[The following was posted Friday evening, a slight departure
from the normal routine.]
About two months ago, Sun Microsystems co-founder, Bill Joy,
had a rather heavy piece in Wired magazine laying out his vision
for the role technology would play in our future. Since then Joy,
and others, have written countless op-ed pieces. In a nutshell,
according to Joy the future is bleak. And guess where your
editor comes down?
I have wanted to address this issue for some time but each week I
put it off. Well, it can wait no longer.
So what will the next 100 years be like? A “century of danger”
or a “century of opportunity?” Joy says one of danger. The
“illimitable power” of technology could destroy us. His position
is best laid out by columnist David Ignatius.
“What will kill us, (Joy) argues, is the very essence of our
culture, our yearning for knowledge and our democratic
spirit…(But) more cleverness doesn”t solve the problem. The
cleverer we are the bigger the problems we create. And more
democracy doesn”t solve the problem, because in an Information
Age, “giving everyone access to this (knowledge) – given that
there are crazy people out there – only makes the problem
worse.”
Joy describes a future where biotechnology will create pathogens
that can destroy life. And nanotechnology will create tiny
weapons that can subvert existence; robotics will create
machines that will turn humans into slaves and then crush them.
As Joy states, “What”s the risk if we put illimitable power in
everyone”s hands, including delusional power?” You know the
answer.
So what to do? Well, we need more, not less, government. And
therein lies the source of conflict. Certainly, an intrusive
government flies in the face of Republican ideals, for starters.
Countless theorists have rhapsodized about this glorious New
World, complete with unfettered borders and boundless
opportunities. The advances in fields like medicine will be
stupendous, no doubt. But who the heck is going to police this
techno-weird world? Who is going to prevent the bad guys from
destroying us?
Today, we live in a world where every scuzzball will soon have
the ability to cause massive harm, and we aren”t just talking
tinkering with a power grid.
And you know this whole debate about taking away some of the
freedoms that the new technology was supposed to give all of us
will grow vicious. Right now, the debate extends to the issue of
a national missile defense (NMD). I address many of the
specifics in my ongoing series in “Hott Spotts” which I urge you
to read. Fundamentally, it boils down to whether or not there is a
threat that we need to shield ourselves from.
I was watching “Crossfire” the other day and Congressman
Barney Frank, clearly the most obnoxious individual ever to
walk the hallowed halls. When asked about the possibility of a
missile strike from a rogue nation like Iran or North Korea,
Frank said, “I don”t think they (the leaders) are suicidal. And I
don”t think they are lunatics.” Frank also added that he didn”t
feel we should spend $60 billion or more on a system unless we
knew it would work. This is all part of the debate.
For a more intellectual look at the side taken by opponents of
NMD, there was an op-ed piece by Michael Oreskes in the New
York Times.
“What frightens some analysts is that a shield against a nuclear
attack on the U.S. would make Americans believe they are safe
and thus help lift from their leaders the pressure of fear, which
helps motivate the world”s one superpower to work for continued
order and safety in the world.”
Sure the above may sound good but what does it all mean? Is
our government supposed to leave us vulnerable to attack when
we all know that eventually the technology will exist to cut down
a limited strike? If we are developing nanorobots, the size of
pinheads, I think we can learn how to shoot down a missile.
[Again, Hott Spotts addresses, and will address in the coming
week, more of the specifics, including the decoy issue.]
Yes, it”s a debate of titanic dimensions. And I”ll offer you a
conclusion I guarantee you won”t find elsewhere.
Opponents of NMD correctly say that the more immediate threat
the U.S. faces is from terrorism; where a nut walks into a city
with a suitcase bomb, or, a rogue nation sends your basic cargo
ship to Los Angeles or New York and detonates it in the harbor.
Why then would a lunatic go through the very public act of
preparing a missile and then launching it?
Well, if we don”t have a defense, why wouldn”t they go through
with it? Why should we assume that every world leader for the
next millennium has half a conscience? This week alone you
saw two more instances, in Chechnya and Sri Lanka, of suicide
bombers trying to make their point.
No, here”s what you need to think about. Without a shield, if one
missile hits one of our major cities, that”s the end of America as
we know it. The American people may understand a stealth
biological or chemical attack on the New York subway system.
But they will never forgive a government that had the tools to
protect them and didn”t.
Microsoft
And tied to the above discussion in a tangential way is the issue
of Bill Gates and Co. It”s easy to say you don”t want
government to be involved. Hopefully, however, I have laid out
a scenario or two where we want them to be. On the issue of this
case, Microsoft screwed up royally. Some say, so what if they
were arrogant and experts at hardball? They made a decent
product at a fair price.
But clearly Microsoft broke some rules and, when confronted,
they opted not to compromise.
