Be careful what you wish for this holiday season? After looking at Saks’ 5th Avenue “Snowflake & Bubbles” holiday window and sound and light display, I couldn’t help but think of a darker subtext. I had to ask the question answered infamously by Rolling Stone back in 2009, “who are the bubble makers?” The fact that this year’s theme was the grownup redux from last year’s child fantasy by focusing on the “makers” was also striking. An extensive google search reveals that NO ONE has tied either years’ bubble themes to manias in the broader economy or to the 1%. In fact, the New York Times called them “new symbols of joy and hope.” Only one article referenced the recession and hardship for many people as a stark backdrop for such a dramatic display. Ominously, one critic likened it to the “Nutcracker with bubbles” and we all know what happened to Tsarist Russia soon thereafter.
The light show created by Iris is spectacular and portends what I believe to be a big trend in the coming decade, namely using the smartphone to interact with signs and displays in the real world. It is not unimaginable that every device will soon have a wifi connection and be controllable via an app from a smartphone. Using the screen to type a message or draw an illustration that appears on a sign is already happening. CNBC showcased the windows as significant commercial and technical successes, which they were. Ironically the 1% appear to be doing just fine as Saks reported record sales in November.
Perhaps the lack of critical commentary has something to do with how quickly Occupy Wall Street rose and fell. Are we really living in a Twitter world? Fascinated and overwhelmed by trivia and endless information? At least the displays were sponsored by FIAT, who is trying to revive two brands in the US market simultaneously, focusing on the very real-world pursuit of car manufacturing. The same, unfortunately, cannot be said about MasterCard, (credit) bubble makers extraordinaire. Manias and speculative bubbles are not new and they will not go away. I’ve seen two build first hand and know that little could have been done to prevent them. So it will be in the future.
One was the crash in 1987 of what I like to call the “bull-sheet market of the 1980s”. More than anything, the 1980s was marked by the ascendance of the spreadsheet as a forecasting tool. Give a green kid out of business school a tool to easily extrapolate logarithmic growth and you’ve created the ultimate risk deferral process; at least until the music stops in the form of one down year in the trend. Who gave these tools out and blessed their use? The bubble makers (aka my bosses). But the market recovered and went to significant new highs (and speculative manias).
Similarly, a new communications paradigm (aka the internet) sprang to life in the early to mid 1990s as a relatively simply store and forward, database look-up solution. By the end of the 1990s there was nothing the internet could not do, especially if communications markets remained competitive. I remember the day in 1999 when Jeff Bezos said, in good bubble maker fashion, that “everyone would be buying goods from their cellphones” as a justification for Amazon’s then astronomical value of $30bn. I was (unfortunately) smart enough to know that scenario was a good 5-10 years in the future. 10 years later it was happening and AMZN recently exceeded $100bn, but not before dropping below $5bn in 2001 along with $5 trillion of wealth evaporating in the market.
If the spreadsheet and internet were the tools of the bubble makers in the 1980s and 1990s, then wireless was the primary tool of the bubble makers in the 2000s. Social media went into hyperdrive with texting, tweeting and 7x24 access from 3G phones apps. Arguably wireless mobility drove people's transiency and ability to move around aiding the housing bubble. So then what is the primary tool of the bubble makers in the 2010s? Arguably it is and will be the application ecosystems of iOS and Android. And what could make for an ugly bubble/burst cycle? Lack of bandwidth and lack of efficient clearinghouse systems (payments) for connecting networks.