CNN:

The Dow and S&P 500 tumbled to levels not seen in nearly 12 years Monday, as investors slowly came to the realization that they have been living well beyond their means while harboring wildly inflated expectations about the viability of their future prospects.

From last November, Michael Lewis:

The era that defined Wall Street is finally, officially over.

From within the midst of the bubble:

People say to me, "Whatever it takes." I tell them, It's going to take everything.

From 2007:

Bird: Well, you have to remember two things about the markets. One is that they are made up of very sharp and sophisticated people, who ... these are the greatest brains in the world!

Fortune: Hmf!

Bird: And the second thing you have to remember is that the financial markets, to use the common phrase, are driven by sentiment.

Fortune: What does that mean?

Bird: What does that mean? Well ...

Dow and S&P 500 at '97 lows

Andrei Codrescu, on the crash of 1987:

The wise men of the market tell us that its main drive is greed.

They tell us that everything is all right, that the fear it now reveals is only temporary, that greed will return soon.

Oh, greed, we miss you terribly!

From 2004, David Crosby:

It is partly their own, you know, greed and, and lack of taste, but it's also partly a condition that's endemic in the country.

From 2005, about "thefacebook":

A successful company needs to have a "clearly articulated product and service," that will "save time or money, offer something someone can't find somewhere else and fulfill a greed or lust factor." The service offered should be "compelling," and one which "draws in new users to get organic grass-roots growth."

From 2007, Alix Goldsmith:

"It’s greed, greed and more greed -- I mean, what’s more important to us, the environment or some stupid golf?"

From 2007, Snow Barlow:

"Here we are, just one species on the earth, and we're grabbing a quarter of the renewable resources ... we're probably being a bit greedy."

From 2007, Faithless:

Greed is a weapon of mass destruction

From 2008, Donald MacKenzie:

The crisis isn’t just about the bursting of the US housing bubble and dodgy sub-prime lending. Nor is it merely a reflection of the perennial cycle in which greed trumps fear to create a euphoric disregard of risk, only for fear to reassert itself as the risk becomes too great. What is revealed by the end-of-the-world trade is that the current crisis concerns the collapse of public fact.

From 2008, Joseph Stiglitz:

We have learned a painful lesson, both in the 1930s and today: The invisible hand often seems invisible because it's not there. At best, it's more than a little palsied. At worst, the pursuit of self-interest -- corporate greed -- can lead to the kind of predicament confronting the country today.

The Price of Dreams

Joe Nocera:

Wall Street traders are extremely reluctant to give up the "eat what you kill" mentality that has dominated their profession these past two decades. There is no sense of shared enterprise at most firms, and no belief among the rank and file that they should have to pay a price if the firm is drowning in losses and needs government support. That is why they are so blind to how they appear to the rest of us. They just want theirs. That is the culture they have created.

Paul Graham:

It will always suck to work for large organizations, and the larger the organization, the more it will suck.

Jose Saramago:

If only all life's deceptions were like this one, and all they had to do was to come to some agreement, Number two is mine, yours is number three, let that be understood once and for all, Were it not for the fact that we're blind this mix-up would never have happened, You're right, our problem is that we're blind.

Nathan Myhrvold:

At one point we saw a lone bull that was trying to get back to the herd, which was about a half mile away. In between him and the herd were four lionesses, sacked out asleep. This looked like the perfect opportunity for a kill, but the buffalo surprised both us and the lions. He crept up on the sleeping lions, then when he got close he lowered his horns and charged. The lions awoke, panicked and scattered into the bushes. The buffalo then trotted victorious back to the pride.

Niall Ferguson:

What about the rest of us?

Well, we shall now have to question some of our most deeply rooted assumptions—not only about the benefits of paper money but also about the rationale of the property-owning democracy itself.

Bob the Banker says:

Revolutionize your heart out. We'll still have this country by the balls.

Back in Baltimore, Burrell barks:

Anyone who can't bring the numbers we need will be replaced by someone who can.

It’s Not the Money, It’s the Principle

In interviews, several high-level music executives said they operated in fear of Apple’s removing a label’s products from the iTunes store.

One result of the dicey relationship is the increasing search by the music industry for a future in which Apple is not so dominant. Many executives say they believe the future of music buying is over the mobile phone, not from buying individual songs but by paying a monthly subscription fee to hear a vast database of music.

Steve Jobs, in 2003:

"We told the record companies the music subscription services they were pushing were going to fail. People don't want to buy their music as a subscription."

