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| http://www.gilder.com/
| Issue 276.0/December 22, 2006
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HEADLINES:
- The Week / Forget the Social Security
“Problem”
- Friday Feature / Analog Opportunities
- Friday Blogger Bonus / Beijing Duck
- Readings /
|
George
Gilder’s technology stock picks continue to strengthen subscriber
portfolios. Finisar is up 66%;
SIgma Designs is up 71%; Equinix is up 101% and Gilder
TECHNOLOGY REPORT favorite, Net processing proDIgy EZchip, is up 185%
for the year! |
The
Week /
Forget the Social Security “Problem”
George Gilder, 12/15/06 (on the www.Gildertech.com message board): This is a letter to Don
Luskin of www.PoorandStupid.com.
Don,
Thanks for your heroic work over the years. This website is a national
treasure.
But
please forget the social security "problem."
Don't
solve "problems." When you solve problems, you feed your failures,
starve your strengths, and achieve costly mediocrity.
Nothing
good is going to come from political haggling over some bogus social security
crisis decades in the future, when our economy will be entirely different and
hugely more productive.
We have to get beyond the idea that any reshuffling of taxes and spending today
will improve the economy's ability to support medical care, housing and
transport for the aged, such as myself, in 2027. That will depend not on
actuarial trumpery but on the realities of productivity, technology, and
immigration.
Only
if we raise tax rates and regulations and cripple the GOP and our defenses with
delusionary spending cuts can social security become a crisis. Yet that sums up
the likely grand compact, doesn't it? Higher tax rates in some form or other,
some jerrybuilt pension scheme full of government regulations on our financial
markets, and gimcrack spending cuts that end up focusing on defense.
We should take the offensive. Lower tax rates will yield the additional
revenues and borrowing power we need to sustain social programs for the aged in
coming decades.
As a key first step, we need to reduce the payroll tax by at least one third.
Indeed, as part of a flat tax program, we should eliminate the payroll tax.
Make the Democrats talk about that, not about spending cuts, which always turn
out to focus on defense. In a dangerous world, we will need defense.
Eurofare economic policies like Germany's would obviously destroy our ability
to supply goods and services to coming generations. Under those conditions we
would have to inflate away the liabilities one way or another. It may be
horrible, but no conceivable compact with the Democrats today can save us from
the nemesis of socialism. Indeed, a compact with the Democrats will tend to
cripple the necessary Republican resistance.
If we keep our tax rates low, however, we will discover that this economy in
future decades can easily sustain the necessary 40 trillion dollars of
additional debt. Read Ken Fisher's The Only Three Questions That Count.
He believes that the U.S. incurs too little debt compared to the productivity
of incremental investment. His regressions show that the larger the budget and
trade deficits the higher the stock market. We already command a steadily
growing resource of some $110 trillion of assets. We are already running an
all-governmental surplus. Our corporations are laden with cash. Our current
debt asset ratio is sub-optimally conservative.
The only thing that matters, as you know, is economic growth. Focus on that.
Let Democrat accountant economists grouse about debt.
Don't solve problems. Pursue Opportunities. This is the Wealth creation
website!
– George
Gilder
Read Don Luskin’s reply:
http://blog.gildertech.com/index.php?/archives/35-Forget-the-Social-Security-Problem.html
|
The Friday Letter Book of the Month By Ken Fisher, with Jennifer Chou, Lara Hoffmans and
James Cramer (Forward)
|
Friday Feature / Analog Opportunities
GTR Subscriber 12/19/06: Paul McWilliams seems to be
down on National Semiconductor (NSM) and analog chipmakers in general. I
recall you had some positive things to say about NSM and its opportunities a
couple of months ago. Can you share your latest thoughts on NSM and analog
chipmakers?
George Gilder 12/19/06: NSM has had a large move, responding to its change in focus to a pure
analog line, with a few leading edge A-to-Ds and D-to-As added. Analog
companies have faced integration fears throughout their ascent to dominance
among microchip companies in ROI. But if you want to play both sides of the
power theme, I recommend purchase of Power-One (PWER) at this price. Its
long-term advance is just beginning, while NSM has had a nice ride already.
Logon to the Gilder Technology Report subscriber-only message board
with your subscriber ID at www.Gildertech.com to read more
posts by George Gilder and his subscribers.
|
The Gildertech Blog, http://blog.gildertech.com/ | Logon now to see what’s new. for FREE
audio downloads of select speakers and panel sessions. |
Friday Blogger Bonus / Beijing Duck
Andy Kessler 12/12/06: Treasury Secretary Henry Paulson, Federal Reserve Chairman
Ben Bernanke and other polished cabinetry are visiting China later this week.
They'll see fields of skyscrapers, traffic jams of new cars and designer
couture replacing the old Maoist uniform with five buttons and too-long
sleeves. In other words, we've got the Chinese right where we want 'em.
Sure, the China Miracle is impressive -- double-digit economic growth, exports
up 30%, a $150-billion trade surplus and a trillion dollars of foreign currency
in their treasury as reserves. The prevailing opinion is that at any moment,
China can stop funding U.S. budget deficits by not buying our bonds -- so
Messrs. Paulson and Bernanke should come hat in hand and beg for indulgence.
Don't believe it.
Your hotel will probably be on a street that didn't exist two years ago. The
traffic jam getting you there? It's from the 1.4 million new family car drivers
in Beijing, now just learning how to drive -- and not too well. Think of China
as a bunch of high school kids (albeit with strict parents) with new driver's
licenses and you won't be far off. Don't give them the keys to anything. Be a
little coy. From the consumers to the government, they are simply adolescents.
China consumes one-eighth of the world's energy, one in four tons of steel and
aluminum, and almost half of the world's cement. According to Stephen Roach at
Morgan Stanley, half of China's GDP is fixed investment. They pay for this with
loans from Chinese banks backed by our dollars. Like a teenager who stole
Grandma's checkbook, the Miracle seems to be based on writing bad checks ….
Check out Andy Kessler’s site:
http://www.disco-tech.org/2006/12/embrace_the_deficit.html
__________________________________________
Readings /
Forbes Sneak Peek 2007
http://www.forbes.com/2006/12/09/2007-predictions-sneakpeek_cx_pm_sp07_land.html
Qualcomm Sees
Stronger Demand For Cellphone Chips Than Expected
http://online.wsj.com/article/SB116676166832757622-email.html
The Elves are Computerized
http://www.wired.com/news/technology/0,72339-0.html?tw=wn_index_1
Deficit Analysis Is A Two-Handed Job
http://article.nationalreview.com/?q=MTQ5MWZhMzVkYzc5MzBiYzM1YzlmZGI0MmJkZjE5NzY=
How Bell Labs Missed The Microchip
http://www.spectrum.ieee.org/dec06/4749
AMD
Opens Lab In Redmond
http://www.edn.com/article/CA6401982.html?partner=enews&nid=2019&rid=2052959400
Tiny
Device Stores Light
http://www.technologyreview.com/BizTech/17936/
IBM
Claims Photonics Speed Record
http://www.eetimes.com/news/design/showArticle.jhtml?articleID=196701466
Cypress
To Set Up $50 Million Solar Fab In India
http://www.eetimes.com/news/latest/showArticle.jhtml?articleID=196701388
Samsung
Claims 3-megapixel Image Sensor For Phones
http://www.eetimes.com/news/latest/showArticle.jhtml?articleID=196701437
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