Thank you Bernanke. Not that the market was doing all that well, but your speech hasn’t inspired much in the way of investor confidence. I’m happy that you’ve picked up on the worsening economy. Welcome to the party.
At the time of this writing (2:45 P.M. est.), the Dow is 211 points down on the day. It was up as much as 145, down as low as 340. The fed is going to buy commercial paper. Bernanke is being honest, which I appreciate. But I feel as though his mother never taught him the art of sugar-coating.
I’m not a financial analyst by any means. I’m a day to day operations guy who happens to love Excel. Yet three times this morning I was asked by various employees of my sister companies what to do in regard to their 401k plan and the market (Disclaimer: I was wearing glasses, which makes me look smarter than I am). I gave the run of the mill and hopefully correct advice of discount purchasing. I used this example:
If you buy 10 shares of a stock valued at 10 dollars, and the stock drops to 5 dollars, buy ten more shares. Your average purchase price has dropped to $7.5 per share, you now own twenty shares, and you thought highly enough of the company to buy it at $10. If the price of the stock rises about $7.5, you’ve made money on the deal.
Of course, I’m not so sure I’d value any company on the NYSE at $10 a share right now.
I also stumbled across an excellent piece by Jim Cramer. If you don’t know who Jim Cramer is…
He gets crazier by the day.
Cramer has been successful, and although gimmicky, Mad Money isn’t the worst show on CNBC. I really wanted to tie this article in for one specific sentence.
“Obama is a recession. McCain is a depression.”
Tie that statement in with this recent Rolling Stone article, reminders of the Keating 5, and the constant hammering of McCain’s own statements regarding the economy, and it’s no wonder why Obama has taken a commanding lead in the polls.
Whatever 24/7 news station was playing in my boss’s office has a countdown to the debate. I remember when the only countdowns on national television were for New Years. The super bowl picked up on the trend, and now it seems that anything that is scheduled and “newsworthy” is also worthy of a countdown. Anyone watching the debate knows what time it starts (9 P.M. Eastern), and if they don’t, there are recent technological breakthroughs to help find this information (newspapers, television programs guides, the Internet, cell phones, etc.).
Dow Update: 2:56 P.M., down 256 points
The economy is terrible. I asked a financial advisor friend of mine how you make money in this market. His response, “Double-short the Euro.” When pressed, he added, “They haven’t been hit with the worst they’re going to see yet.” He wasn’t confident in anything else.
On second thought, the debate tonight is countdown worthy. Someone needs to provide a glimmer of hope. I don’t really care who it is. The polls throughout the week will reflect who had the stronger showing, but I guarantee this much: It’s the economy stupid. I don’t think anyone cares about strategy vs. tactics. If McCain wants to salvage his campaign, it happens tonight.He has to be prepared to answer tough questions, and answer them well. He has to appeal to the middle class, which he has not done well.
Obama can win this election guaranteed in two easy steps:
1) Tonight, he must answer every question directed toward him. Beyond that, he must never veer from the economy. He should sound relevant and current. What do we do now that the bailout has passed? What does the Fed purchasing commercial paper mean for everyday citizens? How in the world are we going to fix the federal budget?
2) After tonight, ignore the attack ads. Mr. Obama, your dirty laundry has been aired. Ayers has no sway, neither does Wright. I always thought Reszko would hurt more than it did, but that story has come and gone as well. You should stay on the offensive against McCain, but on economics alone. You got enough credit in the last debate to slide on foreign policy. You’re winning. He looks desperate. It’s because he is.
“Obama is a recession. McCain is a depression.”
On an entrepreneurial note, I was saddened to learn that Uber is shutting its doors. To read more about the company failure, I’d checkout the TechCrunch write-up.There are plenty of businesses going under, and it’s incredibly easy to blame the economy. Uber is worth noting to me for a few reasons. They had clout within the industry, due in part to Scott Sassa’s involvement. They raised $7.6 million in Series B funding in May of this year. They had pretty innovative technology and a decent user base.
Uber is one of the 100 or so companies I check up on monthly. I tracked them mostly for their AJAX functionality within profile creation, but they weren’t really competitors so I stopped paying attention. What’s really nerve-wracking to me is that they were able to do all of the things we’re trying to do and they pulled the plug. With our burn-rate, I’m pretty confident we could fail miserably for 10 years and keep the doors open if we had $7.6 million. I’m sure most bootstrapping tech start-ups would agree with me.
What really happened there? And what does this failure mean for the rest of us? Venture Capital is already slowing way down (not enough exits, and rarely enough good ideas). Obviously credit is difficult, if not impossible to acquire. Web advertising dollars are not growing, contrary to the always optimistic projections of eMarketer.
“Web 2.0″ is very real. It’s also the most innovative and fastest changing industry around. It’s growing and learning from it’s mistakes. New ideas and technologies are released everyday. Companies want to monetize from the beginning. Without the capital to get these ideas off the ground, I believe that we all suffer. I honestly believe that the technology sector is going to play a big part in this economic cycle.
Dow Close: -508 points
In closing, the economy is not teetering on the edge of a recession, it’s teetering between recession and depression. I’m not the only one who thinks so. This election is by far and away Obama’s to lose. It’s going to be an incredibly difficult four years for whoever wins. It’s going to be an incredibly difficult two years for the American citizen regardless of what happens. The technology industry is not immune, and this economy could severely stifle innovation on the web.
0 Responses to “Mr. President… Meet your economy.”