From April 2004:

Subscription services have the potential to change the way you think about music. Not everyone is ready to face that possibility.

From April 2004:

Lessig asserts that over time, more and more people will opt to pay for music subscription services.

From February 2007:

Rhapsody, not iTunes, in my opinion, is the future of music.

From September 2007:

Rick Rubin says that the future of the industry is a subscription model.

From last month:

The trick is to make people think that a certain paradigm is inevitable, and they had better give in.

Music Labels Still Fret

Obama branded Wall Street bankers “shameful” on Thursday for giving themselves nearly $20 billion in bonuses as the economy was deteriorating and the government was spending billions to bail out some of the nation’s most prominent financial institutions.

Obama was reacting to a report by the New York State comptroller that found financial executives had received an estimated $18.4 billion in bonuses for 2008, less than for the previous several years but the same level of bonuses as they received in 2004, when times were flush.

I find this justification puzzling. The implication is that the bonuses were justified in 2004. But the malpractice was going on all along. Why is it only now that the bonuses are shameful? Fraud is fraud. To even invoke these sorts of year-over-year comparisons is to accept the existence of a "reasonable" bonus total for 2008.

It's not like the earnings in 2004 were perfectly honest, and so bonuses were justified, but then starting in 2005, some people started to go rogue. The reason why "times were flush" in 2004 was because people were still foolishly pouring their money into the scheme. But it's been the same scheme all along. By 2004, the bubble was quite well inflated.

From the archive, Niall Ferguson:

This hunt for scapegoats is futile. To understand the downfall of Planet Finance, you need to take several steps back and locate this crisis in the long run of financial history. Only then will you see that we have all played a part.

Finally, to clarify a point of usage. I would argue that Obama's use of "shameful" is misdirected. The bankers themselves are clearly shameless. It is their actions which are shameful. But only the naive could expect a public display of shame from bankers. Even Madoff did not apologize to his investors.

A recollection:

On August 5, 1981, President Reagan fired 11,345 striking air traffic controllers and banned them from federal service for three years. They were replaced initially with nonparticipating controllers, supervisors, staff personnel, some nonrated personnel, and in some cases by controllers transferred temporarily from other facilities. Some military controllers were also used until replacements could be trained. The union was decertified on October 22, 1981.

Shame - NYTimes.com

The economic crisis doesn’t really scare the people who still practice haute couture, that small, vanishing world of embroiderers, dyers and feathermakers who serve the imagination of the few remaining couturiers. Asked if the economy was having an effect on the spring couture season, Karl Lagerfeld of Chanel said, “Only on the conversation.”

A decade ago, Pierre Bergé, the former chairman of Yves Saint Laurent, summed up the contemporary problem of couture when he called it “the opposite of a business.” Even though people recognize the marketing value of an extravagant couture show, they find it harder and harder to grasp its real value, which is to make exquisite, one-of-a-kind clothes using all the various needle crafts.

A decade from now, if there are more than two or three houses still producing twice-yearly haute couture collections, it will be surprising.

Mr. Lagerfeld is a complete antique in that he doesn’t use a word processor — and all the clothes were white or black and white. What made the show a rare pleasure was Mr. Lagerfeld’s supreme ability to concentrate on a single idea and find endless ways to express it.

He was like a fly that landed on a leaf and surveyed all. But the leaf told him everything.

From the archive:

The sheer amount of sewing done by gentlewomen in those days sometimes takes us moderns aback, but it would probably generally be a mistake to view it either as merely constant joyless toiling, or as young ladies turning out highly embroidered ornamental knicknacks to show off their elegant but meaningless accomplishments.

Look your best.

Most of us, of course, think we know what a depression looks like.

A final thought:

Having been told that the world rested on a platform which rested on the back of an elephant which rested in turn on the back of a turtle, he asked, what did the turtle rest on?

Another turtle.

And that turtle?

"Ah, Sahib, after that it is turtles all the way down."

Courage - NYTimes.com

Jeff Jarvis's new book goes on sale Tuesday. I've read a pre-galley copy of the book and am working on a more substantial commentary. But for now I at least wanted to mention it.

