Tuesday, November 29, 2016

Watching the Train Wreck

Those who lack a sense of history will underestimate how hard it is for a White House to avoid scandal. We have had so few White House scandals in the last eight years because it was a top priority, if not the obsession, of the administration to avoid scandal. You only need to look back one year further to see the contrast and get a sense of what is coming. The president-elect has no patience with the need to follow the concepts of ethical behavior, and if the history of his campaign hinted that his administration would be a non-stop parade of scandals, the personnel selection process now confirms that. Cronies, crooks, and conspiracy theorists are on the incoming administration’s A-list. The transition process is being led by business people seeking mainly to make a profit for themselves, while the president-elect has publicly said that conflict-of-interest rules do not apply to the White House. The scandals to follow will be in the news virtually every day for years to come, presenting an ongoing distraction not just for the government, but for the country and the world. While it will be necessary for some of us to keep track of the mischief and criminal goings-on at the White House in the coming years, there will be a decided personal advantage for people who can tune out the news and focus on problem-solving closer to home. It may be a challenging period for those who need to seek publicity for the ventures, but people who can be quietly effective, focusing on a vision and getting things done without much fanfare, may find themselves years ahead of those who must stand and watch the train wreck day after day and year after year.

Monday, November 28, 2016

Stability on Cyber Monday

Cyber Monday is far from over and I certainly don’t want to jinx anyone’s web store, but I am fascinated that I haven’t found any stories of large-scale processing failures from the weekend. For those of us who work close to e-commerce technology, the Cyber Monday tradition has included logging the many capacity-related failures. This may be the first year in which no such failures occurred. Transaction volume is said to be up 10 to 20 percent from last year, so many sites must be experiencing record volume, but it seems they are prepared this time and the platforms are more stable.

Saturday, November 26, 2016

Wizardry Over Citizenry

This is not a good period for the idea of citizenry. The collective wisdom and will of the people who make up a country go only so far in the best of times, and in the current era they seem to count for less than usual. The 2016 U.S. presidential election may be taken as a warning sign. The citizenry spoke, and the system chose the runner-up candidate, the one who millions fewer had recommended. If the majority of people fear this system and its actions, it is for good reason. Yet this is the same system that gave us the idea of citizenry. It decides what country each of us belongs to, it chooses the leaders, and it tries to persuade us that by acting collectively we can keep our respective countries out of trouble. This whole bakery was always a front for a business much more seedy, and all the more so now. If citizenry is in a weak state right now, the immediate answer is not to throw more energy into ever more desperation collective and civic actions. Instead, this is a time for a greater emphasis on wizardry. By wizardry, I mean that we need to develop individual skills and use them for small-scale action wherever we find ourselves. The word wizardry serves at the same time as a reminder not to limit our efforts to what the system tells us is possible. The forces that block collective change cannot block individual change. The answers we need will not be televised — television, after all, is another collective medium — but the wizard lives in a larger world, larger even than the “real” world you might have seen on TV. Imagine a world large enough to hold all the answers. Then look around.

Friday, November 25, 2016

Black Friday Check-In

Black Friday retail traffic appears to be down from last year, but the story is not as simple as that. From the scant observations and hearsay available to me, Black Friday Eve shopping was up, Black Friday morning traffic was down sharply, and Black Friday afternoon traffic was up from last year. Online shopping was expected to be up sharply but there are not good metrics available yet. Analysts generally expect in-store purchases for Thanksgiving weekend to be down 3 percent from last year. Computing devices seem to be the hottest category, helping to explain the shift to online purchases. Mall apparel shops seem to be suffering the worst, with foot traffic said to be down about 20 percent from last year.

