I’ve been thinking for a while that the Pink Panther films hold some useful lessons (no, really), but not exactly the ones that the Econophysics blog has come up with in a timeless post from late January.

In a virtual way, I have been standing right next to Econophysics blog for nearly a year. Right here, to be precise. But, for all sorts of reasons, I’ve been looking the other way, and it’s about time I offered some acknowledgement. For those who don’t follow finance, let this be a little pointer to someone who knows a lot more about it than I do and can offer up some enviable insights that the Knackered Hack can only really prod bluntly at. So this is a long overdue hat-tip to a blog that can help explain what has been going on, and make some judgements about the politics of it all, and whether the tools of finance have been used wisely or not. It’s also worthy of note that only yesterday Econophysics was listed at economics.alltop.com. I can’t imagine how that might happen; maybe the panther, or the invisible hand, strikes again.

As Clouseau might say: “Monsieur Econophysique iz a critique of ze système yeu kneur…” — the system that delivered us the credit crunch, that is. In this post, he explains how those responsible for the crisis manage to get us to look the other way, to focus on the rogue trader like SocGen’s Jerôme Kerviel for example, while a more sophisticated fraud is being perpetrated. Econophysics characterises this fraud as a hypocritical shrugging of the shoulders by its architects while they simultaneously seek a government bailout on a millennial scale. These same people would scorn support for a social system that might aim to rescue more quotidian personal recklessness or misfortune lower down the social scale. To quote Econophysics:-

What about the politicians that looked the other way when all of this was going on? They weren’t being wined and dined by the Jerome Kerviels of the world nor were they concerned about what would happen to ordinary Joes and Joannes that voted for them when the supposedly non-rogue, but (in some ways) far more crazy financial dealings of those who were wining and dining officials blew up. No, it was the business-world’s equivalents of ‘Sir Charles Lytton’ [David Niven] that did attend the Grandes Ecoles, the Ivy Leagues, etc., that got our leaders and regulators to look the other way.

And looking the other way is at the heart of our crisis. One of the basic tricks of magicians is to use devices that distract the audiences’ attention from what they should be focused in on in order to not get tricked … smoke and mirrors. A good magician knows that human beings are more likely to be interested in the stumbling and bumbling Inspector Clouseau rather than the coldly calculating Phantom.

The mess that we are in is because we believed in a mirage, a possibility suggested in an excellent article by David Leonhardt of the New York Times. Just as Inspector Clouseau repeatedly escaped death by pure dumb luck, we had managed to escape financial disaster (until now that is) by Clouseau-esque good fortune.

I’ve been wanting, for some time, to write about what I’d term “the Clouseau Complex”: Peter Sellers’ depiction of lucky incompetence as brought to life by Inspector Clouseau. For me, Clouseau is the comic epitome of what so many of us know about success and failure: that there are some people who can get themselves into positions of authority and continue to succeed while everyone who comes into contact with them (except their superiors and the general public, perhaps) knows the entirely random route through which their successful results have been achieved. But my real-life examples of the Clouseau Complex will have to wait for another post.

Welcome to the Knackered Hack. If you're visiting in search of my paleo lunch with Black Swan author Nassim Taleb, you'll find it in three parts here. If you enjoy what you see don't forget to subscribe to the RSS feed. Alternatively, so you don't miss an important update and can more easily forward those salient posts to your friends and business contacts, sign up for my regular email service. You can follow me on Twitter by clicking here. Thanks for visiting!

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In 2005, I came 9,405th in the London Marathon in just under four hours (3:55:36, to be precise). Last year I had a plan that I would do better, and would cover it as a freelance journalist too. The organisers obliged, and I realised I’d better start a blog. The Knackered Hack was born to track my exploration of endurance fitness, and some of the issues sports can reveal to us as amateurs: something like the professional lessons of Ed Smith’s book, which I reviewed only the other day.

But I lost eight weeks of training from the first 10 of 2007 to two viruses. Thus my hopes of running a marathon were in shreds. That was a lesson in itself. And it was about that time that Nassim Taleb contacted me so that his publishers could send me a copy of The Black Swan to review. The rest, as they say, is path dependence…

Last week, Guy Kawasaki listed The Knackered Hack as one of the web’s leading journalism blogs at his newly-launched aggregation site: Alltop.com.

Not all of you will be familiar with Guy. That’s OK, because the patron saint of us uncertain folks is Herbert Simon, who some will know coined the term “bounded rationality”, which incorporates the idea that you can’t know everything. Admitting as much did not stop Simon from winning a Nobel Memorial Prize.

But I digress. Guy was one of the early Mac team, he is a venture capitalist, and renowned speaker. And Alltop.com is aimed at us head-scratchers, who don’t quite know where to start sometimes. His company is also called Garage Technology Ventures. QED.

I’m bound to say that Alltop.com is a great site, and if you start using it you’ll be an early adopter because Guy and colleagues only really announced it a few weeks ago. Although I’m no expert in these things, some of you may find that the concept is broadly similar to popurls.com. What Guy is doing is taking a non-Google, non-quant view at the web, looking for influencers and connectors, especially through the prism of Twitter and the trust networks it is both generating and reflecting.

Here is what Guy said about it on his blog:-

A good metaphor is that Alltop is an “online magazine rack” that displays the news from the top publications and blogs. Our goal is to satisfy the information needs of the 99% of Internet users who will never use an RSS feed reader or create a custom page. Think of it as ‘aggregation without the aggravation.’”

If I’m allowed to say one thing I really like about it, it is the clean way that the first few lines of each news or blog entry open up as floating text (see above) and allow you a quick preview of the contents. There are other technologies that try to do something like that, but this reminds me of something I wanted way back in the 1990s as a way to allow the reporter to mask explanations of complex terms that would get in the way of readability or the patience of cognoscenti. Like many bloggers, I use Wikipedia for that these days in most instances, but it does involve opening up a new window/tab. So it will be great when that technology finds its way into more general use.

