In a line that stretched around the building, hopefuls queue up for free resume advice at a job fair at the San Mateo Expo Center on Wednesday.
(Credit: Declan McCullagh/CNET Networks)SAN MATEO, Calif.--The advertisement for the job fair boasted a list of desirable employers, including Kaiser Permanente, Southwest Airlines, and Wells Fargo Bank.
But when hopeful Silicon Valley job-seekers arrived at the San Mateo Expo Center here Wednesday, they found booths for the U.S. Army, U.S. Navy, and the Army National Guard. The only non-government, non-education, non-security company to appear was Verizon, which was looking for sales representatives to work in local retail stores--previous retail sales experience required.
It turns out that the ad included fine print. It said the companies listed were "previous participating employers."
The reason for the remarkably low corporate turnout, according to an employee of the event's organizer, Jobs & Careers Newspaper, is that companies aren't hiring and that they've whacked the hiring staff and recruiters who would usually show up at events like this.
The shrinking number of prospective employers comes as the ranks of the unemployed are growing: San Mateo-based Jobs & Careers Newspaper expected about 600 people. By 2:45 p.m., according to its estimates, about 2,000 showed up.
A sergeant in the Army National Guard was on the phone with a probation officer about a possible recruit. The fellow had stopped by the booth a few minutes before to express interest but was worried his criminal history would get in the way. That may not be a problem, but it's hard to know for sure: the recruiter declined to be interviewed for this article.
The for-profit University of Phoenix arranged for a booth in the corner in hopes that people would be willing to pay to go back to school to finish a degree or add another one. Instead, people who stopped by just wanted a job.
The three people sitting behind the Verizon booth pointed to a stack of resumes a few inches high that applicants had left during the day. The pile was sitting on a large cardboard box--the size that photocopier paper comes in--with many more resumes inside.
The only non-government, non-education, non-security company to appear at this job fair was Verizon. The U.S. military had three separate recruiting booths.
(Credit: Declan McCullagh/CNET Networks)Still, one Verizon representative said that not many applicants appeared to have the necessary background in retail sales. "A manager has certain sales responsibilities and performance goals that have to be met," he said.
No wonder, then, that the longest lines formed in front of two adjacent booths: one offering free resume critiques and the other for a California state office called the Employment Development Department, which offers the CalJOBS matchmaking service and, perhaps more importantly, unemployment benefits. At some points in the day, those queues snaked out the door and around the building.
San Mateo could be called the northern border of Silicon Valley. Oracle's world headquarters is less than four miles away in Redwood City, which is also home to Electronic Arts, PDI/DreamWorks, Informatica, mobile software firm Openwave, and Web applications provider Broadvision. YouTube and Keynote.com are to the north, while most other large employers are south.
According to state figures (PDF), California's unemployment rate was 9.3 percent in December, a substantial jump from 8.4 percent a month earlier and 5.9 percent a year earlier. About 1,732,000 people in California were unemployed, up by 653,000 a year before.
By historic standards, these figures aren't entirely dismal; national unemployment hit 10.8 percent in 1982 and was far higher during the Great Depression. But the figures are hardly encouraging amid a sharp, deep recession that's accompanied by shrinking home values.
Unlike the dot-com bubble a decade ago, Silicon Valley isn't as hard-hit as Wall Street has been. And until the end of 2008, it almost seemed to be weathering the recession. Now it looks like the worst is still to come: Asia's economies are faltering, and high-tech jobs fell by 1.3 percent from December 2007 to December 2008. Another Silicon Valley company, flash memory maker Spansion, just laid off 3,000 people, or 35 percent of its workforce.
Silicon Valley residents may need to get used to more job fairs with more applicants than openings.
Microsoft Chief Executive Steve Ballmer sketched a dire portrait of the world economy on Friday, likening it to market conditions in 1837, 1873, and 1929, each of which involved bank failures, high unemployment, and a depression.
"This is a once-in-a-lifetime economic crisis," Ballmer told a retreat of House Democrats in Williamsburg, Va. "There is a lot of history around that, and frankly if you stop and think about it, 1837, '73, '29, 2008, it's almost exactly a whole lifetime between each of the major economic difficulties that we face."
Ballmer said that economic growth in the last 25 years was fueled by innovation, globalization, and debt--and that the current levels of debt were unsustainable. "In 1929, for example, just before the stock market crash, the private debt-to-GDP ratio was 160 percent," he said. "Last year, private sector debt as a percentage of the GDP: 300 percent, far more leverage."
Microsoft CEO Steve Ballmer: "This is a once-in-a-lifetime economic crisis."
