The End of the World as We Know It... and I feel fine... recession time is here

REM's 1987 hit threw more lyrics at us then most of us could handle.  Doing a BMX freestyle at my sister's 1989 high school graduation after party (Del Mar High in San Jose), I remember this song getting played, and groups of kids singing every word while dancing like maniacs.  Now, 31 years later, this song sums up our U.S. economy, at the moment.  Things are changing in massive ways.  It's the end of the world as we know it... and I feel fine.  But a whole lot of people don't.  It appears "the next recession" is here to stay.

As I write this on February 27, 2020, the U.S. stock market has been plummeting for the last five days.  The Dow Jones Industrial Average, for over 100 years considered a sort of pulse for the U.S. economy, was down 3,542 points this morning, from it's February 12th record high of 29,551.  It's rebounded about 500 points this morning, from today's early drop, but at this moment, at about 26,766, it's still only about 100 points above the high it reached on January 26, 2018... two years ago.  The much hyped U.S. stock market hasn't moved much at all in two years, as of right now.  That's reality.  This recent slide is due to fears of that illness happening in China, and now several other countries.  This disease is having catastrophic effects on business in China, and now supply chains for other businesses worldwide.

(Blogger's note: 1:21 pm Pacific Time, Feb. 27, 2020- I just came back to proofread this post.  The Dow Jones Industrial average closed at 25,766.64 today, down nearly 1200 points on the day, far worse than it was this morning.  By comparison, that's a point it first hit about January 12th, 2018, about two weeks after the Trump Tax Cuts were signed, and about two weeks before the January 26th 2018 peak at 26,616.  The Nasdaq ended today at 8566.48, down from it's all time high, 8 days ago, of 9,817.18.)  

In reality, the U.S. went into a severe financial crisis last September, when a little mentioned part of the economy, the Repo Markets, froze up.  The same thing happened in 2008, while we were already in a recession that hadn't been acknowledged yet, and 100+ year old investment banks Bear Stearns, and Lehman Brothers went out of business suddenly.  That was when the 2007-2009 recession became apparent to most people.

This time, in September 2019, the Federal Reserve started "injecting liquidity into the financial system."  In plain English, that means they basically made money of thin air, and handed it to major banks to prop up the economy (Ok, that's an over-simplification, but close to how things work).  The Fed started pumping 40-50-60 BILLION dollars A DAY into the financial system.  That has happened nearly every day, for 5 months now.  That emergency program was supposed to last a week or two at first, at most.  But the system was so shaky, they had to keep doing it, to keep the stock market from going down hill, which would cause other markets to fall.  So Wall Street took all that money, and they borrowed more, and pumped it into stocks.  Since The Fed's repo market program started, the stock market has surged significantly higher.  But it was already at crazy high levels, and some veteran investors started wondering (and commenting online), about what "black swan" event would come along and pop the stock bubble.  It seems we have our answer.  

So what does this mean for the average person?  To start, it means your 401K, or retirement mutual funds are losing ground.  This econmic downturn will also mean lots more layoffs from major, and smaller companies, in the coming months.  We will see major, well known businesses go bankrupt, and many will go completely out of business.  Good jobs will get harder to find.  Lame jobs will get harder to find.  People with lots of student loan debt, credit card debt, and car debt will really be in tough times, especially if they lose a good job.  For the majority of people, it's a time to buckle down, live more within their means, and struggle through. We appear to be in the early stages of a serious economic downturn, which is already about three years overdue, by historical standards. 

 As the illness effects ripple through countries outside China, including ours, it means we may see some stores shut down temporarily, possibly people quarantined, and some people will get sick.  It will be pretty gnarly, some people will lose their lives, and loved ones to the illness, which is terrible, of course.  But our nation, as a whole will survive this disease. 

