I’m probably not alone in noticing a sharp decline in revenues from standard business activities on the internet — whether that’s from advertising, affiliate sales, or direct selling of products and services.

All the weather vanes are swinging south and, with forecasts that the credit crunch could last for two more years, may stay that way for some time.

How can we buck this trend and not only hold our own, but actually come out ahead? We should look at professional investors, especially the big, successful ones.

The Warren Buffetts and George Soros’s of this world build large cash reserves during bull markets. Buffett has a war chest of tens of billions of dollars and is looking seriously at Britain and Europe for bargain buys during the downturn. There are plenty of them.

For those of us with more modest resources, Soros perhaps is a better example. He it was who sold sterling “short” during the currency crisis of 1992. He is reported to have earned over a billion dollars in a few weeks.

Effectively he bet against the pound’s ability to remain in the European tied currency system — then called “the snake” or ERM — in the face of massive speculation against it.

He was right and did Britain a huge favour by scuppering the crazy political experiment. We owe it to him that the UK is not in the single currency, the eurozone, right now.

So what is “short selling” and how might it benefit internet businesses?

When you “buy long” on a stock or investment, it means buying it for an expected increase in price. But when you go short, you are anticipating a fall.

Short selling is also the selling of a stock that the seller doesn’t own. When you short sell a stock, your broker will lend it to you. The stock may come from the firm’s own inventory, from one of its clients, or from another brokerage firm. The shares are then sold and the proceeds credited to your account.

Now here’s the rub. At some point you must cover the short by buying back the shares and returning them to the broker. If, as you’ve gambled, the price drops, you can purchase them at a lower price and pocket the difference, minus brokerage fees. For example, if you could have predicted the ups and downs of the Microsoft-Yahoo skirmishes recently, you would have cleaned up.

Of course, if the price rises, you lose. Essentially this is about winning in a falling market. With money currently chasing every store of value, like gold, oil and certain other commodities, funds are draining away from many assets and valuations are falling — just look at your house price.

Talking to a trusted broker about short selling may well be a way to replace lost sales in medium-sized internet businesses. With falling markets set to continue, turning logic on its head may be the only way to stay afloat if things get really bad.

Any investment takes a lot of nerve of course — and single-mindedness. A few months ago I was intent on going long on gold. However, another call on my cash intervened and I forfeited the many thousands of dollars I might have made on the spectacular rise in the gold price to around $1000 an ounce.

Going short is one way to survive in a falling market. As sailors say, “any port in a storm.”

Note: This post is not intended as investment advice or to influence your investment choices in any way.

Imagine Barack Obama becoming President of the U.S. and announcing he will use the Democrat-dominated Congress to pass a bill partially outlawing white men from getting jobs.

You can’t really, can you? It’s unthinkable. It would be political — and possibly physical — suicide.

Yet that is precisely what the British nasty party, Newish Labour, is considering doing. Its latest wheeze is to ban the indigenous population — minus women, of course — from getting jobs just when the icy winds of economic recession, and possibly worse, are blowing in from America.

Let’s just remind ourselves of what it’s like now out there in the real world :

The Bank of England is right now being deluged with demands by British banks to borrow £23.6 billion ($50bn) as lenders scramble to prop up their capital amid plunging global stock markets and asset values.

The Bank had offered just £5 billion ($10.4bn) to banks over a three-day period in an attempt to increase the flow of money between lenders.

Banks are running scared after the overnight news that the U.S. Federal Reserve has cut the discount rate by 0.25 percent and facilitated the fire sale of Bear Stearns to J.P. Morgan Chase at a fraction of its value.

Meanwhile, our government socially engineers while the City burns.

As subprime politicians in a subprime government, they should be sliced and diced and bundled into political instruments for sale to any institution that wants them.

Don’t hold your breath.

Postscript Our apologies for yet another political and economic article in this studiously non-political site. The news is getting so alarming now that it’s proving impossible to ignore the elephant in the broom cupboard — which is what the global financial situation now is.