Mood is key, though, and no one seems to have a sense of the shopper’s mood. To retailers, there is a world of difference between a socks-and-sweaters mood and a home-theater mood. Retailers hope that the best wage growth in a decade this year will have shoppers spending more ambitiously, but there is little sign of that. Households wondering about moving to another country or the risk of losing jobs won’t be in a spending mood, and that effect could reduce retail totals even if the overall mood were positive. To show how complicated it is to summarize the mood of the shopper, here are summaries from five real people from today:

  • Worked in an office all day. Too tired to go out anywhere.
  • Spent the day visiting relatives. Surprised to get to the end of the day without having set foot in a store.
  • Purchased a software package online. Saved 50 percent with early Cyber Monday pricing.
  • Picked up pizza. Does that count?
  • Visited seven stores. Bought a reliable brand of jeans and a winter jacket.

It was going to take the biggest Black Friday ever to make up for sluggish sales earlier in November, and no one so far is suggesting that has happened. On the other hand, retail traffic was strong enough to say that this Christmas shopping season won’t be the debacle that some had feared.

Wednesday, November 23, 2016

Retail in a Black Friday Funk

Looking at U.S. holiday-season retail, it is hard to separate the effects of the decline of Black Friday, a jaded post-election public, and consumer time pressure. What is clear already is that this holiday shopping season will be different.
Retailers didn’t even try to draw consumers away from the distractions of the political season. The words “Black Friday” did not appear in my mailbox until last Thursday and have popped up in my email only twice, with one mention on Monday and one on Tuesday. This is a striking turnaround from just a few years ago when it seemed that Black Friday encompassed the entire month of November. With so much hype along with a few violent deaths, it is no wonder that Black Friday lost its allure. The change became obvious last year with a stark dropoff in in-store sales on Black Friday. 
The meaning of Black Friday has changed anyway. It was the symbolic start of Christmas shopping if you look back to the 1990s, but now is seen by more shoppers as the finale of the season. Most purchases are made throughout the month of November. Any purchases these shoppers cannot make by Black Friday will be placed online no later than Cyber Monday. 
This year, though, all bets are off. Retailers are telling me that they have not yet seen detectable levels of holiday shopping traffic this season, and in my own visits to stores I haven’t seen it either. With a washout in the first half of the holiday shopping season, it would take a record-breaking second half to bring things in line with retailer expectations. Yet the almost complete absence of Black Friday hype hints that that won’t happen. The shopper sentiment I am hearing can be summed up as procrastination, a feeling along the lines of “Don’t remind me.” None of the shoppers I talk to have made any shopping plans at all, for Black Friday or otherwise. 
If that feeling abruptly changes during the Thanksgiving holiday, we could see the biggest Black Friday ever. If not, Christmas shopping this year might consist of shoppers shopping on their lunch hours and taking home just enough socks, sweaters, and games to get by. After we have a chance to see Black Friday retail traffic, we may get a clearer idea of where this shopping season is heading.

Friday, November 18, 2016

This Week in Bank Failures

As the week began, Wells Fargo was basking in the lack of attention after the presidential election had pushed the bank and its ghost-account scandal out of the headlines. The smug feeling lasted only a few days, though, because then the bank had to announce operational results that included the shocking figure of a 44 percent decline in account openings compared to the year before. Part of this decline may be attributed to the hit that the bank’s reputation has taken, but most of it must be due to the changes in the bank’s marketing practices. Now that the bank is not so aggressive in pushing new accounts on its customers, it turns out the customers don’t really want new accounts. The ghost accounts, created without customer knowledge or permission, were just one face of a much larger problem. Even when the bank’s customers agreed to open a new account, half of the time, it was an account they neither wanted nor had any use for. The bank was not serving its customers so much as turning them into bit players in its twisted numbers chase. With the fire hose turned off, Wells Fargo customers are more than happy to step out of that game. In a way, the saga is a depressing commentary on how much consumers are willing to put up with in a system that gives them so few options.

