Alan Landowne is one of the world's leading affiliate marketers and an academic
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Alan Lansdowne is an inspirational figure who spins many plates at once. An entrepreneur, publisher and academic, the last few months for the 32 year old have consisted of attending travel conferences in Singapore, holidays to the Black Sea, journeys around India and the Philippines, completing an MA with associated research trips to Eastern Europe, and ongoing development on his hugely popular attitude Travel project.

An acute and astute observer of the workings of global finance, I managed to grab hold of Alan three days ago while he was in London to ask him about the causes of the havoc we are currently witnessing in the financial system. In the next interview, which will be published in October, I ask Alan about his popular website and he shares the secrets of setting up a business which allows you to earn a handsome income while being free to travel around the world.


Alan, what do you think are the roots and causes of the failures of the financial system we are now experiencing?

Financial institutions have lent out too much money being confident there would only be a certain number of defaults and, as was always going to be inevitable, the defaults have started to come in thick and fast.

This has exposed the institutions had far less assets than we thought they had. Their assets were basically the interest on their loans.

You say that this was inevitable. Why did the supposed brightest minds, the best educated and the best paid people in government and financial institutions not see this?

It is a tragedy of the commons.

If you have a farmer who puts his cow out to a common pasture, it has plenty of grass to eat and he prospers. But then other farmers see that there’s grass for their cows and take them to the common land to allow them to graze. But as you get more farmers sending their cows to the same piece of land, it gets eaten up, doesn’t have time to grow again and becomes barren. Then, none of the cows have anything to eat and every farmer loses out.

All the institutions thought ‘the more we lend out, the more money we’ll make by charging interest on the loans’. They lent more and more and more. Obviously it gets to the point where borrowing individuals and businesses are at such points of debt that they do not have the capacity to pay back the loans or even afford to pay the interest. Then the collapse comes.

Do you think things could have been done differently, or is it evitable this would be happen?

State institutions could and should have regulated how much money was lent out.

But that means you are putting reins on independent businesses. Should they not be allowed to operate how they wish?

If borrowers or lenders are delusional, then those reins will come into play anyway: the credit crunch is those reins.

Considering that reins are inevitable anyway, is it not more sensible to say ‘this is the sensible limit’?

You’re basically asking for more regulation?

I am arguing for not having unfettered lending…

… sorry to interrupt, but if people want to borrow, they will argue you or the government does not have the right to tell them what to do?

I don’t think there is any credit institution which disagrees with credit ratings and credit restrictions. So we are not talking about anything new, we are just talking about recalibrating mechanisms which exist anyway.

Why did we feel we were flush with money over the last few years?

That’s easy. In the history of the United States and the British Isles, credit has never been so easy to get hold of.

The George W. Bush and Tony Blair/Gordon Brown regimes had us believe we were living in times of untold affluence. Was that the reality?

I don’t think we’ve been much more affluent than in the past. People have had more spending power based on having more debt. That is confusing debt with wealth.

Who has got more money? The person living on the street on a cardboard box or somebody £48,000 in debt? Unless the latter can sell their TV and DVD player and be in profit, then the debtor is not affluent.

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They are rather foolish to think they are.

But people have got houses worth £300,000 which, despite the recent drops in property prices, are still worth triple that of a few years previously? Does that make them richer than they were?

The value of a house is not terribly significant in and of itself. If you move, you have to buy a new house.

If you sell your house and then move into a youth hostel, you’re quite well off… if you can sell your house that is [smiles].

The only way of capitalising on that increase in property prices is to be flexible enough to find a job abroad where they are cheaper, be a freelancer or an affiliate.

What’s the way out of this financial crisis?

It’s very simple. Pay off your debt as soon as possible. And do not live on money that’s borrowed.

The current crisis pulls the veil off this illusion that people have been very rich. It just exposes that it was a con trick. Regrettably a lot of people have been seduced it would go on forever, that house prices would always go up, credit would always be cheap.

Trader Jeff Feldman works in the S&P 500 pit at the Chicago Mercantile Exchange; 15 September, 2008
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The British and American governments are bailing out financial and other institutions who are going through difficult times. What do you think about that?

I think it is a disaster. It encourages moral hazard. Institutions have not had to bear the consequences of the risks they’ve taken. What’s even worse is the tax-paying public is bearing responsibility.

