| Economic policy, which has been virtually Republican since 1981, has little to do with it. People got into a high tech fever and started throwing venture capital at firms without a business plan. Napster was privately funded, and did not have the least idea of how it was going to make money for several years. People were making killings getting in on IPOs, then turning around and selling the overhyped stock quickly. It was inevitable that all of that would end as soon as expectations were not being met. Internet sales were sluggish, with even the most successful firm, Amazon, going years without posting a profit. Sales of new PCs were cooling, Internet penetration was starting to stagnate, and people started getting cold feet. As sources of funding dried up, a lot of firms collapsed, and suddenly there was a panic. Unfortunately, a lot of people started selling off more stable assets in order to meet their margins and stave off bankruptcy, so the whole market was affected. The market chaos affected consumer confidence and the willingness of firms to expand, and so the economy started to slow, and eventually there was a mild recession. Now, we are in recovery, but it is still too early to expect a roar in the markets...... |
