Facebook and GS tie-up may be unholy disaster

Saint Wolfgang and the Devil, by Michael Pacher.

Image via Wikipedia

Facebook have been “valued” by banksters Goldman Sachs at an outrageous amount but, on a couple of levels, this may be just a step too far:

Facebook has already lost some of its appeal. It has become less “personal”, more confusing and complex with the addition of more and more features.   

Then there was the underhand way in which the privacy debacle was handled.

Facebook are only where they are now because of the phenomenal growth of its membership and it has been becoming more “monetized” (that’s commercial for us Brits).

Now it’s Facebook v Google.

How many people are  interested in taking sides, if it came to that? If presented with that choice I suspect that, given similar functionality, less commercial (or more personal) would be a major factor.

But, wait a minute, even with this huge investment from GS I have an inkling that success or failure will be determined by the memberships reaction to a deal, done with a firm, who were at the very centre of dodgy multi-billion dollar “off-book” deals, lies to Regulators, pressure on rating agencies, lying to and cheating clients, etc.      Of course GS weren’t  the only guilty firm responsible for saddling much of the current and future generations of potential Facebook members with debt that is not theirs and that they may never be free of.

Want some insight into why or how they have such a bad rep? Here’s what a former MD of GS had to say on their modus operandi:

…get the business, rake in the fees—and pawn off the overpriced goods on the clients (even the “shitty deals” so Goldman’s not holding the bag. That dirty formula cost Goldman a $550 million fine less than six months ago.

Yet the Facebook phenomenon shows us that nothing has changed. Goldman again moved aggressively to get the business—investing $75 million into Facebook early, at a low valuation,

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Revisited: Ulrich Beck on Complex societies and politicians

Few people ever apply a name that sticks to an entire social order, but sociologist Ulrich Beck is one of them. In 1986 in Germany he published Risk Society, and the name has become a touchstone in contemporary sociology. Among the attributes of Risk Society is the one he just mentioned: science has become so powerful that it can neither predict nor control its effects. It generates risks too vast to calculate.

Listen to conversation here

imageHis sociological work focuses on understanding the immediate present without renouncing a critical posture that offers a guide to the future. Current societies, according to Beck, are characterised by their extreme complexity at a moment in history in which traditional political institutions have lost much of the power, a power which has now passed into the hands of multinational companies with their relocation strategies. In this situation, a growing deregulation can also be observed which, in turn, redounds in the appearance of new risks and uncertainties.

As you will have realised Prof Beck is a guy worth listening to and, interestingly, on the day that the UK General Election is called, here are a couple of comments that appealed to me. Perhaps this explains why Politicians felt the need to spend time on other jobs and fiddling their expenses!?

“The task of politics has come up against its own limit…Politics has come to seem a satire of reality”

Interpret his words how you wish but when viewed in the context of the lack of a long term solution to the financial crisis, failure to actually punish those responsible and little or no convincing leadership in response to consistent “right wing” sniping at even feeble attempts to change things I reckon he really does have (yet another) good point.

Related!? I have already used this quote in another blog but it merits inclusion here too :

Joseph Tainter wrote a chilling book called The Collapse of Complex Societies

“When the value of complexity turns negative, a society plagued by an inability to react remains as complex as ever, right up to the moment where it becomes suddenly and dramatically simpler, which is to say right up to the moment of collapse. Collapse is simply the last remaining method of simplification.”

World Economic Forum: Risks 2010 – Issues for communities…GET INFORMED


WEF Risks 2010. The WEF report from January this year is not a matter that should be lost in the “heat” of pre-election bullshit over, what are, essentially local issues.

Of course,  there are HUGE issues, like wars on foreign soil, national debt, unemployment, etc. but much of these are symptoms of a greed culture (the “culture of me”) that marginalises &/or disrespects the needs of the wider community. Manifest in the lack of governance and integrity demonstrated by our political and financial leaders.

Of course in this modern, inter-connected, world “Community” has taken on new – or renewed – meaning  and sit in a number of domains.

Concerned communities representing the “culture of we” should not be distracted by local issues and cannot allow those in the positions of influence to abuse their power in the manner that they have. If we do not press them to pursue solutions to the issues that affect us all, globally, they will content themselves with the smokescreens of name calling, non-dom. residency, televised debates, “leaders wives”(!) and related trivia.

Both of these graphics provide a pretty concise means of gaining a view of the “big picture” AND demonstrate the sheer scale, inter-connectedness and complexity of global world. But, what they also clearly demonstrate to me is that this translates back into our communities an irrefutable INTERDEPENDENCE. A NEED to work together…SELFLESS NOT SELFISH…for a more ROBUST future when the only certain thing is that UNCERTAINTY will impact every domain.

imageIf you would like to view all of the information for yourself please follow this link to a great “info graphic”  that enables you to view the WEF assessment of the various risks from a variety of information yourself.

IF you choose to do that you will note that, whilst I have inserted a graphic relating to “Financial crises” (yes that is plural!) I have not inserted the graphic relating to “Asset price collapse”. Why? Because it would probably look like I was intent on using the most “extreme”, or, in terms of the WEF report, most likely risk to illustrate a point in relation to the urgent for a dramatic overhaul OR ADDITION to the conventional management of risk.

Each and every graphic “snapshot” and every meaningful report on risk (from some of the largest, most prestigious firms, keenest commercial and academic brains) illustrates and refers to increased or increasing complexity and the threat that this brings.

None have yet provided a worthwhile tool with which to commence the process of identifying solutions…


What’s next for global banks – Is it a tent and some dodgy headgear?

Here is some commentary from McKinsey on a topic that is “dear to our hearts”…of course dear may be the most appropriate word (depending upon your interpretation of the the word) and how you carry your wallet!

What has happened to the Global economy in recent times is a matter of record and a great number of, apparently, robust organisations and reputations were laid waste. There can be little doubt about the excessive risk taking and greed but has everyone forgotten what provided a “platform” for this culture?

What gave the industry license for such recklessness, made them so “cock sure” of themselves, dazzled, beguiled and blinded Politicians, Regulators and investors???

The Crystal Ball: An essential tool of Consultants & QuantsThat’s right it was blind faith in financial models that were flawed but given kudos (at great expense) by rating agencies whose reliability, if not objectivity (or worse) must warrant greater scrutiny. SO IMAGINE MY SURPRISE WHEN I READ THIS:

To arrive at a perspective on these fundamental changes, we turned to scenarios that the McKinsey Global Institute (MGI) developed to help model uncertainty about economic recovery and growth. We adapted these scenarios to include the particular forces that most influence banking returns: inflation and the shape of the yield curve, as well as uncertainties about state intervention, including new capital requirements, consumer protection measures, new rules on risk management, pay caps, and the extension of regulation to the “shadow” banking system.

“Uncertainty” is THE key word and there is even reference to markets remaining “severely dysfunctional” but it STILL hasn’t prevented this exercise that can only be down to job creation. You can read the full article here.

You could decide to check your Horoscope OR pick a horse for the Grand National – here is a tip: last years result nor an individual horse’s performance in other races are not necessarily a guide to this years race. But I guess you already knew that.

BUT, if you are really stuck for something to read get your head around the fact that irrespective of the intellect, experience and technology at our disposal we/they cannot predict the future even in times of relative stability. What we know about the past, from our experience, is no longer adequate for an inter-connected world.

If you are interested enough to read to this point you may just be keen to explore some thoughts on why and, more importantly, how we need to prepare for the future you may be interested in this previous post. If you want yet more please drop me an email: david@ontonix.com