Why the High-Tech Boom Will Go Bust, Why the Crash Will Be Worse Than You Think, and How to Prosper Afterward
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The economics editor of Business Week forecasts the “good chance” of a “New Economy bust.”

If the sky is indeed falling, Mandel (The High-Risk Society, 1996) comes with somewhat more credible credentials than Chicken Little—and offers advice more useful than “Duck!” He is not encouraged by the “longest period of uninterrupted growth in U.S. history” that occurred between March 1991 and February 2000. Instead, he is convinced that “the market will sour over time” and warns that “when a downturn starts, watch out.” He also provides a date for the birth of what he calls the New Economy—August 9, 1995 (the day Netscape went public). The tech boom that followed—fueled by vast amounts of venture capital and a roaring stock market (especially in tech issues)—has created a whole new set of rules and dangers. Those who have mastered the Old Economy (e.g., Alan Greenspan) must learn the new one quickly if they are to react properly to what Mandel believes is a certain financial crisis. In clear, precise, and plain language, the author describes the features of the New Economy, takes a look back at the Great Depression (which, in that particular form, “will likely never happen again”), and then tries to imagine what a new depression will look like. He believes that innovation is the key to the New Economy and worries that if the Fed continues to slow the stock market and discourage borrowing (as it has been by adjusting interest rates upward), then there will be less capital to invest in start-ups, less willingness to take risks, and a good chance that the economy will crack as entrepreneurs and small companies will no longer find funding and thus be unable to compete with their bigger, more stable rivals. Tech workers will be hit hardest.

Cautionary—perhaps alarmist—but full of sound advice on how to dodge falling chunks of sky and how to replace them when the “All Clear” is sounded.

Pub Date: Nov. 15th, 2000
ISBN: 0-465-04358-5
Page count: 161pp
Publisher: Basic
Review Posted Online:
Kirkus Reviews Issue: Sept. 15th, 2000