Could the new Congress pass a bill forcing Wall Street out of the banking business? It seems possible. There is considerable support among liberals in both houses for a legal and financial wall separating investment banking from deposit accounts. With the incoming administration also supporting that idea and Wall Street throwing much of its support behind Democrats in the latest election, it seems possible that Republicans too could be persuaded to support a bill that would have the effect of scaling back Wall Street’s territory.

A currency recall in India is a fiasco, with the government ordering a surprise recall of bills accounting for around 90 percent of cash in circulation. The recalled bills can no longer legally be spent, yet the government has printed only enough replacement notes to cover around 3 percent of the recalled money. In a country where 98 percent of retail transactions are paid in cash, consumers and businesses alike are unable to do their shopping. ATMs don’t work with the new bills, even if the banks could get them. It is expected to take four months to convert all the ATMs and supply banks with enough currency to complete the replacement of the recalled currency.

Thursday, November 17, 2016

Novel Writers vs. Political Depression

Every November I write the first draft of a new novel as a participant in National Novel Writing Month. After this month’s election the novels in progress took on extra weight, as if completing them would be proof that our national culture is not dead yet. The quality of writing in my own novel seemed to suffer in the days immediately after the election, but I kept writing and the story kept taking shape, and that is the measure of success for a novel at the first draft stage. I haven’t heard of any participating novel writer going through the depression that affected so many people after the election. There were not even any political rants from novelists, or if there were, they somehow did not reach me. And it certainly is not that novel writers are Trump supporters. Just as Trump despises college graduates, which most novel writers are, Trump in known to despise everyone who works with words and ideas, having characterized such people on more than a dozen occasions as criminals and threats to the world. Given the political chasm between Trump and novel writers, I think there may be lessons to be learned from novelists’ relative immunity from the political winds. There is some spiritual protection in having a clear purpose, and even the arbitrary goal of completing a novel first draft in one calendar month may be purpose enough. There is also a degree of political protection in putting forth ideas in fictional form. This has been seen through the ages, but most famously when Galileo was not put to death for suggesting that Earth moved around the sun, in part because he made that suggestion in the form of dramatic dialog, a stage play without a stage. At times like this, there is an undeniable appeal in being able to slip away into another world where events are protected from the cultural crisis of the present. How bad can the world really be if my novel has a happy ending? Writing fiction requires the writer to take a broad view of what is possible, and in its way, that is more powerful than the narrow view of the possible that conventional politics seems to require.

Wednesday, November 16, 2016

Post-Election Time Expansion

It was one week ago when we woke to news of a harsh new America after the presidential election results. For many of us, the time since the election has seemed like a much longer period of time, and it can be a surprise to look back and realize that all the changes we have just seen have taken place in only one week. This perception of time expansion is a real advantage — it translates to real time to do things for those of us who may now feel we are racing to keep up with the flow of events. Millions of us have made millions of changes in the last week. One simple example of this is found in the ACLU’s new Twitter followers, a 25 percent increase in one week. I could write out a long list of other, more substantive changes I have seen, but I don’t want to distract from the key point: when you have a strong sense of purpose, even if it results from a crisis, you get more time to take action. In times like this, when there are important things to do, hold on to that sense of purpose and you will magnify your impact.

Monday, November 14, 2016

The Presidential Apprentice

Donald Trump knows so little about what it means to be president that Barack Obama is taking a substantial amount of time to show him the ropes. Trump is said to have been surprised to learn that the president must hire the White House staff, for example. Details like that will be important for him to know if he wants to be ready to respond when events take place in the world, which of course, happens every day. Obama is a strong believer in continuity, so the effort to tutor Trump on White House operations fits with his priorities in office. We can hope that a little of his sensibilities rub off on Trump during their hours working together.
This does not mean there is much chance of Trump mellowing as he takes office. The names floated for key positions range from white supremacists to senile yes-men. Trump supporters would expect a Trump administration to be a high-stakes gamble of the sort that the country has never seen before, and so far, that is indeed what it is shaping up to be.

