To: Boplicity who wrote (6963 ) 11/26/2000 10:14:24 PM From: Walkingshadow Read Replies (1) | Respond to Greg,<< He caused it all to happen W. Why do think earnings are coming down? Rates are higher. Why do think telecom spending is slowing? Rates are higher. >> not the sole determinant of growth, and in most cases only a modifier. Growth is determined by much larger fundamental global forces of supply and demand, and expansion of markets, little of which is determined by interest rates. That's not at all to say that central bank interest rates have no effect; of course they have an effect, largely on companies whose expansion is dependent on borrowing by themselves or their customers---i.e., Old Economy companies mainly. While I don't have any figures at my fingertips, New Economy companies IMHO are much less dependent on corporate paper than Old Economy companies, and much more dependent on VC, rapidly expanding demand, and stock valuation to finance their continued expansion. None of these last three is significantly influenced by central bank policy.<< I contend that the market would of removed the dot-coms that didn't make sense by now on it's own. >> << Look around, do you see the speed of innovation happen like it once was? No, you are seeing dreams dash or still born, by not getting funded. >> not funded by interest-rate sensitive corporate paper, with rare exceptions (e.g., Bell Labs). Overwhelmingly, it is funded by VC (but also Federal and State grants), whose sole motivation is greed. VC is drying up now, and I view this as having much more to do with pared-down perceptions of profit potential, much less to do with central bank policy. The re-emergence of greed will change all that, regardless of the interest rate environment.<< I say the FED will go down as the killer of the new economy. >>
