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Biotech / Medical : Biotech Valuation

CRSP 56.76

-2.3%

3:59 PM EST

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To: Ian@SI who wrote (8306)	5/8/2003 4:48:41 PM
From: keokalani'nui	of 52153

Ian-- I'm no economist. But it strikes me that A new product made better by innovation and sold at the same or lower price than the one you bought last week is not deflation. Not only is there no overcapacity, you can't keep them in stock. A decline in price in the SAME product, one identical to the one you bought last week, is unit deflation. When present as a structural economic force overall economic activity declines, consumers have less to spend, they wait to spend what they have until the price is lower, and debtors--especially those whose loans were underwritten against depreciating collateral and are full recourse (like homeowners, yeah?)--are toast. The banks don't get paid so they don't lend. People lose jobs. No jobs, no demand, thus overcapacity. Eventually and in retrospect it is called a depression, it is the worst of all economic worlds. As opposed to buying the latest graphics accelerator....which may enter the mythology of the Golden Age when stories come to be told around the tire fire.

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