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10:33 AM
Phil Albinus
Phil Albinus
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The Facebook IPO: Ready, Set, Recovery

For many Americans, the recession started when Bear Stearns collapsed in March 2008 and Lehman Bros imploded the following September. The wave of dire headlines that followed brought to everyone's attention that bad times were ahead and would be with us for months, if not years, to come.

Now, Facebook is going public and stands to raise $5 billion. This is much needed good news and not for the hundreds of people who stand to get rich.

The recovery, psychologically speaking, might be here at last.

This is human nature. Although traders need to be technologists with an intimate knowledge of coding as well as spreadsheets, the capital markets is a business built around human beings. Fancy algos may figure out the best deal and high-speed servers may execute the trades, but every system was built around men and women who run on fear, intuition and hope.

Call it the Brother-In-Law Theory. Everyone has a guy who is married to their sister or maybe he's a cousin, a nephew or a neighbor. Nice person, decent worker, good values but the last three years have been murder on him and his family. He was the first to go when the layoffs came in October 2008 and while he was surprised, you weren't truth be told. He was - well we won't be harsh but he wasn't going to invent the next cancer drug or the next Web 2.0 killer. If anything, he was bouncing along in a decent economy until it took a nose dive.

Now, after three years of no job openings or interview call-backs and some awkward conversations about loans to help with your sister's mortgage, he now has a job offer. Maybe two.

Boom, the recovery is here.

All politics is local and so is most economics. As Americans, we are hard wired to feel optimism when we read that Facebook's IPO will make scores of people millionaires once it goes live. Even the most enthusiastic member of Occupy Wall Street can see value in social media and some sense of pride that a product they use every day is going to join the ranks of Shell, IBM and Ford Motor Company. (Another cachet is that fact that Facebook isn't an oil company or an arms developer).

Facebook's IPO could fuel some optimism outside of Wall Street as well. Americans have been cutting back on spending and may start buying once again. Pizza night might return and the annual trip to Disney World might revive once the bonus check comes in. (Hey, remember bonuses?) This confidence might also spark banks to lend to small businesses and entrepreneurs.

In its coverage of the Facebook IPO, today's New York Times profiles a graffiti artist who painted the social media's Palo Alto offices for stock options instead of cash. He stands to make $200 million.

Say it out loud with me: A graffiti artist might make one-fifth of a billion dollars for some colorful squiggles he painted on walls for an Internet start-up.

Will we see this money? No. But this young man will buy a studio, hire a staff that includes a manager and an accountant, maybe train some apprentices and decorate the homes of people and companies who want to be on the cutting edge. This is a recovery. The security guard or lowly code jockey who joined Mark Zuckerburg's venture might buy a second home and hire carpenters and landscapers to fix things up. Like Microsoft in the 1990s, Facebook, Apple and Google are huge, powerful companies that have created small but vibrant eco-systems where entrepreneurs can grow their ideas. Your iPhone has a case that wasn't made by Apple and your iPad has apps designed by three people in a loft in a tony suburb of Cleveland or Buffalo. These small companies will grow and have to employ other people down the road.

One of those people might be your brother-in-law.

Am I out of my mind? Did I ride to work on a unicorn on the rainbow express this morning? Tell me why.

Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio
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