The IT Skeptic - Comments for "How long will the IT recession last?"

economic ostriches

skeptic — Fri, 30 Apr 2010 09:59:14 +0000

Another one for the economic ostriches amongst us (thank-you A.), according to the BBC

A US economist has claimed that the governor of the Bank of England told him "tough" budgetary measures would be necessary in the UK.

David Hale said Governor Mervyn King had said the measures would keep whoever wins the next election "out of power for a whole generation".

Incidentally these were the BBC headlines alongside that story:

UK economic growth slows to 0.2%
UK borrowing hits record £163.4bn
Small increase in UK retail sales
UK unemployment increases to 2.5m
UK inflation rate rises to 3.4%

"You don't need a weatherman to tell which way the wind blows" R Zimmerman

The slide gathers momentum

skeptic — Thu, 29 Apr 2010 00:42:53 +0000

The slide gathers momentum

Standard & Poor's downgraded Spain's debt to a "AA" rating Wednesday, down from "AA+," a day after its downgrading of Greek debt set off falls in markets worldwide.

The economy falls like a leaf

skeptic — Wed, 28 Apr 2010 19:59:27 +0000

Argentina wasn't part of the euro.

When climbing a mountain, inexperienced climbers are often plagued by "false summits". it looks like the top until you get to it and find it was merely a minor peak or an inflexion in the slope, disguising the true summit beyond.

likewise in many falls including the Great Depression there are false bottoms, not to be confused with secret suitcases. See the quotes above where the Depression was prematurely called as over.

To use another analogy, the economy falls like a leaf, swooping back up under its own falling momentum before stalling and turning into a new plunge. The current cycle looks exactly like that to me. All the upward movement is due to artificial stimulus, the bears coming out to buy, misplaced confidence of generations who have never been here before, and the short attention span of the modern public. Watch it stall as gravity/reality regains control, when we then discover how much empty air there still is under our economy.

Skeptical of the gloom and doom

Visitor — Wed, 28 Apr 2010 14:30:30 +0000

If this were a 12-18 months ago, I'd be more concerned. There is an adage that it's not the quality of debt that matters, it's the quality of debt holders. The domino theory of credit busts do not come about as a result of borrowers' actions, but rather when over-leveraged creditors are forced to sell for big losses. We are not in the same place we were when Lehman went belly up.

Like Argentina, Greece has a long history defaults. It has been in default roughly one out of every two years since it first gained its independence. Greece debt wasn't exactly traded as AAA securities. This won't be pretty for Greek citizens, but an Argentine-style meltdown can be avoided.

I hate to say

skeptic — Wed, 28 Apr 2010 07:47:39 +0000

I hate to say I told you so but, from the BBC...

Asian stock markets have suffered big falls amid further signs that the Greek debt crisis is intensifying.
Shortly before the close, the Tokyo market was down more than 2.6% after falling almost 3% in early trading.
Hong Kong's Hang Seng was down 1.3%, while Singapore has seen a 1.5% drop so far.
Global shares have tumbled after the credit rating agency Standard and Poor's downgraded Greek debt to "junk" on Tuesday.
European markets suffered bigger falls on Tuesday, with London's FTSE 100 down 2.6% and France's Cac 40 index falling 3.8%.
On Wall Street, the Dow Jones index fell nearly 2%.
In Greece itself, demonstrators called for the country to default on its debts, so that foreign banks would pay the price for the crisis.
Greece has become the first eurozone member to have its debt downgraded to "junk" status.
...
Portugal's credit rating was also cut by two-notches to A-minus, further fuelling concern that the crisis was about to spread across Europe, forcing a number of countries to default on their debts, hurting the euro, and sparking a new crisis.
Some investors have expressed concern that the current market jitters could turn into something much bigger.

It certainly doesn't sound like the Greeks are going to acknowledge they screwed up and take one for the team. They seem hell-bent on dragging us all down. Last year might just have been the first swoop of a long dive.

economic dead cat bounce?

skeptic — Sat, 27 Feb 2010 21:53:27 +0000

It ain't over yet. From Thursday's paper while I was in Las Vegas:
24% of mortgaged USA homes have -ve equity, up from 23% in Sept.
702 "problem" banks, highest since 1993.
US cons conf falls steeply in Jan