Sunday, November 13, 2016

The TV President

I continue to hear reactions to the election, and based on what I know of American history, the emotional impact of the election outcome is something not seen since the election of Abraham Lincoln. At that time it was the plantation owners who were convinced the world was coming to an end. It is worth remembering that within their view of the world, their feeling was correct. Well before the end of the presidential term, all the slaves had walked away. The events of that period permanently changed both the form and the self-image of the United States, and it appears more likely than not that something equally complex and consequential will happen in the next five years or so. Plopped into the middle of this tumultuous transition we will have the first U.S. president ever to spend his days watching television. If that seems a bizarre agenda for a president now, imagine how it will seem in a few years when the number of TV viewers has declined by another 25 million. The president will not just be abdicating his responsibilities by wasting his time on television. He will also have lost touch with the direction of U.S. culture. The ancient legend of Nero fiddling comes to mind. The reason this is important to note is that, in the important transitions and crises coming up, the United States will be essentially leaderless. We can expect tirades and racist platitudes from the TV president but no reality-based problem-solving. Solutions will come from all directions, I believe, but few, if any, will come from the White House.

Saturday, November 12, 2016

Swastikas, Blame, Community Building

Last night I attended a gathering of shamans, and even though shamans are not so numerous in the United States their reaction may represent that of much of the country. The election was regarded as so horrible that people could not refer to it directly. We all agreed that we had to do something to build connection and strengthen community even though there was no obvious course of action that anyone could mention. The biggest topic mentioned was the swastikas. They have been popping up since election night — spray-painted on buildings and streets, stuffed into mailboxes, taped to cars and other things, sometimes accompanied by an approximation of evangelical Christian talking points. There is no question what the swastikas are supposed to mean: that someone intends that whole classes of people will be removed from the community. From where we stand, it seems that that is what 45 percent of our fellow citizens voted for. That thought, of course, hurts. Trump as a candidate had no platform in the normal sense but had a long list of people to blame and spoke of little else. People who voted for Trump, then, must have voted for blame. There is other evidence of this, such as the people who, since the election, are mysteriously distant and angry at everyone and everything. They seem to have bought into Trump’s exhortation to find someone to blame. Blame, of course, is not a solution, but it is a problem. How do you reach people who are wrapped up in blame, and who see you (along with almost everyone in town) as someone to blame? The short-term answer, I am afraid, is that you cannot. Besides the practical difficulties, there is an ethical issue of free will involved. When people have chosen blame, who are we to unchoose it for them? In our community-building efforts, we have to start with the people we can reach. How to build a stable cohesive community again is a puzzle, but I think it is perhaps like a sudoku puzzle, in which each connection you can find is a success to be celebrated — it simplifies the problem that remains by an order of magnitude.

Friday, November 11, 2016

This Week in Bank Failures

The Donald Trump election victory is good news and bad news for Wall Street. It is good news in the sense that Trump is a Wall Street insider and has signaled an intention to pepper his cabinet with Wall Street insiders. The Wall Street insiders will be well-positioned to engineer the next Wall Street bailout. It is bad news in the sense that Trump has a negative view of international commerce. All of the Wall Street banks are fundamentally international in character, which means they are, by their nature, at odds with the policies of the incoming administration. Will they be able to adapt to a new set of isolationist policies and new restrictions on what business they can conduct? Are they prepared for the extended recession and loan losses that could result from the price shocks and job losses of an isolationist trade policy? The new regime will, at minimum, be a culture shock on Wall Street. In the worst case, Wall Street could lose the better part of its business.

The fate of Deutsche Bank is a special question. The German banking giant has signaled an intention to keep its U.S. operations relatively intact, but will it be financially able to do so in the light of the new taxes and restrictions that are on the way?

Cyber attacks on banks are becoming more severe. Last weekend the U.K.’s Tesco Bank suffered £2.5 million in fake online transactions. Late in the week, two major Russian banks, Sberbank and Alfa Bank, were hit by unusually large DDoS attacks. Attackers typically use DDoS attacks against banks to disguise false transactions, but there were no apparent transaction losses in the Russian attacks.

