Yeh, been a long time since I last wrote ya.  Guess I'd kinda run out of things to say for a while.   After our first institutional round closed back in December 1999 led by Porcine Capital Partners, we were pretty psyched to have the NY investment bank Bigg, Fees and Howe help us put the book together for our IPO.  But the market tanked the day before we were gonna file.  Not only did the IPO get pulled but Porcine lost some weight, too.  So did all the VCs they typically invest with.  A company that was shining New Era brilliance in March 2000 is regarded two months later in the manner of a bag of burning dog poo left on the front porch by bored teenagers.  Thus leaving us, like everyone else in our, er, space with no access to further bubble dollars.  Our board pressed us to increase our burn rate to "gain market share" a couple months ago but now calls emergency board meetings to discuss how to keep iTulip.com from going nipples-up.

Obviously, our business didn't change.  The environment for greed and speculation did.  Oh, imagine our surprise.  The environment changed for the reasons we predicted and at about the time we predicted (See: What will Pop the Internet Bubble?).  Yet somehow, even though amateur market historians and economist wannabes like us could see it coming long ago, the mainstream press somehow was surprised.  The Wall Street Journal yesterday ran a piece on the Internet stock mania titled, What were we thinking?  To which we reply, what were you thinking?  For years iTulip.com's been making fun of the press for pushing the New Economy bullshit tale and the saps who bought the stock (we call them sheeple).  The sheeple have been around since the dawn of time as a more or less permanent feature of markets; their collective dream of quick riches lays dormant until the next spark of an exciting new discovery or invention and a pile of excess liquidity gets a mania machine running.  What's new in this episode of greed and stupidity is the participation of normally stodgy VCs and conservative investment banks.  We give them a proper spanking in the latest Green Magazine piece, How Venture Capital is Ruining the Internet

Ok, so what's to become of iTulip.com now that the VCs have built their billion dollar mania money funds and are only investing to in so-called Internet "infrastructure" companies?  ("Infrastructure" is a buzzword that means software or hardware that solves a real customer problem that can be sold at a profit, you know, an actual business.)  One option is to spin ourselves as an infrastructure company and go out to get more money.   That's a stretch, even for us.  I mean, let's face it, we're a parody of an Internet company.  Our only product is a stock certificate.  We do have T-shirts now and they're extra cool.  We got a few banner ads.  But this ain't gonna cover the web hosting bills.  No, we need to become a different company.

An alternative tag line for iTulip.com, instead of The Internet Stock Mania Company, might be Econ 101 for Entrepreneurs, Stock Market Investors, and other dreamers.   We tried over the past year and a half to warn both investors in dot coms and the hopefuls who were flocking to work at them, many of whom can read about their companies at the New Era icon Fast Company Magazine parody site F*cked Company, that they were buying into a temporary side effect of flawed monetary policy.  Many have written to thank us for saving them the trouble. 

We firmly ascribe to the No Free Lunch school of economics.  We cannot suspend disbelief while watching the made-for-TV movie, The U.S. Economy Show.  In this whacky prime time series, outlandish stock market speculation is passed off as "investing," risky and outrageous commercial bank lending practices are viewed as normal, experimental derivative strategies to hedge risky investments are regarded as the modern answer to avoiding risk in the first place, the possession of less than $5000 in liquid capital by 62% of households incites no alarm, the average credit card balance is $7,500 is okay because the incomes needed to pay them off will always rise, the average college graduate leaves school with more than $40,000 of debt but that's fine because all college graduates will all get high paying high tech jobs as soon as they graduate, 60% of all homes sold in the past two years were purchased with zero money down mortgages but that's not a problem because even though they have no equity in their homes they won't walk away from them in a nationwide recession as they did in Houston in the localized 1980s recession because no further recessions are possible, the current account deficit breaks new records every month but -- not to worry -- this will correct itself harmlessly in time, the rate of retail inventory growth has been increasing for 17 months but that's fine because retailers must be preparing for a big surge in future sales, and on and on and on.  The imbalances in the US economy are more striking now than at any time in history.  Yet on The U.S. Economy Show, everybody's driving five ton SUVs up to their 10,000 square foot McMansions and smiling. 

iTulip.com describes the U.S. and world economy according to the facts available to us.  This appears to have been useful to our visitors, so as long as we are able we'll continue to do this. 

We think the U.S. Economy Show is even more vapid and dangerous than the recently canceled Internet Stock Mania Show because the delusions it gives Americans are far more self-destructive and far reaching.  Americans have been buying things they can't afford and piling on debt they can never pay back.  We will have a banking crisis that makes Japan's post-bubble crisis look tame.  U.S. households have not amassed savings the way the Japanese did during their bubble nor can the U.S. with an eye-popping $31B monthly trade deficit count on exporting its way out of a crises as Japan has tried to do.  The U.S. budget surplus will evaporate, to be replaced by deficit spending to the tune of multiples of GDP.  The dollar, after falling 50% or more against other currencies, may lose its place as the world's reserve currency. 

Forget appearances.  The U.S. is at the start of the most significant recession that the U.S. economy has seen since The Great Depression (The Perfect Financial Storm? - Financial Storms Heading Towards the U.S. Economy).  A series of events is about to unfold that will shock and surprise everyone.  Everyone except, of course, you.  Our deeply appreciated loyal visitors.

Sincerely,

Arnold Greenspatz

The Prez 
iTulip.com