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Posts Tagged ‘dot-com 3.0’

Dot-Com 3.0 Bust Goes Mainstream As People Pull Away From Silicon Valley Services

Wednesday, September 13th, 2017

As mentioned here before, the Dot-Com 3.0 boom — the years after the iPhone when social media took over — is heading straight for collapse, even as efforts are being made to fight that inevitable end.

The recurring problem that Dot-Com 3.0 faces is tied up with SJWs: our new media overlords have cultivated an audience who fanatically uses their product, but this is not a particularly relevant or effective audience, being made up mostly of obese blue-haired baristas, financially insolvent food service workers, committed Leftist basement-dwellers and angry minorities.

Everyone else is gradually fleeing these services as they become increasingly toxic. In the meantime, in order to curry favor with their audience of SJWs, these giant internet corporations have become manipulative and are starting to resemble Soviet-style indoctrination in their relentless advance of narrative, leading to a growing movement to nationalize them as utilities to neutralize their bias:

The new spotlight on these companies doesn’t come out of nowhere. They sit, substantively, at the heart of the biggest and most pressing issues facing the United States, and often stand on the less popular side of those: automation and inequality, trust in public life, privacy and security. They make the case that growth and transformation are public goods — but the public may not agree.

The tech industry has also benefited for years from its enemies, who it cast — often accurately — as Luddites who genuinely didn’t understand the series of tubes they were ranting about, or protectionist industries that didn’t want the best for consumers. That, too, is over. Opportunists and ideologues have assembled the beginnings of a real coalition against these companies, with a policy core consisting of refugees from Google boss Eric Schmidt’s least favorite think tank unit. Nationalists, accurately, see a consolidation of power over speech and ideas by social liberals and globalists; the left, accurately, sees consolidated corporate power.

This distrust of Silicon Valley is expressed in a recent poll which found that 52% of respondents believe that Google’s search results are biased, and 65% do not want to be tracked. At the same time, Spain has fined Facebook for privacy violations in how it collects data on users.

In the meantime, others have discovered that Silicon Valley has been inflating its usage figures — sort of like a fake Nielsen rating showing more watchers than were actually there — to the point of absurdity, and they have been doing this for years in order to evade one crucial report that showed, two years into the reign of the iPhone and mobile computing, that display ads on social media were worthless.

Silicon Valley has been dodging that one for some time, and their solution has been to cultivate a fanatical audience of SJWs instead of a broader audience of normal people. That in turn has helped enforce a split: on the internet, you are either a fanatical Leftist or someone who is skeptical of the internet. That skepticism has fueled questioning about the value of social media and internet use as an activity, especially since it represents to this generation what daytime television did to the 1980s: people with no purpose, not much hope, and very little else to do.

It is possible that the “always on” nature of social media is making us miserable:

But in 2012, when the proportion of Americans who own smartphones surpassed 50 percent, she noticed abrupt changes in teen behavior and emotional states.

…Among other things, teens are: not hanging out as much with friends, in no rush to drive, dating less, having less sex, and getting less sleep. Most alarming, despite their continual connectivity, they are lonely. And rates of teen depression and suicide have skyrocketed since 2011.

…“Much of this deterioration can be traced to their phones. It’s not just the technology, I should stress, it’s really the social media, which is the most common risk they are facing.”

One factor in this is that social media is driven by Fear Of Missing Out (FOMO) which causes people to obsessively tune in many times throughout the day and night, with many users taking their phone to bed in order to consume more media. This leads to an inability to ever detach from the narrative, which means they are not at rest even when sleeping, and a lack of sleep, which increases delusionality, hallucinations and psychotic behavior:

The primary outcome measures were for insomnia, paranoia, and hallucinatory experiences

…Compared with usual practice, the sleep intervention at 10 weeks reduced insomnia (adjusted difference 4·78, 95% CI 4·29 to 5·26, Cohen’s d=1·11; p<0·0001), paranoia (−2·22, −2·98 to −1·45, Cohen's d=0·19; p<0·0001), and hallucinations (−1·58, −1·98 to −1·18, Cohen's d=0·24; p<0·0001). ...It provides strong evidence that insomnia is a causal factor in the occurrence of psychotic experiences and other mental health problems.

Paranoia might be understood as “inverse solipsism,” meaning that it assumes a focus on the individual by wide-ranging external forces. Both posit the individual as the center of all activity, or origin of all meaning, and as such, the individual assumes that any activity out there is directed at them, in a mild form of one of the symptoms of schizophrenia.

Social media can induce this by compelling the individual to constantly interact with a symbolic representation of the world, and this token quickly obfuscates actual reality, which is both wider and less clear-cut and therefore, more ambiguous and threatening. As one writer found, this creates a pathology like addiction:

The landscape of my days has come to resemble my computer screen. The constant stream of pings and swooshes is a nonstop cry for my attention, and on top of that, everything can be clicked on, read, responded to, and Googled instantaneously. I sense a constant agitation when I’m doing something, as if there is something else out there, beckoning—demanding—my attention. And nothing needs to be deferred. It’s all one gratifying tap of the finger away.

