Serious problems in the new economy
Interest rate increase.
Cost of money increases has been diverted by trade credit allowance of 90-120 days. Fast turn over of inventory, reduces bank loans. Banks are now seeking mortgage, credit card, and automobile loans to consumers. Banks have to move up the feed chain to the ultimate needs of consumers in a demand side economy. Troubles will be resolved.
Labor union strike and its domino effects.
Labor unions have been striking at assembly plants to criple the infrastructures of automobile industry. And pilots have attemted to strike the airline which are buying new planes. This could have wiped out the aircraft industry, except by arbitration and government interventions.
10 year obsolescence plan neglected by unplanned technology advances.
Major changes of automobile and apparels are in ten year cycles for obsolescence and replacement. Any sooner the economy will suffer from inventory adjustments. Computer cpu's have been advancing in a cut throat manner, while Intel had not competition. MMX for cheap, less than $1000 computers, replaced Pentium which has a large installed base. Pentium still has more speed to give, because of the submicron technology is moving to 0.13 micron, due to attenuated phase shift mask (10% transmmision). In the mean time, Pentium Pro2 and pentium2 in slot2 will be a 10 year cycle without much further technological advancement. Intel's new management needs much consulting from Wall Street analysts on product cycles.
World economy without the proper job creation emphasis.
America has created jobs in distribution then production automation; to compensate for the loss of jobs in middle management and technology obsolescence. We are on our way. But Europe, Japan, and Asia has yet to wait for America, Inc. to help them set up distribution and megamalls in their countries, to create more jobs for better economy. Latest planning is to start in 1999. Any non-organized investments elsewhere is a waste of good old American money. |