But something else has happened, this illness, the one all over the news these days, appears to be the "black swan" that was a tipping point for our stock markets, and that will send a domino effect through the U.S. (and other nations') economies.  A "black swan" is a very unlikely event that most people think won't happen, but has very large consequences if it does happen.  Imagine if actual aliens, from another planet, landed at the Super Bowl with hundreds of millions of people watching, for instance.  Yes, that's ridiculous, but that's the point.  That's something most people think would never happen.  But if it did, in a few minutes, it would change the way we look at outer space, and our planet,and life itself,  forever.  That's a crazy example of  a "black swan event."  That term, "black swan," comes from the 2007 book, The Black Swan (not a paid link), by Nassim Nicholas Taleb, looking at how these low probability events affect our world.

This economic downturn, though, will be different from previous ones.  There are several ultra-long term cycles and trends that are all converging right now, and this economic downturn will see far more change, and far more different kinds of change, than any in modern history.  I'm a weird sort of dork that is fascinated by this kind of thing, and I've been reading and learning about these long term trends for 30 years now.  I've been putting my thoughts on this subject into a free online book, of sorts, published as a blog, called, Welcome to Dystopia: The Future is Now. 

I'm thinking of this economic downturn, which we appear to be visibly entering now, as "The Phoenix Great Depression."  It will be crazy, it will be scary, like all economic downturns.  We will see fundamental parts of our society change dramatically, more than we've already seen.  But... this next few years, this next decade, will also offer more opportunity to build amazing new things, more than any time in modern history.  So while the economic downturn will cause a lot of chaos and destruction, we will also have the opportunity to have a better form of human society rise from the ashes. 

Gary Vaynerchuk on why Content Creation is so important (December 2019)

Potentially NSFW.  This is Gary Vaynerchuk.  He's from Jersey.  He cusses.  A lot.  Or curses, as he calls it.  So this may not play well in your office blasting on speakers. That said, Gary is an entrepreneur since childhood, beginning shortly after his family immigrated here from Belarus.  When he was 12 or 13 years old, he says he was making $2,000 to $3,000 a weekend selling baseball cards at mall card shows.  I believe him. 

In the early 2000's, he grew his dad's New Jersey liquor store from $3 million a year to $60 million in revenue a year, in 5-6 years, primarily using Google Adwords and later YouTube.  He started a YouTube channel called Wine Library TV, which sold a ton of wine through the store, and accidentally made Gary an "internet marketing expert."  That eventually led to public speaking, and he now gives keynote speeches around the world, for all kinds of different business oriented events. 

In 2009, Gary and his brother went their own direction and started VaynerMedia, a digital agency (aka new school advertising agency), which focuses on working for Fortune 1000 companies.  VaynerMedia is now doing over $131 million in annual revenue, and Vayner X is home to at least six other businesses. 

Gary Vaynerchuk plans to buy the New York Jets some day, and win a bunch of Super Bowls.  Gary puts out more "content" than nearly any individual out there, and most major businesses.  He has a ginormous personal following, like 2.1 million followers on Twitter, for example, though he doesn't make his living as an influencer.  In his spare time, this multi-millionaire likes to hit New Jersey garage sales, and buy toys, mugs, stuffed animals, and anything else he cam flip for a few buck on eBay.  If that coffee mug has a $1 price tag, and he knows it sell for $9 on eBay, he'll weasel you down to 50 cents.  Maybe a quarter. 

When it comes to creating content for a business, and attracting attention to your business or other project, Gary is one of the main people to watch for tips, hints, and inspiration.

Recession Repurposing: These guys bought a race track

These are the guys behind the Cleetus McFarland YouTube channel.  They bought this abandoned racetrack last month.

Who?  Yeah, that's what I said, I'd never heard of this channel, or these guys.  But that's no big deal, there are thousands of YouTube channels out there I've never heard of.  Here's what caught my attentionm the title, "We bought and abandoned racetrack!!!" 

If any of you have read my personal blog (Steve Emig: The White Bear), you know I tell old school BMX stories, I show my Sharpie art sometimes, and I write about  the economy, the future, and big picture societal issues.  You know, really boring shit no one cares about.  I'm actually most of the way through writing a whole, 20 chapter, mash-up book/blog thing about  the future, and all the crazy shit I see going on.  You can look at all the words you don't want to read here (Welcome to Dystopia: The Future is Now), and then click back here.  I'm into weird stuff, like futuristic thinking, that almost nobody cares about (until it happens). 

