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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (30617)	5/3/2005 4:01:15 PM
From: Elroy Jetson	Respond to of 306849

Although I don't think debt financing, even at a low interest rate, is appropriate for R&D, I understand your point. Very little capital in the US is flowing into long-term projects like R&D. The majority is "invested" in short-term speculation, which is precisely where economist Charles Rist says excess liquidity created during a deflation ends up. I have a friend who is developing a new pharmaceutical drug. After funding the initial development himself, it was not possible to come by venture capital to scale up for trials. He started looking further afield. The state of Bavaria was offering a substantial grant, and free rent in an office park, for high tech businesses. So the six scientists working on the project are now living and working outside of Munich. Ironically, two American bio-tech companies, who previously had little interest, now want to invest in the project as well as a Swiss bank. Now I ask you, what is that all about? Maybe the economics are now better? My friend has purchased a home in Northern Italy, an areas he has always liked, and takes a charters a private plane at a nearby private airport for a brief flight to the private airstrip adjoining the office park in Bavaria when he needs to be there. He is now selling his home in Beverly Hills at bubble prices. When everyone zigs, make sure you zag. Like Charlie Munger of Berkshire Hathaway said a few days ago, "The present era has no comparable referent in the past history of capitalism. We have a higher percentage of the intelligentsia engaged in buying and selling pieces of paper and promoting trading activity than in any past era. A lot of what I see now reminds me of Sodom and Gomorrah. You get activity feeding on itself, envy and imitation. It has happened in the past that there came bad consequences." .