…I am a writer by profession, and about a year ago I found myself unable to produce. I attributed my paralysis to writer’s block, freighted with psychological meaning, when in fact what I suffered from was a frightening inability to remain focused long enough to construct a single sentence.

…My therapy, of my own devising, consists of serial mono-tasking with a big dose of mindful intent, or intentional mindfulness—which is really just good, old-fashioned paying attention.

Living a virtual life means that the real life is ignored, which is why so many people seem to live in neckbeard nests where the computer is the only functional object, a gleaming device of firm lines surrounded by the more detailed organic forms of crumpled clothing, discarded wrappers, cigarette butts, detritus and dirt.

Social media requires people buy into that online life, and while many normal people use it periodically, its compulsive users — mostly SJWs — have become its focus. For those it becomes compulsive, with them fearing to go more than a few moments without checking for updates. Facebook, Google, et al. have figured that if they cannot have everyone use their service, they want to cultivate the largest fanatical audience that they can, which is why politics, lifestyle and social media use converge.

In a broader sense, Dot-Com 3.0 mindlock reflects the conditions of modernity, which are defined by control. The individual demands to control nature, especially the nature within, by asserting his individuality through equality; this creates a herd which must be taught to boo the enemy and cheer the good guys; that in turn makes the individualists enforce those boos and cheers on each other, causing a spiral where the society gradually eliminates any notice of reality and focuses exclusively on symbols.

The cart goes before the horse, the tail wags the dog, the world is turned upside-down. While we chase the One True Ring of power and control, we sleepwalk into a Brave New World style society based on what people want, instead of their suppression. Democracy, equality, pluralism and tolerance encourage us to be as weird as we want to be, and we slowly drift farther from reality, becoming more miserable as we do so, until the end seems like a good thing.

Social media just tapped into our mania for control through symbolism. If you replace the complex knowledge of the world as whole with a single interface of symbols that claim to control it all, people — or at least some types of people — become addicted. This addiction creates a hive mind for the purpose of excluding anything but what it wants to believe, and reality is pushed far away.

At this point, the populist wave has brought a backlash against unreality, and the unrelenting defense of unreality from the social media crowd is what is pushing Dot-Com 3.0 into collapse. The audience they need, the normal middle class, is fleeing, and the legbeards and blue-hairs are taking over at the same time regulators close in and investors shy away. The carnage will be delicious.

Silicon Valley Sees The Pavement Approaching At Terminal Velocity

Tuesday, July 18th, 2017

As mentioned here before, the dot-com 3.0 and Silicon Valley economic miracle is about to come to a crashing end. The internet simply is not worth as much money any more, and instead of contracting, the market expanded, and now the economy will balance the ledger by destroying fake value.

The primary driver for this is the failure of internet advertising as it becomes clear that in addition to not paying much attention to internet ads, people of the sort wanted by advertisers are finding ways to avoid them or the internet entirely. Ad prices have been steadily dropping and now advertisers are ditching them for TV and radio:

“The major issues in digital is that the supply chain still has way too many touch points in it and it lacks transparency,” says Pritchard.

In January, Pritchard threatened to boycott spending with the digital ad behemoths (Google, Facebook, major ad networks etc.) unless they worked to make the system more transparent. He now says the ecosystem is about 40% of the way there, largely thanks to the pressure major advertisers (P&G, Unilever, etc.) are putting on the system.

Pritchard says radio and out of home (billboard) marketing have also been showing increasingly positive results.

The majority dollars don’t even make it to publishers:Citing industry studies, Prichard says that only 40% of dollars reach publishers after payouts to ad tech vendors, and up to another 25% of dollars could be wasted on ad fraud and problems with ad viewability (ads not loading right or ads that aren’t actually viewed by humans).

In other words, the dot-com companies are hiding how ineffective ads are, how much fraud there is and how much those big FANG — Facebook, Apple, Netflix, Google — companies are taking as middlemen. These are all signs of a failing ad regime.

The “Myspace effect” has kicked into full gear where the upper half of society — the desired group for advertisers, because they are responsive to advertising for more than low-end consumer goods — are fleeing Facebook, Twitter, Instagram and other social media and hiding out in messaging apps instead.

Internet companies told us that television and radio were dead, but this was wishful thinking. In actuality, television and radio have a better chance of reaching their audience because they are linear formats, so people are less likely to navigate away from ads. In addition, they tend to be local, instead of spammed across the internet, and people can keep their privacy with them.

Newspapers are the only real losers here, since people read those online, but it is unclear how much people even care anymore. The news content is light and the headline usually tells the story, so skimming Drudge or Real Clear Politics provides most of what these consumers need.

In the meantime, Google has become a victim of its own success. Its PageRank algorithm, which gives massive preference to popular sites, effectively disenfranchised people from putting content on the web to have those sites — including Wikipedia — simply scrape it. All the good content is going behind paywalls. This means that Google searches are less effective these days.

While all this is crashing down, the savvier investors are noticing that this looks a lot like a bubble right before a crash and bailing out:

It’s a bubble that is different — but the same — as the last time. In 2000, start-ups like pets.com were able to go public and jack up share prices even as they were losing hundreds of millions of dollars.

