The Economy

A guy I know is working for a start-up company in the Bay area. They've been going for a year or two now and have 50 or so clients. It doesn't really sound like a viable business, but then I don't know how much revenue they are getting from each client. From where I sit I can't see how they could be making more than about $100 per week per client, which would add up to $250,000 a year. That might be enough to pay for 2 or 3 employees, which is less that half of what they have. So they might need to add a bunch of new clients, which is a slow, labor intensive operation. But so far venture capital has been funding them. We shall see how it goes. It is unlikely to be another E-Bay, but if they keep on it could be a nice solid business that is actually providing a useful service. Or it may never reach profitability and the guys who are funding the operation will pull the plug and kiss their money goodbye. Of course, if you are investing in speculative operations kissing your money goodbye is the probably the first thing you should do. That way if you get to the point where a rational man would pull the plug, you aren't tempted to make any heroic rescue efforts that result in doubling your loss.

Talking to my stock broker the other day and it looks like stocks and bonds are making about 3% a year, which is pretty miserable. 50 years ago banks were paying 3% interest on savings accounts, but 50 years ago inflation was a dirty word. Now real inflation is somewhere between 5 and 10%, never mind what the government says, so all those stocks and bonds that make up the bulk of the business in America are losing real value at the rate of maybe 5% a year. That sucks big time.

Which is why venture capital and real estate are booming. Anyone who has any money is looking for somewhere to put their money besides in traditional investments. It might have something to do with why Trump got elected as well.

Meanwhile, on the recommendation of Bayou Renaissance Man, I am reading The Kek Wars by John Michael Greer. He's got some funny ideas, like the use of magic to change people's minds. Regardless, he has a very different perspective on the current situation and that can very useful in times like these.