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- THE FRIDAY LETTER -
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from Gilder Publishing,
for friends and subscribers)
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| http://www.gilder.com/ | Issue 359.0/October 10,
2008
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HEADLINES:
- The Week / Giant Leaps & Small Steps for Energy Technology
- Friday Feature / George Gilder: Is
Obama Coasting Too Soon?
- Friday Blogger Bonus / Steve Forbes: Fear Will
Subside
- Readings /
The
Week / Giant Leaps and Small Steps for Energy Technology
Mark Mills, Forbes.com “Creative Disruption” (10/9/08):
President Kennedy's 1961 speech launched the Apollo Program. Imagine if he had
invoked the spirit of the Roaring '20s and the technology of the first radio
broadcasts. That's the time span that separates today from the Apollo and, even
longer, from the Manhattan projects that were embraced as archetypes for 21st
century energy policy. While historically impressive, those programs fail as
models to meet our energy needs.
One of the great physicists
and teachers of the 20th century, Nobel Laureate Richard P. Feynman (a
Manhattan Project veteran), said that, "Energy is a very subtle concept.
... It is very, very difficult to get right." The evidence that policy
makers, never mind physicists, have had a hard timing getting it
"right" is starkly obvious given our energy situation and history's
lessons. Wind back the clock to see all the warnings.
Right after the Manhattan
Project--following World War II when oil was front and center--the American
Petroleum Institute, in its 1948 prototype for all subsequent energy reports,
concluded:
"We are already
depending more and more upon imports ... the probability [is for]
long-continued international strain--or worse--and fiercer international
competition for energy. ..."
Fast forward to October 1973
when Saudi Arabia banned U.S. exports, driving oil prices up 300%. Then to
February 1979 when the Iranian revolution shot oil prices up another 260%. Now,
roughly since 9/11, prices have blown past a 500% gain.
What's changed over the past
half-century since all the above? Surprisingly little. There are no new energy
sources; nothing equivalent to the first oil well drilled in Pennsylvania in
1859, or the 1949 discovery of the Saudi Ghawar oil field (world's largest).
The newest addition to the phenomenology of energy production, the
solar-electric cell, dates to 1954 at Bell Labs; the first fission for nuclear
energy was 1942 at the University of Chicago; piston engines around 1900, steam
engines in the 1700s; wind and water mills predate the 1200s. There is nothing
new under the sun for producing energy.
But "new" has been
happening in ever-emerging technologies and ways we find to use energy. Who
would have thought that computers would lead to thousands of Wal-Mart
(nyse: WMT)-sized data centers each consuming the power of a steel
mill--collectively as much energy as global aviation? Which brings us to the
central reality that has changed over the decades: The scale.
Benchmarking from the first
modern energy crisis in 1973, when President Nixon launched Project
Independence ("make the U.S. energy independent by 1980"): Global
energy use has increased by an amount equal to adding another U.S. to the
planet. The world now uses the energy equivalent of 2,500 barrels of oil every
second (some 40% is oil). If those barrels were stacked up, the pile would grow
taller at 5,000 miles per hour.
What's going on? Billions
more people. Trillions more dollars. Developed nations are transforming from a
post-industrial to a gross domestic product-accelerating, information-centric
era. Developing nations are industrializing and leapfrogging into the
information economy. As world GDP grows from $50 trillion to $80 trillion in 20
years, new supply equal to France's total energy consumption will be needed
each year. This is the central challenge of our era….
|
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 / Is Obama Coasting Too
Soon?
Gilder
Telecosm Forum Member (10/8/08): George how do you see the economic
and political situation?
GEORGE
GILDER, Gilder Telecosm Forum (10/8/08): I
think McCain and Palin will win. I was in the Nixon campaign in 1968 and
watched him try to coast to victory. If the election had been held a day or two
later Humphrey would have won. Obama is already coasting even sooner than Nixon
did. His idea that deregulation caused the crash is delusional. Hedge funds are
actually outperforming banks and more regulated entities. Fanny and Freddy were
pure political tools, regulated to the hilt to promote and mandate
come-and-get-it EZchump mortgages, and the Democrats loved them both to death.