But don”t for a second think I”m taking the side of the Justice
Department. Janet Reno said at the press conference following
the Judge”s ruling, “This is an outstanding example of the legal
system at its best.” Coming from a woman who, in her obstinate
refusal to properly investigate the Clinton White House, has
carved out her niche as the worst attorney general in U.S. history,
a truly incredible statement.
No, to me this whole case is moot anyway. Of more importance
are issues like the one where Gateway and AOL are teaming up
to create a series of Internet appliances – like a countertop device
and a Web tablet – that don”t use Windows or Intel.
It”s sad to see Microsoft”s employees (as well as the surrounding
businesses they support) suffer because of the uncertainty (of
course, most of them don”t need our sympathy). But many of them
could be seeking employment elsewhere down the road anyway
because I, for one, believe that Microsoft”s glory days are
largely over.
And then there is always the appeals process and the chance that
the above observations, themselves, could be moot. And add to
that the fact that I need more time to figure out my final
position!!
Wall Street
While there was a dearth of important economic data this week,
save Friday”s tame Producer Price Index, both the stock and
bond markets basically treaded water after the fireworks of the
previous week. The Dow fell 180 points, 1.7%, to 10614. The
Nasdaq rose about the same amount to the 3874 level. And, in
keeping with the light activity (trading on Friday seemed non-
existent), I will save my ammo for next week when figures on
retail sales and consumer prices should help confirm whether or
not the emerging trends are in place; namely enough of a
slowdown in economic activity which, in turn, would allow the
Federal Reserve to hold off on raising interest rates any further
when they break bread on June 27-28.
For now, however, I”ll make do with a repeat of some past
thoughts. If the economy is really slowing down, the frothy
earnings expectations for the second half of 2000 into 2001 will
be hard to meet. Yes, a soft landing is a positive occurrence for
stocks and bonds but it still means that, in the case of the Nasdaq
in particular, those companies which sell at outrageous multiples
today could become even more outrageously overvalued if their
earnings growth slows.
On the other hand, if the market takes off and the wealth effect
returns in force, forget it, Greenspan and Co. will have to get
back aboard the rate train (assuming they had contemplated
jumping off for a spell later this month).
And lastly, if the Fed has induced a hard landing, look out below.
But in reality, it is simply too early to tell what scenario is going
to unfold. In the meantime, I agree with CS First Boston”s
Christine Callies. The markets should “tread water until price /
earnings multiples get down to the point where there is a little bit
of headroom.” We”ve had our bear market in the sectors that
deserved it. I”m satiated for now.
Street Bytes
–Procter & Gamble disappointed for the second time this year
when they issued another lousy profit outlook. The keepers of
the Dow Jones index should just call them up and say, “Get outta
here.”
–Watch the $66 level for Cisco. It”s having trouble getting
through it. [Courtesy of the Junior Technicians of America
Society]
–The European Central Bank raised interest rates a larger than
expected 50 basis points. The ECB, in addition to trying to prop
up the euro a bit, is attempting to reign in incipient inflation.
The ECB sets an inflation target for the Euro-11 of 2% and it”s
currently at 1.9%. Meanwhile, consumer confidence within the
Euro community continues to rise.
–Japan”s economy grew at a 2.4% clip in the first quarter after
two consecutive down ones. Rumors persist that the Bank of
Japan will shortly abandon their “zero” interest rate policy and
raise rates in an attempt to convince business leaders that it”s
reform or ship out. Should the BOJ do this, the markets could
get quite chaotic.
–eBay is under investigation for fraudulent bids, specifically the
practice of “self-bidding” where you get all of your relatives, or
your own split personalities, to place fictitious bids on that 1966
GI Joe doll. Then some poor sap shells out $6,495 for it and the
relatives go off on a cruise to celebrate their good fortune.
Russia
The Russian press described last week”s meeting between
President”s Clinton and Putin as a “modest” summit. True, there
was nothing wrong with getting together as they did. Clinton
just won”t have an arms control legacy to post in his presidential
library, incredible when you think about it. 8 years of a cozy
relationship (at least the 7 with Yeltsin) and zippo, nada. And in
Moscow, Putin trumped Clinton by proposing a joint defense
system. Then Putin went to Rome to plead with the Pope for his
help. And next month, the energetic Vladimir travels to North
Korea as he continues his shrewd effort to drive a wedge
between the U.S. and our allies. Per my leadoff discussion of
this week, columnist Jim Hoagland commented on Putin”s trip to
Rome.
“The relatively low level of public interest in the Putin visit to
Italy reflects the continuing decline of the mobilizing force of
politics and diplomacy in societies more taken today with the
Internet than with ideology, more suspicious of the WTO and the
World Bank than of armies of empire.”
