Here is the link to the Washington Post article:

From Boom to Bust: Down and Out in Silicon Valley

Unfortunately this may be a precursor of things to come. The Administration and the Federal Reserve have allowed this MANIA to continue for many years for ALL the wrong reasons.

Ray

-- Ray (ray@totacc.com), February 12, 2000

Answers

I keep forgetting on this board--is the answer more government or less government??

-- ImSo (lame@prepped.com), February 12, 2000.

Lame One, the answer to your question is quite simple, we need MUCH LESS government but acting on behalf of their constituents and under the laws of our land.

I can well underrstand why YOU in particular get CONFUSED!!

Ray

-- Ray (ray@totacc.com), February 12, 2000.

So then, Ray, the Administration and the Federal Reserve should have what specific plan to stop the MANIA and have ALL the right reasons?

-- ImSo (lame@prepped.com), February 12, 2000.

ImSo Lame, the time for planning is LONG past. The decision was made many years ago by the politicos that deflation was an unacceptable path to follow. The pain would be to great for the sheeple and in turn would lead to the demise of the folks in office, heaven forbid!

TPTB in government and corporations and on Wall Street have used every trick in the books to make it appear that all is well in USA land, but unfortunately it is not. The bubble in Japan began to deflate in the early 90's and is still doing so. They are in bankruptcy and simply using smoke-an-mirrors to obfuscate the fact. Our bubble is considerably larger than theirs was, look at a chart of the NASDAQ today compared to the Nikkie 225 index ten years ago.

The only thing left for TPTB is to figure out how they will shift the blame to anyone or anything other than themselves. They're working diligently at this task as we speak.

Ray

-- Ray (ray@totacc.com), February 12, 2000.

Well, Ray,

I guess the good news is, you'll get to keep bitching. If I understand your post it is: Government has screwed up. It can't be fixed. All is lost. DOOM REAL SOON NOW. No point in trying to avoid it. No point in working toward a better world.

Nosirree, Ray. No one is going to cheat you out of doom, and it is definitely SOMEONE ELSE's fault, and especially the GOVERNMENT. THEY have screwed up; not all the rest of us who had a vote, and a say, and a chance to create a better world. TPTB--that's it.

Darn shame you were born into this crappy country.

Where you headin', BTW, to get out of this hellhole?

-- ImSo (lame@prepped.com), February 12, 2000.

ImSo Lame, typical TROLL response, putting words in anothers mouth. I'm not going anywhere, I have lived through difficult times in the past and find that they tend to be much more rewarding than these days of bubble credit and stock market mania.

My single point is that the bubble could have been punctured many years ago and the pain would have been that much less to absorb, but this was not in the cards for TPTB.

Those who have taken prudent steps with regard to y2k will NEVER regret those actions. Now ImSo Lame, go back to what you do best, putting words in other folks mouths. Ray

-- Ray (ray@totacc.com), February 12, 2000.

I read the article and I don't see the problem. No government intervention is necessary. There are plenty of "silicon valleys" in the U.S. If a manufacturing plant or an employee doesn't like the conditions in California they can move somewhere else. Its that simple. Personally I don't think it would be very bright to locate a plant in California to begin with because of the state tax environment and high cost of living. If they're living in their cars I don't have any sympathy for them. They have high tech jobs but don't know how to use search engines. Try Austin, Phoenix or any number of a whole bunch of other areas - even Columbia, MO.

Some big ego executive wanted to relocate the North Face here in Carbondale, Colorado despite the extreme high cost of living there. It didn't have anything to do with logistics or business sense but everything to do with an emotional decision. Since the company is going down the tubes they had to rescind that decision after that exexcutive left the company.

-- Guy Daley (guydaley@bwn.net), February 12, 2000.

It ain't TPTB keeping the bubble inflated, Ray. It's I and my fellow greedy investors, buying stock because we think we will sell it for even more.

EOM

-- ImSo (lame@prepped.com), February 12, 2000.

Thanks Ray. Ignore the Lady Logic lookalike. It ain't over til its over, and judging from this story, its about over.

From Boom to Bust: Down and Out in Silicon Valley

CUPERTINO, Calif.  Each night, on the floor of a church that sits a few hundred yards from the campus of Apple Computer Inc., software executive Gordon Seybold unfurls a bedroll and attempts sleep. It rarely comes. He often spends hours staring into blackness, wondering how Silicon Valley's wealth stampede could keep rushing past a man with his resume.

