When The Economy Tanks…

The dollar sank to a record low against the euro Thursday and traded at parity against the Canadian currency for the first time since 1976.
In semi-related news, A VC sees a downturn coming in Web 2.0 products and services.

The venture market in any industry (biotech, nanotech, green tech, comm equipment, web, etc) does best when the supply of new companies is relatively modest and the demand to invest in them is equally modest. Right now in web tech, we’ve got a huge supply of new companies and a huge demand to invest in them. That’s not sustainable forever.

I brought up the credit crisis yesterday and the resulting run on English banks. Today, we look at U.S. currency’s sharp decline and a possible downturn in the tech sector. This all spells bad times for advertising, as marketing expenditures dry up in a hurry when the economy is struggling.
For even gloomier doom, see this Telegraph piece on Saudi Arabia’s refusal to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.



About David Burn

I wrote my first ad for a political candidate when I was 17 years old. She won her race and I felt the seductive power of advertising for the first time. Today—after working for seven agencies in five states—I am head of brand strategy and creative at Bonehook in Portland, Oregon.