaper and more reliable coverage. Even having a little Blu-ray laser integrated into the various existing 3G antenna arrays would be a massive improvement (if their various whitepapers aren’t just hokum).

This could really have an effect in some of the more rugged countries that I’ve done work in – I’m thinking of the mountainous regions of Chile, Colombia, Kazakhstan, and most recently, Georgia. The upstream bandwidth is probably still pretty limited, so in a certain sense, this is just a variation on the DirecTV/satellite internet service paradigm, but still, most users tend to download about 1,000 times more information than they upload.

So many people are ReTweeting Cosby's denial of his demise that the keywords are showing up all over trending topics.

Strange. The words “Cosby,” “demise,” “rumors,” “confirming,” and the Palin-esque portmanteau “rebuttaling” are trending. So when I click through to see what everyone’s talking about, this comes up:

Check out how many people are just hitting the "RT" button to repeat what Cosby said -- without any sort of editing of the message whatsoever. Thus including the bit.ly link.

Wow. OK, either there’s some sort of radio or TV contest going on here, or there’s a genuine story brewing. How can I tell that it’s not just one Twitspammer clogging up the Twitosphere? Well, check out the sources of the Tweets: Twidroid, web, UberTwitter (not shown: Tweetdeck, Hootsuite, and about a dozen other clients).

Spammers give themselves away by using only one (or at most two) channels to shovel their dreck. Usually they just compromise one platform and then quickly cram their message through the crack in the security wall before someone notices and plasters it over again.

Still, there’s a possibility that there was a massive exploit of user’s Twitter accounts, and that the weblink will lead to a page where the Trojans & Spyware lurk. So, setting the various anti-virus & script-blockers to “Red Alert” status, I clicked on through. Turns out that the Cos actually does have an app.

A simple message - and one that has been picked up by a significant portion of his million-plus followers.

Now, I’m not sure if this was entirely scam-free. Cosby is a shrewd marketer & hustler; I wouldn’t put it past him to stage a non-event like this to take advantage of the overheated, overhyped nature of the Twitosphere to get his name out there (and how many times in the past six months have you actually even heard Bill Cosby’s name? Yeah, like that). One of the surest ways to cause a kerfuffle was proved a year ago when the news of Michael Jackson’s death caused the FailWhale to appear … so maybe Cosby & his web team figured out that sock-puppeting a rumor of Cosby’s sudden death would be enough to set off a ruckus.

Which Cosby could then take advantage of by issuing a denial … and tying that denial to a message plugging his new money-making app.

Convoluted? Damn Skippy. Like setting up a three-cushion shot on an uneven billiards table. Being carried in the back of a flatbed truck. Over a rutted backwoods Arkansas dirt road.

Then again, Bill Cosby was something of a hustling pool player, once upon a time…

Bill was not always "Mr. Establishment." He had a funky side - maybe it was Sidney Poitier that brought it out of him...

I strongly urge you to listen to this great piece from This American Life about the NUMMI auto plant in Fremont.

They don't make 'em like this any more. Even so, the rear bumper had to be reattached.

It’s about how the U.S. auto industry could have saved itself by actually paying attention to the way its business was eroding, and listening to the people who came back from Japan and transformed the Fremont plant from a place that was “like a prison … with sex, drugs and alcohol freely indulged in during the working day … where the workers maliciously sabotaged cars, and the managers didn’t care, as long as they got their bonuses for churning out pure numbers…”

…into a place where the workers actually looked forward to coming to work each day, and where the quality of the cars they turned out was so high, that even now, 22 years later, many of those cars are still on the road. NUMMI stands for “New United Motor Manufacturing, Inc.” and there is an excellent Wikipedia entry about it, if you want to get a little more background.