…Venture capitalists and private equity investors keep the bubble going by buying into it at higher and higher valuations. The smartest ones guarantee their own success by taking rich advisory fees along the way and exiting before disaster via the secondary market for private shares. And this is, as behavioural economist Peter Atwater recently pointed out to me, unusually liquid thanks in part to central bank-enabled easy money.

…These days, a glut of money eager to bolster gains in a low-return world has lifted the economy of Silicon Valley to ridiculous heights. Yet the real winners are likely to be the small number of platform groups such as Amazon, Google, Facebook and Apple that can use their network effect to capture and control the data, which have become the new oil in our digital economy.

The middleman effect is revealed: large companies take the profits, and everyone else is using Silicon Valley as an investment for the purpose of sale, not as a long-term investment. A pyramid of hype rises from the sweaty, neckbearded wasteland of digital royalty, and other than a few who got in early, everyone is going to lose.

As the mom and pop investors figure out that digital is a ruin, they are going to shatter the value of those stocks which are purchased merely to speculate and resell them, and this will in turn create a domino effect of closures in Silicon Valley. That in turn will have consequences for America’s economy, built in part on anticipation of more easy wealth from the digital demesne.

That leaves us with a country top-heavy in debt, built on top of false expectations, that has sacrificed its productivity for this dream because by claiming it was an “ideas and services economy” it could justify globalism to itself. After the first set of dominoes fall, another larger set will begin its collapse.

Dot-Com 3.0 Collapse Is Here And Will End Western Economies

Thursday, July 6th, 2017

As mentioned frequently here before over the past few cheerfully oblivious years of manic investment in technologies of dubious value, the great collapse has finally gone mainstream:

Last month Robert Bouroujerdi, chief investment officer at Goldman Sachs, and most definitely someone who does remember the last dotcom boom, published a report in which he cautioned of the growing risks presented by the meteoric rise of the Big Five tech behemoths: Apple, Amazon, Facebook, Alphabet and Microsoft.

Bouroujerdi noted that in the year to the start of June, these companies added a total of $600bn of market capitalisation – the equivalent of the gross domestic product of Hong Kong and South Africa combined. Parallels to the 1999-2000 crash are becoming increasingly evident, he said.

…Tech companies are deeply intertwined: when one falls it often takes scores of others down with it and often psychology dictates that the more a stock falls the more likely it is to fall further. Imagine rats scuttling for the exit on a sinking ship. No one wants to be caught inside a cabin and sink.

In other words, it is like a really successful strike when bowling: you hit the middle pins hard enough that they knock the outer pins down. Already we are seeing second- and third-tier tech companies quietly shutting the doors and sending everyone home, and a resulting mass exodus of those who lost the employment lottery in California to other states. But that is nothing compared to what is coming.

Bubbles in the market — huge wealth booms created between the time when the herd becomes fascinated with a New Thing and the time when they realize it is worthless — are classically compared to houses of cards. If any structural piece is removed, or the top crumbles, the whole thing falls in the classic domino effect where the fall of each piece triggers the instability of others.

On the other hand, bowling is an invisible dependency. There is no obvious link between the other pins and the central four. Yet when those pivotal pins go flying, the others go down like bystanders hit by shrapnel during a suicide bombing. Silicon Valley is a giant invisible dependency, not only within itself, but because much of our interlinked economy depends on Silicon Valley:

In 2014, Silicon Valley innovation workers produced $225,000 in added value per employee annually, according to an analysis by Collaborative Economics of federal data. The next closest in productivity was New York City, where tech workers produced an average of $205,000 in added value per year.

This creates tragic conditions where the economy cannot sustain a massive loss in value in Silicon Valley:

As a proportion of GDP, American corporate profits are higher than they have been at any time since 1929. Apple, Google, Amazon and their peers dominate today’s economy just as surely as US Steel, Standard Oil and Sears, Roebuck and Company dominated the economy of Roosevelt’s day.

…The McKinsey Global Institute, the consultancy’s research arm, calculates that 10% of the world’s public companies generate 80% of all profits. Firms with more than $1 billion in annual revenue account for nearly 60% of total global revenues and 65% of market capitalisation.

…The number of listed companies in America nearly halved between 1997 and 2013, from 6,797 to 3,485, according to Gustavo Grullon of Rice University and two colleagues, reflecting the trend towards consolidation and growing size.

And so we come to the ugly word consolidation. This happens when markets are dying, not thriving: the margins on what is being produced shrink as time goes on and the newness of the product fades, and since the big profits are no longer there, companies merge and acquire one another so that a few market-dominant firms can absorb whatever wealth is left in using ten-year-old or twenty-year-old ideas to churn out a product by rote.

We have seen radical compression of the markets over the past few years. The closing of American malls. The domination of the internet by Google (and technically non-profits that serve Google goals like Wikipedia). The tightening up of supply chains like Sysco. Grocery store mergers, and the simultaneous reduction in the number of big box store brands and increase in their territory. Everything is Walmart or Costco now.

