Futurist: Extreme global crash seems unlikely

October 17, 2008 9:49:40 PM PDT
So what is in America's economic future? Billionaire investor Warren Buffett is among the optimists. In a New York Times opinion piece Friday, Buffett says now is the time to invest. "If you wait for the robins," he says, "spring will be over." ABC7 spoke with a man who takes an even broader view.

"It's like a ship navigating through open rocks, getting back to the open sea," says Paul Saffo.

This is how Saffo describes our turbulent economy today. He is a world renowned Silicon Valley technology forecaster. In plain language, Saffo is a futurist, someone who makes his living looking at what our world might be down the road.

"We're going to have a number of tough years and then we will get out of this, if all goes well," says Saffo. "A global crash seems unlikely in the extreme."

That is because a lot of things have to go wrong for that to happen. Saffo already sees some parts of the system correcting themselves.

"Look at the price of commodities coming down, the price of oil coming down," says Saffo. "The money is still there, it's just not going out. The intellectual activity and the creation of new companies is still there."

Saffo believes Silicon Valley may fare better than the rest of the country. Specifically, venture capitalists who may benefit from the collapse of competitors such as hedge funds and other esoteric financial instruments on Wall Street.

"All these weird Wall Street instruments got wiped out and suddenly, if you're an institutional investor looking for long-term high-risk high-reward investment as part of your total portfolio, venture capital looks solid and traditional. Like the old Smith Barney motto, "we make money the old fashioned way, we earn it!"

Saffo says even though consumers are responding to the current crisis by closing their wallets, down the road it may also force them to change bad spending habits.

"I think it's going to really change the economic habits of at least one or two generations of Americans who are now going to view credit card debt and other forms of debt in completely different ways."

So, when will things improve?

"Once everybody has a consensus -- this is what we're in for -- then you're going to see things opening up again," explains Saffo. "We'll be OK, and then probably in another two decades we'll have this happen again and you and I will be right here and our hair will be a little more gray."


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