Last January, Seybold lost his job as a corporate sales manager for Oakland-based C2Net Software Inc., where he said he was on track to earn $125,000 last year, including commissions. He tried to find a new job, came close a few times, but ultimately turned up nothing after several months. In August, he was evicted from his $1,600-a-month apartment in West San Jose.

Since then Seybold, who holds three degrees and speaks five languages, has landed on the Silicon Skids, joining a fast-growing homeless population that might be the best credentialed in the nation.

They are marked by the same runs of bad luck, bad habits and bad decisions that lead to shelter doors anywhere. But Silicon Valley's homeless also provide a starkly different perspective on the giddy high-tech world, one that mocks every common mythology about this place. They are, in many cases, victims of the same aura of promise that keeps technology workers flooding here. Largely hidden and ignored  in shelters, on floors, in cars  their plights define this boom era just as aptly as any overnight geek tycoon.

If this were another place, at another time, it might be easier to reduce expectations, forget stock options and move to a place where tiny rooms don't rent for $1,200 a month. But it's hard not to wish big here. New millionaires get spawned in bull market litters  64 a day, by one count  and it imbues even homeless shelters with a gambler's sense of possibility.

"There's so much sudden wealth here, it's creating a Vegas mentality," said Barry Del Buono, executive director of the Emergency Housing Consortium, which operates seven shelters in Silicon Valley. "A lot of our homeless are living on the hope this economy is creating. But people don't realize how brutal it can be here if you lose your footing."

Or how the downward spiral can spin just as fast as the sudden-wealth machine. Seybold, 56, said he lost his job at C2Net in a mass layoff, though a company spokesman cited "other factors." Whatever the reason, it triggered a depression, which hurt his employment prospects. So did his advancing age, an unspoken liability in a high-tech industry obsessed with the new and young. He spent last fall living in a 1984 Chevrolet van.

Today, Seybold is in a program for homeless men run by Cupertino Community Services. It provides career guidance, shelter and donated meals at a network of Silicon Valley churches, many of them nestled in neighborhoods of million-dollar homes. At night, his floormates keep him awake with their somnolent grunts and moans, which echo through the sanctuary in a chorus of unconscious unease.

"One of the big drawbacks of sleeping in a big church room is that they have perfect acoustics," Seybold said. He stays in Silicon Valley because he has worked in technology for 25 years. "There is 10 times more opportunity here than anywhere else for someone like me," he said, but added that he is thinking about leaving to join the Peace Corps. He recently took a job as a sales clerk at Longs drugstore in Cupertino. It pays $8.50 an hour.

Rethinking Failure as Success

Here, as elsewhere, accounts of becoming homeless often involve a unique, precipitating circumstance: a fire or a big rent increase; some physical or mental hardship. It is rare to find a homeless person who has had plenty of breaks and has done everything right.

But the pioneer's mentality of Silicon Valley can impose perverse interpretations on personal failure. In entrepreneurial circles, failure is said to be a valuable experience, laudable even. It can be the source of vital business lessons and proof of a pioneer's willingness to take chances. And in the strange calculus of the dot-com world, failure is success, as revealed by the stock prices of Internet companies that have never made a profit.

But that's a sanitized notion of failure, describing an entrepreneur's ability to make large amounts of money vanish, often someone else's. Technology workers who wind up homeless represent a baser notion of failure.

"This is the kind of failure that no one in Silicon Valley likes to think about," said Ray Allen, who runs the Community Technology Alliance, a San Jose organization that provides voice mail service to local homeless people and online resources to community aid groups. "The fact is, the technology industry is creating incredible wealth, and it's also creating incredible poverty."

At its crux, this poverty is born of simple economics. The prosperity has sent the cost of housing soaring and pushed lower-income people, many of them employed, onto the margins of society.

"We all have perceptions of what a homeless person is supposed to be like, and I'm not it," said Tom McCormack, 38, who works as a systems engineer at CompuNet Systems Solutions Inc., a network-software firm in San Jose. He wears crisp blue dress shirts and earns $52,000 a year, which should be enough to pay for a low-rent place, but isn't when it's added to child support payments and past credit-card debts.