It is the privatisation of profit and the socialisation of loss. When the good times are rolling, almost all the profits go into the private sector. When companies are crashing, they are bailed out by the taxpayer. And the money they enjoy is not millions, but billions of dollars. In the case of AIG, for instance, it is $85 Billion.

It leads to obscene situations. For instance, banks are borrowing taxpayers money for, let’s say, five dollars and then lending the same money back to the taxpayers for ten dollars!

Do you therefore believe these companies going through difficult times should be allowed to go the wall?

Ideally, yes. Unfortunately, some of them – although it is regrettable – have to be saved. Institutions like Freddie Mac and Fanny Mae have to be saved. While it is morally just for them to bear consequences of their actions, were they to be allowed to fail, the consequences for the wider economy could be more disastrous.

Some of the ‘experts’ are saying we are currently going through the worst point of the crisis. Is that the case and how much longer do you think this is going to play out?

We are not through the worse of it. I have a hunch the economy will bottom out in 2009. Then it will remain at the bottom for 24 months. It won’t be until 2012 that things will start to improve.

What will the impact be on online marketing? Will it lead to decreased expenditure in our sector?

There will be rationalisation. But our sector will be the least affected, because, between 2001 and 2004, it already went through a rationalisation process, and so our field is better equipped to deal with this than many others.

You are a travel publisher. The travel sector has been going through a rough time of late. Do you see any impact on your business and what do you think the coming weeks hold in store for (a) the travel sector as a whole and (b) the resultant impact on travel websites such as yours.

I think business travellers will continue to travel. The general public will go on holiday less. When people do travel, they will look for cheaper travel and cheaper modes of transport.

We’ve seen quite a few airlines collapse of late. Will there be more or have we seen the worst of it.

There will assuredly be more.

Which ones?

Alitalia is likely to be reinvented.

SAS is a candidate for collapse if Lufthansa doesn’t buy it up. I say "candidate", because there is nothing to say Scandinavian governments won’t step in to do something.

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It is worth noting that there is all sorts of consolidation taking place in the industry. Lufthansa is in talks to buy Brussels Airlines. In Germany, Condor, German Wings and TUI Fly have been in talks to merge as well.

I think more likely than collapses, more airlines will merge to pre-empt collapse. Just like HBOS has merged with Lloyds TSB. It’s easier to survive when resources are combined.

But when there are mergers, it will lead to job losses. So, if you’re a recent employee with an airline or bank, it may be time to start learning how to design websites and learn affiliate marketing!

What about the impact on affiliate marketing? Will the downturn effect affiliate networks, for instance?

Yes. It already has. There are merchants going out of business. XL has gone out of business on DGM. has gone out of business on Affiliate Future.

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So networks, agencies and affiliates are already being affected. If a merchant goes out of business, everybody down the chain suffers.

What changes can we start to enact, both on a global, national and individual level, to ensure that boom and bust does not happen again – more so in Britain than any other country?

Before he became an Eco-warrior, George Monbiot proposed a Keynesian idea a while back. He wrote a book called The Age of Consent (UK – USA) and looked into Keynes’ ideas.

One of the ideas he explores is Keynes’ suggestion that if the GDPs of any countries are growing faster than the average GDP around the world, over a certain percentage, they contribute to a central pot, and that those are growing slower than the average GDP take from that pot.

So, instead of this huge chasm between rich and poor and fluctuations in many economies, we converge towards the middle. That is one way of contributing towards evenness in the world.

Is this practical?

Brave new socialist futures are always practical. Forward comrades! [smiles]

We’d be living in a much healthier society if we focused on what people need, rather than spending a lot of time and money trying to convince them to buy crap they don’t need.

With a lot of things, the happiness is transient. People borrow money to buy things they don’t need because they are convinced by marketing they want those things. The satisfaction from owning those possessions is very transient and unfulfilling in the long term. In order to remain satisfied, they have to buy the next thing. People’s genuine needs are not being met. People’s genuine needs are feeling that they make a positive contribution to others and being valued by others. That’s the biggest need that everybody has: to matter to other people.

The things that you can give to others, like reading to children, or being there on the weekend to help somebody to move house, or writing a handwritten thank you to somebody for having been there for you, these things are more important than giving somebody a bought present.

A purchased present is a proxy. Instead of requiring your personal presence, or time, those things are often replaced by a priced commodity.

I’d highly recommend Oliver James Affluenza  (UKUSA) which explores human dissatisfaction as life has become one long series of commodity acquisitions.