Here's why this clip caught my eye, when it popped up on the side of YouTube.  We're going through a whole slew of changes as a society.  A lot of things that once rocked, like this racetrack above, are going out of business.  A lot of amazing properties, even entire shopping malls, are going bankrupt, and winding up abandoned.  When we drop into the next recession, which should be before too long, that process will accelerate.  Yes, a lot of people get into trouble in recessions, and a lot of bad stuff happens, financially, and otherwise.  But the other side of that coin is that there are a lot of really incredible deals on pretty much everything, cars, ATV's, real estate, stocks, businesses, whatever you're into.  So there are a lot of abandoned buildings, bankrupt businesses, and other things that can be had for insane bargains during recessions.  Like this racetrack above.

That's what caught my attention, these guys from a successful YouTube channel were able to buy their own freakin' racetrack.  That's freakin' cool.  Sure, you can blow these guys off as a bunch of crazy, gearhead rednecks... mostly because they are... a bunch of crazy, gearhead rednecks.  But this was a cool and entertaining little video.  AND THEY BOUGHT THEIR OWN RACETRACK!

This is a cool example of things that have faded in popularity, and gone out of business (a local stock car track), and sat abandoned for a while.  Meanwhile, some guys who followed their passion, and build crazy vehicles for a YouTube channel that became financially successful, were able to ante up, and buy a property that's like a dream come true to them, and make it their own.  That's amazing.

If you have some money right now, or can put a cool deal together with people who have the money and other parts of the deal needed, there are a lot of cool opportunities out there.  When the next recession sets in, there will be all kinds of crazy deals, and hardly anybody in a position to take advantage of all the deals.  So keep that in mind, if you have some big dream, like buying your own racetrack.  Or whatever your dream is.  It just might be more possible than ever, in the next few years. 

Just something to think about...

 

A talk about original thinkers that's actually interesting to original thinkers

I was taking a break from a writing project this morning, and wanted to listen to "something smart."  So I searched Ted Talks.  Plenty of  "smart" in TED talks, and a fair amount of dumb, too, in some cases.  This was the first one that popped up, the algorithm's pick from my recent searches.  Actually the first one that popped up was a TED Talk called, "Let's Talk About Porn."  I'm like, "I haven't looked up any porn recently, this algorithm must be female, she's bringing up shit from a while back."  But Porn didn't sound like a topic I wanted to hear a Ted Talk about right now.  So I looked at  the videos in the side bar, and this one was first. 

Initially, I wanted to skip it, thinking, "I'm already an original thinker."  I spent my childhood thinking up all kinds of amazing ideas, and then not acting on any of them.  Classic daydreamer with low self-esteem.  Then, I got into BMX freestyle at age 16, and a couple of years later, had this idea to start a zine.  It seemed an interesting enough idea, that I stuck with it, and actually published my first BMX freestyle zine.  It really sucked.  But I met a bunch of really good freestylers in the San Francisco Bay Area because of it.  They thought it was halfway decent.  So I made another one the next month.  And the next month.  M zines got better, I did 11 issues, got written up in FREESTYLIN' magazine, and then hired to work at BMX Action and FREESTYLIN' magazines.  The first zine, one of the first ideas I actually stuck with, changed the course of my life... for the better. 

I became a part of the BMX industry, and was suddenly surrounded by guys who had lots of cool ideas, and then acted on some of those ideas.  BMX, and especially BMX freestyle, was super entrepreneurial in those early days.  I met Bob Osborn, Scot Breithaupt, R.L. Osborn, Bob Morales, Bob Haro, Don Hoffman, Chris Moeller, Rick Moliterno, Spike Jonze, Brad McDonald, Steve Crandall, and many others.  Being around people like that, acting on my ideas became a natural thing after a while.

My point is, despite my lack of financial success, I've done a lot of cool shit over the years.  A TED Talk about "original thinkers," didn't seem all that interesting at first.  But I gave it a shot.  This is actually a really great talk, and this guy's really funny, and a good speaker, as well.  Check it out.