HAS ANYONE SEEN THE PRESIDENT

SHAKEN BY AN ECONOMIC EARTHQUAKE

San Francisco,California 12.12.2000

I HAVE never been in an earthquake before. But it feels like I'm in one now. I swear the ground is shaking and the sky has turned a darker shade of grey. I am standing in Montgomery Street, San Francisco. I shouldn't be surprised; they get a lot of earthquakes round here.

In America, Montgomery Street is known as the Wall Street of the West. It runs through the heart of San Francisco's financial district. A couple of blocks from where I am standing it is crossed by Sutter Street, named after John Sutter, the local hero who started the Goldrush which set California on its way to becoming one of the wealthiest places on earth.

There will be more of that later. But, for the moment, let's just say that this is one of the more important places to feel an earthquake coming on. And I'm in the middle of it.

Well OK, to be precise, I'm in the virtual reality of it. In actual fact, the road is shaking because two large security vans, built like armoured trucks, are juddering past me in a rush, picking up the takings from several local companies. As it happens, their loads are a fair bit lighter than usual.

It also occurs to me that the sky is dark because in the financial centre of this extraordinary city, many of the buildings are so tall they simply cut out the light.

Nevertheless, I'm still pretty sure there's an earthquake going on.

Sitting on the sidewalk, with a paper cup in his outstretched hand, is a beggar cadging quarters from passers-by. Up above him, on one of those natty moving neon signs, is a flicker-tape message which says the Nasdaq is down by another 80 points. It makes for a poignant cameo of what's happening.

Like I said, the Californians are used to disasters. In less than 100 years they have had more than their fair share. There have been three earthquakes which killed people. Altogether, a whole lot of people. And another one could happen any minute.

On the other hand, there have been more than enough good times to compensate: The Goldrush of 150 years ago which put them on the map, the mega-bucks movie business down the road in Los Angeles, and the New Technology industry which has grown up right around here most recently.

Throw in a few invasions - like the Beatniks of the 1950s, the Hippies of the 1960s, and the Gays of whenever since - and you would definitely be forgiven for thinking that this place has been hurtling through the greatest switchback ride in history.

Come to think of it, there must be a good few Californians alive today who have been through all of it except the Goldrush. All of it by God; every up-and-down of it, every twist-and-turn of it. No wonder they want to get rich quick in these parts. Because tomorrow...

But I digress.

Recession is a word which economists might liken to the tremors before an earthquake. Unrestrained, it can lead to a Great Depression, which is the super biggie; the kind that has ruined businessmen reaching for a pistol in the filing cabinet, or rushing to join the Society of Bungee-jumping for the Unattached.

Things aren't that way yet. But today, in San Francisco, I'd take a sizeable bet that I am at the epicenter of, shall we say, a significant realignment of the financial landscape - although, truth to tell, only history will show if this was precisely the time and the place.

What's happening is that the dotcom sector of the New Technology revolution is going bust. Put in simple terms - of which the Americans have a happy knack - it's a "tech-wreck"; a burn out. And California is the local crematorium. I'll tell you why...

Roughly 30 years ago, when Mr J.C.R.Licklider (yes,really) and his team of boffins funded by the US defence department, first thought up the idea of an electronic internet, they opened a pandora's box which would revolutionise our ability to communicate with one another.

We all know what has happened since. In theory, if not in fact, computer science has brought us the opportunity to improve the speed and efficiency of virtually every task and occupation known to Man. It has also, mind-bogglingly, overwhelmed us with a plethora of equipment, gadgets and gizmos which you have to be a teenager, or younger, to understand.

Anyhow, we are meant to keep everyone informed about what is going on through the internet; the worldwide web. It's a very simple and clever concept, and it's just the kind of thing which people make a fortune out of in California. Or did do. Or still hope to, if you get my drift.

This is the place, they say, where enterprise is an act of faith and optimism is a religion. It is also, not surprisingly, where you can find most of the action when there's a technical revolution going on.

Which brings us round, after a fashion, to the dotcom contingent - or, rather, to the earthquake which is destroying them - and to the reason why I think I'm in on the death.

Not that California has the monopoly on dotty-coms, of course. Or even dotty-ness. But I am told that you can find more of them/it in SiliconValley than anywhere else.

