My feeling it that we're in a Recession and actually have been since last fall - and that findings will be readjusted to reflect this in a couple of months - but….. Are we in a recession? asks Robert Scoble, as he hangs out in hotel lobbies in Davos and asks the Global Elite what they think.
And it sounds like it depends on who you talk to weather we're in a recession or not. I suppose you could say that the question of weather a Recession exists is really separate from weather you are personally touched by it or not.
My feeling is the Global Elite, the more socially conscious of who's at Davos, do think we're in a Recession, but there are many Corporates that will prosper regardless of what the economic system does - and for them, there is no Recession. Robert Scoble goes on to say:
"…I spoke with Steve Forbes last night (yes, that Steve Forbes) and he thinks that the doom and gloomers shouldn’t be listened to. He sees one quarter of bad news and then sees the economy coming back in the second quarter.
I forget his name, but a senior partner at Accel Venture Partners told me while we were waiting for a bus together that he’s watching the sales and other data from 250 startups reporting to Accel and he sees nothing but growth and is very optimistic. That optimism has been shared among the VC’s I’ve run into this week.
Google execs are upbeat and are hiring and so are many other companies. Start ups continue getting funded. Facebook’s executives tell me they are continuing to hire and expand at a rapid pace.
On the other hand, the sub prime problems are very real. I know a couple of people who are getting kicked out of their homes because they couldn’t afford to keep up with payments. Now, you can blame these people, but one of these families has an autistic child and so the mom can’t work. That wasn’t something they planned on, but they are getting evicted nonetheless and this is in Silicon Valley in Saratoga, a pretty rich community. Certainly real estate values are under pressure, in some communities in San Joaguin Valley in California housing prices are seeing huge drops (I’ve heard stories of homes being sold for $350,000 in neighborhoods where prices were $600,000 two years ago).
So, are we in a recession? Or are things going to roar ahead in 2008?"
The answer is Yes, we are, in my opinion, but it depends on who you are and where you sit weather if affects you or not.
Let's make a few assumptions:
1. Economic Stimulus Package, generally perceived as being inadequate (see Analytics of a Economic Stimulus Package), won't kick in till late Summer in any appreciable way.
2. Many State and Local Budgets will be drastically cut - large layoffs will be coming up in the next 3-6 months.
3. Once the full extent of sub-prime Mortgage Backed Security investments by large backs, Corporations and Hedge Funds is fully out in the open, World Stock Markets will plunge and the Dow will settle at 8,000 by the end of the year.
4. The Presidential Election will be affected by the growing detonation of the US Economy - and the edge will point over to Clinton from Obama, because most will think Obama, for all his good intentions, does not have the experience or understanding to dig us out of this mess, that was created, after all, by someone else, George W. Bush, who had nor real experience either - and look where that got us.
Just having someone who you'd rather have a drink with in Bar (isn't that how G.W.B was described as in 2000) over Al Gore, doesnt mean you should give them the keys to the family car. The world is going to be in such a mess this year, I think experience is a factor - and real understanding of the World Economy is vital - and the persons running who I think have that, on the Democratic side are Clinton and perhaps, Edwards - and on the Republican side - no one.
No one - in fact, they whole mess the world is in is mostly their fault - the Republicans. Why anyone would even want to elect a Republican, I can't tell you - but unless they manage to jimmy rig the voting machines, like they are reported to have done in Florida in 2000 and Ohio in 2004 - and I doubt they can pull that one off again - I don't see how a Republican can be elected.
I guess the other possibility where a Republican could possibly be reelected is if another 9/11 happens on our shore shortly before the November 08 Election - be it real or manufactured - and I would not put it past some to want to create such a situation.
Let's hope that if such plans are in the works, that tactic won't succeed - but let's hope that if such a thing does happen, people will be much smarter and aware of how they're being manipulated, and won't fall for it enough to swing the election back over to the Republicans.
Most everyone who attended Davos won't really be too put out by a Dow at 8,000 - but I can tell you - a lot of people will be hurting, bad, and they won't be saying it's a Recession, they'll be calling it a Depression.
That's what I think. In fact, for all we know, what happens this year might not even be called a Recession officially.
But one thing about Davos opinions about Recession show - just how polarized we've become - the trend actually started, as far as I can see, in the mid 1970's and has accelerated ever since.
First we saw it in the Religious Fundamentalism that took over Egypt and got Anwar Sadat murdered - later it spread to the United States, with the Election of Ronald Reagan, who started the trend towards "haves and have-nots" - the country was put on a path of separating the lower class from the middle class , and a new upper class emerged that essentially has fully taken over.
The lower and middle classes have actually started to move back together - at least in this country, both aren't doing that well - while the upper class has become obscenely rich. Those people could not care less if there is a Recession or not - in fact, it might make some of them even richer.
Fact of the matter is - whether this year has Recession in it for you or not depends largely on who you are and what you own - and if you lose your job or not.
In fact, I'm going to throw in a one more thought here - I hope you read this far - the idea of who the Recession touches is actually affected by targeting and micro-segmentation.
After all, since the 1980's we've been given, more and more, choices - as to what we consume, where we live, how we travel, how we communicate, what we study and how we study, and so on.
Why not turn that around and point it back to economic theory - might the Recession/Depression not be as Micro-Targeted as our own consumption habits?
I guess that suggests that one way to alleviate a recession or depression is to use Micro-Targeting to reach out to the groups or segments that have been so affected. While that might not have been possible in the past, the way our society and technology evolves now makes it possible to target stimulus much more accurately and effectively.
And that will bring into the forefront - Ethics - how do you decide who deserves to get stimulated, to get a targeted tax cut - or funds meant to prop them up.
Thinking about it - the problem that's created current ineffectual stimulus package is ideology - and almost 2/3 of the money is going to people that historically, don't spend it - they just pu
t it into a bank (upper and middle classes).……Here’s what it looks like, by quintiles of the income distribution as I wrote about in Analytics of a Economic Stimulus Package:
Which suggests, the main benefit of the tax cuts will be banks …. which are hurting - but not as much as starving people who are losing their houses.
Maybe that's why there's so much questioning about the Recession in Davos - look who's asking the questions.
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