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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: BGR who wrote (48924)	2/25/1999 3:47:00 PM
From: Earlie	Respond to of 132070

BGR: I look at many REALLY new tech companies each year. When I say new, I mean "start-ups" a place where few seem to be interested in investing. That lack of interest derives from the fact that all but a handful of them will not make it to the most important day in any company's life, which is cash flow break-even day. The point is that it is darned tough to find the winners in emerging technology. Even when they make it to the publicly-traded arena, most flop. That is part of the reason why I am not adverse to shorting. My success ratio in spotting the winners hasn't been all that decent, but it's been better than most. It has still been a less-than wondrous money-making experience. It also takes 3-10 years before a pay-off occurs, and that only if Murphy doesn't spot the company. BGR, the reality is that neither you nor I have any concept as to how nasty a deflationary wave can be. We can read about it, we can shudder when we peruse the ugly numbers streaming out of Asia, but living it is sure different from talking about it. Personally, I would have just as soon avoided it, but that doesn't seem possible from my perspective, so I'll just try to prepare for it. I see that wave bearing down on us so my perspective is as you suggest, the future. It takes time to get to the high ground, and one travels more rapidly on uncrowded highways. I agree wholeheartedly with you that it is deflation that keeps inflation, (at least as measured by the U.S. govt.) in check, but they leave out many elements in their measurements,....like the price of stocks. This is "clear stupid" from my perspective. Re Intel: You are right about their business model being cock-eyed. You are also right about the demand situation being a big problem (I've said this many times over the last year). You are less than right if you think competition is not a big problem for Intel. My goodness, when an on-the-ropes company can enter your exclusive domain and grab 25% of your market in a bit over a year, this isn't a problem, it's a disaster. This will be written up in business text books in the future as a classic. In any commodity situation, though, it is almost always the "supply" side that dominates pricing. As noted, the supply capability is massive, even as the demand cools,...a prescription for falling margins and bottom lines. Write down my 90 million unit global forecast,...I missed last year by a bit on units, (thanks to Greenspan's Christmas present) but I was one of only two or three who expected a revenue decline. Another way to get an idea as to whether there will be problems this year is to add up all the micro production that is already available, add in the excess micros floating around in unsold boxes and in the spot markets, then calculate how many PCs you think will be sold this year. I don't care how optimistic you are, the micros will greatly outnumber the boxes by a long shot, which suggests problems. For starters, check out current spot prices on Pentiums and compare with INTC's listed prices. Best, Earlie

To: BGR who wrote (48924)	2/25/1999 6:29:00 PM
From: Mike M2	Read Replies (1) \| Respond to of 132070

BGR, product price deflation due to technological advances and rising productivity is a positive economic force. Some examples are mass production of interchangeable parts-thanks to the Razor Sharp Connecticut yankees ho ho ho, steam engines,railraods, the mechanization of farming, assembly line production, electrification of America and so on. This brought good things to life. The easy money in SEA resulted in excess investment in commercial property and industrial capacity. The Austrian economists saw that the Asian economic miracle was actually a maladjusted bubble economy and the when the bubble burst the balance sheets of both the lenders and borrowers are damaged. In my opinion, the current product price deflation is result of the bursting of the global credit bubble which created excess capacity and debt in SEA. There is excess capacity in virtually every industry. In the 20's the global credit boom -funded in large measure by the US went bust before the crash of 29 currently we see the global credit boom has gone bust and the full impact is yet to be felt in the US but it is coming. In the US the current monetary inflation has maladjusted our economy by inflating financial assets, encouraging overconsumption excess debt, and a low savings rate. most are not concerned about rising debt levels due to the financial asset inflation but all this talk about liquidity ignores the dangers of this leverage. I wish to give recognition to Dr. Kurt Richebacher- a truly outstanding Austrian economist for the Austrian aspects of the preceding commentary some of which I paraphrased from his newsletter. Richebacher Letter 1217 St Paul St Baltimore, MD 21202 Mike ho ho ho