I want to get to the impact of the current economic crisis on tech workers, but first a word on U.S. Treasury Secretary Henry Paulsen, who engineered the mammoth $700 federal bailout of Wall Street with your tax dollars. And your kids' future tax dollars, and their kids' future tax dollars.
I've heard from a lot of Wall Street wise-guys that Paulsen has misread the problem, and that we, as a country, are giving the federal government way too much power that we'll never get back. Oh, and that there is no guarantee that the bailout will even work.
Exhibit "A" is Bud Conrad, Chief Economist of Casey Research, author of the Wall Street research publication "The Casey Report". He says that Paulson has failed to foresee the economic crisis as only a bank crisis and that Paulson is wielding “financial nuclear weapons.”
Conrad writes: "And who is in charge of managing these huge swaths of the U.S. economy? Everybody seems to believe that Paulson is the right person to manage this situation. I disagree."
Conrad asks us to examine Paulsen's track record of insisting, again and again over the last year, that there was no problem. He points out that Paulsen is on record claiming that the subprimemess was “contained” at only $100 billion. And, adds Paulsen, it is hard to overlook the multiple failed ideas he has floated, including the super SIV (four big investment banks to wrap SIV assets in tissue paper and sell them off yet again),or suggesting that two investment banks should come up with $75 billion to bridge the AIG situation.
Then Conrad brings out the long knives.
"That he has been so slow in admitting the scope of the problem, even when it was apparent to any reasonably attentive observer, means he is either incompetent or disingenuous. I think he’s both. If he had admitted the seriousness of the situation sooner, a more well-thought-out plan might have been developed. While the scale of dislocations that have built up in the economy over the decades make the odds high that any plan will fail…short of moving away from the populist quick fixes and allowing the free market to do its painful job, a more realistic assessment, earlier, could have offered a fighting chance at a more balanced solution."
"Handing Paulson the equivalent of financial nuclear weapons is completely unjustified. Even worse, he is aiming the weapons at only one small sector, the banks, and not solving the underlying big problems."
Another sector that has been rocked this week has been technology, but I don't hear Paulsen or any other government leader talking about that. Clearly, the impact on tech industry and tech workers has been significant. As Computerworld points out this week, the pain should be felt in every corner of the tech sector - even historically resilient areas like servers could be hit, although thankfully that hasn't happened yet. Cautions Computerworld, "despite recent warning signs about the overall economy -- accentuated by Monday's viscerally shocking market drop -- server sales were up 6.4% at the end of the second quarter compared to Q2 in 2007, according to IDC."
The publication points out that while tech recruiting efforts are stable for now, that won't last. It cites Jeff Miller, managing director of EdgeLink, a recruiting firm in Portland, Ore., who says that business is still solid, especially for senior senior software engineers with eight to 10 years' experience -- particularly those with .Net and Linux skills.
But everyone, Miller tells Computerworld, is ducking for cover. "Though the market remains good for people with experience, Miller said a lot of engineers are hunkering down, unwilling to change jobs in this increasingly uncertain climate unless they're convinced of a prospective employer's financial strength."
Help for tech workers could come from Congress in the form of tax rebates. Says Computerworld, "Economic woes could yield legislative action aimed at firming up the job market. Analysts and consultants said it's possible that Congress could approve tax incentives designed to encourage U.S. companies to keep jobs in the U.S. That could be especially true of hard-hit financial services that may be under pressure to move jobs offshore to save money. IT career choices may be affected as well."
Meanwhile, panicked investors are sprinting away from tech stocks and to so-called safer havens like consumer goods and utility stocks, which tend to do better in times of economic strife.
Put it all together and we have a classic environment for a downturn in the tech sector that could last for a while. The question no longer is that are we in a recession. Now it's how bad will it be and how long will it last.