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Old 06-05-2011, 08:10 AM
 
44 posts, read 36,486 times
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It was a bubble that popped only to be replaced with the real estate bubble

Now that the real estate bubble popped it seems like dot.com 2.0 is back. Let's call it the social media bubble.
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Old 06-11-2011, 06:17 PM
 
8,137 posts, read 6,188,504 times
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I would do anything to go back. We had the closest thing to full employment anytime since WW II. Even the Federal budget was in surplus. My alma mater met its 10-year fundraising goal in five. Even gasoline was cheap. When we tell our grandchildren how things were back then they won't believe us. A great time to be alive. Dial up service was a minor inconvenience.
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Old 06-12-2011, 07:05 AM
 
Location: Los Angeles area
8,619 posts, read 6,047,745 times
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I did read the entire OP and found it interesting. Just want to point out that many people were relatively unaffected by the whole dot com thing - their jobs and their lives went on as before. The OP states that "everyone was on AOL" in the 1990's, but that is an exaggeration because many people did not yet have an internet connection. AOL wasn't big enough for "everybody" to be on it. I have no doubt that everybody in the OP's circle of friends was on it, as we all tend to group ourselves with people with similar interests and activities. I never did understand what the dot com thing was about, really, and I was not a hermit, but a high school teacher at the time. Some people jump on the latest bandwagon right away and some do not. Even now there are a few holdouts, and that does surprise me. If I exclude people over 80 (one aging aunt and one aging uncle), I do know three people without an internet connection, approximate ages 64, 68, and 76. And these are not destitute people; they are fairly mainstream in most other ways, which is what blows my mind. There is always a wide range of behaviors.
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Old 06-12-2011, 11:18 PM
 
889 posts, read 619,640 times
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Quote:
Originally Posted by pvande55 View Post
I would do anything to go back. We had the closest thing to full employment anytime since WW II. Even the Federal budget was in surplus. My alma mater met its 10-year fundraising goal in five. Even gasoline was cheap. When we tell our grandchildren how things were back then they won't believe us. A great time to be alive. Dial up service was a minor inconvenience.
Very nostalgic when you really think about it huh?

There was that feeling that things were really looking up for us wasn't there?
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Old 06-13-2011, 08:56 AM
 
8,137 posts, read 6,188,504 times
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YouTube - ‪Timbuk 3 - The Future's So Bright‬‏
This sums up how many felt (Note: this was an 80's song).
Quote:
Originally Posted by Crackpot View Post
Very nostalgic when you really think about it huh?

There was that feeling that things were really looking up for us wasn't there?
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Old 06-21-2011, 03:26 PM
 
19,178 posts, read 19,037,599 times
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On the downside, there were the two government shutdowns, Ken Starr, Monica Lewinsky, and the whole mindless impeachment charade to endure. Couple of genocides thrown in as well.
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Old 06-21-2011, 09:02 PM
 
24,221 posts, read 24,738,484 times
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No. Because it was a huge house of cards, built by amateurs with zero business acumen. And the speculative frenzy of the dotcom bubble--as well as the Federal Reserve's reaction to it--paved the way for the economic catastrophe of the past three years.

I can sum-up the Dotcom culture in one anecdote. I was called in as a consultant on an attempt to create a website for nurses. You know, a place where nurses could get continuing education, buy supplies, look for jobs, network with other nurses, etc. etc. There was roughly $5,000,000 in capital raised to get this thing off the ground.

So, I walk into this very nice suite of offices and sit down at a very nice conference table in a very nice boardroom. Mind you, these are the offices for a business that had not generated the first dime of revenue. So I sit down and listen to a very long presentation with slides, graphs, page designs, and everything else you could possibly name. They knew all the buzzwords of the time such as page views, stickiness, etc. etc. etc.

At the end of the presentation, the lights came up and I was asked if I had any questions. My reply?

"So. How are you guys going to make money? I just don't see your income stream on this."

You would have thought that I had pulled down my pants and whizzed on the very nice, very expensive conference room table. They all had just assumed that it would succeed without the first bit of financial analysis, and they basically hated me for raining on their parade. The rest of the meeting was perfunctory and I was escorted out. My contact with the company called me later, complaining about my "unhelpful attitude." All because I tried to figure out how this thing would actually make a profit. They didn't last six months.

To me, that and every other dotcom I encountered was like that. A bunch of people with computers who had a bunch of great ideas, but totally lacked the discipline and grounding to make it work, which meant that untold billions in investment capital disappeared into thin air. The landscape over the late 90s and early 00s was littered with cute dotcom ideas that did nothing but churn the capital of investors and then tank.

I mean, just saying the words, "web site" meant idiots would rush in with capital to fund it. Here's a second example: A sleepy, mid-level book retailer, Books A Million, announced one November day that it was going to start an online store. The stock price went from $5 a share to $45 a share in ONE DAY, without people ever looking at BAM's business model, etc. etc. etc. And then plummeted back down to single digits again once sanity took hold.

Only a relatively small percentage of dotcoms survived, and they sure didn't make it because of their egalitarianism.

Last edited by cpg35223; 06-21-2011 at 09:17 PM..
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Old 06-21-2011, 09:32 PM
 
24,221 posts, read 24,738,484 times
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Quote:
Originally Posted by pvande55 View Post
I would do anything to go back. We had the closest thing to full employment anytime since WW II. Even the Federal budget was in surplus. My alma mater met its 10-year fundraising goal in five. Even gasoline was cheap. When we tell our grandchildren how things were back then they won't believe us. A great time to be alive. Dial up service was a minor inconvenience.
The problem is that all that prosperity was based on illusion. The first seeds of our current economic difficulties were sown in the 90s. In addition to the DotCom Bubble, efforts such as beefing up the Community Reinvestment Act and the lowering of FHA lending standards meant underwriting went out the window. Things really started to snowball in 2003, but the skids had been greased well before then.

