Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
AM EST Monday, August 28, 2006: Are we sliding into
a recession? No one knows. Predictions range all over the place. Housing has
buoyed the US economy -- from the frenetic building of new houses to the frenetic
spending of mortgage money squeezed out of old houses.
Defined broadly, the real estate sector has accounted for 44 percent
of jobs created since 2000. The real estate sector employs more than one
in 10 American workers. The weekend's Economist ran a piece:
IF YOU could
watch just one indicator to gauge America's economic prospects over the next
few years you should pick house prices. A year ago most economists thought
that average prices were unlikely to fall across the nation. Now many of them
have begun to worry about the consequences of falling prices for America's
economy. Figures out this week from the National Association of Realtors show
that average home prices barely rose over the past year, compared with annual
growth of around 15% in mid-2005. In some parts of the country, prices
are already falling. Adjusted for inflation, the average home is worth less
than it was a year ago.
boom has been the main engine of America's economic growth in recent years.
Indeed, it is the main reason why the American economy held up better than
expected after the stockmarket bubble burst at the start of the decade. Since
2000 the real wages of most American workers have barely budged, yet surging
house prices have allowed consumers to keep spending. Over the past five years
the total value of American homes has increased by more than $9 trillion,
to $22 trillion. These gains helped to offset both the slide in share
prices and feeble wage growth.
This is the
biggest bubble in American history: In real terms home prices have risen at
least three times as much as in any previous housing boom. In the past,
average nationwide house prices have experienced year-on-year declines for
the odd, isolated month, but they have not fallen on a sustained basis since
the 1930s. However, most states have seen prices drop at some time in the
past three decades. Since the housing market is looking bubbly in more states
than ever before, prices could simultaneously fall in enough places to give
America its first nationwide price decline since the Great Depression.
On the surface
America's housing boom looks more modest than booms elsewhere. Since 1997
average prices have doubled, compared with a gain of almost 180% in
Britain. But the economic consequences of a bust could be more severe, because
the economy has become so addicted to rising prices.
The boom has
lifted the economy in three ways: it has boosted residential construction;
it has made people feel wealthier and so encouraged them to spend more; and
it has allowed home-owners to use their property as a gigantic cash machine,
taking out money by borrowing against their capital gains. Merrill Lynch estimates
that the three together accounted for more than half of America's total
GDP growth last year. Counting construction, finance and estate agency, the
housing boom has also been responsible for one-third of all jobs created
since 2001. If house-price rises level off, GDP growth could dip below 2%
in 2007. If prices fall, expect a steeper slowdown.
If house prices
do slide, the Federal Reserve will probably slash interest rates so as to
save the economy from recession. But the Fed's ability to do this would be
limited if inflationary pressures remain strong. And it would surely be wrong
for the Fed to support the property market when a slowdown in spending is
part of the rebalancing America needs to increase its saving rate. The Fed
saw off a fall in spending at the start of this decade after share prices
tumbled. To do the same again could damage the long-term health of the economy.
The tech bubble
left behind a modern capital stock that continues to yield productivity gains.
In contrast, the investment stimulated by a property boom does little to boost
long-term growth. Expensive houses merely redistribute wealth to home-owners
from non-home-owners. Worse still, the boom has diverted resources away from
productive sectors and caused households to save less, exacerbating America's
economic imbalances. It is surely better for Americans to start saving in
the old-fashioned way by spending less of their income rather than relying
on rising asset prices. The party has been fun; but it has to end.
Vision (ISV) announces FDA Acceptance of New Drug Application.
InSite Vision today announced the U.S. Food and Drug Administration has accepted
for filing and comprehensive review, InSite Vision's NDA for AzaSite (azithromycin
1% ophthalmic solution), indicated for the treatment of bacterial conjunctivitis.
The NDA contains data from two phase 3 clinical trials in which 698 patients
were treated with AzaSite. Data from these studies demonstrated that when AzaSite
was administered twice daily on the first two days, then once daily on days
3-5, it provided clinically and statistically significant improvements in clinical
resolution of symptoms, and bacterial eradication compared to placebo, and was
equivalent in clinical resolution and bacterial eradication when compared to
tobramycin administered four times a day.
S. Kumar Chandrasekaran, Ph.D., InSite Vision's chief executive officer stated,
"Today's announcement of the FDA acceptance and review of InSite Vision's
NDA is a significant milestone which brings us one step closer to achieving
our ultimate goal of the commercialization of our lead AzaSite product in
expected, this is good news. InSite's stock is lagging because its management
dumbly promised a marketing deal with a big pharma and hasn't delivered. I remain
confident it will deliver. Meantime, at $1.61, InSite's market cap is
only $137 million, low for a company about to have an FDA-approved drug
with serious real-world demand.
your forwarded emails. True story: A dear friend sent me an "analysis"
of his girlfriend's family. It wasn't kind. I replied with housekeeping on his
upcoming trip. Without checking, he forwarded my housekeeping and his
"analysis" to his girlfriend. Big mistake. She is now mightily
miffed -- justifiably so.
1. Be careful what you write in emails. Always assume the world and his brother
will see your emails.
Be careful with emails you forward.
3. The telephone remains the best medium for sensitive material. Most people
don't record their conversations.
spyware: My DSL line was crashing. The nice technician said it might
be spyware. I should load Microsoft's Windows Defender. I did. I had
no spyware. Still, it's not a bad idea. You download Defender rom Microsoft
here. Once installed it will run and tell you if you have any
nasties. Once that's done, go into Tools/Options and uncheck "automatically
scan my computer" and uncheck "use real time protection". That
way it won't run all the time and slow your PC down. You should run Defender
and your virus protection manually once a week.
Eat less. Live longer. Cutting calories may slow down the aging clock
as well as peel off pounds. For more, click
always the cable: When PC things go awry, check your cables. Sometimes
they just go bad. Jiggling sometimes works. Replacing them always works. When
wiring houses with low voltage cables -- such as Ethernet and coaxial (for video)
always install twice as much as you'll need. You'll need them. I promise.
DSL is far less reliable than cable TV broadband: My
telephone company DSL line is always busted and slow. My cable modem is always
up and always fast. I know there are readers with reliable DSL lines. Given
the choice, always choose a cable modem, even if it's more expensive.
You get what you pay for.
about your PC? Shoot your cats and your babies. On
Thursday, I made fun of Pawsense, keyboard protection software. A reader
One of our beloved
cats, Boo, who just passed away, would spend hours finding a nice warm place
to nap on. Unfortunately I would find her often sleeping on one of our IBooks.
One time, I could never reboot the machine. I brought it over to the genius
bar at Apple and they told me the mother board was fried and it wasnt
worth the repair costs to fix it.
If you have
cats, turn off the laptop when done. If you have a two-year old boy, keep
him away from any keyboard. Two-year olds love to pick off the keys. Ive
been over at the Apple store about three times now for them to replace keys;
good thing, they are nice about it and dont charge. Back up, back up,
back up. I had to pay Apple $75 to move all my data over to another IBook
after the last mishap.
airport security check-in procedures:
Kinda puts the fun back into flying.
The US Tennis Open starts officially