Beyond politics...

If you hold any fascination with the study of systems this is your week to ponder. The financial markets and the world economy are clattering in the press about interbank liquidity, the euro crisis and the solvency of several nations. Layered on top of this all is a perceptual web that remembers the past few years and knows the problem is not solved. Nonetheless, we march on. The new evil according to the press and the politicians is national debt. The phrase du jour is "fiscal austerity" and the turning of focus on the mechanisms of this variable brings forth a Salman Rushdie stream-of-consciousness cast of characters, scenarios and yes, politics.

The hidden ghost in the machine is an algorithmic web that toys with these shifts and removes any sense of logic to the casual spectator. If liquidity is the issue, one has to look past the debt ingesting behavior of individual nations. Electronic trading platforms for bonds have increased the bond trade to such an extent that the notion of liquidity is shifting more to take on board the computerization and subsequent increase in bond trading. In other words, "more" was created, and now, the world is pondering this notion of "more" whilst the economies falter and the computers keep churning. The everyday panics and bumps are bigger in this environment, and, the risks have increased. So, then, welcome to the new world. You have been here for a while but it has just raised to the surface and poked you in the eye. And, there is more, but this is a simplified paragraph because I need a cigarette. And it is a blog after all. In essence, the key thing is our notion and definition of liquidity is shifting in a pretty Wittgenstinian kind of way. Roll with it.

Inherently, this new world is really quite fine. But, like any revolution, there are adjustments to be made. This is one of those historical periods of change that will sit in the classrooms of the future. "Let the material express itself" was the dogma of my high school sculpture teacher. I sat in the front unmalleable, and, mumbled, "Yes, but then, what?"...

Animals are not allowed on the beach

The stock markets as of late have been on a high.  Volume is at an all time low and the summer lull is setting in as the tide beckons.  The high is generating a lot of interest for what is normally a fairly dull time of year.  Perhaps our handy electronic gadgets are partially to blame.  

I'd say...see you in September.  Shut off that gadget.  The world is not going to change much before that.  Or, sell out and jump back in sometime in October.  That way, you get a proper relaxing stretch to curl your toes into the warm sand.  I could be wrong so consult your own astrology charts.  

Speaking of charts, one of the best chart-sters out there is Doug Short.  Check his charts out here before you unplug for the summer.  If you are bearish, look at this one.  If you are more bullish, this is the one for you....

Now turn that thing off.

Recalibrating...

Missmarketcrash is recalibrating.  What a delightful word.  This word has been busily employed as of late with regard to the financial crisis.  Colin Gleadell, in his article on the art auction markets in the summer issue of Art Monthly, noted that recalibration was the phrase bandied about by Sotheby's with regard to the current contemporary art market.  He ends his article noting that "more recalibration could be in order".  

On FT Alphaville, recalibration appears here in an article entitled "How U.S. institutions are recalibrating strategies".

Recalibration is a second fine tuning of a measurement standard.  That is, as far as I can tell.  It is a word often used, but seldom pinned down in meaning.  In fact, it is not a word at all according to my very large compact edition of the Oxford English Dictionary.  

The current usage of recalibration implies an adjustment of expectations rather than the second fine-tuning of a measuring standard.  In other words, it is asking for a change in reality, with the measured results looking more "realistic" against the new background.  This usage generously hovers close to the original non-definition, invoking a sense of accuracy.

Accuracy lies at the crux of the recalibration usage mania.  With murky times, we want sharp glasses.  Accuracy is satisfying in these times.  Recalibration gives us a sense of accuracy and control.  It is the proverbial rose-tinted glasses, but, for a more precise type.  Like an accountant.

There-in lies the appeal of recalibration.  It is much like a change in accounting standards.  It makes things look better.  

Yes.  If our expectations are recalibrated, it can all run rather smoothly again.  The new accuracy is gaining momentum.

Steinbeck Redux...

