Pierre, Let me try to be brief. <g>
On the killer app issue. I am already polluted by your ideas, so I can't offer any untainted thinking.
On the inventory cycle. May I suggest the following non theoretical approach to discovery. (If you are interested) Take the National Income and Product numbers as far back as you can get them. I am looking for an Internet source since I get mine from the "Survey of Current Business". Take the GDP and break it into its' various spending categories. I use Federal Spending, State and Local Spending, Consumer Spending, Plant and Equipment, Residential, Net Exports and Inventory Investment (also known as change in business inventories, but it is less confusing when you start talking about changes in changes in business inventories). You can break it down further if you like.
Next you take the quarterly changes in these spending components. (Use the nominal numbers since they are not ruined by specious inflation adjustments.) Follow these changes over time and mark the relative importance in the swings as the business cycle unfolds. You will notice what a disproportionate effect that inventories have in the business cycle. As an example let's look at the recession that began in mid 1990. From the second to the fourth quarter inventory investment went from a positive 26 billion to a negative 24 billion. This is a negative swing of $60 billion. Compare that to the following changes in the other spending components. Federal Spending (+ 14 ), S&L Spending (+ 30 ), Consumer Spending (+131), Plant and Equipment (+4 ), Residential (-4 ), Net Exports (-12 ). See what I mean? I am not attempting to establish cause here, just as I cannot establish cause in the PC inventory problems. What I am pointing out is what a powerful effect swings in inventories can have.
On the Asia Crisis and mistakes. I would place in the category of mistakes during the past century the Federal Reserve not bailing out U.S. banks in the 1930s and letting the money supply contract. This "mistake" helped cause the Great Depression and certainly will never be repeated in this country. Many Asian countries have made mistakes, maybe even some of this magnitude. The Fed took a decade to correct their mistake, if indeed they did, I think the countries of Southeast Asia would be hard pressed to be as stupid as our central bank was in the 30s, yet we seem to have survived it. You may rightfully disagree with me on the severity of the Asian contraction, maybe they are entering their great depression. I will say no, time will tell.
Oh by the way, you can call me Robert. And please feel free to tear apart anything you see me write. Egos and capital gains do not mix.
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