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Rating: 
Summary: "Depressed After Buying the Book!"
Review: Almost every investor can recall a story of an opportunistic broker or a Wall Street analyst who enthusiastically talks up certain stocks for months. Then, when things get very wrong and the stock tanks, he keeps telling he was basically right all the time, because here is this little fine-print qualifier in his report saying that for all these rosy predictions to become true this and that conditions must persist and this setback mustn't happen, and for the reasons beyond his control this haven't turned out to be, and so on. "The Coming Internet Depression" has a certain resemblance to such an analyst. Hardly anybody was more enthusiastic cheerleader of the "New Economy" than the "Business Week" where M. Mandel is an economic editor. To reconcile today's post-dot-com meltdown hangover with unbounded enthusiasm before April 2000 the author performs a partially convincing mind trick. There is an "Internet Economy" after all. But now - surprise! - it has its own downside and its downward cycle, which is also very different from the downward cycle of the "Old Economy". He implicitly claims to have known about this all along, although one wouldn't have this impression leafing through the "Business Week" issues of 1995-99. But of course one can always find fine-print qualifiers even there. To Mr. Mandel's credit, the book most likely have been started before April 2000, which suggests the author was actually shrewder than the overoptimistic tone of the "Business Week" coverage could suggests, and was anticipating the dot-com crash. In this sense, for example, the 1999 book "The Internet Bubble" by the "Red Herring" editors A. Perkins & M. Perkins was earlier, less ambitious, and more specific and intellectually honest. It simply argued that even by very optimistic projection of a future cash flow there is no way one can justify valuations of dot-com companies at that time. Here, in the "Internet Depression" the author attempt a more ambitious task, conceptualizing the whole "Internet Economy". It achieves, in my opinion, a mixed result. One of the problems is that the author doesn't really go deep in explaining his use of the term "depression" as opposed to "recession", "downturn" or other terms. He defines a depression as a "recession that is not followed by a quick and genuine recovery", then adds a few folksy quotes from past politicians along the lines of "a recession is when your neighbor loses a job; a depression is when you lose a job" and such. This is a rather fuzzy description from a respectable economist. It is like a doctor saying that the flu is simply a cold that lasts more than a week instead of a couple of days. More substantial and rigorous distinction can be found, for example, in Paul Krugman's "The Return of Depression Economics". A recession is usually a temporary excess of supply over demand and a liquidity crunch, which can be fairly quickly reversed by a monetary expansion and interest rates cut. A depression is a much more profound crisis when economy stops reacting to expansionary monetary signals and uncontrollably spirals downward into a "liquidity trap". In other words, a recession is when a car ran out of gas, which can be remedied by filling the tank. Depression, on the other hand, is when the engine itself is out of order and requires more costly and elaborate fix - getting under the hood, cleaning filters and pipes, changing worn-out and broken parts. Simply adding gas and pushing the accelerator pedal won't do any good. Consequently, as M. Mandel doesn't go too deep in exploring the nature and the structure of possible forthcoming depression, he largely views it as simply symmetrical unwinding of the positive feedback loop built during the boom years. The ascending phase is characterized by consumer optimism, stock market growth, large investments, high rate of innovation and rapid advances of productivity allowing to keep prices low; the descending phase - loss of consumer confidence, slumping market, slow innovation, weak productivity, high inflationary pressures. At the core of this view is the author's concept of the driving force of today's US economy. The "New" in the "New Economy" is not the Internet itself, but rather a novel form of financing innovation - through the venture capital, which have grown enormously since the 1995 Netscape IPO. This is indeed an important and non-obvious conjecture. But is it valid? Venture capital so far proved to be a significant, but far from leading source of R&D expenditures. To a large extent venture money went not to innovations themselves but rather into marketing and hype machine accompanying them. The overall business model of the venture capital industry itself in recent years was not as much to grow a viable and successful business, as to create a vehicle for hype and buzz - the most precious currency in the dot-com-mania period - which can be sold to over-eager investors. This works as long as the stock market goes up, but it is bound to crash and burn as NASDAQ sours. Such business model is like a sailing ship that has been designed and tested only for the down-wind course. What will happen when the wind turns into the opposite direction? The recipes that the author proposes to overcome the upcoming depression look, although sensible, look remarkably conventional: keep interest rates down, don't engage in tariffs and trade wars, maintain a robust safety net. Among the more non-trivial propositions is to increase government spending on the research and development and training in high-tech skills, which he views as something of a modern version of the "New Deal" public works program. But let's face it - when a serious crisis will finally come, it won't go according to past predictions, and new assessments and recipes will be called for.
