Dot com crisis

boom and bust

In Australia, New Zealand, the EU, US and other parts of the globe the 1990s saw tremendous movements of capital as -

governments deregulated financial markets, privatised critical infrastructure such as telecommunication providers and built budgets around licensing of radiofrequency spectrum or other intangibles

interest rates fell and the money supply increased. In the US for example 30 Year Treasury Bond rates dropped from 8.17% in 1994 to 5.87% in 1999, while the M3 money supply measure grew by 34%

changes to taxation and pension systems (and demographic trends such as aging of the 'baby boomers') pumped investment money into the economy

businesses sought to lower costs, increase profits, aggrandize their executives or address the tyranny of the quarterly report by engulfing other enterprises

investments were made in new communications infrastructure (in particular digital switches, servers, fibre and radio networks)

expectations built that the "digital economy" - and in particular B2B or B2C electronic commerce - would enable fundamental economic growth (with significantly increased productivity through deployment of new methods and equipment) and result in rapid returns for entrepreneurs who addressed untapped local, regional and global markets.

[New York Bank Note Co. notice] (LOC)

A solemn crowd gathers outside the Stock Exchange ...

New York Harbor, from Two World Trade Center

That movement was reflected in -

unprecedent growth in the availability of venture capital, arguably with too much money under the control of inexperienced managers chasing excessive returns, and uncautious lending by mainstream financial institutions

political and technological triumphalism, with claims of the "end of history", "death of distance", "end of inflation", "death of the corporation", "end of scarcity", "permanent boom" and "end of the business cycle"

a proliferation of enterprises (often characterised as 'dot-coms') that secured significant funding - whether through loans or from investors - that was disproportionate to their historic revenue and likely return on capital

payment of astronomical prices for spectrum, for rollout of infrastructure (much...