With consolidation comes the bowling-pin effect. Hit any one of these sectors of the economy hard enough, and odds are that it will careen into another, and that into another. Hit a big enough sector and they all go down. Are you scared yet? Let us travel down memory lane to the last time that a giant bubble popped, namely the government-created housing crash of the early 2000s:

His most successful effort was to impose what were called “affordable housing” requirements on Fannie Mae and Freddie Mac in 1992. Before that time, these two government sponsored enterprises (GSEs) had been required to buy only mortgages that institutional investors would buy–in other words, prime mortgages–but Frank and others thought these standards made it too difficult for low income borrowers to buy homes. The affordable housing law required Fannie and Freddie to meet government quotas when they bought loans from banks and other mortgage originators.

At first, this quota was 30%; that is, of all the loans they bought, 30% had to be made to people at or below the median income in their communities. HUD, however, was given authority to administer these quotas, and between 1992 and 2007, the quotas were raised from 30% to 50% under Clinton in 2000 and to 55% under Bush in 2007. Despite Frank’s effort to make this seem like a partisan issue, it isn’t. The Bush administration was just as guilty of this error as the Clinton administration. And Frank is right to say that he eventually saw his error and corrected it when he got the power to do so in 2007, but by then it was too late.

…By 2002, Fannie and Freddie had bought well over $1 trillion of subprime and other low quality loans…As a result, in 2008, before the mortgage meltdown that triggered the crisis, there were 27 million subprime and other low quality mortgages in the US financial system. That was half of all mortgages. Of these, over 70% (19.2 million) were on the books of government agencies like Fannie and Freddie, so there is no doubt that the government created the demand for these weak loans; less than 30% (7.8 million) were held or distributed by the banks, which profited from the opportunity created by the government.

There are two parts to this disaster: the bowling ball, which was a relatively minor mortgage meltdown, and the pins, which were the vast investment by government and the many for-profit companies helping it. That ball was going to hit hard regardless, but the pins were set up to fall and so they took down other parts of the economy as well, stalling out the whole thing.

Imagine if that recession were a multiple of the one that is coming.

Just for fun, let us look at a true disaster scenario, the Great Depression:

This was a period when the American public discovered the stock market and dove in head first. Speculative frenzies formed in both the real estate markets and on the New York Stock Exchange (NYSE). The lead-up to October 1929 saw equity prices rise to all-time high multiples of more than 30 times earnings, and the benchmark Dow Jones Industrial Average (DJIA) increase 500% in just five years.

The NYSE bubble burst violently on Oct. 24th, 1929, a day that came to be known as Black Thursday. The following week brought Black Monday (Oct. 28) and Black Tuesday (Oct. 29); the DJIA fell more than 20% over those two days. The stock market would eventually fall almost 90% from its 1929 peak.

In other words, it was a typical bubble. The markets seemed to take off, and the herd rushed in for an orgy of rampant speculation just like they did in the California Gold Rush in 1848. But just like in that feeding frenzy, most people were losers and only a few walked away with the gold, and the ones who did best were the ones who got out early and transferred that money to other investments.

In the new California digital Gold Rush, you will most likely see the same thing: the 1% of 1% who are real winners here will be the people who got in early, grabbed the easy money, and then got out and put that money into something tangible and self-renewing like real estate, industry or agriculture. They do not mind that these new investments are not high yield; they are stable, and Silicon Valley is not.

The old Gold Rush made San Francisco a major city; the new Dot-Com mania has made it the center of the world, or at least its inhabitants think so.

Now let us consider some of those outer pins. There are several debt bombs looming. The first is the welfare/consumerism debt bomb, followed by the pension debt bomb, the entitlements debt bomb, the government debt bomb, the education bubble, the consumer debt bomb and the demand-side economics bubble.

With the “Me Generation” set to clock out and trigger a 50 megaton airburst of retirement obligations for government, there is no way our economy will survive. The wealth boom of the victorious Allies in WWII is going to come home to roost in 2020-2040 as the Baby Boomers die off, and since all of our wealth since has not matched it, the markets are going to re-adjust the value of the false wealth through a recession.

Add to that the fact that we are dependent on debt, both in public and private, to international banks and foreign nations, many of which are unstable, and you can see how there is a layer of bowling pins behind the bowling pins of our economy. When we go, they go. When they go, everything goes.

The best part is that almost no one understands how our society works, and so they are all oblivious to the actual risk we face:

It seems that that never have so many known so little about so much. In areas where most of America resides, no one gives much if any thought to the seamless integration of so many moving parts that allow them to transport themselves to the grocery store, and get food – to utilize a myriad of appliances, utilities, technologies, and conveniences independent of their skills, education, resources, etc.

Most people, it seems, do not ever think about what would happen to their ideology and lifestyle after about ten days if the trucks, trains, and airplanes were unable to deliver untold tons of everything like clockwork. Look at the behavior of the people in the face of a few days’ disruption because of a snow storm.

So we have prime conditions for an apocalyptic market endgame. Our debt was borrowed to fund worthless stuff, just like the housing bubble. Our products are aging and no longer good for high margin returns. Markets are consolidating to a few big actors, and they are often dependent on government. Individual consumers have over-invested in these scheme and taken on a huge debt load. The entire structure is propped up and waiting for just the right strike to disintegrate entirely.

