The Greek credit fiasco has rattled securities, currency and commodity markets all over the world. It could destroy the Euro. It has shed bright light on Germany’s disproportionate power in Europe, where 70 years after World War II it has become a liberal-democratic multicultural childcare-providing Fourth Reich.
Yeah, it’s a big story with many dimensions. You’ve got your political drama, your looming social disorder and your Great Unknown -- i.e., the effect of default on the fragile ecosystem of global capital. All because the trilateral forces of beneficence, hope and greed permitted a huge slice of an economy operated for decades on mad money.
But if you frequent these pages, don’t be casting any stones on this one. The Greek capital crisis may be the model for a similarly gathering catastrophe in your own backyard. Call it the Geek capital crisis.
That is what will happen when IPO speculators and venture capitalists and boards of directors come to realize the wages of inflating the start-up economy. The nice way to term it is a “bubble.” Another way is: the Hindenburg. Pity the poor soul hanging onto the ropes when it blows.
Oh, the humanity.
Can we review where the money is in ad tech and digital media? Most of it is at Google. The next-biggest chunk is earned by criminals, foreign and domestic. The next-biggest chunk is (arguably) the equity attached to stratospheric valuations -- although that is hard cash the way Robin Thicke is hard rock. Most of it will never be unlocked. Then there are the ad networks, and handful of SaaS platforms, who are like Levi Strauss and the purveyors of picks and sifting pans during the gold rush. They sell to the dreamers, who eventually drag their broke asses back East.
Much as in Greece, it has taken many converging factors to get us to this place. The zero-interest-rate environment militates against safe harbor investments. Real estate is flat. Blue-chip companies show solid earnings, but even those P/E ratios are getting worrisome -- without any chance to hit the Powerball score. And Jeff Bezos is so rich! And mobile! And all that fantastic technology!
But, of course, a two-hour nap is also fantastic. That does not necessarily create revenue potential.
We are told we are in a golden age of content and a golden age of ingenuity and a golden age of utility. But we are not. Because, as all those bedraggled 49ers learned the hard way, almost nobody has located the gold.
The definition of a bubble market, I suppose, is the steady increase in price absent appreciation in intrinsic value. The psychology of a bubble is the faith that it will never burst. Like the faith in Greece’s ability to remain solvent, it is tragically misplaced.
Beware of geeks bearing decks. They will get inside your walls and destroy you.