>>The dot.coms come into the category of pocket money.
It's not just the dot.coms. It's the telecoms and the computer makers, and the whole technology infrastructure that is supporting them. And if their collapse triggers the dreaded US consumer retrenchment (as it seems it's doing), it's the old economy companies too.
>>The Telecosm and dot.bomb collapse is over.
Not quite. Jay's Global Crossing bonds fell more than 10% since he bought them a few days ago. The collapse is alive and well and a lot more of it is coming. When PSINet showed signs of failing a year ago, Exodus was considered to be solid as a rock; now it is near bankruptcy (PSINet went bankrupt a few months ago.) Nobody thought that Lucent may go bankrupt a few months ago; now its bankruptcy is no longer inconceivable.
>>Globalisation ... Reduction in socialism ... Capital accumulation
Not necessarily good for profits. More competition on a global scale. With cheap and easy information dissemination. How will the QCOMs of the world with their few thousand engineers be able to fend off the hungry millions eagerly studying and reverse engineering their designs and plotting bypasses to their patents?
>>There is little adjustment left to make.
Sun Micro, Cisco, Jdsu, and other icons of the technology revolution are losing money, just like good old cyclicals; but they still sell at hefty multiples of their pre-collapse earnings and at many times their book value. Companies that lose money when times are bad ought to sell at single digit p/es of their earnings when times are good and/or at book value.
>>Those losses are already 'baked in'
Hardly. It took years for reality to sink in after the Japanese bubble burst. In the US we recognize reality a bit faster, since we have fewer hang-ups about saving face, but we are still barely in the beginning stages of absorbing the reality of our burst bubble. Heck, we are still spending like drunks -- thanks to the parallel real estate bubble which is still floating, though it's losing air. Humans are like that.
>>put off upgrading the car
If they cut their spending by about 4% on the average, the US goes into severe recession.
>>USS Enterprise is steaming ahead ... Uncle Al just controls the level of the rods in the reactor
More like limping along on steam power, petrol gone, the US consumer frantically throwing the proceeds of the latest cash out refinancing into the boiler. If I were Jay, I wouldn't be too concerned.
Kyros |
