Dana Blankenhorn

Open Source Process

The video above is more than a good song. It says a lot about the times we live in.

First, it's a collaboration among musicians in Africa, Europe, America and Asia who did not meet to record. They are singing the song of a Jamaican.

Many of these people come from poor backgrounds, yet they are able to use the same basic technology to make their contributions. See the headphones? Tracks are layered on tracks. The music is built using the Internet, the files passed around, additions made much as you would build a software program.

Which is the point. This collaboration was possible because people were using compatible technologies, because they had free interconnection, and because they shared a universal vocabulary.

In this case music. Other universal languages include mathematics, where equations look the same to a Chinese scholar or a Russian, and Java, which (like any computer language) uses the same structure whether you're Indian or Peruvian.

Why Republicans Appear Stupid

Previously I have noted that each political generation represents a change in political assumptions, and a change in the dominant medium.

One thing I had not realized before was it also represents a change in how decisions are made.

The Nixon Thesis was based on TV, and decisions were made based on PR-spinning think tanks. Ideas came out of these ideologically-driven institutions, were pushed into the mainstream media, became conventional wisdom and were then acted upon.

Notice the contrast with how things worked under the New Deal Thesis which preceded it. There decisions were made based on academic research. Ideas came out of universities, were then pushed through Presidential appointees, and newspaper columnists then validated them.

Republicans are continuing to do things the Nixon way. That's why they seem stupid. The mistake made by otherwise-smart people like Digby is to assume this is how things always are. It has always been that way in her memory, how could it ever change?

We're seeing right now how it changes, and what is changing . Village journalists are frankly amazed that not only did the President get his stimulus bill through, but that he remains as popular as ever. He appears to be defying political gravity and thus, they assume, he must be brought back to Earth.

This assumption is especially virulent over at The Politico, the Pajamas Media of the Chattering Classes. Despite the fact that this site exists on the Internet, it is created in the same way, and by the same people, we see on TV. It is thus the penny paper of The Village.

What changed? 

The Influence Game

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Think of this as Volume 12, Number 6 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Since the birth of the Republic media and politics have been one.

When the President quoted Washington at his Inauguration, he was in fact quoting pamphleteer Thomas Paine, whose Common Sense and The Crisis made him the Springsteen of that time:

"America, in the face of our common dangers, in this winter of our hardship, let us remember these timeless words; with hope and virtue, let us brave once more the icy currents, and endure what storms may come; let it be said by our children's children that when we were tested we refused to let this journey end, that we did not turn back nor did we falter; and with eyes fixed on the horizon and God's grace upon us, we carried forth that great gift of freedom and delivered it safely to future generations."

The American media went from pamphlets to penny papers, from books to urban newspapers, from radio to TV, and politicians always followed. The wisest cultivated the new media, the most devious also excoriated the old.

We are again in the midst of such a media transformation. We are moving from an age dominated by TV (well, cable) to one dominated by the Internet. This has many implications. Depth over drama, transparency over control, an end to the concept of journalists as gatekeepers to one in which we're enablers, using links to empower our work rather than acting-out.

And so we come again to the threat of newspapers to go out of business, unless they're given financial control over the Internets.

One Word for Broadband Stimulus

Congress is looking at putting anywhere from $6-9 billion into broadband as part of the stimulus bill.

Not what advocates like Free Press want. (They were looking at more like $44 billion.) But a lot more than I was thinking of, namely, zero.

This is not to say I hate broadband. I love me some broadband, the broader the better. I just happen to think that competition is a better tool for getting it than any subsidy.

Which leads to  one word, the one word by which I will measure whether this is money down a rathole or something significant.

Internet.

Spend

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Think of this as Volume 11, Number 51 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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It's an iron law of economics. When everyone is doing the same thing, that is the wrong thing to do. (Picture from Entrepreneur Philippines, a really great online magazine.)

When everyone wants to buy something the market has topped-out. When everyone is selling that's the time to buy. Everyone knows this. Hardly anyone does this.

The rule goes beyond what may seem obvious. Any investment strategy, no matter how sophisticated it is, runs out of steam once it becomes popular.

There is a corollary to this, equally important. Never do what the TV tells you. Once a piece of investment advice is on TV everyone has heard it, lots of people are going to do it, and it's going to stop working.

This is true for even the hoariest of TV truths. Dollar cost averaging, for instance. If you did that over the last year you got hammered along with everyone else. Same with doing what Cramer tells you. This is not because Cramer is a bad guy -- when he kept his mouth shut and used the advice he is now giving, back in the day, he made money for his clients. But once it is out in the air, it's too late. Too many people are doing it, it's not going to work.

So what should you be doing? Now is probably a very good time to spend, and to invest. There are going to be bargains everywhere in the economy over the next several months. It would be very hard to go wrong picking strong stocks right now, although you will have to be patient.

That advice sounds scary, doesn't it? It may even sound crazy. And it's also likely that, like me, you're not in a position to step up and buy right now. Just do what you can. All I ask is that you not put it all in a mattress or (worse) buy treasury bills for zero percent interest. Because that's what everyone else is doing. So it won't work. Inflation means that money socked away in "safety" is going to be worth less when it comes back than it is now.

Phone FUD Targets Google

It may be the first challenge to the new President's tech policy.

For the last several months advocates for the nation's phone monopolists have been ginning up a public relations campaign against Google. They claim it's a monopolist. They claim it's a threat to freedom, a violator of privacy, evil.