This could easily be a dead cat bounce

Davos calls the recovery fragile

skeptic — Thu, 04 Feb 2010 09:29:00 +0000

According to Knowledge@Wharton

Delegates to the just-ended World Economic Forum in Davos, Switzerland, found plenty of positive economic signs -- but ...called the global recovery "fragile."
...
Nouriel Roubini, a New York University economics professor who had predicted the financial crisis at the Davos meeting three years ago, sent jitters through the meeting with his forecast for a slow recovery worldwide, "subpar growth" and risk of a double-dip, or second recession.
...
Threats, like panic sparked by a possible government-bond default in Greece or Spain, could roil the financial markets and world economy, many said.
...
"It all boils down to jobs at this point," says Mark Zandi, chief economist and co-founder of Moody's Economy.com, analyzing the U.S. economy. "We're still losing them. There's widespread optimism that we will start creating them soon. If we don't, then the recovery will be stillborn."
...
Most experts point out that the world economy is fragile and much could go wrong. "Oil prices could shoot up," Siegel warns. "We could have a very serious development in Greece that causes disruption to the euro zone." Spain looks even more worrisome to many observers.

Wharton Management Professor Marshall W. Meyer notes that China is prone to boom and bust cycles, with booms introducing damaging factors into the world economy, such as higher commodities prices. Currently, he says, China appears to be in a real estate bubble. "Real estate prices are way beyond the reach of ordinary Chinese, particularly in the cities." If the bubble continues to expand and then bursts, it could spark panic in world financial markets, he notes. "I think the psychological impact of a sudden drop in real estate prices in China would be far more important than any economic impact."
...
In the U.S., ... "Banks are not lending very much," says Wharton business and public policy professor Howard Pack. "There's still a huge amount of unemployment and no prospect that it will be reduced very rapidly. And there are still foreclosures."

British economy forecast to shrink 4.75% in 2009

skeptic — Wed, 09 Dec 2009 20:04:21 +0000

# [British] Economy forecast to shrink 4.75% in 2009, worse than 3.5% forecast in April
# Growth of 1%-1.5% expected in 2010 [yeah, right!]

UK Govt pre-budget report

recovery too weak to halt the continuing rise in unemployment

skeptic — Mon, 30 Nov 2009 19:57:00 +0000

The economic recovery now spreading across developed countries is too weak to halt the continuing rise in unemployment, according to the Organisation for Economic Co-Operation and Development. The jobless rate is expected to peak in the first half of 2010 in the U.S., but it may not be until 2011 that unemployment begins to fall in the Euro area

Harvard Business Daily Stat

don't take down the storm shutters just yet

skeptic — Tue, 06 Oct 2009 20:40:35 +0000

Everywhere you turn is cautious talk of a recovery.

For those of you taking down the storm shutters and replacing the patio furniture, not so fast.

Britain is still in nosedive: "Manufacturing output dropped sharply in August... at its lowest since 1992"

US unemployment is still rising and expected to peak next year

China is a huge mountain rumbling

Even Microsoft says it aint over so it must be true.

The housing market threatens the future economy

skeptic — Tue, 25 Aug 2009 10:55:35 +0000

As I've said previously, I'm more interested in good oldfashioned fundamental markets as indicators of the economy's health, and property is one of the main ones. The news ain't good. From the Economist

The Obama administration’s economic successes “will be for naught” if the [USA's] housing free-fall continues much longer... Rising joblessness will continue to weigh on demand for homes. The unemployment rate, currently 9.4%, is expected to peak at more than 10% some time next year... the positive signs in housing are partly driven by short-term factors... A glut of supply will also weigh on prices, thanks to a wave of repossessions. Foreclosures are running at record levels, with one in 355 of the [USA]’s homes receiving a filing in July alone. Seized properties now account for almost one in four sales [in the USA]... Zillow.com, a property-information service, estimates that 23% of homes with mortgages are underwater. Others put it higher. A staggering 60% are submerged in Las Vegas. Deutsche Bank’s securitisation team expects negative equity to peak at 48% of total homes by 2011... the recent pop in house prices will probably fizzle. Most economists expect them to fall by a further 5-10 percentage points, to their long-term trend line at roughly 40% below their peak, and not to reach bottom until some time in 2010. The pessimists predict they will go crashing through the trend-line to as little as half their 2006 high.

It ain't over - brace for more

tracking the economy

skeptic — Wed, 29 Jul 2009 02:31:30 +0000

When you filter out the noise from those who have a vested interest in talking up the economy, such as governments, banks and big business, the remaining information is not so sunny. I'm also old-fashioned enough to discount news about the artificial or virtual economies such as the stockmarket or private equity. I'm more interested in what is happening with dirt (real estate) or boxes (trade). So I noted this article from The Economist, my favourite source:

WORLD trade has been one of the worst casualties of the global economic slowdown... Towards the end of last year trade all but collapsed... slumping by a whopping 32.6% in the year to January... the worst of the slump may now be past... exports and imports have held more or less steady since January... It is too early, however, to conclude that trade will bounce back... for a sustainable recovery in trade, global demand has to recover on its own steam. It is not clear where demand might come from... American households are now saving 5% of their incomes, up from essentially nothing a year ago. Unemployment in America and elsewhere will continue to rise... Luckily, the more open world trading system which allowed trade to thrive has not collapsed. If open trade survives, trade could recover smartly when the world economy does. But given the fundamental problem of deficient demand still facing the world economy, a recovery in trade is likely to be some time coming.

