Apr. 27, 2001
The bluebonnets are in bloom, the wolves are at the gates, and the luster is off the reputation of Austin town.
Daily I sit in my apartment, e-mailing resumes while the concentration of "New Economy" businesses surrounding my complex crumbles. One block away, ClearCommerce cut a quarter of its work force.1 Aperian, which merged with Fourthstage Technologies in Phoenix, laid off 33 people.2
On the west side of Burnet Road, across from the "pink palace" of past employer IBM,3 Multilayer Technology closed its shop.4 Also near IBM, where Burnet connects with Duval Road and MoPac Expressway (Loop 1),5 Agillion dismissed most of its employees and seeks buyers.6
I've even outlasted pcOrder.com.7 It gave me my break as a computer industry novice.8 Unfortunately, two weeks later, somebody gave pcOrder a break-in and absconded with all the computer equipment. Then pcOrder laid off the contractors in the office. Apparently, pcOrder had bigger troubles afterward, troubles not even cheesecake shots in Forbes could fix.9 Now pcOrder plans to merge back into its parent company, Tivoli, which is still building its new campus, across Gracy Farms Lane from my apartment, and across the railroad tracks from the pink palace. Tivoli, by the way, also laid off a lot of people, in December.10
Downtown, however, has the perfect symbols for a boom gone wrong. The unfinished buildings for Vignette and Intel loom over the skyline. The city enticed those companies to build with tax breaks – meaning Austin taxes are too high normally and the city had to make exceptions for these projects to make economic sense. Vignette’s choice of location was a revered music venue, Liberty Lunch, bulldozed out of existence for the project.11 Several streets apiece have been blocked while construction proceeded, joining all the other streets being torn up for building or fiber optic cable projects. Now Intel and Vignette are leaving their buildings unfinished and trying to back out of the contracts.12
Downtown’s impassability was firmly in place last month for the annual South by Southwest Music Conference and Festival, as industry bigwigs flocked to listen to whiny pseudo-angst from heroin-shooting half-wits.13 Last year, the Dallas Observer reported that dot-coms eclipsed the music in generating interest from visitors.14 What a difference a year makes.15
Getting around downtown during the off season is no picnic, either. Why doesn't the city just seal it off from us and be done with it?
Accordingly, local circumstances proscribe me from “living life with an exclamation point,” to quote my ex. Alas, l'affaire KT collapsed like a dot-com. I won't go into the dismal details; suffice it to say unresolvable differences ended it. It was fun while it lasted. I wish her well. Meantime, “… set ‘em up, Joe.”16
Coverage of the Austin economy is contradictory. On the one hand, the local papers report weekly closings, dot-com failures, and layoffs. Simultaneously, overview articles invariably maintain an optimistic tone, with the obligatory quote from some Chamber of Commerce spokeswoman or state economist about how good things are in Travis County.17
compared to the same time last year, is the outlook:
d) the same?
e) all of the above
f) nobody knows nothing
Some of this may be just another periodic crash of the computer industry.18 Another possible factor is the effects of governmental economic manipulation. I read of a recent book on the failure of a hedge fund that collaborated with the Italian government to manipulate the Italian bond market in ways favorable to both parties.19
hedge fund, Long-term Capital Management, manipulated the market with financial
derivatives, investments whose returns derive from the change in value of
other securities or indexes such as
bonds, interest rates or stocks.20
The implication: Central (i.e., government) banks have found a way to use private collaborators to manipulate the price of gold to mask adverse economic indicators. The price of gold is a reliable indicator of government mistakes in economic policy. The financial markets have become acutely sensitive to such mistakes.21 At the "dawn" of the Clinton administration, an established, reputable precious metals dealer told me gold was undervalued, given that administration's macroeconomic policies.22
The collaboration between central banks and hedge funds is also an evolutionary innovation in the vein of central banking itself, which the late Murray Rothbard described as an institution that "began in late seventeenth century England, as a crooked deal between a near-bankrupt government and a corrupt clique of financial promoters."23
The net effect: People make decisions based on distorted information, before reality reasserts itself. The past year's slump in the computer industry, in Austin and elsewhere, is a possible symptom.
Regardless, I trudge on with my perennial recruit-o-rama, securer than the last time I wrote about this. I haven't been reduced to singing "Brother, Can You Spare a Dime?" on street corners.25 Yet.
least the lights are still on. I've been saying for years that Austin is poised
to capture the computer industry from Silicon Valley.26 Maybe having to stumble around in the dark out in California
will be the final push.
