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The late-breaking news on Friday read like a series of dispatches from the front lines. There were horrified first-hand accounts of the "wounded and the dead," of those who had "caught a falling knife" and, above all, of the universality of the "carnage." Though the President stoutly refused to acknowledge the situation, those in the trenches were quickly conceding a "painful" defeat.
Were the wire services referring to an explosion of the tensions between China and Taiwan? Further nuclear experimentation in Pakistan? A new-age Cuban Missile crisis sparked by the likes of Elian Gonzalez?
No, these allusions to warfare were invoked not for physically treacherous circumstances, but, to many, events no less catastrophic. Capping off one of the most miserable weeks in financial history, the Dow and the Nasdaq fell sharply on Friday. The former lost five percent and the latter 10 percent of their respective values.
Although both indices are still at higher levels than they were three months ago, these recent shocks have altered the course of the stock market over the few weeks so as to resemble--to continue in the same literary theme--a minefield. And an air of uncertainty, as any devotee of the Wall Street Journal knows, constitutes the deadliest economic poison of them all. Without getting too technical (ok, without any attempt at a sophisticated analysis) it seems as if things are going to get a lot worse before they get better.
Experts have been busy placing the burden of blame on the technology sector and its famously overvalued stock prices. Considering the hype--and subsequent expectation inflation--that has surrounded the success of the dot-coms, implicating Internet fever is a safe, uncontroversial explanation that specialists feel comfortable voicing and that the public is eager to swallow.
But, as always, the most convenient rationale is not necessarily the most accurate. To find a better answer, we need to turn to the previously mentioned war-zone mentality of the stock market and try to discern what exactly everybody is fighting against. As much as we'd like to believe it's a struggle for control of the World Wide Web, the true battle is the one waged against the fallout of our millennial incarnation of the American Dream.
In every era, this concept has been a volatile mix of aspiration and ambition, ignorance and illusion--an abstraction that the majority of the country is "supposedly" striving for, but which in the corporal world is so elusive as to often be downright fictitious. Though the scenery undoubtedly changes with the century, (by societal standards, "making it" is no longer measured by indoor plumbing and a fashionable buggy, but by a Mercedes and a company in the Valley--Silicon, of course), the latent content of the Dream remains the same. It's a rags-to-riches story, where ambition and fate collide in the Promised Land and instantly propel some lucky Nobody to the status of a Very Wealthy Somebody.
This desire-to-get-rich-quick gene seems permanently grafted onto American society, which probably explains the incredible success of shows like ABC's "Who Wants to be A Millionaire" and Fox's "Greed," (thank you, Fox, for telling it like it is). It also goes a long way to explaining the real reason why the stock market performed so atrociously last week. What could possibly more seductive than the prospect of making untold amounts of money from an IPO for a website, something that anyone with a modicum of technological savvy can create and maintain? How many times over the last few years have we heard about how groups of college students--portrayed without fail as greasy, nerdy and severely lacking in fashion sense--became multimillionaires overnight, thanks to somecreativeidea.org?
But while it's important to recognize the power of the "latest thing," it's disastrous to allow the desire for that power to blind the inevitability of its flaws. What happened in American society over the last few years is that the staggering success of Internet made navigating Wall Street look and feel deceptively easy. Suddenly, everyone could tap into the Dream; fiscal novices flocked without pause into the esoteric world of business. And when it was good, it was very, very good.
But now that the future may not be "very good", the majority of the American population that became involved in the stock market over the last half-decade just doesn't seem to know what to do. Their reach for wealth seems to have greatly exceeded their grasp on the complexities of the system; one survey found that the average American expected the market to grow an average of 19 percent for the next ten years. This figure is totally irrational for a long-term prediction, and reflects the kind of ignorance that led people to continue to transfer funds to the technology sector long after it became hopelessly overvalued. It's so simple, then, to blame that sector as a sort of disembodied entity rather than understanding that this sort of correction was ultimately inevitable--that although it was impossible to prevent this mini-crash, it could have been prepared for if people took a step back from "getting rich quick" and looked at the ludicrousness of pulling money out of thin air.
For all I know, the stock market is rallying as you read this, and those graduating seniors at the business school who contracted to receive half their salaries in options where the strike price was set a month ago will not be in the same state of panic as they were this past weekend. More likely, however, Friday's "bloodbath" was the first signal that the economic boom we've experienced will begin to reverse itself somewhat--and that we need to accept the fact that even the roads in cyberspace aren't paved with gold.
Alixandra E. Smith '02 is a government concentrator in Kirkland House. Her column appears on alternate Mondays.
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