McCormack faced desperate circumstances last spring when a roommate moved out of his San Jose apartment and his landlord doubled the rent to $1,600. "I'm a workaholic and I didn't have much of a social network," he said. "I had nowhere to go." He moved into his 1982 Subaru.

Until a few days ago McCormack lived at Inn-Vision, a beige concrete shelter tucked between the San Jose Arena and a cluster of auto body shops. His quarters were a 4-by-7-foot cubicle separated from 88 roommates by curtain walls, as in a military hospital ward. Rules are strict. Last week one of his shelter mates, Randall Condon, 46, a computer-networking expert, said he was written up by a shelter manager for leaving a book about non-Euclidean geometry on his bunk bed.

Last weekend McCormack reached his six-month limit at Inn-Vision and is back living in his Subaru. He spends hours at night lying in the back seat, reading books on computer programming by flashlight.

The question recurs: Why does he stay in Silicon Valley?

The answer recurs: "This place is just full of opportunity," he said. "This is where my brain food is."

And prospective Cyber Cinderellas keep coming: "This place has this incredible mystique," said Cathy Erickson, who runs the Georgia Travis Center, a drop-in office for homeless people in San Jose. "People come from all over the world to expect instant success, instant hope. But there's only so long you can afford to stay in a hotel." She frequently tells them to go back where they came from.

High-Tech Helping Hands

Cisco Systems Inc., the San Jose-based computer networking giant, comes to the main Emergency Housing Consortium shelter to train prospective technology workers. And Mary Ellen Chell, the executive director of Cupertino Community Services, said one large technology company, the name of which she can't divulge, has inquired about housing new-to-town employees in its shelters. This symbiosis between Silicon Valley's wealth centers and its fringes underscores a precarious separation between the two.

While homeless populations are notoriously difficult to track and quantify, Silicon Valley's has risen steadily in recent years, local social service workers said. Nearly 20,000 people will experience a "homeless episode" this year in Santa Clara County, which covers most of Silicon Valley, up from about 16,000 five years ago.

But what's most striking is the increasing percentage of working people who now live in homeless shelters, a nationwide phenomenon that is poignantly evident in Silicon Valley. Since 1992, 250,000 new jobs have been created here and only about 40,000 new housing units have been built.

"If they were somewhere else, there's a good chance they'd be living in the suburbs," the Emergency Housing Consortium's Del Buono said. "We turn out people every day who are making $60,000 a year." He said that about half of the consortium's 1,100 clients are employed. The biggest shelter, a converted office building that houses 250 people next to a San Jose industrial park, is open 24 hours, but is nearly empty at midday.

Many of Silicon Valley's shelter dwellers fit the conventional shopping cart prototype: hard-luck veterans, unemployed single mothers, the mentally or criminally deinstitutionalized. But talk to enough homeless people and a theme resonates  it doesn't take a lot of misfortune here to start a rapid descent.

"I have a good job and I can't believe I wound up without a place to live," said Tracy Ramirez, a customer service representative at Cyantek, which makes chemicals for the semiconductor industry. She lives half a mile from the main runway of San Jose Airport in a one-room, Emergency Housing Consortium "transitional home," where she shares a bed with her 3- and 9-year-old daughters.

Ramirez, 35, earns $16.90 an hour, about $34,000 a year. She pays $600 a month in day-care costs, $300 a month in car payments. She also has a litany of other bills, expenses and debts trailing from her past, many accrued during a since-ended marriage. A bad credit history, a bankruptcy and an eviction last September inevitably kill her chances with landlords, aside from the fact that the Department of Housing and Urban Development considers $47,800 a year to be "low income" for a three-person household in Silicon Valley. She started getting anxiety attacks last summer.

Her mother, Carolyn Cabral, earns $14.80 an hour working on an assembly line at 3COM Corp. but can't afford a place closer than Mantica, a two-hour drive to her office in Santa Clara. Cabral, 59, who has worked 16 years at 3COM, wakes up at 3:15 a.m. to come to work in the valley. (The commute can reach three hours with traffic.) She could get a job closer to home, but says it would cut her pay by half.

"Silicon Valley is a victim of its own success," said Carl Guardino, chief executive of the Silicon Valley Manufacturers Group, the area's biggest high-tech industry trade organization. With an unemployment rate of 2.7 percent and average annual wages that are nearly $20,000 higher than the national average, it's impossible to deny the success.