(Credit: Microsoft)His warning of a protracted downturn that could become a depression comes amid a stock market that is down by more than 40 percent from its October 2007 peak, and housing prices in many metro areas that have been falling consistently since July 2006--a feat not equalled since the Great Depression.
"In my view, what we now have will be a fundamental economic reset," he said. "The economy is going to have to re-establish itself at a level of spending that reflects the real value of underlying assets before we can all start growing again at a healthy rate."
On the other hand, even after this week's unemployment reports, the U.S. unemployment rate remains at 7.6 percent, lower than where it was in 1975 and 1992, and far lower than 10.8 percent in 1982. Figures before 1940 involved more estimation, but Census Bureau data put the unemployment rate in 1938 at 19.1 percent.
"PC sales (are) discretionary in most home budgets, the second, the third PC," Ballmer said, adding that Microsoft nevertheless will continue to spend more than $9 billion a year in R&D. "Consumer electronics has that characteristic. Fifty percent of capital spending in this country is on information technology. Less capital, less spend on information technology. No sector will be immune."
Microsoft shares have fallen by about half since the fall of 2007, a steeper fall than the Dow Jones index but in line with the tech-centric Nasdaq.
Democrats in the audience applauded when Ballmer endorsed the so-called stimulus legislation currently being considered by the U.S. Congress, saying it is "vital" and "will provide a cushion as we reach the reset point and it will help restart our economic engine."
He didn't go into details or address some of the allegations of wasteful government spending that have imperiled the bill's passage in the Senate as its size swelled to nearly $1 trillion. Senate Democrats said on Friday night that they might whittle down the revised version to $780 billion, still much higher than the $300 billion figure that was proposed as recently as October.
Ballmer said that while he distinguishes "private debt and government debt," there "certainly has been too much use of debt" in general. The stimulus legislation will be paid for by the U.S. Treasury borrowing money and running up debt, largely from other countries such as China.
After offering dark comparisons to history's depressions, Ballmer ended on a positive note, saying the United States has the right combination of talent and potential for innovation to succeed, especially if more tax dollars are spent on basic research and development.
This is, he said, "a once-in-a-lifetime opportunity to think about our priorities again and make the investments that put us on the right foot."
During a whirlwind visit to Sydney, Australia, Microsoft Chief Executive Steve Ballmer this week said he has confidence in President-elect Barack Obama's leadership.
Microsoft CEO Steve Ballmer talks to developers in Sydney.
(Credit: Microsoft)Obama's decisive victory this week over Republican rival John McCain in the U.S. presidential elections has been broadly hailed by technology leaders as potentially beneficial to the country's technology and communications industries.
"I have a lot of faith in our system and our electoral process, and I think President-elect Obama understands that there's a deep set of economic issues, and I have confidence in his leadership," Ballmer said on the Australian Broadcasting Corporation's Lateline program, in response to a question on how he thought Obama's win would help Corporate America.
The full text of the Lateline interview, along with a video of the broadcast, can be found here.
Ballmer said the global economic crisis "definitely affected" the IT industry, with IT spending being 50 percent of overall capital spending, and PCs being one of the more expensive things that most people buy for their homes.
"The No. 1 thing we actually need now is to sort of restore a positive sense of optimism," he said.
"I actually think to some degree...negativity feeds on negativity. And I trust at least in my home country, the U.S., with the presidential election behind us, maybe we can get into a positive psychology loop," Ballmer added.
In the rest of the interview, Ballmer mainly appeared to reiterate comments he made in Sydney earlier this week regarding the need for Australia to adopt fast broadband, as well as about the future of computing and pending new Microsoft products such as Windows 7 and Azure.
The full video of Ballmer's speech to developers in Sydney yesterday is also online.
Renai LeMay of ZDNet Autralia reported from Sydney.
BURLINGAME, Calif.--In the 50 years since Burt Blumert founded Camino Coin Company, a precious metals dealer in this quiet San Francisco suburb, he's never witnessed such a frenzy of interest in gold and silver coins.
"There are no gold coins available," said Blumert, who is now mostly retired after giving the business to a longtime employee last year. "This is just as true of silver, even more so."
Call it the Great Gold Rush of 2008. Or, more accurately, the Great Gold Shortage of 2008. Like many dealers with physical storefronts, the Internet accounts for a good percentage of Camino Coin's business, and it and other online retailers have found that economic uncertainty, the stock market crash, and inflation fears have led to a resurgence of interest in all kinds of precious metals--and a sharply reduced supply.
