I still remember back in Oct of 1998 , AG talked about deflation, and how bad it was
to the economy and the profit of Corp America. So, little bit of inflation is actually good to the economy. If this deflation continues, companies like BA, MU, ...etc will
be bankrupt eventually . In the past one to two years, the worldwide economy was in a deflation mode, and it trended to the one extrem, and of course, it was unhealthy. When we talked about international trade, it should always be two way channel, i.e,
we bought something from our customers, and they get the money to buy something from us and we all benefit from this trade. In the past one to two years , due to the what so called financial crisis, the Asian companies stop upgrading their equipments, their computers, communication systems. Now thanks to export , the local economy started to recover, and again, the Asian companies hold enough money to do things which needed to be done in 1997, 1998, i.e upgrade their equipments, telecom systems, and these upgrade cycle will generate a lot of business opportunities for the
American companies. If the rate was increased now, then it will kill the coming upgrade cycle, and put the world economy into a recession and deflational mode. Because , the Asian will export less, and as a result they lose confidence in the future
of economy , and will hold the upgrade, and hurt the American companies.
Companies like BA will be hurt the most , because Asian will not buy any plans from BA . Companies like CSCO, LU will all get hurt badly. So, to compete for the market, the Asian exporters will cut the price of their products, and US companies
will also cut the price of their products exported to Asia to compete for the limited
business opportunities, because Asian will cut spending in a worldwide recession. As
a result , both the Asian and US companies will sacrifice their profit for market shares, and we will go through the night mare of worldwide deflation again. A mess
bankruptcy. I do not expect AG will let that happen , and what is more, 80% of this inflation is caused by rising gasline price at the pump, and which is artificially hiked by the oil companies, we did not see a shortage of gas in the market, instead of price rise in the general market.
So, if the market expect a rate hike, but it did not happen , it will be a very positive news .
AOL had more than 18 Millin of subscribers, and most subscribers choose AOL is because of its content . So, if AT&T did not cut a deal with AOL, it will be AT&T which got hurt the most, and ATHM can't provide AT&T with such a big customer base immediately.
While AOL will still had DSL with the local Bells, and wireless down the road. What is more , AOL can still cut deals with other 40% of the cable operators .
So, my prediction is AG will not increas the rate, and AOL will announce a deal with
AT&T , and ATHM drops sharply after next week's AOL announcement.
So, the economy continues, AOL gets the broadband access, AT&T get additional
cable subscribers out of AOL's 18 million subscribers immediately. |