The situation bears a strong resemblance to the newspaper industry, and the reason papers are in the same place as the auto industry. Let’s take a look at the places where the news industry and the auto industry screwed the pooch:

1. Starting in the 80s and going through the 90s, sales declined, as customers were turned off by the shoddy quality of the product

In the auto industry: anyone who drove a U.S.-made car in the 80s knows what I’m talking about. Everything about the cars sucked. The seats were uncomfortable to sit in, the controls made no sense and were hard to deal with.  I drove a lot of rental cars in that era, and I can’t tell you how many times the A/C control knob came off in my hand. Or the windshield wiper knob was installed upside-down. In one case, the bolt holding the steering column up on a Chevy Cavalier came loose and the steering wheel dropped into my lap. Which is minor, compared to the engines seizing and misfiring, the electrical system shorting out, the windows not rolling up (or down), the doors sagging on their hinges…

In the newspaper industry: the buyouts and mergers started by the relaxation of the cross-ownership rule, caused many papers to skeletonize their staffs, and run big colorful graphics in the papers. And lots more wire copy. I worked at the Arizona Republic during this era, and I saw what they were doing on “Zone Editions.”  We had the same cruddy stories for Mesa, as we did Tempe, as we did Scottsdale. They were feature stories about things like a guy with a trained parrot that would whistle and dance. We’d run it one week in the Mesa zone, and then the next week, I’d see it in the queue again for Scottsdale. Mostly, the Zone Editions were there to snarf up the advertisers in those areas, and make sure that no competition sprang up to challenge the big paper. “It doesn’t pay NOT to advertise,” was the slogan, and it was true, because of the package deals the Republic was able to offer, sucking the oxygen out of the local markets.  Most papers had a monopoly position in their markets, and could pretty much be assured of making a profit, no matter what they did. Meanwhile, the readers were starting to notice that their newspapers were lacking … how shall we say this … news.

2. The workers felt ignored and belittled, so they began to act out, and a “give a shit” attitude took over

In the auto industry: the line workers had no power to offer suggestions, and indeed, were punished for speaking up. All that mattered was churning out enough cars to meet the quotas, no matter how shitty the quality. Resentfulness led to workers intentionally sabotaging cars, which led to even greater expense down the line, when the shitty cars had to be fixed by workers who really didn’t understand what was wrong with them, and just used the “bigger hammer” method to make cross-threaded bolts hold, or quarterpanels stick onto the chassis.

In the news industry: a kind of rebellious fatalism took hold in newsrooms, both in print and TV. The reporters knew the bosses really didn’t give a shit about the news, they just wanted something that would get good ratings and not get them sued. Every TV producer I have ever met would, with little encouragement, go off about the corporate “suits” that were putting the vise on the newsrooms to “pop a number.” Reporters that dared to try to make suggestions about long-term changes (like less coverage of O.J. Simpson, and more of things like the erosion of middle-class opportunities) were ignored. Newsrooms have always been “simmering cesspools of cynicism,” but this morphed into outright nihilism and rage.

3. A temporary bubble allowed the industry to rack up easy profits and postpone change

In the auto industry: The Bush-Cheney “let’s consume as much oil as we can” faction pushed through a tax break in the early ’00s that meant that people who leased a “light truck over 6,000 pounds” could write off the cost of the car.  Free SUVs for Everyone! What this did was support the Big Three, despite their declining market share, because they were making so damn much money off producing big fat gas-guzzling SUVs and selling them for massive mark-ups.  The SUV was actually pretty cheap to make – but Detroit was able to charge about $10-$20,000 more for them. And, of course, when the tax break ran out — and gas prices skyrocketed — the end of the free cars on the taxpayer’s dime era left GM without a viable product to sell, as consumers looked for more efficient cars.

In the newspaper industry: the subprime mortgage/real-estate boom created a huge advertising windfall for newspapers. The Homes section of the LA Times was often larger than the rest of the newspaper combined.  Thousands of pages of expensive classified ads, paid for by realtors who were so awash in free money that they didn’t care what the cost was. Of course, the rest of the classified business was absolutely cratering at this time.  When the real-estate market imploded, and advertisers abandoned newspapers, looking for more efficient ways to sell their products, newspapers were also left without a viable product to sell. 

4. The industry blamed the people who were honestly pointing out the flaws

In the auto industry: the Detroit execs blamed Consumer Reports for pointing out that the cars they were inflicting on the American people were utterly without redeeming community value. They claimed that the Dirty F’n Hippies at Consumer Reports were biased towards the Japanese, were anti-American traitors, and were unfairly criticizing patriotic Americans. The U.S. cars were better, if only people would realize that.  The industry was in complete denial about how the auto-buying public had turned against it, after years of enduring an abusive and exploitative relationship, and how even Baby Boomers and Gen-Xers who fondly remembered their high school days when they got their first muscle cars, were fed up with cars that broke down or rolled over, killing their families.

