The case for stimulus and against austerity is blindingly obvious and recounted here in a two year old post by Paul Krugman. Regardless of your political beliefs I hope you are pragmatic enough to understand the difference between what Krugman is saying and what’s happening right now in America and Europe. The history of the last two years demonstrates that austerity is the wrong horse to be riding.
Imagining the Citron
The flaw in the whole Euro project is that it attempted to bring too many apples and oranges together into a single currency and economy.
The wise guys are remarkably inflexible and uncreative about how to solve the problem but it really is (almost) divisible into apples and citrus. The Euro as we know it is a currency for markets that have climates that can grow apples. The countries in trouble are mostly places where you can grow citrus (ok, Ireland is an outlier, but stay with me). These countries need an escape mechanism but can’t inflate their way out of the problem because they don’t own the printing presses. If they did, like say the UK or the US, they could inflate (moderately) the currency and bring down the GDP to debt ratio. But there is no comparable citrus-zone-based Euro, let’s call it the Citron, ok?
Divide Europe into Eurozone and Citronzone and you still have most of the advantages of unified currency and enlarged trade zones. However, the Citron economies would be able to run higher inflation rates letting their debt to GDP ratios equilibrate and stemming the crisis. A more flexible Citron would make these countries competitive in the global labor market without the crushing austerity that is the real problem right now. It would reignite demand and trade and end this madness.
The benefit of a unified currency market is over rated in a world rushing into an era of plastic money. There are three currencies in North America and they seem to work well enough. Europe would have more if you consider the Euro, Citron, Pound, Swiss Franc and a raft of other countries like Iceland and Moldova that have their own currencies. Splitting the Eurozone would only add one more currency but it would give Germany and important out.
The German constitution prohibits the kind of bond offerings that many say are needed to stem the crisis. Inventing the Citron would effectively enable Germany to outsource inflation to another currency. The inflation in the Citron zone would accomplish the desired result of enabling those countries to more easily repay their Euro denominated loans the same way that inflation enables a homebuyer to repay a mortgage with cheaper dollars than those borrowed.
Drachma or Deutschmark?
Looks like the Euro Zone has more debate ahead of it. A meeting of country leaders in Brussels yesterday failed to deliver any consensus on what to do about a currency union that is becoming more dysfunctional by the day, according to a story in today’s New York Times.
Greece might abandon the currency union and then? Spain, Italy, Ireland, Portugal are all on the firing line with plenty of disruption for the global economy and perhaps globalization in the process. In watching the debate among the nations it strikes me that no one has elevated (perhaps until yesterday) the discussion to the level it needs to be on to find a solution. All the actors seem to be looking for the lost purse on the proverbial well-lit street even though it was lost elsewhere.
Since the earliest days of the crisis, sensible solutions have been removed from consideration because, regardless of their efficacy, they were unpalatable to some. That left the participants to argue about solutions that were arguably known non-starters that were nevertheless palatable.
Yesterday, France’s new President, Francois Hollande, said the unsayable that the way out of the never-ending crisis is growth, not austerity. Further he said that one approach could be printing EU wide bonds denominated in Euros. The Germans said they were constitutionally prohibited from “assuming other nations’ debts” and so we have what we have.
I know lots of people don’t agree with me and that’s fine (but thanks for reading this). But the record of growing one’s way out of this kind of predicament is well documented just as is the record of failure for using austerity. The acid test for either idea is how well it works, not what your constitution says or what you feel in your gut. This is an issue for science not guts.
It appears to me that the German position, which was once unassailable, is beginning to teeter as Germany has lost the French as allies in austerity and other countries are grumbling. No one has voiced the idea yet but the possibility of a Euro Zone without Greece is becoming only a bit more likely than a Euro Zone without Germany.
Bonds, growth and stimulus would do a world of good for the rest of Europe and while Germany would be missed, it is no longer inconceivable that the deutschmark could re-emerge as an alternative to the rebirth of the drachma.