In a book that's one part prophecy, one part thought experiment, one part manifesto, and one part survival manual, internet impresario and blogging pioneer Jeff Jarvis reverse-engineers Google—the fastest-growing company in history—to discover forty clear and straightforward rules to manage and live by. At the same time, he illuminates the new worldview of the internet generation: how it challenges and destroys, but also opens up vast new opportunities. His findings are counterintuitive, imaginative, practical, and above all visionary, giving readers a glimpse of how everyone and everything—from corporations to governments, nations to individuals—must evolve in the Google era.

Along the way, he looks under the hood of a car designed by its drivers, ponders a worldwide university where the students design their curriculum, envisions an airline fueled by a social network, imagines the open-source restaurant, and examines a series of industries and institutions that will soon benefit from this book's central question.

The result is an astonishing, mind-opening book that, in the end, is not about Google. It's about you.

From the archive:

Noooooo problem ... don't worry about privacy ... privacy is dead ... there's no privacy ... just more databases ... that's what you want ... that's what you NEED ... Buy my shit! Buy it -- give me money! Don't worry about the consequences ... there's no consequences. If you give me money, everything's going to be cool, okay? It's gonna be cool. Give me money. No consequences, no whammies, money. Money for me ... Money for me, databases for you.

You might wonder:

Is more what we really need?

What Would Google Do?

A banker at a Wall Street investment bank said that as business ground to a halt this fall, "There were a lot of football catches on the trading floor, and occasionally you'd hear the sound of footballs crashing into monitors." In November, he was sacked in a fourth round of layoffs.

"What do you think you are doing?" Madoff demanded. Eating a pear, the employee replied.

What you can do is signal a sense of motion, a sense of ferment and activity and direction.

Of Footballs, Fruit, and Ferment

Moisés Naím, editor of Foreign Policy:

In recent years, whenever other countries — Russia, Thailand, Indonesia, South Korea or Mexico — got themselves into an economic crisis, we lectured them about how they had to adopt 'shock therapy'.

But now that we are the ones in crisis and in need of shock therapy, everyone is preaching gradualism.

Dr. King, in 1963:

This is no time to engage in the luxury of cooling off or to take the tranquilizing drug of gradualism.

Recently:

It’s hard to get people to do something bad all in one big jump, but if you can cut it up into small enough pieces, you can get people to do almost anything.

And from 2007:

Fortune: And what happens next?

Bird: Well, then, this debt, this mortgage, this debt, is taken, bought by a bank and packaged together on Wall Street with a lot of other, similar debts.

Fortune: Without going into much detail about what is actually --

Bird: -- Without going into any detail, no, it's far too boring.

Bird: And so, this is put into a package of debt, and then it's moved onto Wall Street, and then, this ... it's extraordinary what happens then ... Somehow, this package of dodgy debts stops being a package of dodgy debts and starts being what we call a structured investment vehicle.

No Time for Gradualism

The idea is to boost "dwell time."

Traditionally retailers measure "footfall," as the number of people entering a store is known, but those numbers say nothing about where people go and how long they spend there. But nowadays, a ubiquitous piece of technology can fill the gap: the mobile phone. Path Intelligence (*), a British company working with the Massachusetts Institute of Technology, tracked people’s phones at Gunwharf Quays, a large retail and leisure centre in Portsmouth -- not by monitoring calls, but by plotting the positions of handsets as they transmit automatically to cellular networks. It found that when dwell time rose 1% sales rose 1.3%.

Technology will also begin to identify customers’ emotions. Often a customer struggling to decide which of two items is best ends up not buying either. A third "decoy" item, which is not quite as good as the other two, can make the choice easier and more pleasurable.

(*) Consider:

The FootPath technology is the only system available on the market today that can gather information on shopper paths continuously and accurately.

From the archive, Decius:

Unless there is some detail that I'm missing, this sounds positively Orwellian.

Also from Decius:

Noooooo problem ... don't worry about privacy ... privacy is dead ... there's no privacy ... just more databases ... that's what you want ... that's what you NEED ... Buy my shit! Buy it -- give me money! Don't worry about the consequences ... there's no consequences. If you give me money, everything's going to be cool, okay? It's gonna be cool. Give me money. No consequences, no whammies, money. Money for me ... Money for me, databases for you.

Note:

fMRI is the new polygraph.

Brain reward circuitry responds to drug and sexual cues presented outside awareness. The results underscore the sensitivity of the brain to “unseen” reward signals and may represent the brain's primordial signature for desire.

Finally:

The reality is that, despite fears that our children are "pumped full of chemicals" everything is made of chemicals.

The science of shopping | The way the brain buys | The Economist