1 Mahoney, Jerry. “Software
Maker ClearCommerce Lays Off 52.” AAS 10 Apr. 2001: C1.
2 Schatz, Amy, and Elizabeth Goldman. “Janus Closes Call Center.” AAS 21 Apr. 2001: G1.
3 AD No. 15 (Mar. 12, 2000), n7.
4 Mahoney. “600 More Lose Jobs as Multek Closes Shop.” AAS 30 Mar. 2001: C1.
5 Daniel, Kelly. “Plans Stir up Furor Over MoPac’s Future.” AAS 10 Apr. 2001: A1.
6 Hawkins, Lori. “Agillion Joins Internet’s Casualty List.” AAS 15 Mar. 2001: D1.
7 “Trilogy to Acquire Spinoff pcOrder.com.” ABJ 27 Oct. 2000: 24.
8 EAD No. 1 (Dec. 1998).
9 Lyons, Daniel. “The Soul of a Gen-X Entrepreneur.” Forbes 30 Nov. 1998: 172.
10 AD No. 24 (Dec. 24, 2000), n15.
11 Riemenschneider, Chris. “The Blues Had a Baby, and Now It’s Left to Fend for Itself.” XL 15 Feb. 2001: 18.
12 Messer, Kate X. “Public Notice.” AC 16 Mar. 2001; Smith, Amy. “Deconstructing Downtown.” AC 20 Apr. 2001: 26+.
13 Black, Louis. “Page Two.” AC 2 Mar. 2001: 2+; Black. “Page Two.” AC 16 Mar. 2001: 10+; Conquest, John. “NotSXSW.” 3rd Coast Music Mar. 2001: 6; Froman, Abe. "Abe Digs SXSW." Austin Daze Apr. 2001: 3.
14 Crain, Zac. “Day-tripping.” Dallas Observer 23 Mar. 2000: 91+.
15 Hudson, D. Collin. “South by Southwest.” ATM Apr. 2001: 29.
16 Arlen, Harold, and Johnny Mercer. “One For My Baby (and One More for the Road).” 1943. Sinatra, Frank. Capitol Years. EMI 96985, 1998.
17 Piasecki, Mary Alice. “Thriving – Not Faltering.” ABJ 23 Mar. 2001: A1+.
18 Cringely, Robert X. [Mark Stephens] Accidental Empires: How the Boys of Silicon Valley Make Their Millions, Battle Foreign Competition, and Still Can't Get a Date, rev. ed. New York City: HarperBusiness, 1996.
19 Dunbar, Nicholas. Inventing Money: The Story of Long-term Capital Management and the Legends Behind It. Chichester, U.K.: John Wiley & Sons, 2000.
20 Holliwell, John. The Financial Risk Manual: A Systematic Guide to Indentifying and Managing Financial Risk. London: Financial Times/Prentice Hall, 1998: 284.
21 McKenzie, Richard B., and Dwight R. Lee. Quicksilver Capital: How the Rapid Movement of Wealth has Changed the World. New York City: Free Press, 1991.
For a critique, see Higgs, Robert. “Leviathan at Bay?” Liberty Nov. 1991: 64-70.
22 Davidson, James Dale. The Plague of the Black Debt: How to Survive the Coming Depression. Baltimore: Strategic Investment Limited Partnership, 1993.
The precious metals dealer who told me this was not Davidson. He worked in Portland, Ore. I don't remember his name.
23 Rothbard, Murray N. The Mystery of Banking. New York City: Richardson & Synder, 1983: 179.
24 EAD No. 8 (Oct. 3, 1999).
25 Johnson, Paul. Modern Times: The World From the Twenties to the Nineties, rev. ed. New York City: HarperCollins Publishers, 1991: 254; Lincoln, Abbey, and Stan Getz. "Brother, Can You Spare a Dime?" You Gotta Pay the Band. Verve 314-511110-2, 1991.
26 EAD No. 10 (Nov. 22, 1999); Gornstein, Leslie. AP. “California Crisis Likely to Zap Economy.” AAS 29 Mar. 2001: C1+; Kemp, Jack. “California Zapped by Static Power Supply Model.” AUSR Apr. 2001: 4.