No summary of 2010, visual or otherwise, would be complete without an extensive overview of what pundits call Monetary Stimulus, quantitative easing or Large Scale Asset Purchases, and the peasantry calls, just as correctly (with a few footnotes), the printing of money. If there are two words that define what we had an absence and an abundance of in the past year, those would be jobs, and money. As some of the key jobs-related charts were presented yesterday, below, once again courtesy of BusinessWeek, are the main charts that among other things demonstrate the various currency manipulation playbooks, the price of gas in bacon and other products, the annotated strength of the dollar through time, and what is actually printed when the Fed does print money.
The first chart shows the progression of dollar strength (and weakness) with an annotation for contemporaneous global events. What is ironic is that while everyone realizes the world is still in a very week position, the core debate over who is weaker - Europe or the US, is sure to provide many hours of entertainment in 2011. And as a bonus, the man whose policies, together with those of Bernanke, are instrumental in just how weak the dollar gets, is presented in his key natural states: from lying just every so slightly, to lying a lot, to lying profusely to save his life, to lying at such a rate, it would make those whose pants are burning, blush with envy. And now you will know how to distinguish the four...
The next chart deals with the actual money printing, but not in an deeply philosophical manner, one in which hours of debate are wasted over whether trillions in excess reserves are actually printed money (even though the last time someone acquired USTs, MBS, and soon Munis and ETFs, with pixie dust, the legal consequences were not all that palatable). Of the just over $300 billion in actual currency printed in 2010, the vast majority was in $100 bills, next up was $20s, followed by $5s, $10s, and lastly, singles. Not a single $50 bill was printed. Also noted: the amount of cash in corporate America. Of particular interest: GM has more than half of its market value, or $27.5 billion sitting in cash. Lastly, and this not come as a surprise to many, the money multiplier: the money supply divided by the monetary base, is at near record lows, courtesy of the $1 trillion in excess reserves.
Another popular meme in 2010 was pricing X in Y, most often the stock market in gold, in which basis it is still down for the year, as gold (not to mention silver), despite the short memory of many, is by and far the best performing asset class of 2010. Those who followed our advice in early 2010 to avoid stocks and to invest in gold, are ahead of most. The chart below takes a comic approach to this relative performance, showing how much the price of gas changed when priced in other "currencies."
Last, and probably most interesting, is the graphic presentation of the currency manipulator playbook: in a world in which Ben Bernanke knows very well he has little competition when it comes to doing as he chooses with the world's reserve currency (for now), other sovereigns are forced to come up with their unique responses. The playbook below shows all the various defensive tactics adopted so far. Luckily, few offensive plays have been established to date. We doubt that will be the status quo for a long time.
And as John Taylor and many others have pointed out, now that the fiscal "stimulus" of the payroll tax has been exhausted in a few short weeks courtesy of the jump in crude oil, and any further fiscal intervention not likely to occur unless Congress wants another incumbent bloodbath next time around, as Americans are tired of subsidizing banker lifestyles, expect to see many additions to the FX manipulation playbook, as the year progresses and monetary intervention continues to be the only direct way of making sure every new banker bonus year is a record one is via the Fed and its ongoing dollar printing-cum-debasement. That said, should the bankrupt European house of cards continue to wave a white flag of surrender every 3 months, the race to the bottom may not have a clear winner well after 2011 is also history.
All charts courtesy of BusinessWeek
(Editor’s note: Charley Polachi is a partner at Polachi, an executive recruiting firm. He submitted this story to VentureBeat.)
2010 is winding down rapidly with all indications that the worst is behind us – hopefully. At the very least, that’s the sentiment of many of the executives we deal with.
As we gave forward into 2011, we queried several of our executive search partners around the world to get their input on what they see happening in their back yards and what they anticipate for the year to come. Here’s what they had to say:
Sean Carroll, Polachi (NYC)
“If there is any meaningful uptick in the economy, good talent that may be on the sidelines will be gone and entrepreneurs will have a tough time hiring on their own. Also, I suspect there will be a strong M&A market as we’ve seen with Netezza, Unica, Coremetrics, etc. Corporations have lots of cash and will buy at the right price.”
“Lastly, as entrepreneurs pioneer innovative solutions, there will always be a shortage of skills as the experience or domain does not exist yet. A good example is SEO products. Automating SEO is an interesting problem to solve but there are only a few young product companies, so the only place to get SEO experience is the agencies…no SaaS or product experience there. Entrepreneurs need to make bets that talent can step up in a new sector.”
Andy Price, Schweichler, Price, Mullarkey and Barry (Silicon Valley)
“My view is that the talent pool is getting snapped up pretty fast and once again we’re seeing a very competitive landscape for people. We’re competing against two forces: Other companies recruiting, and inertia driven by either risk aversion or someone’s low priced options are suddenly in the money and they’re inclined to take risk off the table. That said, people believe startups have a chance again so they’re willing to talk to you. Closing people is the hard part right now.”
Steve Lavelle, Gillamor Stephens (London)
“In Europe, access to the talent pool is there, provided the company’s proposition is compelling enough. Closing candidates can be challenging though and having been through the low point of hiring activity, it’s only going to heat up as we move into next year.”
Sal Rocco, Stonewood Group (Toronto)
“We are seeing more product development, engineering-oriented searches than in the past 2-3 years. The only thing we can attribute this to is that when the market tanked and companies were cash strapped, the focus was on revenue generation and selling what we had. They gutted costly product development and engineering teams. The thought was: Don’t worry about new product development because we may not be alive in 2-3 years if we don’t get cash today.
“To the extent they were doing searches in the past 2-3 years, the searches were on either outward looking sales & marketing types focused on making money or CFOs/Finance types focused on raising cash or slowing the bleed. Today, as the future looks brighter and companies realize that their products are dated, they need to hire engineering leads and product development types, which they were laying off over the past 2-3 years.”
So, for 2011 the future looks fairly bright. VCs are investing and companies are hiring. A few things entrepreneurs can expect to see and look out for are the following:
- Senior talent is getting scarce again
- Social media works for staffing at many levels, but not at the executive level
- Cleantech continues to march on – and more opportunities will be there for investors
- Venture capital is emerging from a difficult stretch, but there is money for good ideas and strong teams in mobile applications, gaming and health care IT
- Candidates want cash and equity.
- Acquisitions will provide the bulk of exits in 2011; the IPO market isn’t here yet.
Next Story: Verizon iPad 2 to join the Verizon iPhone in 2011? Previous Story: Computer platforms with the biggest buzz will be the biggest malware targets in 2011
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