Mr. and Mrs. Bomp lived in a big house in a leafy suburb of London.  Mr. Bomp was a successful lawyer for a big firm.  Mrs. Bomp was the perfect housewife.  The stress of the Great Banking Thing had been wearing down Mr. Bomp for months and months.  He had turned from being a jolly dismiss-it-all-wafting-it-aside kind of fellow to something else entirely.  Every evening he worked later and later, much to the demise of Mrs. Bomp.  He was striving to remain useful.  There was less and less work at his firm and eventually he was reduced to a three day week and 25% of his pay was taken away from him.  He continued to work late in the evenings of the three days for good show.  On his days off, he thought he would study up on something that might be useful to his profession in the future.  Mrs. Bomp thought otherwise.  She had a long list of things-to-fix-around-the-house that she posted on his coffee cup every breakfast-time.

The friction and tension grew between them like a bad fungus.  They kept their cheerful masks on and carried on.  Mrs. Bomp grew paranoid that Mr. Bomp was having an affair though he was not.  Mr. Bomp resented her cheerful little notes and felt despondent that his career had been rendered meaningless.  The little bomps started hitting and punching other children on the playground for no apparent reason.

They went through several chapters of little scenes which illustrated the thick walls forming around them.  The economy continued to tilt.  The psyche of the family mirrored the psyche of the nation.  They tried to begin anew, in a smaller house, with a smaller mortgage and it was an utter failure.  I think the ending was mysteriously gruesome and the beginning of another story.

Re-abstracting the Landscape

Corporate identity of financial institutions is undergoing a flux, to put it mildly.  Corporate identity in days of old was guided by the advertising industry and the field of logo design.  The news now has the upper hand, and, the abstraction of corporate identity runs past those little logos.  A sour pill has sullied the icons of the day.

Citigroup lost (actually, sold) its red umbrella sometime in 2007 and adopted the red arc which now reads as a red (dangerous) small bridge.  AIG has no little corporate abstraction, it stands with its initials.  If pronounced as a word -- "aig" - well, it rhymes with gag and brings to mind a kind of choking yelling noise.  Bank of America has an American flag as landscape, farmer fields on a distinctive curve as it viewed from above, perhaps a corporate jet.  RBS has a geometric tesselation that would make a fine wallpaper - arrows pointing inward to a blank circle...the emptyness of the inside does not read well these days either.

Redesign ideas?  An abstract metamorphosis of these logos will no doubt be coming soon. Colourwise, Missmc recommends out with the red and in with the green.  What else?  American references need to be avoided for a while.  Fonts?  They must get serious.  Times-Roman or something nostalgic.  Perhaps most importantly, all these institutions need to be renamed before they are re-logo'd.  I can see you all smirking with venomous ideas.  Stop that!

Obama, Jay Leno and Robot HRP-4C

Think about robots.  The old-fashioned image of robots conjures up squareness, flashing lights, perhaps an incomprehensible sound.  A mechanical automaton, moving on its own accord, perhaps a bit unpredictable.  A certain menace, or, a comedic aura surrounds the idea of robots-of-old.

Now.  Think about banks.  The old-fashioned image of banks brings forth a sturdy imposing building, men in suits, a kind of properness, reliability and authority.  This image is almost gone.  It is hard to recall because that kind of nostalgia has been erased by current events.

Robots have advanced tremendously since inception.  A new image of robots is evolving in the cultural psyche.  This re-mythologizing process is also underway with the concept of banks. Below is a robot design quite unanticipated by the collective imagination.  Even with consideration of all the models of robot-ness the culture has brought forth, the robot shown here on the BBC website catches one by surprise. And so, it is with Banks.  Expectations are changed.  With regard to the latest robot, known as HRP-4C , an unease and distrust is softened by its feminine features.

Reshaping the cultural palatability of banks and financial instututions is a very tough proposition.  Obama is soon stepping into the cultural myth-making world of television to give his best effort on the Jay Leno show, but, it is going to take much much more than that.  

Japan has produced an amazing array of humourous and odd cultural artifacts since their economic crisis.  The angst has transmogrified into a creativity unique to the country.  If America can do the same with its displeasure, it will be something to look forward to. 

What's coming next and how to get through it...

Which economist would you like to see in one of these shiny suits?

(when viewing, stick through the odd intro - it is worth it...)