The previous posts are listed below:
The good times have been rolling along for quite a few years and there are many indicators of market frothiness. Business fundamentals trump irrational exuberance every time and IMHO business fundamentals had been taking a back seat to “new business models” based on speculative future earnings. The first real reset tremor shook the global economy in the summer of 2015 and the New Year has rung in a few more tremors. Economic tremors usually precede a major correction.
Will the Wubble Burst or Deflate? (The Zombie Apocolypse #walkingdead)
The bridge from private to public funding is built on turning growth into profit. However, recently the private side of the funding chasm has been driven by user growth as the principle metric of success. The public side of the funding chasm is driven by profitability with more rigour around business fundamentals and the level of diligence appears to be on an upward trend. Recent announcements coming from companies like Twitter, LinkedIn, Facebook, Amazon and other Senior Unicorns provide glimpses into how public markets will react. The shift from growth to profit is going to leave a lot of private Zombies stranded with NO EXIT.
The Pending Ice Age and Dinosaur Extinction (Dinosaur Tails #evolveORdie)
IMHO share buy backs and the pending Ice Age will bring about mass Dinosaur Extinction. Dinosaur Extinction is perhaps the biggest risk to the North American economy and when the bubble in this sector bursts it will be catastrophic in terms of lost jobs. The Dinosaur Bubble is also the sector most likely to be impacted by monetary policy. The time to economic impact and correction will continue to shorten as interest rates rise; however, while not as imminent a threat as the Zombie Apocalypse, the Extinction of Dinosaurs will have much broader economic impacts.
Over the Rainbow (Unicorn Lore)
If you look at “The BIG Picture” we are in a period of transition between economic epochs. Change will likely accelerate over the next few years and real growth will create tremendous new value while faux growth and corporations that fail to adapt or evolve will face extinction. Overlay on top of this an exuberant market which is fueling numerous economic bubbles and you have the makings of a major economic correction.
From a policy perspective, fiscal and monetary policy have never been more important. These are two very powerful levers that have a substantive impact on the trajectory of a countries economic prosperity. However, the applications of fiscal and monetary policy levers are separated in time from results. Therefore a small change in interest rates or government spending today can have a major impact in the future economic prosperity of a country.
One of the greatest challenges with respect to Innovation Policy is that cause and effect are separated in time by a great distance. Policy that is implemented today won’t bear fruit for many years. It is on this note that I would like to introduce my next blog post series … “What’s right and wrong with Innovation in Canada?” A somewhat contentious topic and one worthy of some healthy discourse.