On the plus side, we have known for years that modernity was not sustainable. Modernity began with our notions that we as individuals were more important than social, natural or divine order. That creates the groundwork for the trends, fads, and panicked stampedes that create this market boom-bust cycle just like in the Great Depression. Not to mention consumerism, vapidity, mountains of landfill, environmental holocausts and a growing sense of existential dread. The death of modernity will be painful, but a blessing in disguise.

Let’s go bowling!

Why The Dot-Com Collapse Is Rushing At Us

Tuesday, June 13th, 2017

You have probably heard too much of it already: the internet industry is beginning its collapse. But until now, few have mentioned that it also suffers from monopolistic tendencies which will make this collapse even more devastating.

Some are picking up on a small group of companies have become as powerful as government and threaten to savage our industries, then fail and leave us with no alternatives to the services they provided:

Many elements of Taplin’s case are familiar. Newspaper ad revenue has declined by roughly $40 billion between 2000 and 2014, recorded music revenue has dropped $10 billion in the same period, and over 5,000 independent book and record stores have closed in the last two decades. Facebook’s covert experiments in manipulating the emotions of hundreds of thousands of users, Amazon’s atrocious treatment of workers at its distribution centers and Google’s cavalier disregard for copyright laws are also well-documented.

Taplin, director emeritus of the University of Southern California Annenberg Innovation Lab, argues that the major tech companies are fundamentally monopolistic and parasitic — they exploit positions of market dominance to ignore legal regulations, extract inflated prices from advertisers and rely on content produced by others, often without their consent or knowledge.

…Because Amazon can deny publishers access to its enormous customer base, it can force them to accept artificially deflated prices. Google and Facebook can do something similar with advertisers by threatening to deny them access to billions of users. Taplin cites the Herfindahl-Hirschman Index, a widely used measure of market concentration in antitrust law that allows regulators to determine whether markets are becoming monopolistic. A score of 2,500 is considered highly concentrated. The HHI for internet search markets is 7,402.

Industries which behave in this way are ones near the peak of their life cycle. They have grown too far and become too big to manage themselves, and now they need more money just to survive. Instead of admitting that its product was search and advertising, and downsize to fit that need alone, Google expanded to conquer nearby industries and now is a towering behemoth that must constantly expand to feed its own bulk.

As a result, its profit is no longer based on delivery of product alone; it manipulates its own product to make it more profitable, without offering a competitive advantage. This self-cannibalization is leading to the implosion of all internet media, since they have outpaced what the market can offer and now are treating consumers like piggy banks:

The decline of the establishment industries has led to the increased quality of the alternative industries; but the alternative media has been relying upon advertising dollars, and it’s the establishment media which pays for advertising. The establishment industries have effectively been paying to destroy their consumer base. Furthermore, the technology itself undermines advertising. Why pay for a $6 million advertising campaign, when for a few hundred dollars you can advertise on Tom Leykis, and the algorithm will do the rest?

So, the companies which sell algorithmic content – Twitter, YouTube, Google, Amazon, and Facebook – are undermining the establishment industries whose advertising campaigns are bankrolling their algorithms. Thus, to maintain profitability, they need to destroy the very algorithms they offer. They’re currently subsisting off of their First-Mover Advantage, but that’s a foundation which is quickly eroding away.

This means that the industry as a whole is overvalued, and the market will have to correct for this value, which means huge losses inbound. Like all other industries based on consumerism itself, or popularity instead of function, this one too will face the knife, and leave in its place a gaping void where functional business used to be.

Looking Forward To The Dot-Com 3.0 Crash And Recession

Saturday, May 27th, 2017

Without strong leadership, humans act as a herd. They constantly look for what is new so that they can participate, and as soon as that becomes clear to them, they rush toward it.

Nature however is not binary because it has introduced time. What is new is recognized by a gradually increasing group of people, and as they crowd it, the original participants get out and watch the formerly new thing crash as the herd converts it into the same old stuff.

You can see this with monkeys in the wild. One monkey finds a tree with lots of fruit, and starts screeching. The others then rush over, afraid of missing out and hoping to capitalize on this new popularity, and strip the tree bare.

In the meantime, some of the monkeys who found that tree earlier have moved on to new trees, and are keeping mum about it. The monkeys who screech depend for their popularity on being recognized as those who find new things, even if they find them after the really good opportunities are gone. They get their power from introducing the clueless to better options, not good ones.

Humans play the market the same way. Whatever succeeds immediately finds a whole herd of people who are very excited about it, and they invest in it, bloating it to the point where the consequences between intelligent acts and repetition of the past is blurred, so it repeats itself until it crashes and then the herd moves on to a new fascination, like a crowd at an amusement park.

As mentioned here before, our current economy is a fragile mess based on tech companies selling gadgets to morons who are subsidized by the state, in order to make our current appear “in demand” so that we can borrow and tax even more.

Now it becomes clear that the post-1990s Silicon Valley boom may be fragile and ready to pop:

During rising stock markets you can use an indicator like the advance-decline line to confirm that the uptrend is still in place. When the overall stock market is rising but more individual securities are declining than rising,, that can be a signal that the market is not “acting right” and the uptrend could be in trouble. It could be signaling that there could be a change in direction coming.

