Thursday, June 04, 2009

500th Post!!

Well, to say it's been an interesting journey since I launched the blog is a bit of an understatement.

We'll get the jobs report tomorrow and given the recent trend in data I can forecast the headlines with some accuracy. May's numbers will be bad, but probably "not as bad as expected". April will get a massive revision down, but no one will notice. Unemployment is probably heading toward 9% by the start of the summer and should be in double digits by the end of 2009.

Again, we'll have to watch the games they'll play with the Birth/Death model and look at total unemployment and underemployment (U-6).

The market is either being driven by a very patient trader or someone at JP Morgan really likes hitting the enter button over and over (there's more talk that JP Morgan is buying the market consistently in small but sustained amounts all day and trades particularly heavy at the end of the day - if they were shorting the market this way, Congress would be charging their offices with pitchforks).

This is one of the more interesting ideas I've read recently - despite all of the talk of innovation in the US, in fact, the lack of real innovation was a contributing factor to the current economic downturn.

"With the hindsight of a decade, one thing is abundantly clear: The commercial impact of most of those breakthroughs fell far short of expectations—not just in the U.S. but around the world. No gene therapy has yet been approved for sale in the U.S. Rural dwellers can get satellite Internet, but it's far slower, with longer lag times, than the ambitious satellite services that were being developed a decade ago. The economics of alternative energy haven't changed much. And while the biotech industry has continued to grow and produce important drugs—such as Avastin and Gleevec, which are used to fight cancer—the gains in health as a whole have been disappointing, given the enormous sums invested in research. As Gary P. Pisano, a Harvard Business School expert on the biotech business, observes: "It was a much harder road commercially than anyone believed."

If the reality of innovation was less than the perception, that helps explain why America's apparent boom was built on borrowing. The information technology revolution is worth cheering about, but it isn't sufficient by itself to sustain strong growth—especially since much of the actual production of tech gear shifted to Asia. With far fewer breakthrough products than expected, Americans had little new to sell to the rest of the world. Exports stagnated, stuck at around 11% of gross domestic product until 2006, while imports soared. That forced the U.S. to borrow trillions of dollars from overseas. The same surges of imports and borrowing also distorted economic statistics so that growth from 1998 to 2007, rather than averaging 2.7% per year, may have been closer to 2.3% per year. While Wall Street's mistakes may have triggered the financial crisis, the innovation shortfall helps explain why the collapse has been so broad."

More of the article here....



Anonymous said...

there is no innovation because education is so bad. No kids get into math and science which are the building blocks for technology & biotech. They are more interested texting about the cool youtube they saw of someone crashing their bike into a tree. Until we get some kids out of HS and College the can actually read or write or do some complex thinking on their own we will have little to no innovation. Wait, that facebook/twitter is really helping. ;o)

The Artful Blogger said...

I couldn't agree more. There is almost a disdain for math and science that seems to penetrate our youth at a very young age.

I overheard one of my daughter's classmates say "I don't do math". She's in the 3rd grade - sad indeed.

Anonymous said...

...please where can I buy a unicorn?