In short, we're flat out on the bottom and will be a while getting back up. If open trade survives, we might bounce back. If the USA and/or EU get all protectionist on us (and there are some seriously inward-looking ideas about), we won't.

I think even the talk of bottoming out is optimistic ("It is not clear where demand might come from"). Unemployed people and bad loans are still raining down on the world's economies. They will drive another turn of the downward spiral. Talk of a new dawn in 2009 or 2010 is premature. Green shoots are soon rubbed out.

latest on the economy from McKinsey

skeptic — Tue, 16 Jun 2009 09:31:30 +0000

For the June quarter, McKinsey say

Executives have become notably more optimistic about their companies’ and their countries’ economic prospects since mid-April—but the outlook was so poor then that optimism must be tempered.

I also note some New Zealand retailers and manufacturers are having a better year in 2009 than 2008!! Though unemployment remains high, and some companies took the staff hit in 2008 and are now benefiting...

I refuse to allow myself to get optimistic about the economy yet - better pleasantly surprised than bitterly disappointed. Personally, it is still very very tough.

Wharton says the recession aint over

skeptic — Thu, 11 Jun 2009 05:12:05 +0000

A month after the Economist quote above, here's Wharton School of the University of Pennsylvania:

Most financial experts at Wharton and elsewhere insist that the much-talked about recovery is not here yet, despite some of the first hopeful data in months -- and they remain concerned that the recovery will be weaker and take longer to gain momentum than past slowdowns...
A June 10 ...report from the [US] Federal Reserve Board said that economic conditions remained weak during mid-April through May. Conditions deteriorated in many regions of the country, the survey found, as commercial real estate and labor markets continued to struggle...
Several Wharton experts express fairly pessimistic views about the recovery -- predicting that positive growth may not be here yet, and that even when it does arrive, it will probably take several years for employment rates to return to so-called normal levels. Even if the U.S. gross domestic product turns positive by the end of 2009, they note, the American economy will remain close to the bottom of the large trough that began in late 2007, with a long way to climb for jobs, home prices and other key economic indicators just to get back to where they were... "Many of the underlying problems remain -- and we still haven't seen the worst in terms of consumer problems," says Mauro Guillen, Wharton professor of international management and sociology and director of the Lauder Institute at Penn. He lists some of these problems as ongoing mortgage woes for U.S. homeowners -- highlighted by the latest statistics showing about 12% are behind on their mortgages or in foreclosure -- as well as a deepening crisis in consumer credit card debt, looming troubles for commercial real estate, and the ongoing issue of so-called "toxic assets" on the books of larger banks, which may continue to impede their ability to make the loans that would spur a recovery...
The U.S. jobless rate for May has reached 9.4%, the highest in a generation...

On the other hand:

some economists -- even those who predicted financial gloom a couple of years ago -- are seeing a few early signs of optimism. A recent survey of 45 professional forecasters released by the National Association of Business Economists showed that three-quarters of them predicted that the economic recovery would be underway by the late summer or early fall, and none expects the recession to last later than the early months of 2010. Princeton's economist and recent Nobel laureate Paul Krugman says the world economy "averted utter catastrophe" but that the road to recovery will be slow and laced with lingering pain.

Latest on recession from the Economist

skeptic — Mon, 11 May 2009 10:14:50 +0000

According to The Economist, things aren't looking good, just less bad:

the data suggest only that the economy is contracting at a slower pace than before. Nevertheless, the figures seem to point to a deepish recession, rather than the rerun of the Depression that was feared a few months ago... The trouble with this picture is that it all seems too neat... The economic data may have improved, but only from some terrible lows... an observer who had woken after sleeping for the past two years, would be alarmed at the numbers. Nominal GDP in America has fallen for two consecutive quarters for the first time in more than half a century. Industrial production is still dropping at a double-digit annual rate in America, the euro zone and much of Latin America and South-East Asia. Companies are still defaulting on their debts at a steady rate; 40 issuers did so in April and Moody’s expects the default rate to reach 14.3% by next March... 62% of American companies have missed expectations for sales... The world is still drowning in debt, unemployment is still rising, wages are stagnant and the threat of higher taxes hangs over consumers. This was not a conventional downturn; it is unlikely to herald a conventional recovery.

