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Strategies & Market Trends : Coming Financial Collapse Moderated -- Ignore unavailable to you. Want to Upgrade?

To: EL KABONG!!! who wrote (601)	9/2/2001 2:07:41 PM
From: EL KABONG!!!	Read Replies (1) \| Respond to of 974

biz.yahoo.com Friday August 31, 10:20 am Eastern Time "New Economy" profits to remain slim-study By Glenn Somerville JACKSON HOLE, Wyo, Aug 31 (Reuters) - Profits are likely to remain elusive for high-tech participants in the New Economy, despite the bright future for the innovations they bring to the marketplace, a paper prepared for a top-level gathering of central bankers and economists said on Friday. The paper, written by former Treasury Secretary Lawrence Summers and Bradford DeLong, an economist at the University of California at Berkeley, was to be the basis for a discussion at the opening session of the weekend meeting. ``The future of the technology is bright; the future of the profit margins of businesses -- save for those few that truly are able to use economies of scale to create mammoth cost advantages -- is dim,'' the paper said. This means that in the long run, consumers will reap large benefits from the technological revolution but that the path may be rocky for investors. ``Consumers will gain and shareholders will lose,'' the paper said. ``Those products that can be competitively supplied will be at very low margins.'' The authors said the long-run impact of the technological revolutions in data processing and communications would be very large as companies find new ways to use the extended capability. But they acknowledged that ``one-time extreme optimism about the future of the high-tech sector has been severely shaken by the crash of the NASDAQ (composite index) over the past year and a half.'' However, they said the NASDAQ plunge was not a gauge of the the underlying technologies' value, which remains high, but rather was ``the result of the marginal investor's realizing that the odds were heavily against'' many firms gaining significant economies of scale that would foster big profits. Summers, now the president of Harvard University, and DeLong, who also is a research associate at the National Bureau of Economic Research that charts economic cycles, gave the high-technology revolution credit for having added a burst of productivity, or output per worker. ``The high-pressure economy, tight labor market, and gratifyingly low unemployment rate of the past half decade is hard to envision without the productivity speedup, which is largely driven by the technological revolutions in data processing and data communications,'' the paper said. KJC