Rating: 
Summary: Unnecessarily Alarmist, but useful nonetheless
Review: As I only read this last month (December 2000), while the NASDAQ was doing its finest imitation of a "dance of death", it came across as a timely and vital piece of work. Now, with some distance, it appears somewhat less so. I've come to the conclusion that the author had to be sensationalist in order to maximize sales for his volume. But don't get the idea that I find this book unimportant or a waste of time. As an economist by trade (and my education), I can say that very little of what has taken place over the past decade was adequately anticipated or understood by others of my ilk. Too many of them never took the concept of "New Economy" seriously, and continue to believe in the old school of the Phillips Curve and other discredited relics of the past. Mandel makes an almost Keynesian case here, with his correct diagnosis that the way to keep the 2000 NASDAQ crash from turning into a more severe problem is to pump liquidity into the system, in the form of rate cuts and tax cuts (although he doesn't endorse the latter as clearly as the former - he is a Harvard man after all), and any resulting budget deficits can hang. What happened in the 30's was the opposite, of course, and formed the touchstone for more-or-less all central banking policy since - that is, the Keynesian view of government as a sort of "lender of last resort". Mandel's central premise is that the tech-dominated economy of the late 1990's and its resulting crash cannot be handled by traditional policy remedies. Worse, he seems certain that the Fed and others won't figure out what to do in time for disaster to be averted. This is too alarmist by half, and I think misses an essential point - and that is that information now flows much faster than in the past and the resulting implications of that, one being that firms (and markets) adjust to changing conditions literally "on a dime" - and he also assumes that demand for IT services and resources will dry up, as it appears to be doing right now. After all, the thinking goes, once everyone has a computer and a cell phone, who will continue to buy more of them? Ah, but we know that they will, because the capabilities of these products will continue to improve and amaze. Indeed, I foresee the excess inventory currently in the system to be flushed in the next 2-3 months or so, then these companies will be rockin' again come May or June. Still, I recommend reading this book (as I have to many here in Davos this week) because it will force you to think of some things in a different light, especially the global ramifications of what is happening. We can no longer conduct policy in a vacuum. If the Fed lowers interest rates too far, it risks a run on the dollar, with disastrous consequences if Europeans and Japanese have to repatriate funds from the US markets. Right now, however, the greater dangers to the world economy are the situation in Japan with its expanding catalog of bad loans, and the global energy mess and the need to find a stable world price for oil that will work to the benefit of the producing and consuming nations. We in México would like to see $25 as that price, and it is heartening to think the US with its new leadership will embark on a coherent energy policy, especially with regard to electric power. It is this latter element that is critical to maintaining the high-tech-led "New Economy" (we sometimes call it the "Techonomy"), else Mr. Mandel's more dire predictions may come to pass...
Rating:
Summary: Don't understand the internet economy? Read this book.
Review: Don't judge a book by it's cover....or in this case, by it's title. The author (Michael J. Mandel) displays a very convincing understanding of the "New Economy". He vividly points out that many economists today have proven they do not understand it, and that some even deny it's existence. This book is not a doom and gloom story as the title would suggest, but is rather a keen insight to future business cycles as compared to past cycles. It is a study of what is really driving our economy today, and how much it differs from the past economic expansions. Most notably, the internet boom will end like no other boom has ever before, and how it must be understood by decision makers when that ultimately happens, else we truly will have a depression on our hands. I found this book hard to put down, and read it cover to cover in one day. Although parts of it were somewhat dry or repetitive, I recommend it. I have already ordered a copy for my father.
