Wednesday, December 17, 2008

Need one depression at least once in five years

A Commentary by Matthew Lynn in the Bloomberg says that “during the 1930s, new industries such as consumer electronics and plastics were created. In the turbulent mid- 1970s, the personal-computer industry was born, as companies such as Microsoft Corp. and Apple Inc. were founded. 

The economy didn’t look much good then, either, with soaring oil prices, rampant inflation and tumbling stock markets. That didn’t stop a young Bill Gates or Steve Jobs from setting up new businesses. No doubt there are now plenty of young entrepreneurs with bright ideas and loads of determination ready to build the corporate giants of the 2020s and 2030s. 

As Tom Nicholas, an associate professor at Harvard Business School, said in the latest issue of the McKinsey Quarterly, the 1930s became a period of intense innovation and experimentation. “For companies with cash and ideas, history shows that downturns can provide enormous strategic opportunities,” he said”.

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