JAW Speak

Jonathan Andrew Wolter

Archive for the ‘economics’ tag

Broadband as a driver in social progress and economic development

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Reading time: 3 – 5 minutes

There is an interesting videoconference on Broadband as an economic development driver by Steve Rosenbush, senior Writer at BusinessWeek Online engine.

http://www.iian.ibeam.com/events/mcgr004/14273/index.jsp?autoLogin=false lets you log in. It should be free, although you may need to create an account.

Some interesting tidbits:

  • The US has 94 telephone lines per 100 people.
  • Developing countries may only have 5 lines per 100 people.
  • A 1% increase in phone lines leads to a 3% increase in GDP
  • Nov 2003: 35% of US internet users had high speed access, May 2004: 42%, Dec 2004: 50%, 2005: 53%+

Dr. John Rudledge of Rudlege Capital, LLC (Economic Advisor to Reagan and Bush) talks about what is broadband. He suggests it is a verb, not a noun. It means you’re faster than everyone else. Once the “Pony Express” was broadband, now it is wireless and cable internet, for some it is optical fiber to the desktop. He continues,

“I think of broadband as the Central Nervous System of the economy…. America is not competing for jobs, but capital. Capital makes you productive and allows you to earn a paycheck. We need to learn to compete for capital with other countries in the world who know the importance of telecom capital. … China’s current energy use 20 years in the future (with no conservation) uses more than total world production today. … Because of that impending clash, they are shifting resources from oil and gas industries to IT growth [and efficiency.] … The US is in 16th place in the world telecom speed tables.

Christina Heakart (?) is the Gen. Mgr. of Marketing for Microsoft TV. She points out that the entire broadband revolution is limited to people using PC’s. It’s helped businesses and homes (with PC’s) into the digital age. In 5-10 years broadband will bring it to the TV. We will see the ignition of enormous new amounts of new commerce, new ways to communicate, unite community, and new content. … Bring the TV in as a full citizen to the digital age. TV will become 2-way and no longer 1-way.

Leo Hinderly, Jr (Managing Partner of InterMedia) claims broadband is not available to all and is in fact discriminatory–favoring urban and wealthy areas; rare in rural and poor areas.

Once again, John Rudledge says there is not (or only recently) a broadband policy in the administration. Most pressure for reform has come out of congress.

“5 years ago 40% of telecom equipment was made in the US, now it is down to 20%. R & D is going as well. Because the manufacturing factor is going, the intellectual aspect is getting more and more important. This year [2005], China will make more engineers than America + Germany + Japan.”

Christine advocates the free market to “wave it’s invisible hand” that will allow economic models to emerge for the digital divide to reunite. Most people that are poor don’t have PC’s. They have TV’s but not PC’s. It doesn’t matter if they have broadband in the home if they can’t use it.

About Christine’s point with poor not having PC’s — the open source community in Chicago has been working on creating free machines in exchange for volunteer hours building refurbished PC’s out of donated hardware. I’ve been volunteering there, and I encourage you check out their website at www.freegeekchicago.org With some digging, you can even find some pictures of me, I suspect.

Then they go into a lengthy Q & A where I stopped watching. I’m tired and can use my sleep to arrive at work early and get my laptop to then meet with Chris Perry, CEO and Frank Gruber, blogger extraordinaire (and tech event planner) two fascinating entrepreneurial types.

Written by Jonathan

June 6th, 2007 at 2:46 am

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Liz Ann Sonders’ points to less rosey economic news

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Reading time: 2 – 4 minutes

In a recent commentary article on Charles Schwab, Liz Ann Sonders recently pointed to signs of an impending recession. We’re experiencing an oil price shock, inverted yield curves, and a real estate slump. Three things that, while inconclusive, are not particularly desirable.
Recession Warning Signals

First, the oil price phenomenon:

“Since the late 1990s, oil prices have gone up from $10 to $76 per barrel! With OPEC effectively flat-out producing, the U.S. producing a record low percentage of its own consumption, pipeline problems in Alaska and our imports coming from increasingly unstable regions, a major drop in prices is unlikely. Add the effect of rising interest rates and rising medical expenses, and consumers are now spending 55% of their disposable personal income on “essential” non-discretionary consumption, an all-time record. The massive infusion of liquidity by the Federal Reserve, via 46-year record low interest rates earlier this decade, had been the tailwind offsetting the headwind of rising oil prices.”

So maybe the liquidity we saw in recent years will evaporate. Interest rates are rising, and if home equity stops flowing, consumer spending won’t be able to keep buoying up the economy. Consumers are important too. They account for close to two-thirds of our GDP.

Combine tightening consumer budgets with recent indicators of inverted yield curves. Inverted yield curves occur when longer-term interest rates are lower than shorter-term rates. Historically, these have preceded recessions. Especially a special one where the Fed inverts the curve by raising the fed funds rate above the 10-year Treasury yield. The Fed did this in June. Since the ’70s this happened 6 times and in every case the economy shortly therafter (or already) was in a recession.

“One of the well-watched models for recession predictability [the inverted yields thing I mentioned - JAW] now shows the odds of a recession at greater than 25% based on the degree of inversion (as of Aug. 11) between the 10-year Treasury bond and the 3-month Treasury bill, presently at -0.10 percentage points.”

Past Recession Patterns
Regarding housing, mortgage application volume was down nearly 30% year-over-year as of July 28th. Housing starts? They were down 11% from a year ago. Existing and new home sales? Yes, down too: 9% and 11%, respectively. One could hastily conclude people aren’t opening mortgages with the increasing rates. Or maybe Americans are too greedy and want too much for their homes, so buyers are more scarce. Perhaps. The inventory of unsold homes was up close to 40%.

The impending doom Ms. Sonders predicts, may or may not materialize. Regardless, I want your articles or predictions of the current economy. Please leave a comment below, just click the “comments” link.

Written by Jonathan

September 24th, 2006 at 2:53 am

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