I'm scared because of the "The Economic Crisis"
That reason is telling; I think, anyway. As I explained to my team in Verilab's Austin office yesterday, January 2009 feels much the same as January 2008, or January 2007. If anything, January 2009 actually feels better than those past years. Of course fortunes can change fast for a small firm, but that has nothing to do with 2009. Being a small company means you're always at risk from the big wave, let alone the perfect storm. And so if I keep my eyes purely on the data that immediately affects me, I cannot yet see a problem worse than the problem of being a small, international firm working in high tech.
So, why did I allow "The Economic Crisis" to affect my buying behaviour? The world of PC sales is $1,500 shorter than it would have been had I, You-Are-Already-Dead-Kelly, had the balls to buy a new machine. Why did I chicken out? Well the reason is, I'm scared not because I have anything yet to be scared about, but because you're scared. I'm reacting not to a softening sales pipeline, or to all my consultants being emptied from their clients, or to a sudden ban on the use of SystemVerilog for chip verification. I'm reacting primarily to the fear shown by others. You, and your fear, is the problem. Of course, you in turn are scared primarily because your friend is scared. And your friend's scared because his cousin in Austin was laid off because his Austin employer was scared because his next door neighbour, Tommy Kelly, was scared. Repeat until sick.
Now I'm not denying that there are real economic problems. As Kipling never said:
"If you can keep your head while all about you are losing theirs ... you may have misjudged the situation"So bad stuff is definitely out there. Toxic assets are, well, toxic. Companies large and small are in danger, jobs are being lost, and home loans foreclosed. Aaaah! But is it reasonable to believe that I am not alone in reacting not to actual observable problems but merely to other people reacting to something? Is it reasonable to believe that a large part - maybe the largest part - of the current problem is not "real"?
Let's do some math(s). There are, what, 300 million people in the US? Let's say 200 million of them are sufficiently afraid of their neighbour's fear that they are not buying as much stuff as they otherwise would. Let's say I'm an average non-spender. So, some are not buying a Starbucks for $4.00, while others are not buying a new Hummer for $60,000. Just for argument's sake, assume the average non-spend is $1,500. Two hundred million Americans each didn't spend $1,500 dollars they otherwise would have. That means $300 billion dollars of non-spend. For no reason. $300 billion dollars of trade that would have happened, didn't happen, because of fear triggered by someone else's fear.
Suppose we decided to actually advance in the face of fire. Instead of battening down the hatches we each decided to buy something that we we knew we were putting off only because of the fear. What would happen to the economy?
I'll leave you with the best video I've yet seen explaining the crisis, and particularly this aspect of "market sentiment".
Meantime, I'm off to buy a shiny new PC!
Great Post - if only the so-called experts in finance and government would recognize this - and oh, let's not forget the media who are having a field day fanning the flames. When everything is going good and the world is at peace, the media has nothing to talk about leading to less viewers.ReplyDelete
Spending away in Silicon Valley ...