Thursday, November 10, 2016

You Are Not Alone

There have been protests in dozens of major cities, especially last night, after the presidential election outcome. One benefit of the protests is the message of solidarity with the many people left feeling shocked, depressed, dismayed, rejected, or fearful after the election outcome. It is one thing to hear that you are not alone. It is another to see thousands of people in the street.
If you sense danger in the situation, it is not your imagination. You did not imagine Trump suggesting that protesters might be shot and killed or that writers could be locked up if they disagreed. You did not imagine the campaign statements about women who were victims of violence, saying that the victims should “get over it” and in some cases, change jobs. Nor did you imagine the millions of votes for Trump by people who agreed with these sentiments. It might seem like a bad dream, but all this really happened. If you woke up yesterday feeling like your country is against you for wanting to do the most simple things like get up and go to work, many of the facts justify that feeling.
It is important, though, not to fall into the pattern of viewing the world or the country as essentially hostile or the related trap of thinking that your own efforts don’t count for anything. Seeing other people’s efforts that align with your own helps you find hope in your own efforts.
Here, then, are links to a few actions and statements that happened to come my way. Miley Cyrus said she couldn’t stop crying: http://twitter.com/President/status/796445231751118849. Students walked out of class in protest: https://twitter.com/i/web/status/796426534194024448. Business leaders in California are looking into the possibility of seceding, not to make a statement, but to save approximately 2 million export-related tech jobshttps://twitter.com/search?q=%23Calexit&s=typd&x=0&y=0.
And then there is my own story. My recent work depends on consumers feeling comfortable with making major purchases. With uncertainty in the air and a recession on the way, by next year I could find myself essentially unemployed along with most of the people I work with. 
The election is just another in a long series of blows to the U.S. middle class, but there are also those lke me who will suffer individual losses as a result of the election outcome. There are people who will watch a family member die after health coverage is canceled. People are afraid they will see their parents deported. Gay couples are afraid their marriages will be canceled. People have reported handwritten death threats. If you search online or ask around there are millions of stories of people in trouble in the aftermath of this election. Yours is not the only one. In truth, everyone has lost something of importance, even if many of us do not realize it yet.

Wednesday, November 9, 2016

Day 1 of a Dangerous New Era

I am not up at 4 a.m. just because yesterday’s election signals a dangerous new era in the United States — but since I am up, allow me to run through a few quick observations about what happened and the situation we find ourselves in.

