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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: westpacific who wrote (6940)	8/10/2001 8:54:49 PM
From: westpacific	Read Replies (3) \| Respond to of 74559

THE WEEK/Tumbling Into The Telechasm by George Gilder When Bill Clinton assumed office nine years ago, I predicted he would enjoy one of the greatest economic booms in the history of the world. Impelled by the spread of the Internet, the onset of fiber optics, and a tenfold increase in venture capital -- unleashed by the lower tax rates and deregulation of the Reagan administration -- the Clinton economy had it made. Moreover, until the election year of 2000, Mr. Clinton actually pushed the economy along with beneficent trade policy, an astonishing opposition to Internet taxes and restrictions, and a 30% capital-gains tax cut that yielded hugely more revenues than projected by demand-side models. The Bush economy, unfortunately, not only possesses no such immunity to bad policy, but also is gravely vulnerable to policy mistakes accumulating by the end of the Clinton term. A high-tech depression is under way, driven by a long siege of deflationary monetary policy and obtuse regulation that has shriveled hundreds of debt-laden telecom companies and brought Internet expansion to a halt. For debt-burdened companies, nothing is so oppressive as deflation -- a dearth of money -- which inflicts soaring real interest burdens, sinking asset values, and collapsing growth. The leaders of the telecosm have to pay off debt in appreciating dollars while cash flow and collateral declines, and banks deny the kinds of rollovers that saved the likes of MCI in the 1980s. Real interest rates are now drifting upward faster than the Federal Reserve can reduce them. Monetary economists prattle about too many dollars while the dollar soars against deflated currencies, such as the yen, with its interest rate near zero. From industrial staples such as steel (down 42% in four years) to the monetary tocsin of gold (down 40% in four years), commodity prices lie in a deep trough. Meanwhile, the Bush "tax cut" degenerates into a ten-year gantlet of meaningless shifts and shuffles, the OPEC tax hike persists in its wanton gouge, and regulations strangle the broadband Internet. The only reason for the so-called "fiber optics glut" is the near deliberate starvation of connections to homes and small businesses. It is a classic socialist famine, where the warehouses are full but the people are starving for lack of market distribution systems. Part of this is because of a few poor business decisions in the industry, but most of it comes down to intrusive regulatory policy in an era of deflation. The absence of broadband local loops also withers the optical Internet. The $44.8 billion write-off and $8 billion loss announced last week by JDS Uniphase signals the devastation of the most promising communications technology in the history of the planet. Treating JDS Uniphase as a budding monopoly, the Federal Trade Commission permitted its merger with SDL only on condition that it sell its Rushlikon pump laser facility to Nortel. Some monopoly. Uniphase last week devalued its SDL pump laser acquisition by some $35 billion. The write-off - the largest in business history -- was partly because of the collapse of last-mile traffic growth. But it was also because an efflorescence of new laser and amplifier technologies -- from such companies as NP Photonics and Princeton Optronics -- are already making conventional pump lasers obsolete. Regulators can't keep up. As difficult as it may be for Republicans to acknowledge, they have become part of the Internet sclerosis. Led in Congress by regulation lovers such as Sen. Ted Stevens of Alaska, pressed by Republican governors such as Utah's Mike Levitt to impose Internet taxes, and beset by conservatives who blame the Internet for pornography (rather than prosecuting pornographers), the party is imperiling the crucial expansion of the Internet economy. Meanwhile, the president is preening for pollsters and junk science greens while hundreds of telecommunications companies tumble into the telechasm, choking on debt easily sustainable under favorable tax and regulatory conditions, but now rendered devastating by a global deflation.

To: westpacific who wrote (6940)	8/10/2001 8:54:55 PM
From: LLCF	Respond to of 74559

Yep, won't become 'obvious' to most for quite some time... perhaps about the time the rituals of plowing retirement money mindlessly into equities die out... to be replaced by new rituals and 'myths' about success and happiness. dAK

To: westpacific who wrote (6940)	8/10/2001 9:10:17 PM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

Hi westpacific, just for the record, I disclose that I at one time flipped the following shares included in you list and made profit on each ... I was fortunate and not overly greedy. 300% profit in a few months was considered amply adequate by me at the time:0) ATHM CMRC ICGE VERT YHOO Like you, I have my doubts about whether I will ever have another opportunity to make so much gain in so short a time for so little effort and with so much fun. On the <<folks lost their life savings>> I have to admit that so far I have not given the issue a lot of thought, because I do not want to feel bad about a game the nature of which is often "Live and let Die". As this tsunami rolls gently forward below the cash boat we now are on, gathering strength towards the sleepy fishing village full of revellers still, I try not to think too much about them, because they have access to the same boat I have, and they simply chose not to make use of what they can. Should, in the off chance, the tsunami dissipate without causing any damage to the fishing village, the revellers will not give our opportunity loss a fraction of a thought, merely laugh at us and say "those chicken littles, they deserve not getting what we got". And so they do, the folks in the fishing village. Chugs, Jay

To: westpacific who wrote (6940)	8/12/2001 5:20:11 AM
From: FrozenZ	Respond to of 74559

On that note:"BRUSSELS, Belgium--With enough money to survive only until the end of October, fallen tech star Lernout & Hauspie said Friday it will probably sell off its core language-technology business in parts. The deadline to attract investors for the language-technology division is now the end of October, when the company will run out of cash, he said. The division is burning through about $900,000 a week. Though the asset sales protect new investors from claims brought against the original L&H and some of its units, they offer no solace to individual investors, who have collectively lost billions of dollars from the collapse of the company's stock." Like Social Security, the tech revolution looks a lot like a Ponzi scheme. Given the size of what has happened I do believe Mr. Ponzi's head should be carved into Mt.Rushmore to sort of cap off this period. I've never felt people should feel embarrassment over the truth.