Tulipomania Blowoff Contest: Why and When will it end? Message Board

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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end?

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Jun 26 5:00 PM EST

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To: EL KABONG!!! who wrote (3407)	3/31/2001 2:37:53 PM
From: Mad2	of 3543

Re: Telecom is all about supply/demand. If the demand continues to grow then maybe a disaster will be averted. One day however the telecom industry will follow the path of the swteel industry (ugh!) as the same principles apply. Both are fixed cost business. In the case of steel, bond holders keep excess supply in the system because restructuring debit and operations is the only way to recover any value. In telecom, when growth falters then competition will chase the last dollar of revenue (because variable cost is so low). It will end with default on bond payment, but as in the case of the steel industry they will restructure and go on. I used to think capital intensive business was attractive because of the barrier to entry. But when capacity exceeds supply all that fixed cost becomes a barrier to exit Its just a matter of time. mad2

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