  • Clinton was a candidate first and foremost. Hillary Clinton came across as a woman who had spent her whole life preparing to be a candidate for U.S. president. It was not as convincing to voters as it might have been had she put the same effort into preparing to be a president.
  • Obama’s party-building efforts failed — in the short run. I am not sure any U.S. president ever made party-building a higher priority than Obama did, but the result of his effort has been to take the Democratic Party from a position of controlling the presidency and both houses of Congress to falling just short in all three areas.
  • Trump is as far from having a mandate as U.S. politics allows. When I checked a few hours ago, Trump’s share of the popular vote was estimated to be slightly over 45 percent. If accurate, that would mean his share of the vote was less than that of the losing presidential candidate in the four previous elections. It would also be less than that of Clinton, though not by much. At the same time, there are other special factors that suggest a lack of a mandate. Trump did not spell out any coherent, credible policy positions. Some of the people voting for Trump were Republican voters who hoped that a Trump victory, and the assumed incompetent administration that would follow, would lead to a quick collapse the Republican Party. Trump got a late boost from an unorthodox and almost certainly illegal intervention in the election by the FBI. Looking back, it is safe to say that Trump could not have been elected without the benefit of these last two factors.
  • This could be the last hurrah for the Republican Party. Did you see the millennial-voter version of the electoral map? If you only counted votes of voters under 40, Trump’s share of the vote would have been about 5 percent and he would have won about 5 states. The age of the average Republican voter is around 63. Four years from now these same voters would be 67 years old except that some of them will have died of the diseases of old age before then. The advanced age of Republican voters costs the party at least 2 points per 4 years. When you are declining from a base around 45 percent, that is fairly grim.
  • American democracy is broken. More voters voted for Democrats for House, Senate, and President, yet the system delivered control in each case to Republicans.
  • There is a risk of a stock market crash. Investors shocked by events often need to sell a few specific stocks and bonds immediately regardless of loss. If enough companies are affected and the price moves are large enough, this can lead to investors generally feeling that they need to sell quickly.
  • Businesses are feeling uncertain. There was a sudden pause in hiring when the FBI intervened in the election a week ago. Hiring will continue to be slow until businesses feel comfortable that they know what the new regime will be. Given Trump’s reticence and incoherence on policy matters, it might be a couple of years before that happens. One interpretation of Trump’s trade policies would be expected to reduce U.S. economic output by 10 percent, so businesses have a reason to be cautious about new investments of any kind.
  • Austerity is back. Households that were starting to spend more freely again after nine years of being financially squeezed will feel some of the same uncertainty that is affecting investors, businesses, and the job market, and will go back to the very tight style of spending that so many of us learned in 2007. This could lead to sharply lower economic growth all by itself.

Friday, November 4, 2016

This Week in Bank Failures

Italy’s government and central bank are moving to eliminate the country’s cooperative banks. New rules virtually require holding companies to have at least €1 billion in capital. If all of the country’s cooperative banks merged, the new size requirement would seemingly result in just three cooperative banks in the country. All would be in the same financial distress that currently affects Italy’s larger banks. At that point, the government could look for a pretext to eliminate the cooperative banks entirely, most likely by merging them into another bank.
Raising capital: Deutsche Bank has final approval to sell its ownership share in Chinese bank Hua Xia.
Pennsylvania is the latest state to suspend Wells Fargo from state business. Investigations into the bank’s ghost-account scandal have expanded, with evidence suggesting that the bank’s fraudulent practices extended into its brokerage and that the bank retaliated against former employees who had objected to the fraud scheme. The bank confirms that the SEC is investigating the bank’s public statements about its marketing practices, many of which are now known to be false. The bank’s auditor, KPMG, is also facing an investigation. The auditor knew of the pattern of fraud but concluded it was immaterial, and regulators are asking if that was a reasonable conclusion.

Thursday, November 3, 2016

A Late Brexit at Parliament

The plan for Britain’s exit from the European Union is something that Parliament will have to vote on. That was the view of legal scholars and political analysts all along, and now it is the official opinion of the British court with jurisdiction on the question. Looking at it one way, the involvement of Parliament in a question of policy makes perfect sense, but looking at it another way, the requirement greatly complicates the British exit from the EU. Political opinion is not so unified that a simple question on an EU exit will pass. The Prime Minister will have to present a general plan of how the EU exit will go. The trouble with that, of course, is that no matter what plan Britain goes to the EU with, there is no realistic chance of it passing intact. The near-failure of a trade agreement with Canada just a few days ago shows how hard it is to get all of Europe to agree on anything. Nevertheless Britain must take its best guess on the outline of its future trade arrangements with the EU and make its best case for that approach. That should be the same plan that the Prime Minister presents to her own country. Regardless of the difficulties, the plan has to be written out and agreed to, in general terms if not in all the specifics, before the formal paperwork and diplomacy can get started. With so much riding on the initial plan document, it has to be researched in detail and written thoughtfully. It is a tall order. It could take months to do, perhaps even a year. Britain’s EU exit will be delayed. But it is British law and especially EU law that mandate this approach, and the chances of getting Europe to bend its laws just to make things easier for Britain at this point are, for all practical purposes, nonexistent.