Don't blame ITIL

M.McEvoy — Fri, 20 Mar 2009 13:14:27 +0000

ITIL is about delivering a service and service is all about the customer. So I do think ITIL is customer focused. The people implementing it however are often bogged down in the depths of the processes and detached from the customer experience and costs. Often because no joined up processes are in place before the ITIL programme, it is really difficult to measure any improvements. If the programme works the improvements are obvious unfortunately most the programmes don’t work and then people challenge ITIL’s value.
All ITIL does is describes a bunch of processes that interrelate with each other to provide a way to deliver IT services. Most organisations have a complex mess of process that do not all support good service. For these people ITIL will provide better service for less cost. It is like the factory assemble line for IT. But implementing one bit of the line with out the others will not deliver any value to the overall service.

Funny you should say that...

JamesFinister — Thu, 19 Mar 2009 21:16:50 +0000

My new website focuses on just that point. It also came up in a debate about corporate governance - why is it that organisations can comply with corporate governance requirements but still get away with being dishonest?

The only, partial, answer I have at the moment is we have been asking the wrong kinds of question. How many ITIL maturity assessments have you seen that ask about outcomes, not process?

IT employment market down by 70%

skeptic — Thu, 19 Mar 2009 20:25:00 +0000

Indeed.

I think Ian's "next 30, 60, 90 days" challenge is very salient in the current climate. Thoise who don't follow me on twitter may not have noticed when I said:

New Zealand IT employment market down by 70% over 12 months according to one recruitment agency. First time ever candidates exceed positions

I doubt very much that New Zealand is unique, though possibly a bit worse due to a new cost-cutting government in power. Maybe other places are only 50% down.

Now is not the time to have your project disbanded. If the projected benefits are 18 months out, you are in deep drek.

ITIL Doesn't Matter Results Do...

ianclayton — Thu, 19 Mar 2009 20:06:31 +0000

James - I like the rant on - rant off bit... I might use that.

3 years ago I presented to the title of this entry at the annual conference. I drew a crowd of 4-500 that seemed to include every name you might drop within OGC, TSO, APMG, and Castle ITIL. I had previously crossed emails with Nicholas Carr for pointers on how to get bums on seats and then out of their seats (he being the innovator of the technique and eyecatcher title!).

At the core was an attempt to remind folks of what Deming said - process improvement (especially one based around the 'implementation' of an onerous framework) is irrelevant unless it directly and positively affects either the results of the customer (I add provider) or the cost of provision. Similarly, ITIL or any other 'best practice' (note that is now missing from ITIL book covers) framework is irrelevant unless it meets this criteria.

It did not sit well with some folks - yet I feel it is fair to ask any approach for specific proof of value.

>>RANT ON
I fear too many of our peers were lured to the ITIL bound process improvement light and focus far too much on getting processes in place rather than fixing a customer related service problem. Too many others make money by repeating a mantra and encouraging customers to do what eventually amounts to foolish things. My experience is that few actually attach the approach to specific problems, goals and benefits. This is a huge issue in our profession and I see little changing from within.
>>RANT OFF!
This economy will see many of those folks and their projects suffer horribly in front of C-level stakeholders, questioning them on why the project should continue... it will take an outside influence to reset what service management was all about - and how one proposal can be weighed against another. We should welcome this opportunity - there is no better time to do service management!

I ask folks out there - what will your project deliver in the way of real tangible benefits to either the customer or provider communities in the next 30, 60, 90 days.... Apply a reality check yourself - now - before someone else does...

Agree for process improvement but less for ITSM

M.McEvoy — Thu, 19 Mar 2009 18:01:09 +0000

For process improvement I agree but not for ITSM. Good service management includes continuous service improvement so there is a link. But typically ITSM is still miss understood and therefore difficult to deploy, I would say people pushing for ITSM are not in it for a promotion and if they are they are naive as these are risky projects. But process improvement is a safer bet. You review a process apply some six sigma terminology and make some hacks and patches to an already flaky process and move on up the ladder before anyone notices you did more damage than good.

An interesting observation for so called process improvement. Six sigma process improvements will only work on a stable process as it relies on data points to measure “the voice of the process”. Yet we see many organisations and so called black belts insisting on applying six sigma principles to processes that are anything but stable and have no historic data points. I am suspicious of process improvement experts making improvements to broken processes in the name of six sigma.