Read more posts by George Gilder
and the Gilder Telecosm Forum members, logon with you subscriber password at www.Gildertech.com
today.
__________________________________________
Friday Blogger Bonus / Fear Will
Subside
Steve Forbes, Forbes.com “Fact and
Comment” (10/9/08): Although
you'd never know it from market volatility, the financial fever in the U.S. may
be about to break. The Treasury, of course, must move with alacrity in removing
those impaired mortgages and other exotic instruments off of bank balance
sheets. Just as important, the Administration must deal decisively with the
insanity of mark-to-market, or so-called fair value, accounting that has forced
institutions under severe pressure from regulators and accountants to
maniacally mark down to absurdly low levels the value of unmarketable
securities and assets, thus destroying entities that have positive cash
flows. Congress has made its intent clear: It wants mark-to-market scrapped or
at least suspended for a good, long time. Sensible reform here would sharply
alleviate the severity of the credit crisis. Foot- dragging on this would be
criminal as well as destructive. And the SEC should get its act together on
short-selling.
Taken together, these
measures will allow banks and financial institutions to catch their breath and
not fear that they will be gratuitously plunged into insolvency. A recuperation
will then begin, which would be hastened if the Administration abandoned its
weak dollar policy. In fact, a strong dollar commitment would stem the
panic.
Meanwhile, Europe and Asia
will find ways to stop the contagion there, just as we are haltingly, clumsily
doing here. The great danger going forward will be the political reaction. Will
we apply growth-stunting regulations in the name of "never again"? Will
we raise taxes in part to punish the "rich," harming the capital
creation so necessary for growth? The answers will determine whether we have a
Reaganesque recovery or the drawn-out stagnation of the 1930s.
Why a panic unseen in almost
everyone's lifetime? Never before in American economic history have we
undergone such a confluence of irresponsible behavior, of measures taken and
not taken that have been demonstrably destructive. Recent shenanigans over the
bailout bill defied credibility. Our financial system was on the verge of a
Great Depression wreck. Policymakers in those days could at least plead
ignorance in their disastrous decisions.
The U.S. economy is in
recession, and the slide is gaining momentum. Europe is also in a recession,
and Asia's growth rates are slowing down markedly. Yet Congress couldn't resist
playing brinksmanship partisan politics. The Administration deserves a severe
knuckle-rapping as well. More important, President Bush--not to mention Hank
Paulson and Ben Bernanke--never convincingly explained to the American people
why the legislation was a dire necessity, flawed as it was. Most Americans
thought of it as a gratuitous handout to greedy Wall Street executives. Even
so, House Republicans should have made sure the bill passed on Monday, Sept.
29. Occasionally members of the national legislature must act in the national
interest even if--temporarily-- constituents don't realize the magnitude of the
impending horror.
Put the bailout's $700
billion price tag in perspective: American households, until recently, had net
assets of $56 trillion. A 2% decline in the value of those financial and hard
assets overwhelms that $700 billion.
This whole crisis was
absolutely unnecessary. The list of villains is long and ugly….
Read On:
http://www.forbes.com/opinions/forbes/2008/1027/021.html
__________________________________________
Readings /
New Chips Poised to
Revolutionize Photography
http://blog.wired.com/gadgets/2008/10/new-chips-poise.html
Silicon Valley Finds Isn’t
Immune to Credit Crisis
http://online.wsj.com/article/SB122359422742921079.html
An Easier Update to
Holographic Storage
http://www.technologyreview.com/computing/21507/?a=f
Linux at 17: What Windows
Promised to Be
http://www.theregister.co.uk/2008/10/09/linux_at_17/
World first for sending data
using quantum cryptography
http://www.physorg.com/news142677178.html
Market Freefall: 10
Depressing Facts
http://blog.wired.com/business/2008/10/market-free-fal.html
__________________________________________
Friday Letter Editor: Mary Collins George / mcollins@gilder.com
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