It's of some consolation that shelters receive donations from tech zillionaires, especially during the holidays. In December, for example, a Yahoo Inc. employee gave $100,000 in stock to 10 social service agencies, said Maury Kendall, communications manager at the Emergency Housing Consortium. Last month, after local news outlets reported that pets belonging to homeless people could not stay in shelters, donations poured in, Kendall said. "We just got $15,000 to start a kennel."

But the housing crisis is clearly exacting a toll on humans. A study revealed this week that for the first time in five years, more people are leaving Santa Clara County than are arriving. While the difference was negligible  1,284 more people moved out than in  the lack of affordable housing has become the biggest obstacle that valley companies face in keeping and recruiting employees, Guardino said.

"We would like technology workers to drive their cars, not live in them."

A Fast Free-Fall

"There's a very thin line in Silicon Valley between being a director and being a derelict," said Randall Condon, the computer networking expert encamped at San Jose's Inn-Vision. "Everything here is accelerated  business cycles, wealth creation, and certainly the rate at which your life can fall apart."

Condon was living in Olympia, Wash., where he had moved to be with a girlfriend and work at an Internet service provider. In November, as the relationship was ending, he lost everything in an apartment fire. He came to Silicon Valley because he had worked in technology for 20 years.

After a brief and futile search for a rental, Condon came to Inn-Vision. He sleeps  or tries to  in a large room with 43 other men, whom he collectively refers to as "the snoring symphony." Condon, who has sad blue eyes and oily chestnut hair, said he tries to stay busy and positive.

On a rainy Monday in mid-January, he calls his existence "tortuous." Libraries were closed for Martin Luther King Jr. Day, which denied him access to his prime job-seeking tool, the Internet. "I'm a total cyber-cripple in here," he said.

But a post-script: Condon got a job last week, at a San Jose Internet start-up company where he says he will earn more than $80,000 a year, plus stock options. He won't name his new employer because he doesn't want people there to see this article. They don't know that he lives in a shelter.

-- (@ .), February 12, 2000.

ImSo Lame commented:

"It ain't TPTB keeping the bubble inflated, Ray. It's I and my fellow greedy investors, buying stock because we think we will sell it for even more. "

Well ImSo Lame, where do you think all you greedy investors are getting their money from??

Ray

-- Ray (ray@totacc.com), February 12, 2000.

What a sad story. I'm so sorry for all those people who were making $100,000 a year and never saved a penny. Just as sorry as I was when a similar situation occurred in the late '80s on Wall Street, only that time they had been making $500,000 a year and couldn't make the payments on their $2,000,000 home.

I do have one question, though. Have these people ever heard of living within their means?

-- Steve Heller (stheller@koyote.com), February 12, 2000.

The story just brings tears to my eyes....

-- haha (haha@haha.com), February 12, 2000.

Sadly true.

Ill always remember the B-school case study about the Founder of Hersheys Chocolate going bankrupt seven times before making it. In the Valley weve never gotten over the garage-style Apple Computer start-up mentality... from rags to riches. The rest of the story often reverts to rags again. The only option Ive seen for the experienced Sillicon Valley crowd, with arms length resumes, is another start-up.

Housing prices are out of reach in the Valley for all but the young, employed and the entrepreneurally restless. The family homestead that my parents bought 37 years ago would now sell for astronomical amount. (Boggles my mind, but its in a great area).

Need to mosey on over to that Cupertino shelter.

Diane
Silicon Valley

-- Diane J. Squire (sacredspaces@yahoo.com), February 12, 2000.

Actually, Ray, I was using the royal we; I don't have money in overpriced tech stocks.

I grew up dirt poor, but happy (hey; I'm a polly, as we know).

I think a lot of money is from boomers whose incomes are maturing, and whose parents are dying, leaving them the nest egg. Then there are the pension funds. I don't know where it all comes from. Why do you ask? And why is there so much anger on this board directed to those with high incomes? If people are irresponsible with their money, it is likely to eventually catch up with them. No government interference necessary. Somehow journalists feel sorrier for the guy who was making $100/hr and now makes $10 than the guy who has always made $10/hr. An honest living is an honest living.

