AIM Theatre (10 steps to ruin an economy) *edit*

If there is one thing I hear people bitch about more than anything else, it is the economy. However, most of the bitching is directed towards George W. Bush, as if the president has anything remotely resembling a more than marginal control on the economy. I was bored so I decided to tell a little story called "how the Dot Com Bubble Burst." Since I can’t draw, I did the next best thing to illustrate my point: AIM Theatre.

1). Flash back to 1996. Some dumb bastard kids discover the Internet. One of them decides it is a great idea to start an online company.

Internet Idiot: Uh, what’s a business plan?
eJackass: Are any of you experienced in accounting?
EmptyHeadedDumbass: Yeah. I can go up to fifty if you give me a minute.

2). Some greedy venture capitalist scumbag(s) gets in on the action by "investing" a bunch of money to the clueless sods.

VCScumbag: I will give you $5 million in cold hard cash to start your business!
eJackass: Cool!
VCScumbag: ALl I ask in return is first dibs on the stock options at $10 per share.
Internet Idiot: Sure! What are stock options again?
VCScumbag: 😀

3). Bullshit company launches website and goes public. Big media hype along with a snazzy website and dot.com domain name skyrockets their stock price. Expert advice from intelligent professionals is nowhere to be found.

eJackass: Wow! Our stock price jumped to $80 and it’s only the first half hour of our IPO!
Internet Idiot: That’s awesome! What is it that our company makes again?
EmptyHeadedDumbass: We make stuffed animal squirrels and sell them online, but the investors don’t know that. 😉

4). Cue the dumbass stock investor with an MBA from Berkeley who slept through finance classes and can’t spot a scam when he sees one.

MBALoser: It’s a dot.com company!
CluelessSod: Where do we sign up?

5). Fat VC bastard sells the stock once it peaks and makes his escape, returning his initial investment twenty times over. Investors still don’t know they’ve been had.

VCScumbag: In a perfect world, I’d go to jail for this, but the only crime here is rampant stupidity.

6). Stock price crashes after people realize that the "company" doesn’t do/make anything. Everyone who was stupid enough to invest in the stock at $200 per share despite not knowing anything about the company’s performance, marketing strategies (or lack thereof), or financial status gets collectively ass-banged with no grease.

CluelessSod: You call this a financial forecast?
MBALoser: This looks like a fortune cookie fortune!

7). Bankruptcy ensues. The employees get fired, the investors lose their shorts, and the tax-payers bail out another bad idea.

CluelessSod: How could this have happened? Is it possible that we somehow made a poor error in judgment?
Hapless Investor: Nah. I am sure George Bush is behind this.

8). Repeat as often as needed until the tide of bullshit can no longer be stemmed by ignorance and/or the unscrupulous Venture Capitalists, Investment Banker con-artists, and Broker Assholes has padded their retirement fund with the wealth of suckers who thought a subscription to Business 2.0 made them Wall Street Gurus.

9). Suppliers lose their customers, workers get laid off en-masse, and legitimate investors lose business opportunities as hundreds of sham businesses across the country shut down. Since most of these people have no concept of how the economy or stock market works, they find an easy scapegoat.

ProtestorMoron: I HATE GEORGE W BUSH!
MarxistAsshole: Capitalism is a social disease!

10). Cue the President appeasing the masses with optimistic statements, despite the fact that no one man can control the entire American economy.

G<span style="CO

LOR: blue”>WBush: Things are getting better. Things are getting better everyday.
Proof once more that there is no force in the world more potent than human stupidity. Offshoring American jobs doesn’t hurt much either. A lot of assholes blame oil tycoons and Bush for the fall of Enron, but all those people are idiots. Anyone who can read a financial statement knows that a company that has so many subsidiaries that a page count listing them would rival the size of The Lord of The Rings compilation, is in serious financial trouble or is hiding something. Too bad common sense and responsible research was out of style in the late 90’s.

