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- THE FRIDAY LETTER -
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for friends and subscribers)
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| http://www.gilder.com/ | Issue 310.0/September
14, 2007
SIGN-UP A FRIEND FOR FREE!
HEADLINES:
- The
Week / Mortgage Meltdown
- Friday Feature / Intellectual
Property & Patent Power
- Friday Blogger Bonus / What are the Limits of EZchip?
- Readings /
SPECIAL OFFER
|
|
The
Week / Mortgage Meltdown
Ashby Foote, Gilder Telecosm
Forum (9/7/07): When you
hear Wall Street moguls haranguing the Federal Reserve to bail out the little
guy, you can rest assured there are some big guys in dire straits. Such is the
case today. The convulsions we are witnessing in the stock and bond markets
center around serious problems in the housing and mortgage debt arena.
It's a "Wonderful Mess." The mortgage business has changed a lot
since Jimmy Stewart as George Bailey struggled to keep his Building & Loan
afloat in the 1946 classic film It's a Wonderful Life. Today, mortgage lenders
still use apple pie slogans like, "Proud Sponsor of the American
Dream" and "Our Business is the American Dream," but the old
days of George Bailey are long gone.
With sophisticated computer programs, mortgages today are pooled, sliced
and diced, securitized and sold across the globe to pension, mutual fund and
insurance portfolios. The appeal of this financial engineering is
diversification and the increased safety that is supposed to result.
Alas, add some complacency from rating agencies and lenders and some
leverage from hedge funds and you have the recipe for today's turmoil.
What becomes painfully obvious when one gets past the headlines and
financial jargon is the simple truth that for the past half-decade or so, too
much capital has gone into residential housing, resulting in too many units and
lots of folks owning more home than they can afford. For them, the American
dream has quickly turned into their worst nightmare.
The macro-economic term for this predicament is "misallocation of
capital" on a grand scale. Adjustments are inevitable, and though painful,
they are a necessary feature of a market economy. Some homeowners, mortgage
companies and hedge funds will be closed out. For some homeowners,
restructuring may be a preferred solution.
There are two silver linings to this dark and foreboding cloud….
Read the complete article in The
Clarion-Ledger:
http://www.clarionledger.com/apps/pbcs.dll/article?AID=/20070909/OPINION/709090321/1285/OPINION02
George Gilder,
Gilder Telecosm
Forum (9/9/07): Ashby, Thanks for the most
lucid and trenchant look at the sub-prime debacle that I have seen. Through
scores of Fanny padding programs, interest deductibles, risk aggregation and
spreads, the US achieved the miracle of over 70 percent home ownership, never
before attained by any economy. In their kitchens and garages, bays and ebays,
leveraged and cantilevered extensions, those homes harbored and capitalized
millions of businesses. But there was a cost. You point out that the cost can
be sustained by the yield of new technology investment and innovation, already
massively underway across the Telecosm around the world.
The most damaging dimension of the picture is heavy international
exposure. Prevented from buying Unocal and resisted in other direct
investments, the Asians bought trillions of dollars of gerrybuilt securities
that were partly misrepresented. We may well pay a price for this, in a further
decline of the dollar and devaluation of US assets.
To read more posts by
George Gilder and the Gilder Telecosm Forum members, visit http://www.gildertech.com/ and log on today.
|
The Gilder
Telecosm Forum |
Friday Feature / Intellectual
Property & Patent Power
ZDNet, “House Passes Patent Reform, as
White House Voices Objections” (9/7/07): The House of Representatives handed the
technology industry a big win by passing the Patent Reform Act. The bill
changes the way damages for patent infringement are calculated, InfoWorld
reports.
Under the current scheme, damages are calculated based on the value of the
entire product containing the infringing invention. Under the new law, juries
and courts could assess damages just on the value of the infringing piece …. READ
ON: http://government.zdnet.com/?p=3391
Gilder Telecosm
Forum
Member (9/12/07): It seems
that there is an assault on the protection of IP, not too dissimilar from an
unwarranted assault on the rich or using a Sarbanes-Oxley to "fix"
Enron and the like….
While I agree that there can be improvements to the USPTO and the
patenting process, I am opposed to much of this recent reform and court
decisions.
George Gilder, Gilder Telecosm Forum (9/10/07): We’ll be covering this at Telecosm 2007.
________________________________________
Gilder/Forbes Telecosm 2007 | 3:45 pm Wednesday Oct. 17
Intellectual Property & Patent Power: Protecting
the knowledge that defines the Telecosm
Featuring:
-John Thorne, Senior Vice President and Deputy General Counsel, Verizon
Communications
-Marshall Phelps, Corporate Vice President and Deputy General Counsel,
Microsoft
-Vincent Pluvinage, General Manager of Strategic Alliance and Private
Equity Partnerships, Intellectual Ventures
-TBA Microsoft Counsel
Register Today:
http://www.telecosmconference.com/
________________________________________
Friday Blogger Bonus / What are the Limits of EZchip?
George Gilder, Gilder Telecosm Forum (9/9/07): People everywhere want to know. What are the limits
of EZchip (LNOP)?
The Linley Group defines EZ's limits as some portion of the $700M Carrier
Ethernet market, particularly the demand for metro ethernet switches. Yet the
NPU performs generic functions of routing, switching and managing traffic for
Internet Protocol packets and Ethernet frames, which are by no means restricted
to metro slots. These functions have to be performed everywhere the Internet
reaches, from entertainment rooms to Googleplex datacenters, from telco central
offices to enterprise local area networks, from surveillance devices to
satellite links, from automobiles to airplanes, from storage area networks to
medical centers. The current carrier switches are merely the first of the
markets to emerge, but they do not begin to represent the limits for EZchips.
How does Bay Microsystems define EZ’s limits? How about Larry Boucher of
Alacritech?
To find out, log on to the Gilder
Telecosm Forum today, by visiting www.Gildertech.com or register for Telecosm 2007, where EZchip CEO Eli Fruchter will face Alacritech
CEO Larry,
Bay Micro
CEO Charles Gershman, and Andrew Schmitt of Nyquist Capital, on the “The
Critical Path of Fiberspeed Connectivity” panel on
Thursday October 18.
__________________________________________
Readings /
Unnecessary
Rate Cut… On Its Way?
http://www.ftportfolios.com/Commentary/EconomicResearch/2007/9/10/Unnecessary_Rate_Cut...On_Its_Way? [PDF]
Why
Won’t Apple Become a Phone Company
http://www.forbes.com/technology/2007/09/11/apple-iphone-motorola-tech-cx_bc_0911apple.html
AMD
Launches Barcelona
http://www.forbes.com/technology/2007/09/10/advanced-micro-devices-tech-cx_bc_0910semiconductors.html
Patenting The Co-Ed Code
http://www.forbes.com/technology/2007/09/13/women-patents-study-tech-science-cz_cm_0913techwomen.html
The Weekly GTI
http://www.gtindex.com/
Google Bankrolls Prize in Moon Race
http://www.boston.com/business/technology/articles/2007/09/14/google_bankrolls_prize_in_moon_race/
Alcatel-Lucent Shares Sink
http://online.wsj.com/article/SB118966977349126197.html?mod=technology_main_whats_news
Microsoft
Expands Xbox 360 Line in Japan
http://online.wsj.com/article/SB118958477235524945.html?mod=OATE
__________________________________________
FRIDAY LETTER STAFF
Editor: Mary Collins George / mcollins@gilder.com
Research: Sandy Fleischmann / sfleischmann@gilder.com
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