Rating: 
Summary: Put a crystal ball in front of this guy!!!
Review: Mandel called it before it happened.... He recognized the patterns in psychographics, world economics, technology, and the road ahead. He shows that the paradigms of the technology driven society we hastily built will need to radically change if we are to continue growing. As we are all painfully aware, we built upon the euphoria of intrinsic technology while the foundation was being eroded by weak (to non-existent) earnings and fundamental business needs. If you want to understand exactly what's going on right now and how to position yourself for the future, you will want to get this book!
Rating:
Summary: Put a crystal ball in front of this guy!!!
Review: Mandel called it before it happened.... He recognized the patterns in psychographics, world economics, technology, and the road ahead. He shows that the paradigms of the technology driven society we hastily built will need to radically change if we are to continue growing. As we are all painfully aware, we built upon the euphoria of intrinsic technology while the foundation was being eroded by weak (to non-existent) earnings and fundamental business needs. If you want to understand exactly what's going on right now and how to position yourself for the future, you will want to get this book!
Rating:
Summary: He is right, but just how right?
Review: Mandel was among the first proponents of the New Economy, predicting the prosperity which has evolved from Internet commerce and high-tech stock investment. Here he predicts the next major economic trend - a downturn which will wreck havoc. He explains why he believes this is imminent, how to tell when it's arrived, and how to survive it and prosper in the recovery which will follow. Food for thought.
Rating: 
Summary: Long on noise, short on sound advice.
Review: Michael Mandel, economics editor at Business Week, has written another economic apocalyptic book, albeit well documented and educational. He writes, as do most with financial backgrounds, in a dry manner (and includes a few charts and graphs often associated with financial writing). His basic premise is that "The U.S. has a New Economy in which the business cycle has been replaced by the tech cycle," and we do not know how to comprehend this new cycle, thus we will be bitten on the butt because of our own ignorance. Mandel goes on to underscore that since none of us have lived through a "tech bust" we do not know what to expect. While he really doesn't either, he does give us his prognosis of what could happen during this coming tech melt down. He states that, "The downturn is likely to come, as violent and destructive as a hurricane," and that it will bring "devastating damage" to those with jobs in the IT market. The coming internet depression will bring a significant fall in household prosperity, and it will bring a loss of wealth, as the stock market tanks, especially for those with "new economy stocks." One interesting evaluation Mandel makes is how the U.S. rose to dominate the world market in technology and innovation. He answers the question "Why did the New Economy start in the U.S. rather than Japan or Europe?" by pointing out three important strengths: First, the U.S. had early deregulation and a very flexible labor market. Second, we developed a system capable of financing innovative businesses. Third, we had educated workers who were willing to take risk and step outside the safe confines of the protection of large corporations. Good insight. Mandel writes about the coming depression but refuses to state when, how long and how deep. At the end of his chapter "The Next Depression," Mandel writes the caveat, "Anyone who puts too much trust in economic forecast runs the risk of finding out that the forecast will be as wrong," so from Mandel we get nothing specific, just the warning that bad times are a-coming. It reminds me of my past interludes with apocalyptic Christians who storm the streets crying, "Jesus is Coming, Jesus is Coming soon!" Jesus has been coming for the past 2000 years but we are still here. Conditionally recommended.
