From: Richard Loosemore (rpwl@lightlink.com)
Date: Wed Apr 19 2006 - 11:22:42 MDT
Mikko Särelä wrote:
> On Tue, 18 Apr 2006, Richard Loosemore wrote:
>
>> But on the other hand, if Seidensticker wants to point to stupidly
>> overhyped technology, he is speaking words of wisdom. The imaginary
>> version of the internet that drove the investors into a feeding frenzy
>> in the late 1990's was a complete fiction. By itself, the internet was
>> good, but it was not *that* good. There are a lot of details that we
>> could argue about here, but my basic point is that the internet by
>> itself (not the other things that might one day be facilitated by it,
>> but the direct thing in itself) was not something to get that worked up
>> about. It was convenient for the Market, because the Market has a
>> voracious need for (controlled) volatility, fresh blood and emotional
>> enthusiasm in order for the skillful players to make their killings, but
>> for the world in general it would have been better if the internet had
>> simply developed at a regular pace and nobody threw a hundred billion
>> dollars down the toilet trying to get rich on it.
>
> Actually, it is not clear that the investment was a bad thing from
> society's perspective. It was from the investor's perspective. The reason
> for this is that all those billions of dollars educated millions of people
> to the challenges and possibilities of computer science and the Internet.
> This in turn hastened the evolution and revolution caused by Internet.
>
Hmmmm.... I doubt very much that the stock market frenzy did anything
very significant in that regard. If the bubble had not happened, people
would still have flocked to use and enjoy the stuff that the internet
made available, would they not?
The damage done by the bubble, on the other hand, was enormous.
I can give a little personal example to illustrate. During the boom
time when everyone believed that this was a brave new era of fabulous
technology and that the stock market rise was the beginning of something
new, big and permanent, the people who managed a little Montessori
school near here found that their enrollment was growing so rapidly that
they could not cope with the demand.
They really hated the pain of turning away kids for lack of space, so
they decided to take out a loan to expand the school and hire more
teachers. Not being experienced managers (the school is run as a co-op)
they took the advice of a local bank and a nefarious local contractor
...... and then found themselves sitting on an overpriced expansion, a
viciously structured loan and (when the bubble burst and nobody could
afford to send their children to private school anymore) a massive drop
in enrollment. The school was brought to the edge of bankruptcy, and to
this day it limps along with enormously high fees that mostly go to pay
the mortgage and other debts.
These people were not scheming investors, they were only trying to do
their best to cope with the changes forced on them by the boom.
This story was doubtless repeated in various ways all over the place,
and of course this is a pretty mild example, as heartbreaks go.
Richard Loosemore.
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