I'll have to agree with your assessment. Things have gotten out of control. I'm starting to wonder if we've got any common sense.
Your blog link is missing a classic example of this sort of stupidity: The Dot Bomb era of the late 90's. At the time, I worked for a company that supplied CRM solutions to companies. We made plenty of money during that time. There were all manner of new start-ups that needed our services.
I often found myself scratching my head, wondering just how the heck these companies planned on surviving. Looking over their business plans (or whatever passed for one) and processes left me wondering how they planned on making money. Especially with the lavish way they spent what money they had. They had a product - which, of course, they were giving away for free. Some of them were good products. Some of them - eh...Not so much. Either way, they hadn't quite figured out how they were going to stay afloat.
Of course, when you brought up your concerns and such about this kinda thing - the person you were talking to shot back with the inevitable "It's the new economy, stupid!" usually in conjunction with "It's the Internet!"
Of course, I was quite sure something didn't make sense. In the real world, people need to eat. Food is not free. They go to work to earn the money it takes to buy the food. They repeat the process.
Companies need to bring in the money - in order to pay the employees and such. Therefore, they have to sell something - a product or a service - for real money. So when you get these dot bombers talking about "new economies" and such, and their business plan ultimately has no source of income (beyond the VC funding) defined, you gotta wonder what these guys were smoking... (hint: it's not tobacco...)
And of course, the inevitable happened. The Venture Capitalists started smelling something fishy. They decided not to cough up another round of money for these "new economy" idiots to burn through and the whole dot bomb era crashed and burned.
So yeah... I saw the dot bomb bubble burst - well before it did. There wasn't much I personally could do about it. There's not much you can do when someone willing goes through a round of self delusion that something will work when it clearly makes no sense. The best you can do is duck as the shrapnel flies by...
Like many of you, I have been waking up in the middle of the night wondering what’s going on with the global economies and how the world will look in a few months when we adjust to the new economic reality. I started thinking about about the world when people lived within their means, took a job for a job’s sake, and could plan for the future. It then hit me hard - things have simply fallen out of proportion.
When I graduated in ‘94 there weren’t a lot of high-powered careers available to graduates - you took what you could get and worked at it until something better came along. I actually started off in customer relations for a burglar alarm firm… doesn’t make my LinkedIn profile, but it actually started me off on a track that somehow got me here (and I did have some hilarious conversations with London celebs with their alarms wailing in the background).
Let’s talk about proportion and focus on the two staples in life - food and shelter. By 1996, I was flying high as an analyst earning a whopping $30K a year (about the same as an Oracle developer in Bangalore today). I also purchased an apartment for $100K. In those days you could borrow 3 times your annual salary - that was it. The cost of groceries was about $40 a week, and a good restaurant meal was never more than $35 a head. I’ll stop there. While my salary seems terrible by today’s standards, I didn’t build any debt and I had a mortgage that was manageable for a property that was fairly valued. Life was good, and I slept well at night.
Take 2008. The equivalent salary for a graduate-level analyst is about $50K. The cost of that equivalent apartment is $300K (6 times the salary), weekly groceries $75 and a good meal $60 (if you’re lucky and the wine’s cheap). There’s no feasible way you can enjoy the same quality of life without mortgaging yourself way beyond your means and delving deep into credit-card debt. What’s worse is that debt has become part of life for so many people. And that’s precisely what happened, and now everyone’s paying the price.
The optimum way out of this crisis is for these proportions to be redressed, however painful it may be.