For further reading, check out Dot.con. It is an excellent documentary that proves this point perfectly. Stay tuned for the next episode: "You can’t spend more than you make: how to send your state deficit into a spiraling increase." Plans on destroying the myth that tax increases are the solution, since states that have the highest taxes also have the most effed up deficits.

-His Divine Shadow

**[ADDENDUM]**

I just returned from my Intermediate Accounting class with an income statement from Pets.com. It’s amazing that people actually thought this company was a good investment in the late 90’s. Monetary numbres are in thousands.

Income Statement for Pets.com
Year Ending 1999

Net Sales
$5,787

Cost of Goods Sold
$13,412

Gross Profit
($7,625)

R & D Expenses
$6,481

Sell Gen & Admin Exp
$46,745

Income Before Amortization/Depreciation
($60,851)

Depreciation/Amortization
$2,118

Non Operating Income
$1,191

Net Income
($61,778)

<= fucked.

Balance Sheet for Pets.com
Year Ending 1999

Assets

Cash
$30,196

Inventories
$6,756

Other Current Assets
$8,222

Total Current Assets
$45,174

Fixed Assets
$11,327

Accumulated Depreciation
$0

Net Fixed Assets
$11,327

Investments
$845

Intangibles
$399

Deposits & Misc.
$2,565

Total Assets
$60,310

Liabilities and Owners Equity

Accounts Payable
$6,563

Current Capital Leases
$16

Accrued Expenses
$2,137

Other Current Liabilities</td>
$370

Total Current Liabilities
$9,086

Non Current Capital Leases
$104

Total Liabilities
$9,190

Preferred Stock
$20

Common Stock Net
$6

Capital Surplus
$128,422

Retained Earnings
($61,778)

Other Equities
($15,570)

Total Shareholder Equity
$51,120

Total Liabilities + Net Worth
$60,310

<= suckers.

Question #1: Why would any asshole invest in a company with a negative profit margin? For those of you who don’t know anything about money/business, it works like this: you have to make more money than you spend when you make/sell something. If it costs $0.40 to make a pencil, you’d better price it above $0.40 per pencil. Otherwise, you are guaranteed a loss every time you sell something and the more you sell, the more money you lose. This is called a Variable Cost for simplicity’s sake and the most variable cost is the Cost of Goods sold. Therefore, if your Cost of Goods sold is higher than your Net Sales, you are screwed and nothing afterwards can change that. It’s like trying to shoot a masterpiece video on shitty film – no matter how good the acting, the storyline, or the directing is, the movie’s going to suck ass. That is pretty much what Pets.com is – one big ass sucking fest.

Question #2: What kind of asshole invests in a company with negative Retained Earnings? Or negative Net Income for that matter? This is a less complicated idea – Net Income is how much money the company keeps after all expenses are paid. Retained Earnings is this year’s Net Income plus all the money saved up from previous years less dividends. When Net Income is negative, that means that a company spent more than they made. And when Retained Earnings is less than 0, it means that the only thing that this company is retaining are IOUs to the assholes dumb enough to sell to this shitty company.

This company was fucked from 1999 and the worst part is, people were really investing in Pets.com. The proof is that the Capital Surplus (the only account giving this company a positive net worth) is over a hundred million dollars. (I am sure that at most, ten percent of that is Venture Capitalist money that was used to pay the salaries of the doomed employees as well as to pay supplier companies who were completely unaware that they were just years away from being financially cornholed.) This happened even though this posted information was publicly disclosed – anyone who wanted to see this financial statement could have done it without any hassle. It doesn’t take a genius to figure out that a company that doesn’t make money is a shitty buy. So either these people enjoy throwing money away, can’t read, or think that somehow the .com name is a better indicator of a company’s value than actual financial data.

So there you have it. Anyone else that believes that only Bush is responsible for thousands of shitty .com companies that make no money shutting down and contributing to massive unemployment and loss of wealth can eat shit.

-His Divine Shadow