According to the National Venture Capital Association, 43 Venture Capital funds raised $3.4 billion in the fourth quarter of 2008, down sharply from both the previous quarter amount of $8.4 billion, and the fourth quarter of 2007 ($11.7 billion). Mark Heesen, president of the NVCA, said he expects the slowdown to continue well into 2009, until economic conditions improve, and institutional investors can “recommit with confidence.”
When I was asked by The New School to teach NMGT2133 “Introductory Finance for Business”, I had the inspiration to use excerpts from movies and television to reinforce some of the class learning objectives. It seemed like a “no-brainer”; many of my students would be media majors, so this would be a great way to bridge my world and theirs.
Finding suitable films and tv shows to quote for this purpose has proven somewhat more difficult than I expected. An MSNBC survey article, “The Top 10 Business Movies,” gives some perspective why. In this unscientific 2004 poll, 74% of responders cited the side-splitting film, “Office Space” as their favorite “business-themed” film, followed by “Godfathers 1 and 2”, and “It’s a Wonderful Life.” Finance may be the lifeblood of business, but as a group, the 10 choices given to MSNBC readers depict the struggle to succeed in business from a comical, sentimental and suspenseful standpoint, while doing little to educate viewers on financial concepts.
Fortunately, I was able to find some great choices, including the Million Dollar Idea episode from “The Lucy Show”, “Wall Street”, “Other People’s Money” and “Lost in Lamancha.”
The course is open to the general public as a continuing education offering, meeting Mondays at 4pm, with the first class on 1/26/09. Or if you are interested in some recommendations, on finance-related books, try some of these:
“Finance for the Non-Financial Manager”, by Gene Siciliano
“When Genius Failed”, by Roger Lowenstein
“Buffet: The Making of an American Capitalist”, by Roger Lowenstein
“Barbarians at the Gate”, by Bryan Burrough and John Helyar
“Optical Illusions: Lucent and the Crash of Telecom”, by Lisa Endlich
“Disney Wars”, by James B. Stewart
“Den of Thieves”, by James B. Stewart
“Stocks for the Long Run”, by Jeremy Siegel
“Capital Ideas Evolving”, by Peter Bernstein
“Liar’s Poker”, Michael Lewis
Thanks to economist John Dunham of John Dunham & Associates for putting the current U.S. economic situation in a historical context:
The last time the country experienced a serious recession was in 1980-81 when the economy contracted by 1.5 percent. This compares to our projection of a 1.2 percent decline for the current recession. This extended period of strong economic growth and very shallow and short recessions, has created an environment where many of those working in finance, the government and the media expect the same thing to continue indefinitely. During times like this it is good to remember what the pundits were saying in 1982, the last time the US experienced a true recession. Commentators during that period screamed that the US was entering an “economic Dunkirk,” and that we would be fighting economic stagnation for the next decade. The Dow Jones Industrial Average fell by 24% (to a low of 777), unemployment rose to a high of 10.8 percent, and states throughout the country experienced large deficits. Companies that were too big to fail like Bethlehem Steel shuttered plants throughout the country and there were more bank failures than any time since the great depression. In addition, the country was in the throes of the Savings & Loan Crisis which was also brought on by a fall in home prices. While Carl Sagan’s “Cosmos” topped the New York Times’ Bestseller List in 1981, other titles like “The Coming Currency Collapse” (Jerome F. Smith) and “Crisis Investing: Opportunities for investing in the coming Great Depression” (Douglas R. Casey) echoed the concern surrounding an economy in recession. As pundits and politicians decry the end of capitalism and suggest that today’s situation is some unique event unseen since the early 1930’s (when by the way, the economy shrank by 45 percent and unemployment approached 25 percent of the workforce) it is important to keep everything in context. Capitalism is not dead, markets continue to function, and new firms, and new industries will emerge from the creative destruction brought about by the recession of 2008.
Thanks to economist John Dunham of John Dunham & Associates for putting the current U.S. economic situation in a historical context:
The last time the country experienced a serious recession was in 1980-81 when the economy contracted by 1.5 percent. This compares to our projection of a 1.2 percent decline for the current recession. This extended period of strong economic growth and very shallow and short recessions, has created an environment where many of those working in finance, the government and the media expect the same thing to continue indefinitely. During times like this it is good to remember what the pundits were saying in 1982, the last time the US experienced a true recession. Commentators during that period screamed that the US was entering an “economic Dunkirk,” and that we would be fighting economic stagnation for the next decade. The Dow Jones Industrial Average fell by 24% (to a low of 777), unemployment rose to a high of 10.8 percent, and states throughout the country experienced large deficits. Companies that were too big to fail like Bethlehem Steel shuttered plants throughout the country and there were more bank failures than any time since the great depression. In addition, the country was in the throes of the Savings & Loan Crisis which was also brought on by a fall in home prices. While Carl Sagan’s “Cosmos” topped the New York Times’ Bestseller List in 1981, other titles like “The Coming Currency Collapse” (Jerome F. Smith) and “Crisis Investing: Opportunities for investing in the coming Great Depression” (Douglas R. Casey) echoed the concern surrounding an economy in recession. As pundits and politicians decry the end of capitalism and suggest that today’s situation is some unique event unseen since the early 1930’s (when by the way, the economy shrank by 45 percent and unemployment approached 25 percent of the workforce) it is important to keep everything in context. Capitalism is not dead, markets continue to function, and new firms, and new industries will emerge from the creative destruction brought about by the recession of 2008.
Is a bad economy a good time to start a new business? Maybe so, according to a 11/18/08 Marketplace report, broadcast by American Public Media. Resources are less expensive and available, such as highly skilled workers and consultants. Investors who have been burned by the stock market, might be looking to invest in new ventures. And at this point, with consumer sentiment and purchases in a trough, you can plan for the worst, and hope to be pleasantly surprised if the economy improves in 2009/2010.
