What Goes Down Must Go Up

Where is the oh-so-rational Alan Greenspan when we really need him?

Where is the oh-so-rational Alan Greenspan when we really need him? The Federal Reserve chairman disappointed much of the investment community during an appearance before a congressional committee last week, because he failed to signal a further lowering of interest rates. That did not bother me at all. I was disappointed that he failed to wield a far more potent weapon in his arsenal — his bully pulpit.

This was the guy who first pricked the dot-com bubble by decrying the "irrational exuberance" of the market, especially the technology sector. It took longer than expected, but he finally got the correction he was looking for. Now that things are swinging in the direction of negative growth, hes back in more comfortable technical territory, attempting to right the ship with more time-honored economic tools. But it wont work. Just as raising interest rates failed to cool the relentless growth of the economy in the last several years, lowering rates wont heat it back up. Thats because theres nothing fundamentally wrong with the economy.

This isnt your grandfathers correction. What we have here is a psycho-recession. Greenspan would be wise to note the markets "irrational panic" in the technology sector before a flood of red ink further erodes the foundations of the nations economy.

Granted, it is hard to find a silver lining in the technology implosion. Share prices are tumbling. Earnings, where they can be found at all, are anemic. Layoffs are endemic. Industry giants from AT&T to Intel to Sun Microsystems are nervously shifting their focus like a row of hyperactive 10-year-olds in a church pew.

Even so, things could get a lot worse — in fact, they are going to get downright alarming if the markets current funk becomes a self-fulfilling prophesy that snowballs into a full-fledged recession.

The mood of the tech industries seems to have moved from the nervous caution of December and January to a numbing state of shock. And not without some reason. The dot-com bubble was so enormous that the backlash created by its collapse is threatening many ships afloat on the Internet, from hardware, software and infrastructure giants to the myriad tiny ancillary companies that set sail and picked up speed in sunnier days.

And yet, the one thing that became clear as we were producing this weeks special issue on the wireless Web is that continued rapid growth in the interactive industries is inevitable. There is no time for a recession. There is too much work to be done, too much promise for huge jumps in productivity and too much money to be made.

You readers already sense this, of course, because you are the "I-managers," the folks responsible for steering the course of enterprises large and small, public and private, into the frontiers of online productivity. You know the frustrations inherent in that responsibility as well as the rewards, but you also know that the Internet has become so ingrained in our economy and culture that there is no turning back. And when we look ahead, the future is clearly an era of relentless technological change that will pump billions of dollars of new wealth into the economy.

The wired world will be the unwired world, as the Net evolves from a place inside our PCs to a place inside our consciousness, redefining our perceptions of community and commerce. If that inevitability fails to impress Wall Streets myopic and impatient denizens, the momentum we document in this issue at least signals sustained confidence within the communities that have always led the way in the technology industries — the visionaries, entrepreneurs and venture capitalists.

Only this time around, the folks at the helm are not adolescents hosting an orgy of hype and fast bucks, but a new breed of seasoned managers, people with experience, savvy and real business plans. All they need is a reconciliation with Wall Street and the investing public.

So come on, Mr. Greenspan. It is time to play the oracle once again and calm the frenzied markets. After that, you can go back to playing with your interest rates.