Meanwhile, the war in Chechnya rages on. Even Russian
Foreign Minister Ivanov conceded the conflict could last for
years as this week Putin announced that Russia would take direct
control rather than wait for a political solution. [Of course
Chechnya is still formally part of Russia so they have every right
to do so.] And Moscow can”t be happy that international
watchdog groups, Human Rights Watch and Amnesty
International, released reports cataloguing Russian atrocities.
Even financier George Soros, ever active in Russian affairs,
weighed in:
“The brutality of one side feeds the brutality of the other side, so
it is a kind of vicious circle descending into the inferno that
Chechnya has become.”
Japan
Two weeks ago I mentioned that Prime Minister Mori referred to
his nation in terms which hearkened back to pre-WW II days.
This past week he used the term “kokutai,” or “national polity,”
again, an archaic term used in decades leading up to WW II
which connotes a Japanese nation-state ruled by a divine
emperor. Why does he keep saying these things? The
Washington Post offered the following in a lead editorial:
“The remarks show the power of nationalist feeling in Japan; and
despite the prime minister”s strenuous efforts at damage control,
(ed. They weren”t that strenuous) they show that this nationalism
includes nostalgia for the mystical chauvinism that drove Japan”s
expansionist drive into Asia and ultimately its war with
America.”
The July G-8 meeting is being held in Tokyo, just weeks after
Japan”s parliamentary elections. The nation is struggling to
retain its pre-eminent position in Asia and it”s times like these
that the art of diplomacy (as practiced by a Kissinger, not an out-
of-her-league Albright) is most needed.
Elsewhere in the World
North Korea: The North is not slowing its long-range missile
program, even though at the urging of the U.S. they haven”t
tested recently. So this begs the question, at next week”s summit
between North and South Korea, does North Korea”s Kim Jong-
Il simply “pocket concessions and keep his military threat” as
strategist Robert Manning put it? The North announced on
Thursday that they are suffering through another devastating
drought. And how much of the massive aid that the U.S. and
others actually donate ends up in the hands of those who truly
need it?
When Putin visits Pyongyang next month, I have to believe that
he will cut some kind of deal over the North”s missile
technology. Though we”ll be kept in the dark on this.
Iran: Two big stories this week involving Iranian terrorism.
First, U.S. intelligence appears to have the goods on Iran and
their role in the Khobar Towers bombing in Saudi Arabia (1996)
which killed 19 U.S. servicemen. Second, the U.S. is attempting
to confirm the veracity of the Iranian defector”s story, as
presented on “60 Minutes,” that Iran, not Libya, masterminded
the Pan Am 103 bombing. Should the latter be proved, President
Clinton has to act in some way against Iran. At the same time,
however, we have to be careful not to turn the reformers who
now hold a majority in Parliament, against us.
Israel: Prime Minister Barak is once again in trouble at home as
Parliament gave preliminary approval to call for early elections.
Not exactly the vote of confidence Barak needs to deal from a
position of strength during the peace negotiations. However, 2
or 3 more votes are needed before elections can be called and a
final decision may not be made for months.
Greece: The U.S. has ruled that Greece is ineffective in the fight
against terrorism. Greece was, needless to say, torqued off. Then,
just a few days later, a British diplomat is killed by terrorists on
his way to work in Athens. Greece now admits they have a
problem. [20 people have been killed by the suspected terrorist
group, ”November 17,” but over the years there have been zero
arrests.] Greece is slated to host the 2004 Summer Olympics.
Unless they develop a comprehensive security plan, soon, they
can kiss that goodbye.
Montenegro: This Serbian province is about to blow. The #2
leader was assassinated and Milosevic seems to be preparing to
formally move in. Should this occur the West would have to act
forcefully.
South Africa: Local journalist Charlene Smith writes that in 4
years the average life expectancy in the nation will be 35 years.
As I noted before, President Thabo Mbeki refuses to address the
AIDS problem head on. Another issue that Ms. Smith writes of
is the staggering incidence of child rape in the country, a trend
which is accelerating, spurred on by the myth that a man who
rapes a virgin will rid himself of HIV.
Congo: Now this is totally insane (as if the above wasn”t).
Rwanda and Uganda, two of the 14 or so nations that have
“peacekeepers” in Congo, have been battling it out all week.
And a study released at week”s end says that over the past 22
months, the fighting in Congo is responsible for some 1.7 million
deaths. Absolutely staggering.
Fiji / Solomon Islands: The unrest in places we view as paradise
is just another example that in this CNN / Internet world we live
in, it”s easier to recognize just how much we hate each other.
Peru: Evidence emerged that President Fujimori used henchmen
to try and ensure his recent reelection. Journalist Fabian Salazar
had video evidence of election fraud during the first round of
voting. Salazar was then visited by 4 armed men who used a
chainsaw to cut his hand and arm, demanding that Salazar
divulge his sources. His screams alerted building security and
the attackers fled. Salazar then left the hospital where he was
being treated and fled the country.
