It’s Boxing Day here in England, a day traditionally reserved for giving presents (Christmas boxes) to the extended family and friends. I was going to take a rest from posting on Syntagma and other sites until January 2, but something is jangling away at me : the upcoming downturn/recession/depression/crash, depending on which view you take. The nasty end of that spectrum is now a real and menacing possibility.

The optimistic view says that Sovereign Wealth Funds — vast reserves of cash held by Gulf oil sheiks and “new economy” developing countries like China — will save world stock markets from collapse. Indeed such funds are buying up wagonloads of equity in some of the biggest Western corporations, Citicorp and Merrill Lynch, for example, and great chunks of Britain’s FTSE 100 companies.

Quite how allowing our biggest companies to be owned and run by a small group of Oriental potentates will look in 10 years time is anyone’s guess. I doubt we will think it such a smart move.

The pessimistic view — which I confess I’m now leaning strongly toward, despite my normally sunny nature — comes from the banks. Never mind the stock markets, look at how the bankers are reacting on the ground.

All banks are now hoarding cash like Ebeneezer Scrooge and virtually ceasing to lend. With house price indices slithering down a slope like novice ice skaters, and inter-bank rates running at around 8 percent, this has become a total banking crisis worldwide, and that has the potential for real evil in our economies.

Japan’s decade-long woes in the 1990s were caused by crises in its overprotected banking system, as were the Far-Eastern “Tiger” economies that collapsed at around the same time.

So how are we all reacting to this worldwide financial mess, now a “perfect storm” according to another banking pundit? Are we hoarding cash like the banks, or are we spend, spend, spending in the post-Christmas sales?

The real crunch comes if we all stop spending, as the Japanese did in 1990. Our economies will then spiral out of control as the High Street suffers and all kinds of businesses lay off staff in droves. Do we protect ourselves first by reining in, or do we support the wider economy? Since there will be little money to spend, the economy will suffer whatever anyone does. It’s a no-win situation from whatever angle you view it.

In retrospect it’s now clear that Alan Greenspan left rates too low for too long and spawned the mad rush to lend to the sub-prime market (Ninja mortgages : no income, no job, no assets). But on top of that, it is also now normal to be permanently in debt and to service it by moving it continuously between lenders engaged in a bitter battle for market share and a bigger slice of the easy action. These lenders are no longer willing to cough up, even if they were in a position to do so.

In Britain, the situation is getting dire. From the UK’s Telegraph : “Tim Congdon, a banking historian at the London School of Economics, said the rot had seeped through the foundations of British lending. … ‘How on earth did the Financial Services Authority let this happen?’ he asks. Worse, changes pushed through by Gordon Brown in 1998 have caused the de facto cash and liquid assets ratio to collapse from post-war levels above 30 per cent to near zero. ‘Brown hadn’t got a clue what he was doing,’ he says.”

And European treaties, like Maastricht, will make matters worse not better, says Ambrose Evans-Pritchard : “Maastricht rules may force the Government to raise taxes or slash spending into a recession. This way lies crucifixion. … Brown has disarmed us on every front.”

Crucifixion is a powerful word, especially at this time of year. “Brown has disarmed us on every front” is a damning indictment of the UK’s new Prime Minister, more particularly because he has just signed us up to another Euro treaty.

I wish Syntagma could bring you a better box on Boxing Day, but I fear it may be much worse than even the news we’re now getting suggests.

Maybe I should have continued with my holiday. See you on January 2.

I’ve written a number of times about the new Apple store about to open in our town here in the West Country of England. While looking out for local information on an opening date, the following email arrived for me this morning from Apple :

If you look at it carefully, you’ll see it’s precisely geo-targeted. There’s no mention of a town or city, just the shopping complex : Princesshay. No-one outside a couple of counties would know what this was. So how did they do it?

Putting on my Sherlock Holmes deer-stalker hat, I’ve concluded the information must have been gleaned from my membership of Apple iTunes, possibly from credit card details. Even so, that’s very precise targeting and shows what can be done in the age of the internet.

We have known for a while that Google is seeking ways of marrying person-specific advertising with worldwide IP television. Apple seems to have beaten them to it with city-specific advertising by email.

Some might call it spam, but I’m grateful for the information.

If you want to begin to understand the way Google is reconfiguring its pack of algorithms — much to the despair of its smaller commercial customers — you could do a lot worse than read I, Cringley’s latest article on PBS. It portrays the Mountain View operation as a giant can of worms.

[A] problem at Google right now is algorithmic optimization gone mad with the probable result that many of Google’s smaller AdWords customers will go broke this Christmas. Killing longtime customers is not a good corporate policy.

The upshot seems to be that Google is subject to the Law of Unforeseen Consequences, a well-known byproduct of increasing complexity. Worse, Google does not address these problems directly for fear of crashing its already wobbly customer service system. Now there’s a real bind.

We’re used to governments getting into hot waters like this, but they are operated by rather stupid people. Google is run by whizz kids with Stanford PhDs and brains the size of a minor moon of Jupiter.

What’s really going on here? “Algorithms — the smarter the better — are at the heart of Google’s success. But Google’s major failing nearly always comes down to confusing algorithmic efficiency with moral, ethical, or even business correctness. Sometimes good algorithms do bad things and the tendency at Google is to simply not care: it was the ALGORITHM’s fault.”

I’ve always suspected that Algy the Algorithm was a thoroughly nasty cartoon character. Like all such characters, he’s completely indestructible. Even if you flatten him to the floor he just pops up again worse than ever.

As Cringely puts it : “… recently Google started messing with AdWords, modifying algorithms and launching new programs that make the company look good to Wall Street, which is always seeking at least the appearance of improvement, but not to Google’s AdWords customers.”

At $700 a share it may be easy to break with its original customer base, but with the U.S. and world economies going sharply south, even Google may need the support of anyone it can get … maybe even those small-scale, under-capitalized guys who built their businesses alongside its growing infrastructure.

I’ve been writing about my interest in the economics of the retail sector for a year without very much happening. Now the long-gestated project is beginning to come to life thanks to our contacts with a number of specialist retail analysts.

One of the reasons I moved into the content business online was because of a long-term plan to create specialist information products for high-worth niches, published privately or behind subscription walls.

The idea goes back to my initial training in information science at the Central Office of Information in London. The COI is part of the Foreign Office, for which I also produced specialist information packages for Britain’s Embassies abroad. These were mainly product and technology based.

Now, working with a small team of retail analysts, we’ve hatched the first of these new projects aimed at large retail corporations. The project will have its own corporality separate from Syntagma Media, which will own a share of the business.

Given Google’s sudden froideur towards digital networks, this will provide much-needed diversification away from our reliance on Google traffic and rankings.

The retail product will be followed by others of a similar nature. They won’t be visible to a general audience, although some of the knowledge-base may trickle down into Syntagma sites.

The quality of the product is everything, of course. High-worth clients are not going to pay real money for information generally available in the press. Expertise and relevance are essential. I believe our team has that, and coupled with Syntagma’s in-house information skills, the result will be a killer product for the industry.

Year 3 of the Syntagma odyssey begins with a bang.

You always knew it would.