One thing everyone agrees on: The current economic contraction, which began a year ago, will be the longest on record since the Great Depression. The optimistic scenario, voiced in the New York Times, is that it will end by the middle of 2009, as the housing market recovers and the government pours money into public works. That will put the recession at 18 to 21 months. Even playboy economist Nouriel Roubini, the professional doomsayer who installed a wall of vaginas in his personal misbegotten real-estate venture, thinks that the worst-case scenario is a recession that ends by December 2009 — 24 months. Consumers are resilient, economists say, and love nothing better than earning money and spending it.

But that's a rather U.S.-centric forecast, amid a globalized economy. (Who knew the halls of economics departments were filled with such isolationists?)

There are, even today, sectors of industry which make physical things. So old media, I know! The business is called manufacturing, and its forecasts are abysmal. A strengthening dollar, predicted as the rest of the world suffers economically, will hurt manufacturers' exports. And weak foreign markets will hurt many of the technology giants which thrived on overseas growth.

So could the recession last through 2010? Quite possibly. But it's a scenario no one's contemplating — even the most bearish of economists.

(Photo via the New York Times)

The nav market is a tough one, and with the added economic difficulties, Dash feels it can do better work by focusing on their open-source OS, which they will then sell business-to-business. More important than the OS, which is fine but not fantastic, is the back end traffic mesh system. A Dash-powered mid-range Garmin nav sounds like a pretty appealing propect, and will help bring a Dash-like system to more people for less dough. New CEO Rob Currie also notes that the Dash's GPRS chip and 400MHz ARM processor are quickly being outpaced by even low-end mobiles, so a move toward adding Dash functionality to GPS-equipped smartphones sounds like a plan to me.

Dash is going to keep the Express back end running for existing owners, but no word on for how long; because these devices hold almost zero local data, once the service goes you will have yourself a nav that can't do much more than direct address routing. Dash friends, care to let us know how long we have? [GigaOM]

A San Francisco Chronicle reporter attempting to survey the landscape had no luck getting called back:

A Microsoft spokesman declined to comment, Oracle and Sun Microsystems didn't return phone calls seeking comment, and a spokeswoman for SAP said executives were unavailable for comment.

Expect to hear a lot of Valley CFOs talking about the lack of "visibility" in the next round of quarterly earnings calls. That is to say, they're utterly in the dark as to what will happen with the economy. Just like the rest of us — but they get paid to profess their ignorance.

(Photo by wlscience)

The bad news? They're in occupations like construction and extraction; installation, maintenance, and repair; and healthcare support.

The Asian financial crisis had roiled markets for a year, much as the credit crunch has done. Long-Term Capital Management, a hedge fund, required an elaborate Wall Street rescue, backed by the Federal Reserve, foreshadowing Bear Stearns. All this happened, mind you, while Mark Zuckerberg was still in junior high.

In the Valley, meanwhile, the first Internet boom was just starting to unfold. Towards the end of the year, Henry Blodget, then a Wall Street stock analyst, set a $400 target for Amazon.com shares. The talk of market-watchers was how the technology-heavy Nasdaq index had uncoupled itself from the gyrations of the Dow. But surely it would come to an end, right? Then as now, that was the question on everyone's mind.

It did end, but not in 1998, and not in 1999. The Valley's Teflon economy just raised expectations further, contributing to the wildness of the boom and the harshness of the bust, which unfolded in wearying slow motion from the Nasdaq peak in March 2000. The buoyancy of technology in the '90s only served to sink us, come the new millennium.

That's where I think we are: Not 2000, but 1998. In the lull before the storm, the wild upward ride before the crash. A tech recession now might actually be healthy, since so many are braced for it. Strategy Analytics reports that the second quarter was the slowest rate of growth for digital media in two years, since the research firm started tracking its index of online-advertising and e-commerce revenues. Ad-dependent companies are preparing themselves accordingly. Marc Andreessen talked about an economic "nuclear winter" before his social-network startup, Ning, raised $60 million; similar fears, if less bluntly voiced, drove Slide CEO Max Levchin to add $50 million to his startup's stash earlier this year.

The risk of all these companies adding to their stock of dry powder is that, in the absence of a deep downturn, the Valley's leaders will be tempted to light it up. The lack of big exits is driving venture capitalists crazy; they want to hand their charges off to greater fools, so they can get back to hunting for the next plausibly big thing. Companies spending for spending's sake, to form the appearance of turbocharged growth and make companies look like IPO material, could return us to the bad old days of 2000.

That, I think, is why so many here are secretly rooting for a downturn. They want to get it over with, before things get really wild. "The Great Web Wipeout," a work of speculative satire published by Wired in 1996, makes for instructive readings. The names will mean nothing to today's readers. But substitute "Twitter" for "Starwave," update Stewart Alsop's title from "computer columnist" to "venture capitalist," and you've more or less got a contemporary piece. Underlying the Valley's blue-skies optimism: The fear that the heavens are soon to open up with rain.

• Silicon Valley's economy has trended upward since 2005, when it gained jobs, 2,000 of them, first time since 2001.
• In the last 12 months, median household income in Silicon Valley increased 2 percent to over $82,000 a year, outpacing the nation's 1.5 percent growth.
• Silicon Valley's high-school graduation rate declined last year.
• Juvenile felony offenses grew.

(Photo by Das Bobby 2000)

For Coach and other retailers, Google's search-marketing model is probably a more cost-effective form of advertising than buying a spread in Vogue. So advertising dollars will continue to come online. But here's the question to ask: If online media is growing by stealing ads from conventional venues, what happens to its growth when that offline pie shrinks? (Photo by azrainman)