I did a lot of bank consulting then as well. I remember when the new mandates came along in the mid 90s for lending standards. While written to ensure fairness in lending to minorities, what they really did was make it possible for people with terrible credit to borrow money--and the Federal Reserve was looking over the shoulders of mortgage lenders to make sure they made their quotas. And if you didn't, you'd have your bank charter yanked.

There were some old hands in the underwriting department who were pretty vocal about the new regs and the effect it would have down the economic road. At the time, they were dismissed as fuddy-duddies and quietly pushed out the door. But, looking back, they were remarkably prescient.

Mind you, at the time, it was a point of pride for local banks to keep their own paper, so if you took out a mortgage with a bank, they'd still be carrying the note 30 years later when you paid it off.

But with the new regs, along with the lowering of FHA standards, it became financially untenable for small- and mid-sized institutions to hold their own mortgages anymore. By the year 2000, banks would write the mortgage and then sell upstream to some consolidator. The typical mortgage would only be held by the originating bank for roughly three weeks before getting snapped up by someone.

Unfortunately, that meant that underwriting standards, already seriously diluted by the demands of the Federal government, evaporated entirely. After all, if you're just going to be selling the mortgage to Citi, why worry? And since the government has a gun to your back, you've got to do it anyway. Might as well make a profit doing so.

So what you had was an artificial prosperity that was fueled by easy and cheap credit, and a government policy to get as many people into single-family dwellings as possible regardless of their ability to pay a mortgage over the long term. Home values predictably skyrocketed to unsustainable levels and the bubble inevitably burst. I'm amazed it lasted as long as it did.

It was the Dutch Tulip Craze all over again, this time with real estate. And we are years from coming out of it. Because we are not dealing with a recession, but rather a Depression, a violent balance sheet adjustment if you will. No one dares call it that, of course, but that's precisely what it is. The recovery has not taken place yet, nor will it, until the credit problems finally unwind themselves. That's not likely to happen any time soon, either. Right now, we're watching the Euro unravel under the burden of cradle-to-grave entitlement systems in places such as Greece, Italy, and Spain. And China, with its crony capitalism and cooked books, may be the biggest bubble of them all.
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Old 06-22-2011, 06:55 AM
 
24,221 posts, read 24,738,484 times
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Quote:
Originally Posted by Escort Rider View Post
I did read the entire OP and found it interesting. Just want to point out that many people were relatively unaffected by the whole dot com thing - their jobs and their lives went on as before. The OP states that "everyone was on AOL" in the 1990's, but that is an exaggeration because many people did not yet have an internet connection. AOL wasn't big enough for "everybody" to be on it. I have no doubt that everybody in the OP's circle of friends was on it, as we all tend to group ourselves with people with similar interests and activities. I never did understand what the dot com thing was about, really, and I was not a hermit, but a high school teacher at the time. Some people jump on the latest bandwagon right away and some do not. Even now there are a few holdouts, and that does surprise me. If I exclude people over 80 (one aging aunt and one aging uncle), I do know three people without an internet connection, approximate ages 64, 68, and 76. And these are not destitute people; they are fairly mainstream in most other ways, which is what blows my mind. There is always a wide range of behaviors.
Actually, this couldn't be further from the truth. No, there wasn't a collapse la 1929, but literally trillions of dollars vanished practically overnight from the capital markets. Over the past 11 years, it has affected everything, from your stagnating wages to the Federal Reserve's loose money policy that engendered the 2008 real estate bubble.

Macroeconomics matter. Fiscal policy matters. It may not be obvious to you, but it really does. That's why it is so important for ordinary citizens to tune into the current economic debates that are going on. The issues are not impenetrable, and they directly affect you.

Essentially, what we are facing is the slow unwinding of credit. It started in the financial sector, worked its way to Main Street, and now it's taking place in world governments. From Greece to your hometown, governments and governed alike are having to wake up to the fact that there's no free lunch and certainly no cradle-to-grave welfare. Those are built on borrowing from the future and, well, the future is here.

The DotCom crisis was the beginning of it. We're now seeing the whole wretched scenario play out.
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Old 06-22-2011, 07:50 AM
 
19,178 posts, read 19,037,599 times
Reputation: 3896
A lot of steamboat start-ups didn't last. A lot of telegraph start-ups didn't last. A lot of railroad start-ups didn't last. A lot of automobile start-ups didn't last. Do you spot a trend here? Predicting that a lot of internet start-ups wouldn't last would have been a sun-will-rise-in-the-east sort of thing. Drawing irrational inferences from the facts as they actually played out is hardly worthwhile.

The CRA did not lower lending standards. It called for banks and S&L's that took federal deposit insurance to apply already existing standards to a larger population. What was learned from that was that an entire unserved market existed in areas and neighborhoods that traditional lenders had simply ignored for at least decades. Once you actually took their applications, about half of all CRA applicants were qualified at prime terms, and nearly all the rest at Alt-A, the level just below prime. The portfolio of CRA loans built up over the 1990's performed better than industry averages. Not a lot better, but better. CRA was not just good policy, it was good business.
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