What would have happened without GM?

The story goes that the defense budget was cut by 20% at the end of the 1950s. A lot of engineers and radio technicians saw themselves without jobs or without great prospects, and this was the foundation of Silicon Valley.

What would have happened if we hadn't saved General Motors? We would have had all this manufcturing open for contracts. What would have happened if as a consequence, Tesla was able to buy three automovile plants at rock bottom prices? It might have been a great story for the US automovile industry.

Philip Auerswald
Economist

An older Perspective

A long time ago, the Gold Standard ruled. It has been praised again as the answer for current issues.

But once upon a time, England left the Gold standard, and bankers rushed to reinstate the precendent in the land of Money.

The story goes that bankers feared that if interest rates were not tied to Gold, they would be manage by politicians:
"Sober finance might be held hostage to political expediency, giving a bias towards inflation and paper money"

"Keynes...is flirting with strange gods and proposing to abandon the gold standard forever and to substitute a 'managed' currency...it is better to have some standard than to turn our affairs over to the wisdom of the economists for management."
- J. P. Morgan was warned.

Trying to bring England back to the Gold standard, bankers in the US kept interest rates extremely low. This might accelerated the bubble that ended in the crash of 1929. So similar. So close to recent events.

And the story went. Trying to push British currency up to match the previous honored place of an overvalued currency, it destroyed the British industry which needed cheap currency to be competitive in foreign markets.

1926 was a tumultuous year in England's history. The old bankers had no choice than to "returned to their natural habitat: the shadows. Playing duets at their pianos while strikers and police clashed in the streets" of London.

Micron, ARM, and the cycle GiG

I was writing this a while back trying to bring some sense to Intel's prospects at this point, and Otellini announced his retirement later that week.

There is not much to add. There is always tomorrow, and it is all we have to wait for.

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It probably still has the edge of the pure science for the next wave of computing chips.

Sony Chocolates

It was a long time ago that Sony sued a chocolate maker for its name. It was a landmark case driven by the concept of brand dilution. The fact that nobody could find Sony in any dictionary, gave Sony the rights to its name across the planet way before global was a business adjective. Back then, Sony was a mere transnational.

Sony was the first Japanese company to sell stock in a US market. It conquered the Americas and later boasted of their disciplined character when raising debt.

Fast forward at least 30 years, and a Sony debt offering causes the stock to plunge. The markets have reacted as if a wet cat just jumped on the table.

It is convertible offering for common stock at a premium price in 5 years. The problem is not a subtle matter of the right capital-debt ratio that might not serve their wise investors well. It is one of those rare offering where every possible outcome is bad. Without anywhere to look, investors headed for the exit of the house of mirrors.

If Sony gets in serious trouble, getting common stock for debt is like loosing the whole investment. Debt gets serviced first.

If Sony reaches a premium in 5 years, and the debt is converted, it would be an additional 15% dilution for the stock. So the stock plunges.

If Sony does revamps its facilities and comes out ahead with "taking names" products, it might be better to keep the debt given the high yield it will carry instead of an unpredictable and diluted stock price.

A good place to start might be to get a good read on the market for their offering before sitting at the gambling table of the consumer electronic tournament trying to take back their old global spot.

Geo

Geo-politics is inserting itself in the Thanksgiving Turkey.

Among the most cunning observations is the melting of the Artic cap. Preventable, human made, or precognized in tabular scriptures, the Artic cap is breaking.

The opening ceremony occurred a few years back at the height of Russian growth. Seen as a transcient nationalistic act by most, it was explained by a few as the begining of a race to a new world. It was a simple event: a Russian submarine placed the Russian flag on Artic underwater soil which was accessible for first time in thousands of years.

The most relevant prediction is the raise of Canada from Backyard neighbor to Artic power with new direct commerce routes to very developed markets. It is like the discovery of a new route to the Indies except this time the walkway might be private.

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I think the new edition of Smithonian copied from this posting; they just added a page to each sentence.
March 25th, 2013.