"Those who cannot remember the past are condemned to repeat it." Life of Reason, Reason in Common Sense, Scribner's, 1905, page 284".


We know how the mania-bust cycle works. We have many examples in history. Seems like our "FIRE"-driven economy forgot it. FIRE=Financial, Insurance and Real Estate industries. In 1920s, it was stocks and too much debt. In the 2000s it's real estate and too much debt. It absolutely makes no sense to buy a house for a mortgage payment that is two times the rent cost! It's even more foolish to take a HELOC up to the manic value of a house to pay for consumer goods like cars, vacations and a lifestyle that otherwise one cannot afford. The industries that supported all of this activity expanded to a oversupply condition that must contract. So now we unwind...we may be halfway there; there being appropriately valued real estate that people can purchase with confidence...if the government let's the cycle play out without interference. If not, then we (the USA and EU) may follow in Japan's footsteps and it will take a while.


Nevertheless, it's not the end of the world, just the end of an era. In economic depressions and deflations, business activity continues. It just doesn't continue at the previous pace. However, there are still growth opportunities. We can look at the 1930s for instruction. We know auction houses, bars, home entertainment, repo businesses, bankruptcy and divorce lawyers will have a lot of business. But also the government will expand. Regulation and the implementation of regulation will expand. Industries will be transformed (finance, insurance, government, energy, real estate, manufacturing, health care, education, etc...).


In the 1930s, emerging high technology in the form of tabulator machines and improved telephonic services continued to grow. IBM led the charge and had growth every year in the 1930s with expanded opportunities for tabulators to support the new regulatory environment and to help industries become more productive and reduce costs. New Deal government programs drove a lot of demand and the companies that were looking ahead also took advantage of the new technology to improve their businesses. Remember, 75% of the people were still employed and even with pay cuts, many were coming out ahead due to deflation (as long as they had little debt!). They saved a lot more and spent less, but business was still transacted and those businesses positioned to serve the government and remaining consumer demand with new products, services that solved problems did OK to well.


Today, we will see the same thing. Not everyone will go out of business and whether we see 8%, 12% or 18% unemployment, business activity will continue. Certainly the government will expand...trillions of $ are being lined up. The FIRE industries will need to be re-invented to operate in a much different regulatory environment. Existing IT assets, configured as they are, will become obsolete. They can be reused, but need to be augmented and reintegrated to operate in the "New New Deal".


Today's business productivity and transformation tools will include further transition to an SOA-enabled environment. Since there likely will be several waves of regulation and increased change in the business environment, enterprises that set themselves and their value chain to respond to change rapidly will win. Beyond re-integrating IT assets to operate in the "New New Deal", businesses will also need to pull their business rules out of scattered applications, consolidate them in business rules management systems and present them to the applications, people and business processes as SOA services. This will be required to be responsive to a rapidly changing environment.


But these enterprises and value chains will need to do this with reduced budgets, even with bailout money available! Local and state governments cannot print money and will have reduced tax revenues. They will not be able to afford the $50K / CPU closed source SOA platforms or $100K+ / CPU BRMSes that require a lot of capital expenditure up front. Fortunately, open source SOA and BRMS (Business Rules Management Systems) are maturing and offer a more simple, open and affordable way to weather these challenging economic and turbulent times. Indeed, business and government will need to serve picky customers with better service on reduced budgets and open source can help lead the way!


Maybe we will get lucky and this will only be a "serious recession" like 1980-82. Or this could look more like a modern version of the 1870s, 1890s or 1930s. Or 1990s-2000s Japan. Either way, Red Hat, with its high value, cost-effective open source subscriptions and services, stands ready to serve and help enterprises, value chains, and governments not only survive, but to prepare for prosperity again!