FINALLY - Authoritative -- and Believable Economic Good News

A few years ago, economist Alan Beaulieu stood in front of a packed Indianapolis crowd at Butler University and blithely predicted that the whole economic world was going to go to hell in a hand basket. A lot of very intelligent people were in that crowd. Most, like me, didn't do what he said. Way in advance he predicted what we now call the "Great Recession" would be The Perfect Storm. It was going to be exceptionally ugly.

Of course, it was.

At the time, I wrote a Chicago-based business column called the Hoosier Coefficient. So I interviewed Beaulieu and wrote a column about his predictions.

They. All. Came. True.

Every last ugly one of them.

Since I didn't do what he said, the economic maelstrom blew out the windows of my little business. We hung on by our fingernails. When he made his prediction, banks were throwing money at me. When he said that in a few months nobody would be loaning anybody anything, some thought him mad. He said cash would be king, and now I know what that means. I REALLY know what that means. In fact, my business became a little bank, as some client invoices started going 30, 60 and in some cases 180 days, before they were paid.

Just like Beaulieu said they would.

Now, in the past year or so, I -- like you -- have heard it all about our economic "recovery." Off and on, double dip or no double dip. It wakes me up at night and sends me to my knees.
Until now.

Wait for it.

Beaulieu's company, The Institute for Trend Research, has made it OFFICIAL. ITR has a 96% accuracy rate. Here it is:

The year 2012 will be the first real year of expansion and recovery.
The recovery and expansion will continue right through the first half of 2013, and then perhaps get a little bumpy.
ITR says we may have a little bump of a recession beginning in the latter half of 2013, but the economy will pick back up and then expand again from 2015 to 2017.
Now, according to ITR, is the time to market, position and SELL. Time to build up cash reserves, leverage favorable interest rates and GROW.

Did I say that I believe this forecast?

How can I not, especially when he was right down the line, point by excruciatingly painful point, when everyone else was saying "Oh, the housing marketing will rebound, we'll be okay" just a few years ago.

I'm ready to believe. And act!

Tired of Super Bowl ads? Here's an interesting worldview of America

Tired of endless (and meaningless) speculation about Super Bowl ads and how they reflect America culture? Economist Barry Eichengreen lays out a few thoughts and a different worldview in his new tome Exorbitant Privilege. The dollar's role in the international scheme of all things money is changing, but is not doomed. Just different.

Economist Menize Chinn weighs in on Eichengreen's worldview on The Business Insider. According to Eichengreen: "... increases in efficiency can't be willed into existence; they have to be achieved. And in order to deliver an improvement in the U.S. trade balance, they have to be achieved faster than in countries with which we compete."

"Here the United states has some obvious strengths. It has large numbers of university- and industry-based scientists, many attracted from other countries. ... entrepreneurs and an agile venture capital industry ... flexible labor markets . . . abundance of fertile land . ...

"But much of the country's physical infrastructure is antiquated and difficult to modernize, partly by virtue of the fact that it is under the jurisdiction of a multitude of state and local governments or in private hands. Freight railways own much of the track used by Amtrak, for example.

"Contrast the difficulty of building a high-speed link between Beijing and Shanghai -- or for that matter with France's, Germany's, and Spain's high-speed trains. China plans to build as much as 8,000 miles of high-speed rail by 2020. In the United States, meanwhile, intercity rail service is now actually slower than in the 1940's. ... Were Dwight Eisenhower to come along today and propose building the interstate highway system, no doubt he would be accused of socialism."

Professor Eichengreen worries:
"... the United States is no longer the beneficiary of an increasingly well-educated labor force."
I think evidence supporting this last point is evident everywhere, including in political discourse.

An Alternative View of Change - 30 Years Later

As a 55-year-old watching nearly everything change before my eyes - dramatic changes in public/private partnerships across the board, techniques of capital formation, restructuring of healthcare and banking, how people make and buy music, new global views and expectations, online connectivity, and on and on -- I've been casting around a bit to see whether anyone truly has a reliable forecasting model.

To that end, I recently plowed through the highly-worthwhile Clayton Christensen tome Seeing What's Next, which is a fascinating read on how innovation models can predict industry change (which, if you haven't read, proceed immediately to your nearest bookstore - unless you're a MEK competitor, upon which forget all of this). I further took a fresh look at the Garner Technology Hype Cycle, which mercilessly lampoons the claims of new "world-changing" tech like the iPad.

What I was struck by is how reactive these models are. They really don't predict or pontificate on potential change until after the change agent is visible and has entered the marketplace or social sphere. So the questions become: how does one truly anticipate change, the appearance of the actual change agent, and the outcome (preferred or otherwise).

Now to be fair (and before your eyes glaze over), considerable attention to finding a truly predictive model has been the obsession of humans for Millennia - from Nostradamus to ancient biblical prophecies to "infallible" prognostications of every economist or social scientist known to humanity -- all with varying degrees of failure, misinterpretation or outright fallacious conclusions.

Do I have the answer? No. Obviously.

What did strike me recently is this: in the Feb. 22 issue of Newsweek, editor Jon Meacham pens a remarkable column about change: "The System's Not to Blame. We Are." In it he speaks of gradualism, the capacity to "leap backwards," and the fact that it is "dangerously self-important" to believe that our current problems are unique. Read the whole thing by following the link.

Meanwhile, what's the point of this blog's title and how does this all fit together?

If we are in a era of "dangerously self-important thinking" (my take on Meacham's column), are we failing to see what is presently hiding out in plain view? If we over-analyze variables upon variables, are we missing the point of possibly forecasting human, business and institutional behavior?

Let me leave you with this to think about. Some 30 years ago, as a twenty-something, I remember being fascinated by a British television series titled Connections. James Burke, a science historian, produced 10 episodes, traveling all over the world for location shots to demonstrate -- with highly effective dry humor -- just how seemingly unrelated events lead up to major moments in human scientific and social history. Based on my current quest to better understand where we are as a community, a nation, and a cosmos, I found Connections was available on NetFlix. So I thought, "I wondered how all that turned out," since three decades had lapsed since I last viewed it. So I ordered it online.

After it came in the mail, I slipped it into my DVD player (which technology didn't exist in 1978), and proceeded to be stunned.

The first episode, titled "The Trigger Effect," Burke begins his series trek atop the Tower One of the World Trade Center in New York City, now of course destroyed in the infamous 9/11 terrorist attack. After warning of humanity's looming capacity to fall into a "technology trap," he chronicles the dangerously high degree of vulnerability of the fragile electrical grid (sound familiar these days?), using real events in New York City as the example. The first episode ends up in Kuwait, where Burke asks how the Kuwaiti people will respond to their new-found oil wealth and the possibility of integrating into Western society of sorts.

Of course, a little over a decade later, Kuwait was invaded by Iraq, setting off a whole new global reaction. What would Burke -- or his audience for that matter -- said if someone had walked up to him in 1977 and said "Oh, the building for your first setting will be annihilated by global terrorist forces from halfway around the world in a decade or two, and second, the electric grid problems will be far more serious in 30 years with new solutions only now coming into view, and by the way, the country where you filmed your last bit will be the site of a near-total global military reaction to the vulnerability of energy supplies."

Order the episode for yourself and see if you don't experience a eerie feeling or two. Then ask yourself: what are we missing today that is right in front of us? Are we in fact in an era of "dangerously self-important thinking" when it comes to achieving real and strategic change?

If you have any thoughts on this (and don't want to log into Google to comment), e-mail me at msnyder@themekgroup.com and we'll continue the conversation about "an alternative view of change."

Fortuna favet fortibus.