The Investor’s Marketing Forum (IMF) held it’s Holiday Luncheon and Marketing meeting at the Orinda Country Club today. It was a sold out event. Tapan Munroe was the guest speaker. Tapan is a past chief economist for PG&E. He served his post longer than any other chief economist.
Tapan suggests that we as a state should focus on our strengths- namely the Silicon Valley. As a state, California is the 5th largest economy in the world and our Bay Area is the 20th largest economy in the world! The Silicon Valley is the nucleus of jobs and innovation. Innovation is propelling China to its economic strength. The GDP numbers for 2009 and 2010 show the United States losing 2.7% in 2009 and predicting a 2.5% increase in 2010. Meanwhile, China experienced a 7% increase in GDP in 2009 and predictions show a 7% increase in 2010 as well.
Tapan announced “THE RECESSION IS OVER” to which the room sat silently. Tapan then shared that unfortunately, the recovery period can take up to two years. Using more data from his studies of previous recessions, Tapan shared that we experienced the longest recession ever. He marked the peak at Dec 2007 and the trough at Oct 2009, a 22 month recession.
The culprit? NINJA loans. These are loans that were issued to borrowers who showed No Income, No Job, Asset Based applications only. Tapan indicated that this recession will hopefully teach us to live within our means, do our due diligence for real and that banks should and will underwrite with an eye for caution going forward.
Tapan shared that commercial real estate cycles much slower than residential and that we should expect a 2.5 to 3 year recovery for commercial real estate. Further, we should expect NO BAILOUT from the government. There is just not enough money to bailout poor investment decisions. The weakest players during our recovery are the regional banks- because they didn’t have enough time to prepare for the downturn.
Tapan stated that business as usual is dead and that INNOVATION is key. Tapan shared that the most intriguing new businesses of 2009 (those you Noodle/Google) are all in the Silicon Valley and/or San Francisco. Tapan’s prediction for “the next big thing” is Clean Technology. He predicts California can be all solar powered in ten to fifteen years. Numerous emerging green companies in the East Bay are leading the way. If innovation is the key moving forward, the Silicon Valley holds the global model!
Tapan’s recent book is titled “What makes Silicon Valley tick?”
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