Lee, at the turn of the century, more than 90% of the population were toiling 16 hours a day, mostly on the farm, today, we produce farm surpluses with less than 3% of our population, so yes, "the new economy" will replace the old economy, to some extent and we may have to pay for these services once we are hooked (competition for advertising space may, however keep that to a minimum). The point about the new economy being over rated right now (in the market place), is more qualitative than quantitative. We have already undergone one major two major transformations in the last 100 years, and the third is in progress (from agrarian to industrial, and from industrial to service economy, and now to the "information economy"). These transitions however take time, and often leave periods of stagnation as economic dislocations resulting from these transformations get absorbed.
Once thing has not changed IMHO, when new business opportunities (.com) appear, capital migrate to these opportunities, and often in an unbalanced form, so much that rapid over capacity in these opportunities create new economic cycles of boom and bust. This "boom" is not different, it will cause capital starvation in some segments with "apparently" less potential returns and excess capital chasing too few opportunities in other segments (AMZN being able to attract some $2 billions in debt over the last six months or so is just one example). Industries starved for capital will have difficulties, due to lack of capital, those with excess capital will have problem with excess competition, and thus narrowing margins. Welcome back to the economic cycle.
Notwithstanding the above, I still think that the market as measured by the DOW and the NAZ have topped yet, I have late this year early next year as the actual top, if for no other reasons than political reasons (liquidity helps a lot as well).
Zeev |
