Zeev: Interest rates can only do so much. Their limitation has been proven in Japan. I believe the discussion pertains to the effect of interest rates on the profit growth of the high TECHs.
Current techs have brought us this far and are beginning to experience the law of diminishing returns. That is the main reason why their profit growth has slowed. This has happened before in Aviation, Shipping, Energy, Railroads, Electric power , Nuclear etc. At this stage of our evolution, truly disruptive technologies such as quantum computing, teleportation, Combinatorial DNA modified medicine etc, Fusion, nano tech remote surgery, Fuel /Solar cells etc would be far more effective in increasing the tech sector GDP than a 25c or 50c cut in the interest rates.
Another factor often overlooked is that the TECH knowledge gap betwen the U.S and others is shrinking. Countries in Asia are beginning to be more assertive in Tech manufacture and Software. Within the U.S that gap too has shrunk. Examples AMD/INTC ; LU/NT,ALA etc etc This was not the situation a decade ago.
Sure interest rates are important. They have a big role when there is large unemployment and a shortage of Industrial capacity. I dont believe that such conditions exists. If this is correct, I agree that the cut in rates will stimulate the economy but this will not be able to generate 30% profit growth in the high tech sector that is needed to justify current valuations. |