Sales Comp as Motivator? Xactly
Last week was like the fireworks on the Fourth of July. You know how at the end they fire off a huge flourish of explosives and if you live in Boston for some reason the Boston Pops plays the 1812 Overture? It was like that minus the Pops. Actually, the crescendo was not limited to last week but to a rolling thunder effect that happens because many software companies have decided Q2 is a good time for analysts to visit the Bay Area.
So SAP, NetSuite and Xactly, just to name a few, all had conferences. I heard from attendees that SAP had some interesting things to say though I am not sure where they go from here since I was not in attendance and I won’t comment further. I’ve already commented on NetSuite, which I think put on a good show of painting a picture of the future and showing how they were positioning themselves for it. A couple of weeks earlier SugarCRM did much the same thing.
The Xactly conference followed the broad outlines others had set. Attendance nearly doubled over last year and the company came into the event fully loaded with announcements and ideas. If you aren’t aware of Xactly you should be. The company specializes in sales compensation management. You might think sales comp is a backwater but not so fast — it is becoming an integral part of the sales management tool kit.
It’s about time too. I can’t tell you how many companies want to brief me on the latest ways to make sales people perform. Please. They’re already coin operated, you don’t need draconian measures to get them to perform, just a little reward system that makes sense. That’s where Xactly comes in.
Sales compensation systems used to be sold on the benefits of timely reward for jobs well done and accuracy in the accounting process. Indirectly, greater accuracy meant less labor for the CFO’s team trying to close out the quarter too. But another benefit, that Xactly CEO, Chris Cabrera likes to focus on, is the utility of a mountain of sales data and Xactly provides analytics for that.
Selling, in case you haven’t been paying attention, has become much more metrics driven. The amount of data sales teams collect is quite big and the vendor that can turn that data into usable information will be ahead of the pack. That’s what Xactly has tried to do and it seems to be working.
What also impressed me about the Xactly CompCloud 2012 is how well the company is managing to insert compensation management and tracking into the sales process. The company is sticking to its knitting and doing things relevant to performance management through compensation. The best example is the release of an iPhone app, which was announced at the show.
Large and small sales organizations are equipping their sales people with iPads these days. And just as graphics packages like PowerPoint became the killer application of the laptop and word processing and spreadsheets were the killer apps of desktops, the killer app for the tablet might be video. With video a sales person can deliver an error free message to customers and do all the other things a sales person needs to do without starting up the machine and waiting or running down the battery. Unlike PowerPoint, there’s less wondering if the presentation is up to date and all the rest.
So it’s highly likely that the tablet will in short order be the go-to device for sales people. It’s also less expensive than a laptop, which only adds fuel to the fire. So it makes good sense for Xactly to be on the tablet where sales people are certain to be in the future. In this context an iPad app makes perfect sense.
In its various product editions Xactly has increased the compensation footprint in useful and logical ways. For instance, Xactly Territories is an end-to-end solution for territory planning and management. What managers used to spend hours on with manual processes can now be done in a fraction of the time it once took while enabling them to play what-if scenarios.
Other extensions into the sales process include Xactly Analytics (already discussed), eDocs & Approvals, Modeling and Sandbox. All of these modules provide logical extensions of the sales compensation idea that will directly benefit sales people and managers.
So there’s a lot to like for this sales compensation management company. Given the environment and the customer response I saw last week, it would be easy to say that Xactly is on course and poised to make more of an impression as selling and the economy continue to improve.
Austerity, Stimulus and Beyond
In case you’ve been following the discussion here about austerity and stimulus or microeconomic vs. macroeconomic ideas for ending the global recession, the following might be interesting.
Check out the April 28, 2012 issue of The Economist, which had Francois Hollande on the cover with the headline, “The rather dangerous Monsieur Hollande.”
The Economist is a center right publication and my impression is that the editorial board are not believers in Keynesian economics. Nonetheless, a column on page 61, “Charlemagne,” had this to say about austerity: “Germany’s predilection for all-round austerity is a mistake, with financial markets now worried as much about deep recession as about deficits.”
Austerity is a negative stimulus to an economy. Less money circulating means more unemployment, which means more people falling into the social safety net, which means more deficits. It’s better to have deficits that serve the broader purpose of stimulation than to simply spend on supporting the dole.