Should I explain Silicon Valley? Well, it's a rather mystical stretch of office and factory hi-tech utopia which, for want of a better description, lies between Highways 101 and Interstate 5 which run in parallel down the west coast from Seattle to Los Angeles via San Francisco.

I am tempted to point out that Microsoft, the biggest name in computers, is at one end of it, and that Warner Brothers, probably the biggest name in disaster movies, is at the other. But perhaps I'm hinting at a connection that really isn't there.

Meanwhile, back at the dotty-coms, no one seems able to find out exactly who came up with the naively flawed idea that all you need to make an e-fortune is to take a service or product, pop a hype-load of information about it onto the web, and then sell it in huge quantities to people all around the world.

If they did, I'm not even sure the electric chair would be good enough.

Oh that making money was so easy! In fact, I suppose, it was the very simplicity of the idea which provided its fatal attraction. Enterprise is a religion round here, remember? So the investors - otherwise known as speculators - said their prayers every night and threw billions at it.

Trouble is, as the world and his wife now knows, it takes more than billions to persuade enough folk to buy the whatever-it-is from a dotty-com site - even if they can find it to begin with. Couple that with an almost evangelical need by many of the proprietors to work in fancy-Dan offices, to pay themselves fancy-Dan salaries, and to live out fancy-Dan lifestyles, and what have you got? Answer: earthquake economics of seismic proportions.

I am in California just before Christmas. As I have said, only history will tell if this was the time and this was the place. But right now it certainly feels like the Earth is moving big-time.

As is the way of these things, there have been some prior warnings. Just nine months ago, the Nasdaq index, which is America's daily measure of the worth of hi-tech companies, was at an all-time high. Today it is at an all-time low.

In between, the sound of crashing dotcom companies has been echoing all around. Many of them have been here in San Francisco, and many of them have had names sounding about as daft as their business plans. Here's just a few: DrKoop.com, Send.com, Boo.com and MotherNature.com.

Today there is news of another fatality - Kibu.com, a company whose idea it was to capture the hearts, minds and pocket-money of teenage girls with the aim of selling them appropriate products by the handbag-full. They call it on-line focused marketing.

Anyway, you can guess what happened. The proprietors set up in fancy-Dan offices, paid themselves fancy-Dan salaries etc etc , and then, in practically no time at all, they got through a shedload - no, it was actually more like a containerload - of OPM (that's Other People's Money), promoting and advertising a site that (a) hardly anyone visited, and consequently, (b) no one bought anything from.

At least the bosses appear to have waved the white flag before the cupboard was completely bare.

Just another burned-out wreck among the pile of dotty-com ashes? Maybe. But now I'm not certain. After all, there always has to be one last straw; a time when enough is enough; a place where the writing is on the wall; a day when the wheels come off; a moment when the earthquake strikes.

I find that the Nasdaq has dropped with another hefty thud. I see a headline in the paper which says, in effect, that the dotcom game is over. Maybe this is it then: On this day in this month of December 2000, and in this place called California?

And yet, I hear you ask, so what if a few billion - no, make that a trillion - dollars of Other People's Money have gone down the tubes? So what (if I have heard it correctly) that around 20,000 people have lost their jobs round here in the last month alone? So what. It's hardly enough to shake the world, surely?

Ah yes, but here's the rub - for let's not forget where we are. This isn't called the Golden State for nothing. If it was a country, the economy, as measured by Gross Domestic Product (GDP), would be the sixth largest in the world. In the league table of these things, only the rest of North America, Japan and Germany, come significantly higher. It's bigger than China and virtually on a par with France and the UK.

Get the picture? Size does matter. This is the place where they measure things on the Richer - as well as the Richter - Scale. When they get the financial jitters in California, an awful lot of people catch the bug.

The proof is in the indices of Stock Markets all across the world. I check the paper. Tech stock prices are falling everywhere. What's happening to the New Age Economy in California is psychologically shattering. Confidence is plummeting. Those economic earthquake shockwaves are spreading. So hold on tight for the next, exciting roller-coaster ride!

Which kind of brings us back to John Sutton and how it all began, and why no one in California should be surprised by whatever type of earthquake strikes them next.