It's being done in clever ways, through academics and think tanks you don't usually think of as Bell shills. Privacy advocates are being taken in, even the Electronic Frontier Foundation.

But it doesn't take a genius to see where all this is coming for, or where it's leading. All it takes is a little knowledge of the industry's history, a quick look at who stands to benefit, and a short Google of who's cheering from the sidelines.

Just read Scott Cleland's blog. Cleland, a notorious phone monopoly booster of long standing, has been hammering Google this year at every opportunity.

Google itself seems unable to understand the situation, or properly respond to it. CEO Eric Schmidt has tried to be personally charming. The company's other officials have sought to be transparent, and answer questions honestly.

Meanwhile, the stock market crash has hit Google hard. The company is now worth only about what Verizon is worth -- AT&T is now worth nearly twice that. And Google's stock valuation has begun tracking the phone giants. Suddenly it's no longer a growth stock.

How should Google respond? Aggressively. And it needs to understand who its opposition really is, the ruthlessness of that opposition, and the nature of the struggle.

It is a political struggle.

Old Economy, New Economy

- Norah Jones "Sinkin' Soon" Lyrics

Paulson lied.

He claimed to have a coherent plan for $700 billion in workout money. I supported him on that basis. He would buy up toxic assets at the market value, find the real value in them, and re-sell them for what they were.

Instead he propped up the capital in banks and insurance companies, no strings attached, and now he claims to be trying to prop up consumer spending and housing.

Heckuva job, Henry.

Michael Brown at least had the excuse of a rotten career in the private sector. Hank Paulson was once the head of Goldman Sachs, the smartest investment banker in the world.

Markets have tanked for a good reason. It is now plain that there is no one with a brain cell alive in Washington City. If Paulson has lost his marbles, the old economy is lost.

The implications of that are painful to contemplate.

Housing has to find its level, regardless of the consequences. Consumer spending has to find its level, regardless of consequences. People have to get their own balance sheets in line, on their own, or go under. Same with all kinds of businesses, all around the world.

The old economy is dead. It can no longer be saved. And this has enormous implications for the policy of the new Administration.

Where the Next Boom Will Start

Think of this as Volume 11, Number 43 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Every economic recovery is different. What worked before may recover but it's never the same.

That said, note that every new boom starts slowly. Growth is never uniform, not between industries or within an economic cycle. Recovery will be slow. It will take years. But its pace will accelerate and at some point we'll forget again what hard times felt like. That's when we'll be ready for another bust.

Let me start by looking at previous booms I have lived through:

• The 1970s happened in the oil patch. I was in Houston then and it was a lot like Dubai has been the last few years. One bank put up what looked from the air like a huge green dollar sign. That's how things were. After the crash, which was hard, there was finally a recovery, but it was never the same as it had been.
• The 1980s happened on Wall Street. I was a business reporter then and I watched as supposedly brilliant people took apart companies, then put them back together to reveal value. Everything else went up in sympathy. After the crash the Wall Street game changed. You still read about the "heroes" of that era, like Carl Icahn, but it's not the same. Nor will it be.
• The 1990s  happened on the Internet. I was an Internet reporter. I started warning of the crash in 1997, but the boom happened despite me. The bust took down a ton of companies, and I was out of work completely for over two years. But it did come back. Amazon and eBay came back. Other sites came back. Google barely existed at that time. But, again, this decade, online, has been mainly about consolidation and steady change, not revolution.
• The 2000s were all about housing. Whether the boom was real or artificial, the product of lax regulation or an attempt to cover up for the Iraq War's costs, is irrelevant right now. We created enough Confederate Money to paper the world, backed by houses that were only worth a fraction of what we paid for them, and it will take years to unwind that. When housing does "come back" it won't be the same. It can't be. But, in time, it will come back.

The Big Bang of the Online Universe

Think of this as Volume 11, Number 36 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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After 25 years online, with more-and-more ways to communicate interactively being found each day, it gets harder-and-harder to actually communicate. (Picture from Steve Kay.)

Take e-mail. Please. A-Clue.Com started life as an e-mail newsletter. I just spent 20 minutes clearing out 24 hours worth of junk via Mailwasher. And what I came out with, after all that, was mainly semi-junk.  Even after a mass clearing of e-mails from my work and my favorite mailing list, most of them unread, I am still left with a pile that I can hardly get to.

Each "real" e-mail -- often an invitation to an interview or a news release -- takes several minutes to read and respond to cogently. I don't have that many minutes.  So a lot of that legitimate e-mail itself goes unread, or is read too late for me to do much with it.

Instead I have lately spent increased amounts of my time looking at RSS feeds. I can skip over items I'm not interested in, but even after I read just the ones I am interested in hours may have passed, and work may not have gotten done.

They Don't Understand (Perhaps They Never Will)

Having followed the political blogosphere for 5 years, and the Internet medium for 25, I really expected that by this point the media would be more integrated than it is.

After all, the Internet Generation is now grown. My two kids can't remember a time before the Internet. They have had broadband access in their rooms since she was 10 and he was 7. Today he never watches TV, and her TV-watching is usually accompanied by the clicking of her keyboard.

The Internet is not just integrated into their lives. It is their lives. It is the medium of their lives.

Their reality is also the reality for tens of millions of others. Not just old fogies like me. I grew up with TV and, while I now work exclusively online I'm more like a 1950s sitcom writer, translating the vocabulary of what I know into where I am.

So you would expect that, by this time, the old medium would have a fine-grained understanding of the new, and be able to bring the best of it along into the new age.

Nope. Not at all.