Rakesh Bhandari bhandari at Princeton.EDU
Sun Mar 12 08:42:24 PST 2000

>Rakesh Bhandari wrote:
>>You breakdown theorists out there can all wait for a crash, I think the
>>question is how we are going to make the most out of the new vibrant
>>American technological capitalism, e.g. questions about genetic privacy,
>>the unemployment effects of automation, the Lessing questions about
>>architecture, the encouragement of R&D into and adoption of most eco sound
>>tech, etc.
>Hmm, there's a saying on Wall Street about when the last bear becomes
>a bull, the hour is getting late....

Oh, I was just kidding, Not a bull at all; still a member of the Party of Catastrophe.

Yet though we are suffering stagnant global market conditions--partially a result of loss of effective demand from govt fiscal austerity--it should be pointed out that such conditions are much less an impediment to the rapid adoption of new technology when capital goods are rendered obsolescent quickly, as is the case with computers and semiconductors.

As I have already noted, those slow market conditions also make the need for rationalization more acute--it's obvious that exports can't fully provide effective demand eliminated by fiscal austerity. To some great extent profitability depends on the assimilation of latest technology. Exceptional profits may largely be transferred to advanced machine maker since this allows first assimilator not to lose much profit or ground in a slow growing global market. And these advanced producers of capital goods are concentrated in the US indutrial structure (which has gone through an enormous shake out) and well represented in the NASDAQ.

So for reasons of rationalization and turnover in a slow growth global economy, I would expect some absolute and much relative gain for the more solid tech companies in the NASDAQ perhaps even if we move into a global depression.

Which is not to say a bubble can't be formed out of this tech. With an overaccumulation of capital, it seems quite likely that some sector will enjoy overexuberance.

Yours, Rakesh

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