On The Turning Away

We were on a fool’s errand, or perhaps entered into the folly of explaining market moves. But a selloff as large as yesterday’s is bound to elicit a multitude of explanations. Serious minds at WSJ chimed in and pointed to the cracks “appearing in the housing credit markets, especially in subprime loans but with some damage up the income chain as well”, ergo the mortgage-related markets, which sold off nearly as much as stocks.

Or a more visceral hunch when you step away from the computer or otherwise incommunicado. Last time when LTCM blew up in 1998, we were traveling in Switzerland and incidentally picked up a local paper on the commuter train. The only thing we made out was “casino capitalism”, and the rest, of course, is history. The dotcom crash - we were also on the road in 2000, witnessing the Nasdaq crash in a hotel room in Boston. This time, we racked our brains and concluded that it’s Drudge Report which tanked the market. Try cling to some semblance of a poker face.

There’s an oft-quoted anecdotal exchange between Henry Kissinger and China’s then premier Zhou Enlai. Kissinger asked Zhou what he thought of the significance of the French Revolution. Zhou paused for a moment, then shrewdly answered, “It’s too early to tell.” The same can be said about China in the aftermath of yesterday’s global market tumble.

While reassuring comments from Fed Chairman Bernanke this morning helped soothe investors’ nerves on Wall Street, yesterday’s carnage gave them pause. No bien-pensant consensus has emerged yet, but some suggested that there appeared to be a “correlated fall” that involved many different over-valued assets. Against the global macro backdrop, “Chinese consumers and Joe Public in Detroit are no longer as dissimilar as they used to be.”

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Tyranny starts as a habit; it has the tendency to, and generally finally does develop into a disease.
- Fëdor Mikhailovich Dostoevsky (1821 - 1881)

Book publishers have taken a step into cyberspace by introducing online services that let people browse books on the Internet. This effort to update their businesses comes at a time when more young readers consume media via the Web, a trend that already has affected the music, movie and newspaper industries.

Random House, owned by German media giant Bertelsmann AG, is rolling out Insight, which will allow consumers search and browse through more than 5,000 of its titles online. And as if not to be left out on the social media craze, it will introduce a service to let users add material from titles to personal pages on social networks such as MySpace or to a retailer’s Web site. This function is similar to what HarperCollins Publishers, part of Murdoch’s News Corp empire, is making available to users, who will be able embed pages of books onto networking sites such as MySpace.

A think tank group at IBM Global Business Services concluded that in new media “four divergent business models will co-exist at least through 2010″. Namely, traditional media, walled communities, Content hyper-syndication, and new platform aggregation.

Through 2010, the lion’s share of revenue will still be from traditional media against the backdrop of a fast-evolving digital world where distribution platforms proliferate and new players drive access prices down. In uber-consultant speak, there is an increasing likelihood of conflicts between traditional content owners and distributors as they explore new business models.

In the process, distributors will move toward walled communities and content owners toward content hyper-syndication, although the former “will feel more pressure”. On the whole, IBM apepars to be putting its foot down in the “content is king” camp.

A melodramatic “break-up” of two North Carolina college students in front of a raucous crowd has been one of the most popular (over 747,000 hits) clips on YouTube.com in recent weeks. The only problem? It’s a hoax.

The “pair” promoted the event on facebook.com, which attracted hundreds of students and several photographers among the spectators at a popular gathering spot on the University of North Carolina at Chapel Hill campus. It was all a stunt “to show the power of Internet communities and the amount of money that companies make from them”. To that, we could only tip our hat - a “well done” to the limelight-starved.

Among the pundits rushing to offer their take on today’s global markets tumble, one camp pointed fingers at the Chinese, the “proximate cause” of the plunge on the Chinese stock market “was the government’s crackdown on unauthorized trading and initial public offerings”. What they referred to was an FT interview with Cheng Siwei, deputy chairman of the National People’s Congress, last month.

Mr Cheng, an influential figure in Beijing financial circles, warned on Janurary 30 that the mainland stock market could be overheating, in the wake of a dramatic rise of 130% last year that came after a five-year slump when China was one of the world’s worst-performing markets. “There is a bubble going on. Investors should be concerned about the risks. ” His remark sent the Chinese stock markets tumbling the next day, with shares plunging nearly 5% on fears that the government would act to cool down the mainland stock market.
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We are not given to bickering, much less shrieking. But once in a while we encounter some cringe-inducing stuff on the Internet. This week it’s the tirade Janet Hanson, of 85 Broads fame, hurled at the acerbic and uproarious in equal measures Lucy Kellaway, of the FT, for her Monday column, “Let’s stand on our own feet – not other women’s shoulders”, in which Kellaway critiqued the faddish women’s networks that have been sprouting up like mushrooms after the rain.

By crying out loud, “Lucy Kellaway gives “SHREW” a whole new meaning!”, Hanson may have mistaken Kellaway’s satire of high-flying women’s networks as “filled with bonhomie laced with spite” for ad hominem attack. Opininated and acerbic she maybe, Kellaway is not “mean-spirited” and empty.

Hanson also missed a larger point. If our experience is any guide, Kellaway hit the nail on the head with the observation that the “we’re-in-this-together” atmosphere at women-only networks is “made less supportive both by being compulsory and by the competition that lurks not far beneath the surface.” Worse still, some exist largely to facilitate those founders’ social climbing masqueraded as professional networking. Perhaps now is as opportune a time as any to bring up one ludicrous experience we had with a (hedge funds) women’s network.
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All eyes are on the markets today as a global plunge unfolded. Stocks plummeted, briefly hurtling the Dow Jones industrials down more than 500 points. Earlier the Shanghai Composite Index tumbled 8.8%, the biggest decline since it fell 8.9% on Feb. 18, 1997. Hong Kong’s benchmark Hang Seng Index dropped 1.8%; Japan’s Nikkei stock average fell a more moderate 0.52%, but European markets were rattled - UK’s FTSE 100 lost more than 2%, Germany’s DAX index dropped close to 3%.

Across NYSE and Nasdaq, shares of Chinese companies fell sharply as Wall Street succumbed to a global market plunge sparked by growing concerns that the U.S. and Chinese economies are cooling and that equities prices have become overinflated. No sector was left unscathed by today’s sell-off. The Russell 2000 index of smaller companies dropped over 3%.

By Internet buzz-o-meter, Joost - the ad-supported streaming video service currently in beta testing - is the latest media darling. Take your pick - it’s either the “YouTube Killer” or “TV on Steroids”.

Or as the Economist gushed, it “threatened to devastate the television industry”. Much of the buzz is about Joost’s promise to transform the experience of watching television by combining what people like about old-fashioned TV with the exciting possibilities of the internet. While YouTube has become a repository for Long Tail user-generated content, Joost is looking to distribute professionally created content.
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