OK a few sketchy comments on the economy.<\/p>\n
First, I think it’s a mistake to think that we live in “an economy”; we live in a collection if economies, which intersect more and less strongly at different connection points. The economy I live in has very little to do with the economy of an immigrant worker who lives in Lima, Ohio and works in a building services company, nor with the economy of a hedge fund manager who lives in Greenwich. The economy is one of ‘layers’ that coexist geographically but really have more to do with a larger, global network of peers – mine in Bangalore or London or Boston. We’ve been living through a decades in which the old industrial economy layer in the US has been eroding while other layers – technology, services, financial services – did great. Now we’re seeing two layers – two critical ones (the housing market and financial services) – get slammed.<\/p>\n
And these are getting slammed because the markets are doing exactly what they are supposed to do – slam people who are massively greedy (“pigs get fat, hogs get slaughtered”) and who have been living and investing beyond their means.<\/p>\n
And, I’ll suggest we’ve been doing that – somewhat – since the Clinton boom. I think we had two bubbles that started about the same time in the late 1990’s. One was the technology bubble, and one was the financial bubble that we’re just now starting to see deflate.<\/p>\n
The financial history of America, remember, is one that was built on bubbles. Read Charles Beard on the economic history<\/a> around Independence and the financial bubbles and manipulation that surrounded the actual creation of the country. The railroads left European investors with rooms full of worthless paper – and America with a railroad system. Global Crossing and the other tech companies didn’t just make Terry MacAuliffe rich; they left us with an infrastructure that’s valuable today.<\/p>\n I’m asking myself what will be left behind by this bubble, and to be honest, I’m not sure.<\/p>\n