…The advance-decline line was crashing beginning in early-1999, while stocks continued to rise for another year or so. The fact that so few stocks were carrying the market higher with a falling advance-decline line was a big warning sign for the coming dotcom crash.

As we watch the leaders of the market separate from the rest, it becomes clear that we live in a house on stilts where a few of those stilts are carrying most of the weight. If anything happens to them — as seems likely as history repeats itself — we are in for a big crash.

Rumors Of Dot-Com 3.0 Implosion Spreading

Wednesday, May 24th, 2017

You may have heard it here first, but rumors are starting to spread about the collapse of the Dot-Com 3.0 bubble which is based on social media and other entertainment products. Unfortunately the Obama economy was based upon it, so expect rough times ahead.

Others are starting to notice that the market is totally overvalued, which is a precursor to crash:

What truly puts the stamp of reality on what it says today, is the fact, that even as the “markets” have since (once again) risen to never before seen in history all time highs since that post some 3 months ago. The above have done nothing but either vacillate right where they stood, or worse, have lost even more value.

…Isn’t it funny when it comes to anything involving “The Valley” it always seems it’s about the next big “buy” that’ll be the reason why some insane P/E or valuation will be, “So worth it!” Never the core product that is/was supposedly its raison d’être. And it’s always just around the corner, or as close as the shareholders checkbook. Funny how that works.

Social media is dying primarily because its audience consists of people who are not responsive to advertising. It also suffers from a scourge of bots, fake accounts, manipulative SEO technicians and generally, the bad behavior of the “daytime television” audience that Dot-Com 3.0 salvaged in order to overcome the mass exodus of people when the second internet trend boom ended.

In addition, people are wary of the visibility of social media and the manipulative nature of these companies. Who wants employers looking through a Facebook profile, or to be shown only what the filters allow? With European states demanding that Facebook and Twitter censor controversial topics, social media is no longer the Wild West it once seemed to be.

The result is a shift that the numbers do not reveal. There may be just as many people using social media, but who are they? These are no longer the middle class brand-conscious consumers, but an army of baristas and cubicle slaves who have no money and would not spend it on advertising products anyway. No wonder the dying trend shows signs of instability.

Anatomy Of A Fragile Market Bubble

Wednesday, May 17th, 2017

Modern society possesses a fragile duality: people depend on its power and wealth, but simultaneously are existentially miserable.

Their existential misery comes from the fact that civilization is in decline, social order is failing, and so all meaning and purpose is removed from their lives because whatever they do is futile and will be destroyed once the raging herd gets ahold of it. At the same time, we all must survive, and so they are dependent on this abusive system for paychecks and enough stability for grocery stores.

What happens if the money runs out? All Western governments are heavily in debt, consumers are heavily leveraged, and our industries are massively interdependent.

On top of that, we have the makings of a brutal tech bubble:

Yesterday afternoon, the S&P 500 closed at a record high, and is up over $1.5 trillion since the start of 2017. “And the companies doing the most to drive that rally are all tech firms,” reports The Verge. “Apple, Alphabet, Facebook, Amazon, and Microsoft make up a whopping 37 percent of the total gains.” From the report:

All of these companies saw their share prices touch record highs in recent months. This is in stark contrast to the rest of the U.S. economy, which grew at a rate of less than 1 percent during the first three months of this year. That divide is the culmination of a long-term trend, according to a recent report featured in The Wall Street Journal: “In digital industries — technology, communications, media, software, finance and professional services — productivity grew 2.7% annually over the past 15 years…The slowdown is concentrated in physical industries — health care, transportation, education, manufacturing, retail — where productivity grew a mere 0.7% annually over the same period.” There is no industry where these players aren’t competing. Music, movies, shipping, delivery, transportation, energy — the list goes on and on. As these companies continue to scale, the network effects bolstering their business are strengthening. Facebook and Google accounted for over three-quarters of the growth in the digital advertising industry in 2016, leaving the rest to be divided among small fry like Twitter, Snapchat, and the entire American media industry. Meanwhile Apple and Alphabet have achieved a virtual duopoly on mobile operating systems, with only a tiny sliver of consumers choosing an alternative for their smartphones and tablets.

As mentioned here before, the tech sector is primed for a crash because it is overvalued and yet is selling a product that is increasingly less relevant to middle America, the group that forms the base of the conventional consumer economy.

To counter this, the tech companies are trying to cultivate the conventional media audience, who lean Left and consume more media than others but may not actually be as relevant as consumers except for luxury goods.

In order to bolster that process, Western governments have created a capitalism-socialism hybrid which consists of heavily taxing citizens and corporations, and then dumping that money on the working classes so that they can purchase more consumer goods, creating a circular Ponzi scheme which will eventually run out of money.

On top of that, Western governments have accumulated enough debt that when their taxes fall short, they will be in a tough position where they will be unable to acquire new debt cheaply enough to justify it, and these governments will head toward default at the same time their economies cave in and the social consequences of Leftist policies culminate in crashes.