The first gold-bearing ore was discovered on land owned by Capt Sutton down in the western foothills of the Sierra Nevadas. Apparently he told a newspaper editor friend but swore him to secrecy. Mad fool! A few front page headlines later and sleepy San Francisco, then just a huddle of 200 homes and 800 people, was truly on the map.

The Goldrush of 1849 was under way, bringing 60,000 fortune-hunting hopefulls trekking in from across the nation, or sailing in from overseas, and transforming the place into a cosmopolitan city almost overnight.

Boomtime No.2 has been altogether different. It began in 1908 with the birth of an entertainments industry which grew big through flickering, voiceless camera images, rolled on into movies, TV and recording, spawned Hollywood and Disneyland along the way, and developed the celluloid city of Los Angeles into the world's greatest star-making (and sometimes breaking) machine.

Then, dating from the 1960s, came Boomtime No.3 with the dawning of the Information Era or the New Economy or the Whatever-else-you-want-to-call-it-as-long-as-it's-not-the Dotcom Era, much stirrings in Silicon Valley, and the birth of a multi-billion-dollar, hi-tech industry.

Most places are lucky if they benefit from one Boomtime. Californians have had three. Plus, it must be said, more than their fair share of baby-boomers - like silver, oil and government defence contracts.

But in this land which would surely scoop every prize for topsy-turvyness, they have also witnessed some appalling earthquakes.

If, like me, you struggle to remember what teacher described as a cwm or a corrie, or even a circue, in the geography class, then you will only have the vaguest notion about what causes earthquakes. Just for you, however, I looked it up in a book. They say it is caused by the movement of tectonic plates just under the earth's surface. San Francisco apparently straddles the Eastern Pacific and North American plates and when they move whatever happens is usually the fault of San Andreas.

All I can say is that he's been very busy. After what I read to have been a "sizeable earthquake" in 1868, the Big One came in 1906, decimating most of San Francisco, killing 3000 people and leaving 100,000 homeless.

In 1989 came another, causing extensive damage and 67 deaths; and then another, in 1994, down towards Los Angeles, which killed 72 and ruined the homes of 22,000.

Amazing, eh? And sobering, too. Being practical people, and no doubt fatalistic (well, wouldn't you be if your hometown was being hit by an earthquake more often than you know what's good for you) I find that tradesfolk are not at all averse to advertising goods and services to help in a holocaust.

I note with interest, too, that all new construction must have flexibility and safety features built in, especially for high buildings. So that's good to know then!

There is even a section devoted to an earthquake "first aid and survival guide" in the local telephone book. One rule reads: "(if you are) in a crowded public place, do NOT rush for the exits. Stay calm and encourage others to do the same."

Perhaps they should put a sign up like that in Montgomery Street.

I think of it again today as I listen to the virtually real sounds of plunging stock prices, crashing profit forecasts and exploding ( or should that be imploding?) Balance Sheets.

On TV I am told that elsewhere in America the Big Three car-makers are all cutting back on production; a leading steel-maker is about to go bust; and one of the oldest names in retail is closing 250 stores. The country's main stock index, the Dow Jones, is at its lowest for 20 years, national growth is slowing fast; profit-making is at a standstill...

Maybe you will say I am carrying the earthquake analogy too far. But I am not so sure.

There's a whole lot of shaking going on. And, here in California, the symbolism of an earthquake striking the economy seems inescapable.

Postscript:

Jan 3: The Fed, in an emergency move to boost the economy, cuts interest rates by 0.5%

January: Nat Assoc of Purchasing Managers says US manufacturing already in recession.

Jan 17: Emergency funding approved in California to avoid power utilities going broke.

Jan 27: World Economic Forum asks:: Is US slowdown dragging world into recession?

Jan 31: Fed cuts interest rates another 0.5%.(This month's total 1% is the most for a decade.)

February: Last month's jobs loss total is highest since recording began.

Feb 8: President Bush announces $1.6trillion tax cuts plan to boost economy & confidence

March 14: Japanese admit 19 largest banks are on verge of collapse

March 16: Dow suffers worst one-week points drop in 11 years

March 20: Fed cuts interest rates another 0.5%

April: Dow's points loss in Quarter 1 is 8.4% - most for 23 years