This should have happened a long time ago, but better late than never. Marc Andreessen - the co-founder of Netscape and currently the co-founder of Ning, is now writing a blog at blog.pmarca.com. Here’s his introductory post, and today he weighs in on the “bubble” meme. It’s a long post, but can be summed up in this quote: “The human psyche seems to have a powerful underlying need to predict doom and gloom.”
The New York Times also wrote about this today, citing a recent blog post that I wrote at TechCrunch. So this particular round of predictions may have been started by me.
But as I argued before, my post wasn’t about bubbles, it was about the state of silicon valley. I still agree with my post from January arguing that we are in a very different world today than we were seven years ago.
Yes, I just said I agree with myself, but the point is that I feel the same way as I did in January. You can’t predict bubbles when you are in the middle of one, which means you can’t predict them at all.
Welcome to the blogosphere, Marc. And thanks for being an expert at our upcoming TechCrunch20 Conference.
Web 2.0 is full of crappy coding, feature emphasis rather than greatness in software, and virtual vaporware-ish hype.
I just wrote a “Top Web 2.0 Problems” post on my blog, click my name to read it. In that post, I give specific examples of failures and errors of Popfly, Joost, Instructables, and others.
“Beta” = screw the users.
It’s all cyclical. And somebody usually pushes the cycle and once critical mass is reached it becomes a self fulfilling prophecy. This time you got the ball rolling.
“You can’t predict bubbles when you are in the middle of one, which means you can’t predict them at all.” Maybe *you* can’t. The “Austrian” school of economics has a pretty remarkable record though. Mises and Hayek predicted the 1929 crash, (not that they named the day but that they saw it coming when other economists were saying we had entered a “new prosperity” and such). Similarly, Austrian economists called the .com bubble and crash as documented here: http://www.independent.org/publications/tir/article.asp?issueID=38&articleID=212
As Thornton writes in that linked article: “Attempts to measure economic aggregates precisely have failed to forecast the boom and bust cycle accurately, but economists who focused on basic cause-and-effect relationships among economic phenomena were among the most prescient predictors of the 2000 stock-market bubble and crash.”
This is the doom and gloom I see…or it is an opportunity if I am correct. In any event, I am deeply worried about the U.S.
Gold will go way up, maybe to $1,500 an ounce or higher because the dollar will fall for years. The dollar will keep falling and here is why:
The U.S. cannot sustain 800 bilion a year trade deficits. We cannot export our way out of this mess. The only answer is a sharply lower dollar to drive manufactruing home and to lower the trade deficit. The dollar has much farther to fall. What you are seeing is a long term effort (it will take 20 years) to get the trade deficit back under 1% of GDP. We are currently running a trade imbalance of nearly 6% of GDP. No nation can do this. The IMF would be stepping in to help any nation if its trade imbalance went to 6% of GDP becuase its currency would collapse! The U.S. is different, but still, we cannot sustain a trade deficit of this magnitude. People must understand that when we buy an item from say China, we pay in dollars. The Chinese company we just bought from them goes to an Exchange Bank in China and converts those dollars to Yuan. The Chinese banking system (Chinese Government) is now sitting on those dollars. They can either 1, buy oil, 2, buy Treasuries, 3. buy U.S goods, 4. buy U.S. Corporations, 5. other. Over time if we (the U.S. ) continue to run a trade deficit we could simply be completely bought and controlled by foreigners. Warren Buffet has explained the situation as being like a rich Texas farmer who loses a small piece of his land year after year and never notices for a while. When he then notices, tragedy sets in because he no longer controls his land. So in sum, we need to get the trade deficit way down. This is why the Fed has abandoned the dollar. It wil be going down for the next 20 years. That is how long it is going to take to correct this imbalance mess. Bottom line: Lower, much lower dollar will equal higher inflation and higher GOLD prices. Much higher!