Spikes in demand are not exactly new: in 1991, fears of war in the Middle East caused sales of U.S. Mint-produced American Eagle bullion gold coins to spike. In the stagflation of the 1970s, gold prices increased eightfold in just three years before falling back to earth in the 1980s.
But today's remarkable flood of demand for gold coins--something tangible, symbolic, and entirely divorced from an increasingly-fragile banking system--has surpassed those other eras.
"In normal times you're buying as much off the street as you're selling," Blumert, 80, said in a weekend interview. "In average times, you don't go to the mint. All of that has dried up. All of those sources. The mint becomes the only source of merchandise." The worse news: the U.S. Mint, citing unprecedented demand, has actually halted sales of many gold coins until 2009.
Hal Varian, Google's chief economist, echoed that observation in an earnings-related conference call last week. Varian said there's been an "obsession" with related search terms among Google users, with "huge increases" in searches for gold, home safes, Libor, and money market funds.
At Blanchard and Company, the self-described "largest and most respected" precious metals retailer in the United States, visits to the firm's Web site have increased by about 1,000 percent since early September, according to David Beahm, vice president of economic research.
Beahm said that search engine advertising is responsible for attracting about three-quarters of new customers to the New Orleans-based firm. "Quite frankly, we've never seen this kind of demand before," he said. "People are actually just interested in gold. Right now, most people want gold American Eagles, but they'll take anything they can get." (The U.S. Mint manufactures American Eagle bullion coins that contain one ounce of gold.)
Precious metals demand "skyrocketed"
Other online retailers report similar experiences. "The demand for precious metals has skyrocketed," said Mike Maroney, a vice president at Monex of Newport Beach, Calif., which calls itself "America's premier precious metal dealer" with more than $25 billion in transactions to date. Maroney said Monex's business has increased by "four to five times" since September, and now customers want to take physical possession of their purchases.
"We're seeing large net worth customers looking to own some gold as a hedge," Maroney said. "A lot are worth hundreds of millions. They're not worried about price. They're worried about having something in their hands if everything else goes to hell in a hand basket...(In addition), we're seeing people who have never owned precious metals in the past call up and ask how to start."
The lack of American Eagle gold coins, coupled with new shortages of Canada's Maple Leaf coins, has been problematic. "Thankfully, we have a marketing agreement with the Austrians--they're running their presses around the clock...I typically have somewhere between 60 to 70 delivery products. Now I have seven. Everything else is sold out." (The Austrian government mints a gold bullion coin called the Vienna Philharmonic.)
Goldmoney.com offers a different, and innovative way to buy gold: Open an account through their Web site, transfer funds from a bank account, and the U.K.-based company will buy bullion for you and hold it in a vault insured by Lloyd's of London. The benefit is that you don't have to worry about finding a safe place to store coins; the downside is that in an emergency, you don't possess them.
In the last month, said James Mitchell, a customer support manager for Goldmoney.com, "business has quadrupled, it's gone up four to five times. It's really gone crazy here. We've been growing steadily over the last few years but we've had a boom in the last month."
In addition to offering a popular specialty-news aggregation site, Kitco.com lets customers order bullion coins or hold gold in storage accounts.
John Nadler, a senior Kitco analyst, suggests that customers set up a storage account and wait for the current shortage to wane: "If people are going out and paying unreasonable premiums on products, there's just no reason for that. They could buy a pool account, wait until there is normal production and convert to coins at small fees."
An alternative to stocks, bonds
Another way to benefit from potential price rises, and own an asset that's generally not correlated with the performance of the stock market, is to buy an exchange-traded fund through a brokerage like Sharebuilder.com. The amount of gold held in trust by SPDR Gold Shares leapt by about 16 percent in September alone.
The downside--and this applies to buying coins as well--is that the price of gold may fall and investors could lose money. Gold does not pay interest or dividends, and can badly underperform the stock market during an economic boom.
This happened in dramatic fashion in the early 1980s, when gold hit a high of around $850, not adjusted for inflation. Then it plummeted to a fraction of that value and remained there until its gains this decade. A 1999 article in The New York Times expressed the conventional wisdom of the time: "In the nearly two decades since the price of gold peaked, there have not been many good seasons for the precious metal."
If inflation is increasing, especially with the amazing amount of dollars that the U.S. government has created out of thin air in the last few weeks, gold could continue to shine.
"People are concerned about inflation right now," said Dana Samuelson, president of American Gold Exchange in Austin, Texas. "I think gold prices will be substantially higher still in the coming years, based on the inflationary forces of all this money they're printing to continue to lubricate the financial system...People are scared. We're in uncharted territory."
CNET News' Stephanie Condon and Stephen Shankland contributed to this report.
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