Internet Collapse May Be Consumerism Collapse

Friday, April 28th, 2017

Consumerism had a good thing going. We invented all of these cool gadgets for the home and personal care back in the 1950s, and as long as we had people, we could sell them and make a tidy profit.

But then consumerism took over the culture, as it always seems to do. Planned obsolescence became a thing; so did low-cost junk made abroad. And then people slowed down in buying because when everything is sort of worthless, why care much about what you buy?

No matter what option you choose — unless you have real luxury spending dollars like a billionaire — it will perform adequately and die within a few years, so there is no point investing much effort into the choice. Sort of like how the Soviet system faded away into heat death…

This follows a pattern we see in most business, and in fact everything in life: it starts out as a new idea that few understand, then gets accepted and the load of humans that it supports grows, which requires it to raise more money, which happens simultaneously with the acceptance of the new idea as part of normal life and thus a lowering of its margins. At that point, the business is in a death cycle.

As Plato pointed out, the same thing happens to civilizations. They start out idealistic, then deviate into materialism, at which point they cycle through aristocracy, military rule, business rule and finally democracy before self-destructing in tyranny. The point is that a new innovation cannot be expected to maintain itself, but requires an active pressure to enforce quality, in a Darwinian sense, or it bloats and self-destructs.

Consumerism has bloated and self-destructed. Refrigerators are so bad now that you need to purchase a ten-year warranty to get five years out of them; in the 1950s, they made refrigerators that lasted for decades. We have clearly degenerated, and the latest victim is the internet.

When the internet was new, it gave us all these new capabilities. But over the next twenty years, it became clear that some were actually useful and the rest hype. However, the hype got the most focus from the media, because it was most like their own business model.

Now ad payments are falling because the people watching the ads are not actual consumers but cube slaves time wasting at their McJobs. As a result, the internet economy is imploding. Today, Paul Joseph Watson sees his business model collapse; tomorrow, Twitter or Facebook will.

This collapse follows the same pattern as consumerism. An initially high-value product attracted the herd, got overburdened with expenses to support all those people, and then folded inward as its relevance declined with its novelty.

We are seeing the convergence of internet and consumerism collapses already:

In March, MarketWatch estimated that Amazon will destroy 1.5 million retail jobs in the next five years. And with its push into self-driving trucks, drone delivery, automated grocery stores and more, the site said the total number of lost jobs would likely be more than 2 million, concluding, “Could Amazon actually kill more American jobs than China did? It’s quite likely.”

…Critics are beginning to wonder if Amazon — with such control over retail sales, jobs, ad dollars and more — is good for America.

…“Retail always evolves and reflects society, and right now, consumers are getting more value for their money,” said Richard Kestenbaum, a partner in Triangle Capital. “That makes our society stronger and it forces other retailers to be more creative and competitive.”

In other words, Amazon has become more efficient, and so is displacing most of the rest of the market. However, this will cause collapse by crushing margins on these products, which will in turn mean that they will be of less quality in the future. Soviet-style.

The worst case scenario is that Amazon gobbles up a bunch of smaller industries and then finds its own margins falling, and then goes down with a mighty crash, leaving the consumers with no options.

Looking at this, it makes sense to advance a theory of economy inefficiency. In contrast to the idea that lower price is always better, this theory states that there is a “sweet spot” in cost where a product is cheap enough for the upper half of society to afford it, but still expensive enough that there is incentive to compete on the basis of quality.

Consumerism fails this test, and the internet has as well. In their greed to increase shareholder prices, these companies destroy more than they create, and leave behind mediocre substitutes. This cannot last, like Soviet product entropy, and will cascade in failure together, leaving a void.

Over-Hyped Dot-Com 3.0 Elites Head Toward Collapse

Sunday, April 23rd, 2017

Every new business idea goes through a life cycle. When it is new and demonstrates how useful it is, people sell it at high prices and pay a lot of attention to it.

However, as time passes, the cost is expected to drop and people want to pay less attention to it. Consider the telephone: once cutting-edge, now humdrum. Or radio. Or desktop computers.

Now it is time for the third wave of internet companies to face this part of the business cycle. They are no longer cutting-edge; they are mundane services. But they grew too large and need more money to keep their staffs, stockholders and empires afloat.

At this point, the Dot-Com 3.0 crowd are zombie businesses. They gobble up anything they can in order to make this quarter profitable, but have no actual plan, and the value of the services they provide is declining. Crash imminent.

Some are starting to notice how abusive these new monopolists have become:

The upshot here is that both Google’s overwhelming search dominance and their profitable exploitation thereof are almost wholly unmerited in terms of their actual product. Google is a fine tool, but what defines the company is luck. Its profits come from a largely unearned strategic position within a socially-created communication medium. Devouring a small business that provided Google and the internet writ large with quality research simply to keep people fenced onto their own portion of the internet is just one particularly egregious example how this position can be abused.

The technology behind search engines is now well-understood. The real challenges are having enough machines to make a search engine comprehensive, and the “network effects” that arise from having many other people in the market using the product as a kind of de facto standard.

If Google kept itself to 500 employees and a relative stable, blue chip style stock price, it would not have these problems. However, Silicon Valley was always about getting rich quick and the winner taking it all, which has produced a relentlessly self-promoting culture that has destroyed the very thing from which it profits.

