For the rest of us who were not born with an embedded calculator and did not graduate to an MBA, here's THE video that explains the reason why the World is going right into deep sh*t. Watch and listen to "Marketplace Senior Editor Paddy Hirsch [who] gives
a bubbly explanation of the intricacies of collateralized debt
obligations those financial instruments that got us into this financial
mess".
Since a few days, I've got the furious impression that the actual crisis is repeating the very same patterns than the Dotcom' crash *. When I saw the description of the CDO collateralized debt obligations loop, I saw the very same problem than the one we in the Telecoms/IT industry suffered back in 1998-2000, during the first Bubble : the guys who make the big money are totally disconnected from the guys who are supposed to pay. At this time, the whole Telecoms industry was B2B. Remember Telecom'99 in Geneva ? 90% of the exhibitors were there to exhibit their stuff (prototypes, commercial products, booth hostesses) to the other exhibitors. You and me as the real end-user/consumer ? Nowhere to see.
Heck, I've no MBA, but I think I understand the fundamentals of business. Peter Drucker describes the process dead simple (diagram from DeltaNet) :
The fact is, once you insert an intermediate party between you and the customer, you screw up the whole stuff. That's exactly what happened with the Dotcom Bubble, wherein every startup was trying to reach you and me with no clue on how do it, whilst every established firm was selling its products roadmap to other established firms with even-greater products roadmap. Anecdote (may I disappear right away from my captain chair if I lie here) : back in november 2000, I heard of a potential deal of 1 billion USD between Nortel and Agilent Technologies. 1 billion USD. For a company (Agilent Technologies) who did $11B for its first year of existence.
The actual turmoil has been caused by the very same defective link with the customer - read : the house' s owner. Watch the video :
Thanks to Garr Reynolds of PresentationZen for the heads up. By the way, why such a video on a blog which aims at everything "presentation" ? Simply because this explanation of a very complex process is made very simple. Mr Hirsch proves that once you master your topic, you don't need Powerpoint. Give me a paperboard, and I'll explain you Fiber Optics ;-)
*post-scriptum : I'm still looking for any information, link, contact name, whatever, on this french researcher who published a study back in september 2003, on the fractals applied to Economy. Back then, the guy simply announced the crisis we're enjoying (joke) today, saying that the downturn is going to be harder and longer than the one we've seen in 2000.