The week before last was Annie Hall week at home here, which contains Woody Allen’s paraphrased reference to the Groucho Marx joke: “I would never want to belong to any club that would have someone like me for a member”. It was not my intention to start a journalism blog, and I’m not doing this for the brethren, but I’m grateful for the recognition. Of course, I do think journalism is important, and I do write about journalism frequently on this blog. And just so that there’s no doubt that this IS a journalism blog (amongst other things), I’ve decided to celebrate my Alltop accolade with the introduction of a new category on the right there: “journalism”. As I’m learning more and more, there are two certainties in this new world of ours: death and taxonomy.

And before we get carried away that we’ve reached the A-list, Guy shares some interesting ideas about influence from different sources on his blog here and here, that further explains perhaps our apparent non-linear rise out of the Long Tail’s long tail.

Of course, for regular readers of KH, especially those who’ve subscribed to the email, or feed or follow the marginal entertainment of my Twitter service, you can feel especially vindicated for your loyalty and encouragement of this tired soul . Thank you.

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In 2001 I was faced with a choice.

Sit quietly on the sidelines of a corporate collapse while hell was freezing over, find a new job, or attempt a management buyout.

The latter involved some breaking ranks: never a comfortable path, as Gerd Gigerenzer has shown. But in the circumstances, and in Schumpeterian terms, it would seem to have been honest and right to try. In a Chapter 11 auction, you need bidders quickly. They need to come from somewhere. With my colleagues, I decided we were as worthy as any. After all, we had been pretty neat in creating social networks, so we knew how to operate at high levels of productivity without the need for as many staff as most news companies. Remember, we had to operate in Reuters’ backyard — probably the reason we were so resourceful, necessity being the mother of invention and all that.

Bear Stearns played a small but disappointing role in this MBO attempt, as investment banker to the wider company sale, appointed by the company’s creditors. Surprisingly, as a thirty-something editor, this was the first management buy-out I’d attempted. So I needed help. I was pointed toward the bankers as I needed to prepare business plans and locate potential investors, but I was also still doing my bit trying to find a corporate buyer in London for the whole firm. As I recall, emails, calls and voicemails to Bear Stearns went unreturned. All I got for my efforts was a solicitation document pdf that I already had, and to which I’d made some contribution as a general manager, in any event.

Where Bear Stearns were too lazy to venture, I had to go find other help. It materialized in the form of London bankers Cazenove, who were systematic and supportive. Time worked against; all sorts of clocks are ticking in these sorts of end game, (although not as quick as must have happened over this past weekend).

It is just possible that, as an internal player, the rules put you at a disadvantage from the get-go. You feel an unwelcome visitor at the poker table — everyone else is expecting you to be clearing out the ashtrays. But I spent enough time at the table to lay down a couple of hands and get the chance to explain a little about the productivity benefits of social networks within the firm to a few of the great and good, who I guess might be grateful now for having had a little of that accumulated knowledge.

And one of the biggest ironies of it all: as we re-modelled our various news business lines to reflect an independent future, our strongest business plan identified that there was an untapped news market in a rapidly growing sector called credit derivatives. And we had the people who knew how to and wanted to cover it.

As we wake up each morning with the scale of the credit crunch appearing ever larger, I’ve wanted for a while, so long as you won’t think me a Jeremiah, to coin that old cliché from the Jaws movie for the sake of our central banker friends, uttered by Chief Brody (Roy Scheider) to Quint (Robert Shaw):-

• “You’re gonna need a bigger boat.”

And I wonder if, before too long, anyone is gonna get to say:-

• “Smile you son-of-a-bitch.”

Unfortunately, we may all now be in the same small boat.

For those unfamiliar with the movie, it goes something like this. As one YouTube commenter said: the shark still looks fake:-

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This is a quick post to highlight, for the statisticians among you, two tails of fame.

My pictures below show an informal but nervous event in which a few hundred people fought and crammed their way in to see Viktor Tsoi and Yuri Kasparyan play a few songs. Their fame was clandestine. The video at the end shows what had happened to them (as Kino) in four short but tumultuous years in the late stages of the Soviet empire. It’s the difference between The Cavern and Shea Stadium, Russian style.

Things used to take a long time to set up in the Soviet Union. And that was as true of an underground concert as anything else. As I recall, there were a few technical problems before and during that 1986 concert; had there not been, I doubt I would have felt comfortable getting up and snapping. The artist is on the stage getting the unreliable equipment working, while the audience mills around after a very un-Soviet crush to get in. I don’t know if anybody had to pay - I certainly didn’t because Viktor and Yuri had invited me and the language-course crowd along as their guests.

The contrast with the later footage could not be more stark. There was a distinct absence of anything official in spring 1986, given how many people there were congregating in such an enclosed space. There’s a polite restraint amongst the audience, as if they’ve come to a favourite author’s signing session at the local bookstore. Nobody wants to embarrass themselves by looking too enthusiastic once through the door! But by 1990 a real hysteria has set in. As Viktor arrives for his last concert at Moscow’s huge Luzhniki Grand Sports Arena*, just a couple of months prior to his death, the streets leading up to the Olympic stadium are lined with scores of Russian police.

A little translation for the video: the titles about halfway through, as a hand menacingly covers the lens, read “Luzhniki Grand Sports Arena 24 June 1990″ and then “The Last Concert of Viktor Tsoi”.

Boy, would I fight to get into a room with them now!

*For soccer fans, the stadium is due to host the 2008 UEFA Champions League Final on May 21.

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