Global Crisis: Advice for Developers
At this point, there is no question in my mind that we’ve entered into a global financial crisis of epic proportions such that you will (hopefully) tell your grandchildren about the “Global Meltdown of 2008”. I kid you not.
Although over the years I have been a very diligent student of economic cycles and trends, I do not purport to hold some sort of “crystal ball” that makes me the Edward Cayce of global economic trends. But one thing is sure: long term economic cycles of boom-and-bust have turned decidedly negative, and this has broad, long-term implications for you and me as software developers. This is not a “US phenomenon” – this is truly global and touches every economy on the face of the earth. WHAT IS HAPPENING IN 2008 WILL REWRITE HISTORY.
I’m not going to bore you with economic theories and say who is to blame or claim to have a solution to the problems that face us. Rather, I want to take a few paragraphs to give my read on what is happening and how you can protect your ass.
The best “thermometer” of the credit situation is what is known in financial parlance as the “TED Spread”. Simply put, this is the difference in rates between US short term 3 month Treasury Bills (considered a “riskless” security) and LIBOR (London Interbank Offered Rate). LIBOR simply reflects the credit risk of lending to commercial banks by other banks, in US Dollars. Right now, the TED spread (even after all the inter-government intervention and global discount rate cuts this week) has hit around 400 basis points (4%) after hovering between 1% and 2% since last November. That’s the equivalent of a “choke hold” on the global financial markets. In sum, the global economy is HAVING A STROKE:
What this means is that there is so much fear in the international banking markets that the credit system – as we know it – has virtually DRIED UP. FINIS. NADA. KAPUT. EFES. NO CREDIT. It’s DYSFUNCTIONAL. They’ve tried to fix it, and the patient is still terminal. Everything the doctors have tried DOESN’T WORK. Got the picture?
This has long-term effects on Wall Street, but it also trickles down to the “average Joe” – that’s you and me. Here’s what it means, in PLAIN ENGLISH:
- The company you work for will probably NOT get new contracts. You could be out of a job, depending on what service sector and target market your company is in.
- Companies will be shortly looking at ways to cut costs. That mean lay-offs, terminations. If you aren’t “Senior” at your company, your job is AT RISK, RIGHT NOW. NOT TOMORROW - TODAY!
- Companies will be delaying or aborting plans that involve any kind of incremental expenditure other than those that enable the company to SURVIVE.
The vendors that survive and prosper, in the main, will be those that offer a product or service that can either help a company SAVE MONEY, or MAKE MONEY. If your company / product is not able to clearly and efficiently spell out how you deliver this benefit, YOU ARE AT RISK.
My advice?
- Polish up your resume. NOW!
- Keep your ear to the ground to be aware of any potential changes around you.
- Keep up your networking contacts (LinkedIn, recruiters, etc) and REOPEN the dialog.
Have fun, and good luck! This will pass, but it could take a long time (several years)- and you need to be both vigilant and informed.
That is good advice.
ReplyDeleteWhile not recession proof, these are days I'm glad I went into the defense sector...
ReplyDeletehmm isn't that a tiny bit alarmist? Totally agree that this is a major crisis and will result in a loss of jobs for many, but when it comes to the situation of a developer, it depends on the type of industry you are in.
ReplyDeleteInsurance, financial, banking sectors are hurt the worst by this, after that, industries that depend heavily on consumer spending, and I would say that industrial sectors would be less effected (again, depends on the specific industry). It never hurts to be prepared but some of us are less concerned about the immediacy of this to our jobs being lost, than others...
Remember even in the great depression unemployment only reached 20% :)
Welcome to the new America, Comrade.
ReplyDeleteWow, you're just a ray of sunshine, aren't you? :).
ReplyDeleteSeriously though, I'm a developer with an Economics degree, for whatever that's worth. As bad as things are, the will get worse, and that's mostly because politicians don't have to pledge primum non nocere when they take their oath of office. The corrective measures they introduce will in turn introduce market distortions which will in turn feedback into the economy causing more trouble...there's a famous economist's story whereby FDR set the price of some commodity to 17 cents per unit because "the seven sounded lucky". It won't matter what industry you're in...the GDP will fall, and with it, tax revenues (even as the new Congress jacks the tax rates sky high, which in turn feedback...).
From a historical point of view, it's just time for us to make these mistakes. Take the typical human lifespan without plague or war, about 75 years +/- ten years. Go back that amount from the present, you get the period of the Great Depression and WWII. Go back another lifespan, you get the Civil War. Go back another lifespan and you get the American Revolution. Go back another lifespan and you get the Glorious Revolution in Britain...
The good news is that the world recovers and is followed by a period of glorious progress. We land on the moon. Go back a lifespan and you get the transcontinental railroad, electrification, the conquest of the west. Go back another...you get the picture.
Be decent...you will be tested.