In the newspaper industry: the newsrooms blamed the internet. They still blame the internet. They see the competition on the internet as being anti-American, that the public was deluded by web-based hucksters, and that imposing paywalls would make people realize how much they really needed to pay for news. No matter that the readers and advertisers have made their preferences clear – they must be MADE to come back and obey.

Since the first utterance of the phrase “green shoots,” there have been attempts to gaze into the crystal ball, to predict what things are going to be like once we get out of the recession/depression-lite.

The most recent is a long Newsweek piece on how the psychological effects of being a young person caught up in the throes of an economic meltdown persist for the rest of your life.

On behalf of all us Upper Midwestern kids who came of age during the early 80s, when Reaganomics was strangling the industrial sector to death, and open war was being made upon union jobs that paid livable wages, may I say the following:

No duh, Sherlock.

The behavior changes that are listed: increased saving, cynicism about institutions, depression and alienation from communities — hey, didn’t I useta know you guys by the moniker Generation X?

The Economist has a slightly more intellectual and facts-based analysis, as you might expect. Back in October, they devoted an issue to analyzing whether it’s safe to come out of the bomb shelters yet. Basically, they still rely on the predictable free-market capitalist ideas of the government handing huge sums of cash over to supposedly wise business leaders, who will then generously use said piles o’ cash to create jobs and tax revenues.

Cash-strapped companies are skimping on research and development. Emerging economies are having to rethink their reliance on exports for growth. Both rich and poor governments will be tempted to intervene. They should avoid cosseting specific industries with subsidies or protection. Allowing market signals to work will do more to boost productivity than cack-handed industrial policy.

This rather flies in the face of the behaviors (I almost stuck the veddy British “u” into that last word) of the last 20 years or so, where the whole “Greed is Good” and “Masters of the Universe” memes combined to raise a generation of bankers & industrialists who felt that no luxury was too absurd. $30,000 shower curtains? Sure, hang ‘em up! Blowing $400 million of shareholder money to fund your lavish lifestyle? Why not. Running a $50 billion Ponzi scheme that impoverishes just about every decent charity in the Western Hemisphere? Done deal.

So forgive me if I don’t buy into the notion that the same profligate, arrogant pricks that got us into this mess, and who are even now right back at their ugly, reckless behavior — are suddenly going to transform themselves into righteous, community-minded slow&steady engines of economic growth. 

Barrons jumped the gun last June, with an article that tried to impose some kind of formula on what a recovery is going to look like. They figured that the biggest threats were higher oil prices, driven by a showdown between Israel and Iran over nukes (still a strong contender), and too much consumer saving driving down demand (mixed on that one). But here’s the nut graf:

What troubles me the most is that people lost faith in things that they really should believe in. This was an unprecedented financial crisis, but it has pretty much calmed down, and now we have a very severe but precedented recession. What disturbs me is the phrase, “It is different this time.”

And there we come to it.

All this analysis, to me, is an outgrowth from our desperate need to believe that what we did in the last 10 years was just a momentary blip, that things are going to go back to some sense of normalcy some time soon.  Unfortunately, the things that I saw when I was traveling all over the world in 2006-8, working with some very high level bankers, proved to me that there was, indeed, something different this time around.

This wasn’t just the Thai monetary meltdown of 1997, or the oil price spikes of the 70s.

The real-estate madness was global. Everywhere I went, I heard the same thing: “You think house prices are crazy where you are. Well, HERE they’re REALLY out of whack!” Mexico. Chile. Argentina. Russia. Netherlands. Spain. England.

Everywhere I went, the same thing.

I am coming to believe that the only normalcy that we are going to have (for as long as we are able to keep our petroleum-based house of cards aloft) is that there is going to be constant chaos and upheaval. The big, buried financial instrument of Mass Destruction that Po Bronson so prophetically wrote about a decade ago in “Bombardiers” are going to keep going off, like the deep-buried IEDs that keep killing US soldiers in Afghanistan.

Commercial real-estate. Peak oil. Lack of investment in electrical or transportation infrastructure. Unwillingness to deal with absurd public employee pensions. An unbreakable military-industrial complex that insists on wasting hundreds of  billions on weapons systems we don’t need and will never use.

If we are very, very lucky, what this means is that we are finally going to deal with all these problems. Because there simply is no alternative.

Technorati Tags: New Normal, economy, advertising, analysis, greed, The Economist, Newsweek, future, webconomics