The rest of the world may not know who, or what, Fannie Mae and Freddie Mac are, but Americans do. They are the financial institutions that guarantee 60 percent of the U.S. home loan market. Both are on the edge of meltdown.

The U.S. Federal Reserve Bank

They are also the leading players in a top-tier of lenders that control $11 trillion of mortgage lending. A collapse would trigger a catastrophe of unprecedented proportions across the world’s largest economy with swift knock-on effects around the globe.

What is emerging now is the greatest financial crisis since the Great Depression in the 1930s. If America’s huge mortage banks are no longer rock solid, nothing is safe anymore.

The Fed is pulling every string available to it to neutralize the toxic effects of the subprime disaster. It’s predicted to lower rates by another 75 basis points within days, and is now offering Treasury bonds in exchange for mortgage debt. By soaking up some of the poison, the central bank is temporarily providing a shoulder to lean on for jumpy bankers whose world is disintegrating around them.

Like the British mortgage bank, Northern Rock, Freddie and Fannie may have to be nationalized — or their dubious collateral underwritten by government agencies — to shore up the economy against plunging over the edge. And Bear Stearns is in serious trouble too.

All this makes the UK Chancellor of the Exchequer’s budget today rather small beer. And that’s just what we expect — taxes on beer and faux “green” measures to raise a little cash here and there.

The real action is in Washingtom, where the Fed is leading the charge against a U.S.-generated global meltdown of potentially epic proportions.

Bernard Connolly, Global Strategist at Banque AIG, believes Fed action won’t solve the problem of eroded of bank capital. “There is the risk of a very damaging credit contraction. We face the most serious global crisis since the Great Depression. But this time at least the North American central banks are doing their best to stop it spreading to the real economy. We should be thankful that we have people in charge who appreciate the gravity of the situation.”

True enough, but the “perfect storm” is gathering perfection by the hour.

Banks are pulling back from the industrial securitization of risk that has blown up so spectacularly in their faces.

So called collateralized debt obligations (CDOs) are the supermarket sausages of the financial system — nobody knows what’s in them, and most prefer not to.

In the old days, banks took the risk of lending money on themselves and ensured that borrowers would be able to pay it back over time. Securitization means that they can lend to any Tom, Dick or Harriet, package up the debts into large parcels of small slices from many borrowers, and sell them onto other banks and finance houses.

When house prices are rising fast, and rates are low (thanks to the Iraq war — see yesterday’s post), there will be no problem. How quickly the weather can change.

Now there’s a rush back to caution and traditional virtues — and not before time.

The Private Equity industry is currently holding its global jamboree in Germany. What a difference a year makes. Just months ago (pre-August 9, to be precise) the Private Equity barons were borrowing billions to take over all manner of companies, many blue-chip, and some national strategic giants. Now the sources of funds are drying up and the world has become a much more anxious place.

Not so long ago, securitization of talent was the goal for what HG Wells called “originative intellectual workers” — the kind of people who work from a laptop and a cell phone, hot-desking from place to place. They were advised to raise money on future earnings by selling shares in themselves. Specialized markets were to spring up, something like the London Stock Exchange’s AIM market, to flog these things to admirers with more money than sense.

I suppose if you turned into a Bill Gates or the Google guys your investors would be happy — but how many of us do?

The whole notion of securitization is targeted on bypassing the present reality in favour of an unknown future, using other people’s money — often their pension funds or insurance pots. In essence it’s no different from betting on racehorses.

Now the bubble has burst and cold realism has dawned, even for the godlings of private equity and their blood brothers, venture capitalists.

The beneficiaries will be China, and the sovereign wealth funds of Asia, including the Middle East. Western financial centres have permitted power to pass from settled democracies under the rule of law, to the potentates of totalitarian regimes whose oil deposits or cheap, exploited labour will soon allow to rule over us in many covert ways yet to be revealed.

And why? The abandonment of risk management in the cause of easy pickings.

Who will hold the banks to account?

Nobody — it’s too risky.