Rating:
Summary: Has W Become Hoover 2
Review: Should the title be changed to "The Currant Internet Depression'? It seems likely. Mandel highlights the obvious parallels between the twenties and the nineties, and explains in detail why he expects why he the currant economic protections to ineffective and dealing with the possible collapse of the New Economy. His main thesis is that the currant economists, business leaders and government officials will be as unprepared for the tech collapse as the people of Hoover's time were for the stock crash, and for much the same reasons. Mandel believes the `New Economy' is more important even than New Economy proponents suggest, and that it's collapse will lead a general collapse by a few years. He suggests that it represents an economic shift of the magnitude that took place in the twenties with the emergence of personal credit and the spread of new technologies of the time. He does not claim, as his overconfident knee jerk critics will expect, that the collapse will happen the same way as the Great Depression. Indeed, this is the opposite of his thesis; although he does point out that the conservative economists of the twenties were just as certain that there could never again be a collapse. One ideologue I mentioned the work to dismissed it out of hand because of the SEC and the FDIC, it's this sort of overconfidence that lead to the last collapse and the inability to cope with it when it did occur. Indeed, given Congresses willingness to allow the protections installed in the thirties to lapse (allowing consolidation and cross pollination in the financial/insurance world) perhaps it WILL happen just the way that it did, especially if the knee jerk anti-government lassie fare radicals actually get their way. If anything, Mandel is to optimistic, especially when he suggests that Venture Capitalists are a hardy forward-looking bunch. Mandel's scenario, with tech layoffs leading to a crisis of consumer confidence and subsequent personal bankruptcies and an unwillingness on the part of VC's to indulge in risky spending to jump start the tech sector seems compelling, and not simply because it seems to be happening now. Is the `recession' really a `depression' and will it last as long as Mandel suggests? You can decide for your self, but you ought to read the book, if for no other reason than to understand the underlying weakness of a risk driven economy.
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Summary: CONFIRMATION OF THE KONDRATIEV WAVE THEORY
Review: The key to Micahel J. Mandel's The Coming Internet Depression is not an economic debate on the possible merits of the an Internet Crash-but empirical confirmation. The pragmatic school of empirical testing seeks knowledge based on actual empirical results in the Internet Economy. One of the greatest experts on this subject Dr. Andrew Whinston has examined the Internet Economy into several layers and would ask the question-Which layer of the Internet Economy is at risk? The second empirical issue is the question of the confirmation of the Kondratiev Wave within Mr. Mandel's model? The Kondratiev wave confirms a 50 year pattern based on an upwave and downwave. The current American analysis of this downwave argues that 1980 was the start of a twenty year downwave and 2000 is the bottom of the downwave. This would confirm Mr. Mandel's alignment with the Kondratiev downwave. The idea of replacing the business cycle with techological cycle is premature and lacks substantial evidence. However, the idea of an alignment with this wave would be a more plausable explanation of this phenomenon. The impact of this alignment would result into a three phase process: (1) 2000-2002 the technological bottom is hit and is a major factor for creating an upwave of a 20 year cycle of inflation; (2) the 2003-2010 the first phase of healthy inflation which will contribute to the Denton's Roaring 2000; (3) 2011-2017 a period of unhealthy inflation which begins to destablize the economy; (4) 2018-2022 the period where inflation peaks and creates the Millennium Crisis of destroying essential Economic and Political Institutions. If this projected analysis does come about the real crisis is not with the Internet depression which is essenitally an extention of deflationary scenario where supply is greater than demand but actually allows for strategic realignment of an existing deflationary economy. The real issue here is that corporations and individuals have made economical decisions on a inflationary model and applied this to the technological model. The technological model or New Economy exists in a deflationary enviroment which does not favor inflationary investment strategies. Mr. Mandel is unaware that this process of deflation has been a 20 year process starting in the 1980's and his projection of the "great terror" in 2001-2002 is a natural outcome of this alignment with the Kondratiev wave. In conclusion, Mr. Mandel book is at the end of the deflationary process and the emergence of a new upwave that will last 20 years. He has set off the alarm 20 years to late and like Rip Van Winkle he has shocked the X generation into accepting the limitations of working at the bottom of an economic cycle.
Rating:
Summary: Insightful Book
Review: This book is very interesting because what Mandel describes is happening righ this moment. The Internet Bubble happened the stock market went haywire and now you see the results of a coming recession; tons of layoffs and bad corporate profits. As for his analysis we shall see if it truly happens in the next few months.
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