… from here. To support my last argument, a few indications towards the massive changes we’ll experience in 2009.
1 - Retail: No doubt we’ll hear a lot more about this on Monday and throughout January as the Christmas numbers come in. Nobody expects it to be pretty. Felix Salmon points to this unencouraging WSJ graphic:
In high school, around 1996, I remember reading that sales of luxury cars had risen steadily even throughout the recession of the early 90′s. Since then this counterintuitive fact (which continued to be true right up until now, that sales of luxury goods are consistently strong) has stuck with me and driven my fascination and skepticism of economics. Maybe this marks the end of a long boom-of-booms that has gone on for nearly two decades.
Also according to the Wall Street Journal:
Analysts estimate that from about 10% to 26% of all retailers are in financial distress and in danger of filing for Chapter 11. AlixPartners LLP, a Michigan-based turnaround consulting firm, estimates that 25.8% of 182 large retailers it tracks are at significant risk of filing for bankruptcy or facing financial distress in 2009 or 2010.
Complements of Paul Kedrosky, who adds, “Retail, as we know it, is going to look very, very different a decade from now.” Salmon suggested that “shopping has moved from being a pleasurable activity — think mall-as-destination — to being an unpleasant chore,” noting that Amazon is standing out with reported increased sales this year.
That isn’t a negligible change. A decade of suburban expansion has been planned around prominent destination-retail centres. What happens to those power centres if 10 – 26% of the tenants go broke and vacate by the summer (or never move in to begin with)? I almost went off on an extended tangent on this topic, but for now too much is unknown and (for me at least) these “half-baked cakes” are just something to be mindful of.
1.5 - Music, the business of. According to Bob Lefsetz, the music industry has been “the canary in the coal mine,” even before the auto industry went into crisis mode, failing to adapt to new technological, cultural, and economic realities — first ignoring, then denying, then fighting head-on (turning off their customer base), and finally falling into erratic desperation. Sales are reportedly down 33% since last Christmas (which was already far from the high water mark). More assorted metaphors from Lefsetz:
It’s like a game of musical chairs… Time to change the game. Time to stop running for the hills and to build a boat. Time to realize the nineties are over. Hell, MTV not only isn’t airing any music, its numbers are tanking and it’s banking on reality shows. They missed the Internet too. Stop looking at your old partners and start dealing with reality.
As Lefsetz also points out, the concept of “rock star” is exactly one generation old, starting with the Beatles (or one could argue, starting with Elvis — though he doesn’t quite represent the dominant model of studio “artist” that we expect from our music heroes). There’s an imaginary wall that went up some time around the 1950′s (which is carefully tended by a not-so-secret society of guardians led by Jann Wenner), that dampens all sounds emanating from pre-rock-history and preventing us from imagining any kind of music beyond the Beatles-Dylan paradigms. An emerging or future generation could just as easily erect their own wall, doing to commercial pop and rock what the Woodstock generation did to classical and jazz.
I’ll have much, much more to say about this in the near future.
2 - Pakistan and India. Oh boy, this seems a little out of place coming after remarks about the pop music industry. That in itself demonstrates quite a bit: the return of seriousness. We’ve technically been at war for years in Afghanistan, and the U.S. war in Iraq is catching up to Vietnam (if it hasn’t already) in terms of historical stature, but a full-scale conflict between Pakistan and India could potential thrust the world into a much more Hobbesian state of war – far more complex, wider in scope, generating much more destruction and changing everyone’s psychology more deeply.
A few days ago the Reuters Global blog pointed out that “in another two days it will be a month since the Mumbai attackers struck. As far as India is concerned, that is time enough for Pakistan to have acted against the men and groups that it says are involved in attacks on India.” Well two days have passed and Pakistan has reportedly mobilized 20,000 troops, not against Lashkar-e-Taiba, not more aggressively into the tribal areas that support militant activity in Afghanistan, but to the Indian border. Making things even more dramatic, it was one year ago today that Benazir Bhutto was assassinated, and responsibility for that event is still ambiguous… They ask, “Is there a clock ticking somewhere?”
“Ambiguous” might be the most generous word for Pakistan’s current condition. Power in the country flows through complex, delicate relationships among various antagonists and fairweather allies. There could be any number of individuals and groups working to induce war or a government collapse (without being the obvious culprits), in order to capitalize on the ensuing volatility to become the country’s ruling power.
Their international relations are the same: Reuters Global suggests there is a kind of “diplomatic encirclement” of Pakistan, including (besides India) the U.S., Russia, and China — not the greatest of allies, and none of whom can afford creating the perception they’re expanding a supposed “war against Islam” (a perception which a war in Pakistan will almost certainly generate, making diplomacy in and around the Middle East more difficult, tensions even more tense, and violent insurgency even more violent). Who knows who will ally with whom, what positions different countries might take, and how those decisions will ultimately affect the balance of global power.
I’m not saying it’s going to happen — there have been plenty of tensions between India and Pakistan before, which turned out ok in terms of the big picture — but then again I might wake up in a few hours to read there’s an all-out war going on there, in which the world’s superpowers are entangled, and Canada could be facing a decision to declare war against China or Russia or both or whoever. I’m open to any assurances anyone might have to offer, but for now, this isn’t something I’m willing to bet on either way.
If we do wake up to find tensions have crossed over a critical threshold, will we be mentally and intellectually equipped to have useful conversations about Canada’s position or potential role?
