Another Step Away From Internet E-Mail

Facebook’s new messaging platform, announced today, may be mostly copied from MySpace, but it is still another significant step in the decline of Internet e-mail.

The problem with Internet e-mail is that it can be sent anonymously or with a false identity. You can’t really rely on information from Internet e-mail messages unless you can verify them through a more secure medium, such as a web site or telephone call.

The messages sent inside Facebook (or MySpace, for that matter) don’t travel through the open Internet, so they can’t be falsified so easily. You can count on the message originating from the account it says it comes from.

There is potential for confusion, though, because Facebook e-mail messages may arrive in the same inbox as Internet e-mail messages. Even though they may appear on the same list, it’s important to remember that the outside messages contain risks that aren’t there in the inside messages.

Now that Facebook users can send e-mail messages to each other within Facebook, there will be fewer personal messages being sent through Internet e-mail. This move may cement Internet e-mail’s status as a commercial, rather than a personal, communications medium.

The Christmas Shoppers Are Back

The Christmas shoppers are back. In the stores, the Christmas season is on. It’s on like Donkey Kong (I had to add that because that’s one of the revamped products people are out shopping for). I know this is true because of the increased weekend vehicular traffic I’ve been seeing in shopping areas. This suggests that retailers can count on another “early” Christmas season, in which Black Friday is the midpoint of the season. Many shoppers will be finishing their Christmas gift shopping on that day — or online on Thanksgiving, a pattern that began to emerge last year — while others will just be getting started at that point.

The early gift shopping defies the usual American commercial thinking. “You’ll miss all the sales!” If this thought is not a deterrent to early shoppers, it may be because:

• There just isn’t enough time in December, the busiest month of the year, to do a lot of shopping.
• When you go shopping during a big sale, you might end up spending more rather than less.

Either of these thoughts indicate that consumers are starting to chart their own course, no longer taking their cues from commercial interests.

On the other hand, retailers this year are trying to adapt to the early Christmas shopping by spreading their major one-day sales around the month of November, instead of concentrating them all on Thanksgiving weekend. Any shopping strategy will miss out on something. But it makes sense that retailers have to follow the shoppers, many of whom just don’t have much shopping time in December, and that’s why there are more “Christmas” sales in November this year.

This Week in Bank Failures

Nationwide Insurance, which was burned by mortgage-backed securities in 2008, has decided it can reduce its mortgage-related risks by relying less on the securities market and doing more mortgage lending of its own. It might seem like a strange time for a financial company to be making a move in the U.S. mortgage market, but a lender with good underwriting that can find gaps in the market can do well.

Tonight in Georgia, state regulators closed Darby Bank & Trust Co. of Vidalia, Georgia. The failed bank had $588 million in deposits at seven locations. The deposits were transferred to Ameris Bank, which is also purchasing the assets. 

Darby Bank had been operating since 1927. As of September, more than a third of its real estate loans were facing some kind of distress. 

Separately, in Tifton, Georgia, Tifton Banking Co. failed and its $142 million in deposits were also acquired by Ameris Bank. Tifton Banking Co. had the bad luck of opening for business in 2004, just as the Georgia economy was starting to decline. 

Across the country, in the Phoenix, Arizona, area, state regulators closed Copper Star Bank. Minnesota-based Stearns Bank paid a 1 percent premium for the $190 million in deposits and is also purchasing the assets. 

Campbell’s Soup a Luxury Item?

There was a surprising notice yesterday from Campbell Soup Co.: Its fall advertising for soup wasn’t enough to increase sales. Sales fell 1 percent in spite of an unusually broad advertising campaign from Campbell.

To be fair, it would be hard to boost sales for canned soup over the levels of the last two years, when consumers cutting back on their restaurant spending turned to canned soup and fast food to fill the gap. By this year, people were starting to get tired of Big Macs and ham and bean soup — and perhaps realizing that these shortcuts weren’t a substitute for real food.

The long-term trend for Campbell has been inexorably downward as consumers look for healthier food, a trend that a soup factory cannot easily participate in.

But this latest downward tick in Campbell sales came as a surprise, and suggests structural changes in consumer spending. For example, it may be a sign that consumer advertising is not as effective as it used to be. It may also be that consumers are starting to view canned soup, or at least Campbell’s soup, as a luxury item, something they cannot afford to buy regularly.

Casting a Vote Against the Winds of Change

I have heard from some people who voted in last week’s U.S. elections that they had hoped their vote would slow the pace of change that the country is experiencing. There are similar reports in the news media. To the extent that this is the reason for people’s votes, it is a miscalculation.

The government is not the source of changes that are affecting the world right now, but it is trying to manage those changes. Selecting officials who will ignore or resist the changes that are on the way will not stop the changes from taking place. Similarly, choosing legislators who disagree with each other may paralyze the government, but it will not stop the world from turning. It is like eliminating the hurricane forecasting office (a cost-cutting measure that is actually being considered) and hoping that this will result in a smaller number of hurricanes. The winds of changes will not slow down, but when they hit, people might not be prepared.

Already, government, business, and organized religion stand united in trying to slow the pace of change. This institutional resistance to change can’t stop change from happening, but it can push it outside the institutional framework — out of the towers and onto the streets.

The big issue that people talk about is health care. People want to slow down the “rush” to extend access to health care to more people, but in the meantime, the health care delivery system is collapsing, with more and more people every day not able to get routine medical care. But the result will not be that people just give up and die from their illnesses. They will discover or invent some form of health care — but it will not come from doctors. The results of this are far less predictable than if the evolution of medical care were happening within the formal health care system — and without any institutional constraints, much more rapid change is possible.

When the world changes and institutions do not, the institutions get pushed to the sidelines. Then, changes cannot be coordinated, something that Alvin and Heidi Toffler warned about in Revolutionary Wealth. If there is no institutional power to keep the changes that happen in one area in sync with changes that are happening in another area, then changes will happen when people aren’t ready for them.

We are already seeing this, of course. Uncoordinated changes are happening all over the place because of weak or marginalized institutions.

• Consumers are moving away from milk, in part because of its high price, at the same time that governments (in countries around the world) are encouraging dairy farmers to produce more milk than ever. The result is a massive oversupply of milk, and the largest cheese inventory in U.S. history, while dairy farmers fall into poverty.
• Some government authorities are trying to encourage the construction industry in the hope that this will lead to an improved economy. At the same time, other government officials are changing the rules of home financing so that fewer people can borrow money for a house, and social norms are also moving away from these financial arrangements. The result is a housing market that is out of sync, with lots of homes being built and no one to buy them.
• Government efforts to clamp down on the content of television programs over the last seven years have coincided with a decline in the television audience, and an increase in Internet video.
• Two of the United States’ largest automakers went bankrupt trying to build more SUVs faster at a time when drivers were cutting back on their vehicle purchases and switching to much smaller vehicles.

Lifestyle changes are happening on a massive scale and, in many cases, going almost unnoticed. The world is drinking less beer, for example, but we can’t really say why. Eventually, these changes will bubble up to the level where they topple large institutions. Nothing will stop this from happening; it is hard enough to predict where and how fast these changes will occur.