No escape from the perfect financial storm

The proverbial wheels are coming off. The financial crisis is spreading across the globe. The political mudslinging is getting into full gear as the U.S. presidential election nears its conclusion and inflation continues to rise. Basically, everything costs more, with the exception of gasoline spurred by slowing demand as consumers look for ways to stay afloat financially.

The well-heeled country of Iceland, with 320,000 residents (about half the population of Alaska in an island the size of Kentucky) is nearly underwater financially. Europe, not just the U.S., is in the midst of a once-in-a-lifetime economic crisis.

Governments, via taxpayer funds, are stepping into the breach with the equivalent of Band-Aids and bailing wire to stop the potential slide into financial oblivion. But there is no escape from this perfect storm. The financial institutions played fast and loose and now they can't cover their bets. (See the 60 Minutes segment in which the credit crunch is explained in plain English.)

For the tech industry it means hunkering down. A few days ago, the legendary Bill Gates said that companies will continue to invest while the economy sputters somewhat, but "nothing like a big recession or a depression."

His remarks seem overly optimistic, given the crisis of confidence in financial markets spreading like a virus throughout the world. A hacker or terrorist hoping to destabilize economies couldn't have done a better job than the financial industry itself.

Already a steady stream of companies are lowering their forecasts, taking out any surprises as the typically more lucrative fourth quarter gets under way. The stock prices of the top tech companies are in the tank, which is indicative of a very spooked investor community. The investment community looks at those prices and sees a buy order--the stocks are really cheap--but after the last few days it's difficult to have any confidence that a seemingly good bet would pay off.

In the midst and aftermath of this perfect storm, brewed out of years of habit and taken down by mortgages for the masses, both consumers and businesses will be far more conservative in their spending habits in the coming months. As in other epochs, such as the tech meltdown at the end of the 20th century, only the strong will survive. Consolidation or extinction will be the exit strategy, reaching way beyond the broken banking industry, which has been whittled down to a handful of players.

Out of this perfect storm new financial infrastructure and regulations will emerge that bring back confidence into the markets and reignite innovation, that is until the next destructive cycle driven by irrational exuberance comes around.

Click here for ongoing coverage from CNET News, 'Tough times for tech'

[jimoase]

Our country isn't selling enough internationally to pays its international bills and that is why we are in our domestic economy is failing.

All the cash flow coming into our country, and therefore taxes, come from the activities of our international businesses. For our country to get out of this mess we will need to increase the number of United States businesses selling internationally and increase the sales of our existing international businesses.

Can United States increase the number of businesses selling internationally and increase international business sales by increasing business overhead?

Can United States businesses compete internationally while being lead by the least competent management?

Is good management, such as Bill Gates, worth their above average income?

How does the United States create an environment for growing international businesses by increasing the taxes on those businesses and their leadership?

That's my story and I am sticking to it.

Jim

[Commander_Spock]

Agreed 100% . However, how about adding the values of RANKING the businesses who are likely to bring in the most "foreign exchange" into the country.in addition to help reduce the country's trade imbalance starting with companies such as the BOEING COMPANY, INTEL......

[universeman]

The U.S. (and most of the developed world) has gone on a 25-year credit binge which, like a great party, has to end sometime. And just like a party, you end up with a hangover.

Folks, enjoy the hangover. This one might last a while.

For Jim above, while current account deficits are a Big Deal to the U.S., that's not the whole picture. If we didn't borrow and consume so much, we would need to export anything (foreigners could buy our debt and equity and get the return they want.) Problem is we've outstripped everyone's ability to lend to us. Kaboom.

[Commander_Spock]

[...."Folks, enjoy the hangover. This one might last a while.

For Jim above, while current account deficits are a Big Deal to the U.S., that's not the whole picture. If we didn't borrow and consume so much, we would need to export anything (foreigners could buy our debt and equity and get the return they want.) Problem is we've outstripped everyone's ability to lend to us. Kaboom.." Don't think so; and, the gut feeling is that America is really just waking up on New Year's 1999 and here is why:

As a point of reference here is an extract from a 1998 Lotus Development Corporation communication; Re:" Concerning the issues with 1-2-3 that are talked about in the documentation you gave me, most of the issues are related to converting files between older and newer versions of product and converting documents between Lotus and Microsoft. Anytime a file is saved backwards or saved with an older file format than the format the file was created under, such as saving a 1-2-3 , 97 file for Windows 95 into a WK1 format for DOS, then naturally we are expected to loose certain features due to technology and features that are present now that were not present 8 - 10 years ago. Similarly, if we try to convert a file from Lotus into Excel or Excel into Lotus, due to differences in the products not every feature will be converted perfectly with the file filters that are available. Both Lotus and Microsoft create similar spreadsheet programs; however, there are several differences in both programs and these differences will remain to distinguish the products apart. We do try to design conversion filters that will allow as much of the file formats as possible to be exchanged and converted without disrupting the actual file design and format.

In one of your letters you made mention of the @IRR and @ERR functions in the 1-2-3 product. By design the @IRR (notably "absent" in Open Office) will calculate the Internal Rate of Return; where the @ERR is used in conjunction with other formulas, posted was an "ERR" showing an error was received in the calculations. As far as I can see in the program I cannot find an @ERR function that will allow us to calculate an Economic Rate of Return"

Here is exactly what is happening: The United States of America (and the rest of the world) is now waking up to do their "MICRO-ECONOMICS" coursework for their college finals and the market forces (on Wall and Main Streets) around the world are the invigilators.
.

[mark1214]

Well the chickens have indeed come home to roost. It seems like some of the old rules still apply. In the 90's it was the " new economy". The new internet and tech companies didn't need to make a profit. They were wrong. Then the government tried to manipulate the market. Old lending rules don't apply. Everyone should have a "right" to own a home. Well their mandates caused lenders to come up ways to fund everyone. Nothing down, interest only, adjustable rates. The lenders had no problems because corrupt fannie and freddie were only too eager to underwrite this junk and sell it off to wall street who packaged it and sold it to anyone. When will the government learn? Some of the old ways really do work.