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

To: arun gera who wrote (64879)	6/11/2005 1:24:00 AM
From: Maurice Winn	Respond to of 74559

<Energy is the steroid of the developed world economies. Do developed countries allow or control the prices of resources to be just above the price of the world's masses? Or the price of energy rises to the level that it can only be affordable to a small percentage who are already ahead. The game seems to favor the countries in the lead, by design or by chance.> Arun, energy was seen as the steroid of the developed world in the 1970s. But it seems to me that intellectual property is the steroid of the 21st century. Prices aren't set by anyone, though OPEC apparently tries to vary production somewhat to control prices [at least to some extent]. Of course the price is just above that which could be paid by the world's masses of people. Price is how everything is allocated [unless stupid governments get in on the act and give things to their pork barrel club supporters, thereby destroying production]. The game doesn't really favour the countries in the lead. The countries in the lead have done things better in the past and unsurprisingly, usually tend to continue to do things better, though they gradually become fat, dumb, happy, arrogant, and lazy and their greatness fizzles out. As Singapore, Japan, South Korea, Taiwan showed, countries can go from very poor to very wealthy in a single generation when they stop doing things which make them poor and start doing things which make wealth. China has abandoned many things which made them poor and have started doing many things which make wealth. But they'll only get a limited amount of success because they are missing key ingredients for great success [such as freedom]. India has started letting people make some money too, but still does lots of poverty-creating things. Even when India and China stop the poverty stuff and get wealthy too, they won't be able to drive SUVs around like Americans do. I imagine there will be superconductor maglev electronically and photonically controlled small passenger vehicles zipping around the place [maybe in tubes for security, safety, and engineering purposes such as photovoltaics on the roof of the tube, partial vacuum in the tubes]. A tube running from Shanghai to London could have those little zoomers traveling at 1000 kph or maybe 2000 kph. Why fly 10 km high when flying can be done at ground level? I fancy China's chances of making those and selling them in the USA more than I do GM's chances of producing SUVs and selling them in China [and India]. Mqurice

To: arun gera who wrote (64879)	6/11/2005 3:33:39 AM
From: energyplay	Respond to of 74559

Some very good questions - With about 700 million cell phones being made per year, vs. about 40 million cars, getting pluged into the world is easier than driving around the block. >>>"Do developed countries allow or control the prices of resources to be just above the price of the world's masses? Or the price of energy rises to the level that it can only be affordable to a small percentage who are already ahead."<<< This tends to be the short term effect of supply and demand setting pricing. If we believe to supply siders, and some others, long term profit maximization requires ongoing reductions in price to constantly expand the market. This has been easy to see in the Personal Computer market. From a late 1970s price of about $2000 for an Apple II, and a 1983 price of about $2300 for the IBM PC with two floppy drives, 4.7 MHz 8086, and 128 K of Dram. Those prices are equivalent to roughly 6000-8000 dollars today. There was considerable concern about the affordability of computers and the creating of a "digital divide" between the rich and the poor. 2000 in 1980 was about 35-40% of the list price on a NEW Ford Mustang, and roughly 80% of the price of a good used car. This price was about 750 hours of the $2.90 minimum wage. There was an enormous drive to get costs down by using learning curves and Moore's law (15 years old by then). This drive was both politically/ideologically driven and financially driven. Amazing what greed, ideology, and a bunch of hype can accomplish. With complete PCs now at $600-800 in 2005,(which is maybe 15-20% of the price of a good used car, and 120 hours at minimum wage) there are few worries about the "digital divide" in developed countries. Now with efforts to deploy Linux based PCs, the prices are becoming affordable for more countires. ******** Automotive technology has moved slower, because metal has to be formed in 3 dimensions, instead of silicon and circuit boards in 2-D. This makes manufacturing much harder. For transporting people, you can't miniturize a car....well, we can, but it can be tough to get into the back seat of a sub-micron car. There's another issue with quality and complexity. PCs have gome from 4.7 Mhz to > 1 GHz, etc. Almost of all of these improvements have been items which could be done at low cost, and had a future road map to even lower costs. A counter example would be "Bluetooth", a standard developed in Europe, with and initial chip cost of about $ 5.00. Everyone in Silicon Valley, even the biotech guys, knows that PC makers will sell their grandmother for $5.00 of cost, but the Euros had no clue, and were puzzeled at the slow acceptance of Bluetooth. They may have since become enlightened to some degree. Continued ----

To: arun gera who wrote (64879)	6/11/2005 5:45:17 AM
From: energyplay	Read Replies (2) \| Respond to of 74559

For automobiles, the quality and complexity frequently CANNOT be solved in low cost ways. Often more metal is required. Life, and property are at risk, for both the user, other drivers, and pedestrians. Safety glass costs more to make than window glass. Good brakes on four wheels cost more than lousy brakes on 2 wheels Performance and speeds have also gone up from 30 mph to 70 mph or more. One of the problems that occured in the late 1920s was the saturation of the market for basic cars. The prices of new Model Ts fell from about $800 to about $200, along with the prices of used Model Ts. To get some one who had a car to buy a NEW car, the new car must have some improvements over the old car. This caused cars to add features like self starters(instead of hand cranks), enclosed bodies, heaters (real luxury item) windshield wipers, better seats, enclosed trunks (boots), exterior lighting for attempting to drive at night, etc. In the late 1930s, automatic transmissions, much better suspensions, and air conditioning were availible. How did consumers afford this ? One big factor has been selling their present car. Getting even 20-30% of the price of the next car for your used car really helps to buy a better, more complex car. **** For developing nations, getting the first group of cars is a big hump to get over. Antoher factor is the cost of steel. In the US and Europe, much of the steel in a car comes from recycled scrap from very old cars. China, for example, now has to import scrap steel. In roughly 25 years , they will have most of their own scrap supply from older cars. ********* If we look at South Korea, which has developed very rapidly, going from about $500 per capita GDP in the 1960s to about 7000 + today, they have developed a car culture, and are vastly improving their quality. Korea did have large anounts of scrap metal left over from the Korean War. they alos made a huge sacrifice in civil liberties (esentially all of them) used some almost forced savings (low returns to savers, money directed to key Chaebols) massive US aid, some help from Japan to become a low cost supplier, and brutal hard work to achieve their rapid rise in living standards. Korea was also extremely export oriented, and ran large trade surpluses. Not sure how feasible the Korea path is for other countries. I expect that more countries will become developed, if they have an educated work force, some natural resources, are not over populated, and don't have governments of crooks, incompetents, or socialists ideologes. The last criteria leaves out most of Africa. Also Phillipines, maybe VietNam (ideologes) Argentina has had some experience going back and forth on economic progress - it's not irreversable either way. Also note that at one time Cuba had the highest living standard in South America. The overpopulation issue has been tough for El Salvador, and presents a problem for Bangladesh and Indonesia. In the Americas, Bolivia, Paraguay, Suriname, Guatamaela will have a tough time. Most of the rest of South America will develop about as much as they want. There is a pricing effect that tends to stablize prices at points where demand changes, especially when supply is expensive to develop. If you are going to sink a billion dollars into an oil refinery in say New Zealand or Barbados, you will want to make sure there are enough people who will be able to pay a profitable price for all your produciton - not just half the people you need who can only buy at a rock bottom price.