Wikipedia, Amazon, Google, Apple and Reddit (WAGAR) are companies that centralize the internet. Instead of being decentralized as originally envisioned, the internet is now used as a means of reaching the big sites where network effects mean that the audience is lurking there. This essentially excludes the actual breadth and depth of information on the internet.

Sane minds fear a repetition of history, which is what happens when “gold rush” style thinking results in massive overvaluation of an industry, which then requires a brutal industry correction to remove the false wealth so that other sectors can function normally:

The tech bubble of the mid-90s was inflated by lies that sent the NASDAQ on a vertiginous downward spike that eviscerated the life savings of thousands of retirees and Americans who believed in the hype. This time around, it seems that some of these business may be real, but the people running them are still as tone deaf regarding how their actions affect other people. Silicon Valley has indeed created some amazing things. One can only hope these people don’t erase it with their hubris.

During the 1990s, the Bill Clinton administration urged more development in tech as a means of replacing the economy which was collapsing under the weight of expensive union labor, too much regulation and lawsuit costs, and inbound immigration which was removing traditional sources of work and forcing all sorts of underqualified people into office jobs.

Now we repeat this process. Politicians hate to point out that the new cash boom is false and we should hold back. Voters, like stockholders, like those bottom lines and really do not think beyond the next quarter.

And yet, history shows us this is a problem. The great postwar wealth boom of the stock market ended in tears with the Great Depression; the huge housing boom collapsed in misery when supply far exceeded demand. The same is happening to Silicon Valley.

Its once-innovative gadgets are now as common as telephones were in the 1990s, and people want them to just work, be very cheap and unobtrusive. All of those things mean reduced profit and importance, which destroys Silicon Valley and its mythos as well.

Even more, it seems that the replacement for the internet, or the centralized form of content browsing known as “social media,” is no longer the hot item it once was:

[Vkontakte founder Pavel Durov] explained his decision to purge: “Everyone a person needs has long been on messengers. It’s pointless and time-consuming to maintain increasingly obsolete friend lists on public networks. Reading other people’s news is brain clutter. To clear out room for the new, one shouldn’t fear getting rid of old baggage.”

Durov is right when he says everyone is on messengers these days.

Back in 2015, messengers overtook social networks in terms of total active users. And back in 2014, when Facebook separated Messenger from its main offering, Zuckerberg himself acknowledged the trend, saying that “messaging is one of the few things people do more than social networking”.

The problem for Silicon Valley is that internet advertising represents a shrinking pool of dollars, and this means that the big companies need to take the majority share in order to stay afloat.

As internet old-timers like myself warned in the early 1990s, advertising is not a stable model for the internet. The audience is not captive, as with newspapers or television, but capable of flitting off or filtering out the nonsense.

To combat this, the industry first tried to make the internet into video. When that failed, they put more ads on every page, which decreased the power of each. Then they tried social media, or making browsing more like passively watching television.

All have failed. A large correction is coming. Grab ahold of your seat and get ready for the crash.

Dot-Com 3.0 Collapse Picks Up Speed As Twitter Burns

Tuesday, March 21st, 2017

Watching negative contributors burn provides the only realistic pleasure in a time when most things are corrupt. As noted here before, Dot-Com 3.0 is going bust because its advertising model prioritizes true believers who use the net a lot but are not large financial contributors to the economy, thus its advertising is declining in value.

Currently, Twitter is on the chopping block because in an effort to appeal to true believers, it has sacrificed the more interesting parts of its userbase:

The company shut down a total of 376,890 accounts in the last six months of 2016, Twitter said in its latest transparency report.

In doing so, it has pared down its constituents to include a group that may be artificially inflated by a large number of spam bots, upon which the service has based its user figures and the presumed value of its (flailing) advertising:

Twitter was last week hit by a report from professors at the University of Southern California and the University of Indiana that estimated that as many as 15% of the social media site’s 319m users were not human. That is nearly twice the company’s own estimate that up to 8.5% of its accounts are managed by “bots”.

The charge is particularly damaging for Twitter because it is already struggling to convince advertisers to return to its platform.

As illusions fall, a void is created into which new(er) media rushes, in particular the voices of individuals. The net may be overcoming the centralized caused by social media, which has not delivered the content or community that people desire. In particular, few trust their dot-com overlords to be anything but conniving, manipulative little Utopians hell-bent on control.

Social media, in response to flagging sales, went after the True Believers who tend to be employed in dead-end positions where they have a lot of time to waste on social media and therefore, represent the bulk of the traffic, despite being a relative minority in the world and having little social, cultural, political or economic influence.

This tendency overstated the importance of groups of these life failures such as SJWs, who seem to be losers in the dating and marriage marketplace as well as in the quest to do something useful with their lives. That in turn through a compliant media gave a boost to these views, but as their insanity emerged, the bulk of normal people fled from them, removing their power.

The upshot is that smaller blogs like this one may have greater importance in the future as people realize that wherever the herd is can be found only lies, and wherever exclusive groups gather, information of actual value is being transacted. The hierarchy of nature restores itself in the vacuum created by the failure of grandiose human designs.

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