-- ImSo (lame@prepped.com), February 12, 2000.

What I find amazing about this story is lack of new reasonable housing. There definately doesn't seem to be any lack of capital there. So if thats not the problem what is it? Are building restrictions so stringent there or high land prices just not make it viable? Are apartment complexes not allowed there?

My personnal opinion though is even if you have a decent paying job but can't afford a place to live it's definately time to move!

-- Lucy (lifeisgoodhere@webt.net), February 12, 2000.

What I find amazing about this story is lack of new reasonable housing. There definately doesn't seem to be any lack of capital there. So if thats not the problem what is it? Are building restrictions so stringent there or high land prices just not make it viable?

I believe it's the insane regulations in the People's Republic of California that are the main cause of the housing problem, just as in the People's Republic of New York City.

-- Steve Heller (stheller@koyote.com), February 12, 2000.

When Historians write the epitaph on this period in our history, one of the more important reasons discussed will be government REGULATIONS. They have created a slow but sure strangle hold on every aspect of our lives.

I found it interesting this week that some governments were willing to relax their regulations so that heating oil could get to the consumer more rapidly.

Ray

-- Ray (ray@totacc.com), February 12, 2000.

"The question recurs: Why does he stay in Silicon Valley?

The answer recurs: "This place is just full of opportunity," he said. "This is where my brain food is."

And prospective Cyber Cinderellas keep coming: "This place has this incredible mystique," said Cathy Erickson, who runs the Georgia Travis Center, a drop-in office for homeless people in San Jose. "People come from all over the world to expect instant success, instant hope. But there's only so long you can afford to stay in a hotel." She frequently tells them to go back where they came from."

Sounds similar to Hollywood/LA. Lots of talented people people flocking in, all competing to strike it big quickly in spite of the odds and the high rcosts involved for the area.

-- Tim (pixmo@pixelquest.com), February 12, 2000.

To Steve Heller:

What a sad story. I'm so sorry for all those people who were making $100,000 a year and never saved a penny.

(You hit it right on the head. Gee, I'm so sorry for all those people who are making many multiples of what I earn. I'm so sorry for all those people who bought expensive homes, cars, boats and clothing and then after brief stints unemployed, found themselves destitute. Yeah, I'm all broken up.)

Just as sorry as I was when a similar situation occurred in the late '80s on Wall Street, only that time they had been making $500,000 a year and couldn't make the payments on their $2,000,000 home. I do have one question, though. Have these people ever heard of living within their means?

(No, Steve, they haven't. I have five kids and made a fraction of what those people made last year. I live within my means. I have not accrued ANY debt. I have over a years worth of food for a dozen people stored away. I have behaved responsibly understanding that catastrophe can strike and that it is foolish to be caught unprepared. But, today, in Amerika, we have bazillions of people like the above mentioned idiots who have lived beyond their means, in debt, unprepared. I empathize with their plight but I do not SYMPATHIZE with them at all because their 'plight' is in large part self-induced. And now, we are supposed to feel sorry for them. Not a prayer.)

Paul Milne

-- Steve Heller (stheller@koyote.com), February 12, 2000.

-- Paul Milne (fedinfo@halifax.com), February 12, 2000.

Why is rent so high? Why is it so high in my area, the income donesn't fit what the mortages is. Could there be too big a price on land, house, etc.. They do seem to out strip everything else.

-- ET (bneville@zebra.net), February 12, 2000.

Rent Con-troll, Building Con-troll & Freeway Con-troll

If the Bay Area had NO rent con-troll, the FREEDOM to build as many high-rise apartments & condos as possible, & the WISDOM to build just a few more inner-city freeways, it could be the richest, most exciting city on the planet.

As it is, they coulda been contenders....

-- INever (INevercheckmy@onebox.com), February 12, 2000.

This is everywhere. Most of the people I work worth who make a middle class income or above live just a hair or more above their means. Now there is a battle between the politicized Treasury and the Federal Reserve on monetary policy. As the screws turn tighters these people are caught in the vice of rising interest rates. They didn't lock in Fixed Rates to get a bigger house in a nicer neighborhood. They didn't take the big bonuses and pay down debt, they went on vacation.

By the time they give up and head for jobs elsewhere it will be too late. To bad so sad.

-- Squid (ItsDark@Down.here), February 13, 2000.