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- THE FRIDAY LETTER -
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for friends and subscribers)
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| http://www.gilder.com/ | Issue 357.0/September
26, 2008
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HEADLINES:
- The Week / George Gilder:
Survival in the Global Economy
- Friday Feature / Steve Forbes: Two
Biggest Things Still To Do
- Friday Blogger Bonus / Extreme’s Bet
- Readings /
The
Week /
Survival in the Global Economy (audio download)
The Frontier Centre for Public Policy’s David Seymour sits down with George
Gilder to discuss
government ownership of telecom companies, the future of the United States, how
the microchip changed the economy and much more, at the 2008 Atlas Experience
in Canada.
SEYMOUR: How has technology changed the rules of public policy?
GILDER: I don’t think technology
has radically changed the rules. It’s just increased the penalties for defying
the rules. You use to be able to have an insulated little economy, with high
tariffs, and perhaps you could survive. You wouldn’t do well, but you’d
survive.
Today,
you separate yourself from the global economy and you’re left vastly behind.
All
of the growth in the world economy over the past twenty years has essentially
stemmed from the steady expansion of trade and exchange, which has been
spearheaded by the opening of ever more capacious worldwide networks of glass
and light. Fiber optic lines around the globe bring everyone together in new
enterprises that span the world, and if you try to insulate yourself from this
process you fall behind into poverty and decline. And that’s really what is
being proposed for America by Barack Obama. He somehow thinks that he can
insulate us from the world economy. It is a real peril for the United States.
Download the Audio of the Complete Interview with George Gilder:
http://www.fcpp.org/main/publication_detail.php?PubID=2355
|
The Gilder Telecosm Forum To
learn how to join this powerful network of talented, tech-savvy investors and
thinkers online daily to debate, discuss, and decode new and emerging
technologies and share valuable and actionable investment advice, visit www.Gildertech.com today. |
Friday Feature / Two Biggest Things Still
To Do
STEVE FORBES, “Fact and Comment” Forbes.com (9/18/08): The government's creation of
a mechanism to take on bad assets from banks and other financial institutions
has stopped a catastrophic meltdown of the system. But the two big viruses
remain untreated. The most immediate is the mark-to-market, or so-called
fair-value accounting, rules that regulators have been enforcing since the
early 1990s. The idea of writing down the value of financial assets when the
market for them is seriously impaired or doesn't exist is sheer folly. The
actual losses from subprime mortgages and other exotic instruments were large
but absorbable. Packages of subprime mortgages came to about $1.2 trillion. At
worst, perhaps half of these--$600 billion--might ultimately go bad. Compare
that number with the $56 trillion of net assets of American households. Actual
losses on exotic instruments, moreover, won't come near the value of those
subprime mortgages.
If
such rules had been in place during the Great Depression, we'd still be in it
today. With one exception, all the large banks and life insurance companies
(which were the major institutional source of long-term capital in those days)
survived. Every one of those large entities would have collapsed under today's
regulatory accounting rules.
If
we had had similar regs in the early 1990s when the S&L crisis and the bad
loans of our major commercial banks came to a head, we'd have had a second
Great Depression instead of a recession. Nearly all of the large commercial
banks back then would have failed. Fair-value accounting is an absurdity for
financial institutions.
Current
regulators--Treasury, the Fed, the FDIC, the comptroller of the currency and
the SEC--have it within their powers to cease this nonsense. There is no
reason for the whole structure to be teetering.
The
other virus is the weak dollar. The Federal Reserve's reckless, loose-money
policy in 2004 and again in the summer of 2007 led to a catastrophic inflation
in the commodities and housing markets. The binge of recent years would not
have been possible if the Fed had had a prudent monetary policy. In a bar
patrons shouldn't be allowed to drink too much; in this instance the
bartender--the Federal Reserve--made every hour happy hour, charging
increasingly drunken customers about 20 cents a shot.
It
is within the U.S. government's powers to make the dollar strong. Thankfully,
John McCain gets it about the dollar. He recently urged the Fed to do what it
must to strengthen its greenback. Such a mission would actually complement
rather than get in the way of its efforts to fight the credit crisis. There is
no shortage of liquidity. The problem is that everyone has been clutching their
dollars for dear life instead of putting them to work.
More from Steve Forbes:
http://www.forbes.com/opinions/forbes/2008/1013/019.html
__________________________________________
Friday Blogger Bonus / Extreme’s Bet
Gilder
Telecosm Forum Member (9/22/08): See “Extreme
Goes for Ethernet Glory” (http://www.telecomdirectnews.com/do.php/140/32607).
What does this mean for EZchip (EZCH)?
GEORGE
GILDER, Gilder Telecosm Forum (9/22/08): This is an
Extremely application-specific box that probably uses application-specific
integrated circuits (ASICs) rather than network processors. It almost certainly
does use NetLogic (NETL) for the look-ups in this generation
BlackDiamond, as it did in its last generation.
Extreme is betting on the emergence of a large market of layer 2 PBT boxes
in the metro. EZchips can deal with any developments in the Metro,
including the still unsettled provider bridged network standard and its virtual
variations such as PBBN. Cisco (CSCO) decided against building such a
box. If you bet right on the right ASIC, you may make a market. In extremis a
company may take a risk that Cisco and Juniper can avoid.
Read more posts by George Gilder and the Gilder Telecosm Forum members, logon with you subscriber password at www.Gildertech.com today.
__________________________________________
Readings /
Agreement Reached on Bailout Ahead of
High-Level Meeting
http://online.wsj.com/article/SB122235295272975207.html
Stocks Rise on Bailout Hopes
http://online.wsj.com/article/SB122233845314174903.html
AMD’s Best Dual Core Ever?
http://en.expreview.com/2008/09/23/amds-best-dual-core-ever-athlon-6500-kuma-review.html
Craig Mundie’s Cloud Vision
http://www.technologyreview.com/Infotech/21422/?a=f
Google
Debuts Digg Clone
http://www.webmonkey.com/blog/Google_Announces_Digg_For_Questions
Storage Vendors Jump on Oracle Bandwagon
http://www.byteandswitch.com/document.asp?doc_id=164544&WT.svl=news1_4
The Day the NASDAQ Died
http://invest-stocks-gw.blogspot.com/2008/09/was-looking-through-my-joke-collection.html
Review: Upstream by Alfred Regnery
http://blog.acton.org/archives/2498-Review-emUpstreamem-by-Alfred-Regnery.html
__________________________________________
Friday Letter Editor: Mary Collins George / mcollins@gilder.com
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