Trade: Prime Minister Amato of Italy told Jim Hoagland,
“Intellectuals in France and elsewhere fear that through
globalization the U.S. is forcing a kind of uniform view of the
world and of society on all other countries…It becomes a
sophisticated version of Yankee go home.” Yup, the world
doesn”t always have to buy American.
This Week in Politics
–Bloomberg News released a poll showing George Bush with a
44-40 lead over Al Gore (Ralph Nader received 4%, Pat
Buchanan 3%). Separately, Bush laid out some proposals for
ending Washington gridlock as well as softening the current
atmosphere of bitter partisan warfare. The main goal would be a
biennial budget process, hopefully taking the now annual slugfest
out of election year politics. For his part, Gore”s supporters
continue to label their man, “the most influential Veep in
history.” I”m still trying to figure out how you calculate this.
Gore”s staff should clearly be worried about Ralph Nader. Nader
is polling 5% in California, a figure that could kill any chance
Gore has of winning the White House.
And Gore also has to be concerned about the memo from FBI
director Louis Freeh that has emerged concerning the
investigation into Gore”s White House fund-raising activities.
Freeh urged Attorney General Reno to appoint an independent
counsel. Reno, of course, denied the request.
Finally, there is the growing issue of Gore”s missing e-mails.
Yes, while the public may be tired of all the investigations, this is
Al Gore, a man not “loved” like Bill Clinton is among his hard-
core supporters. Gore will be damaged.
–In the New York Senate race, a Daily News poll has Hillary
ahead of Rick Lazio, 46-42, while a Quinnipiac poll scores it
dead even at 44-44. Of utmost concern to Hillary”s campaign
staff should be the 37% “unfavorable” rating she received in the
News poll, an exceedingly high number. [Lazio”s “unfavorable”
in the same poll was 12%, but, to be fair, he simply isn”t known
enough for many in the electorate to have formed an opinion.]
–And in New Jersey, if you watched the national news this week
you now know why I said the Democratic Senate primary race
had national impact. Certainly, former Goldman Sachs CEO Jon
Corzine captured his share of attention with his $35 million
primary campaign, one in which he ended up defeating former
Governor Jim Florio by 16 percent. Corzine now goes up against
Republican Congressman Bob Franks. And guess what? Both
men attend the same church!
I will have much more on the second phase of the campaign in
coming weeks but, for now, let me just say that Corzine, under
existing laws, has every right to spend his own money. But it”s
one thing to flood the airwaves with image ads. That”s not
“buying” an election in the classic definition of the term. No,
what bothers me is Corzine doling out $20,000-$30,000 for every
little county organization in existence to yes, in effect, buy votes.
And wait till you hear what Corzine proposes to do with your
money! Watch your wallet.
Random Musings
–Technology, Part XV: Thomas Friedman had the following
observation.
“Walking through the casino in Las Vegas I was struck by all the
shouting around the craps tables – strangers high-fiving each
other in victory and consoling each other in defeat. You can”t do
that gambling online. Las Vegas is thriving today precisely
because it is such a tactile place, so full of people rubbing against
people – at shows, in casinos, in fantasy hotels and in giant
swimming pools. Las Vegas is the future because it”s the past.”
And Friedman commented on some ad copy he saw. “I phone, I
fax, I surf at the same time – because I can.” But who wants to?
–Technology, Part XVI: Writing in Newsweek”s ”My Turn”
column, bike shop owner Patrick Vala-Haynes wrote:
“Good retail business is a dialogue, not the punching of a few
keys and the exchange of an address and a credit card number.
Those little moments of contact that we brick-and-mortar shops
can offer are part of our social contract. Maybe we are meant to
slow the world down.”
–Another Bloomberg News poll showed that 63% believe now is
a good time to buy a car and 57% said it”s a good time to buy a
house. But 56% said they live paycheck-to-paycheck. And 9 out
of 10 couldn”t give an approximate level for the Dow Jones.
–Archaeologists discovered submerged cities from the 7th or 6th
century B.C. in the Mediterranean. One is believed to be
Herakleion, mentioned by Herodotus in 450 B.C. Herakleion,
and the others, are believed to have fallen victim to an
earthquake….that or a Chinese dam project gone terribly awry.
–The Supreme Court ruled that grandparents don”t have a special
right to see their grandkids and that it is the fundamental right of
the parent to make those decisions.
–The EPA has banned a common pesticide, Dursban, which can
be found on flea collars, among other things. Supposedly,
children could suffer from exposure to the chemical. But no
word on the impact on dogs! Geezuz.
–Well, I may be showing my ignorance but on Friday, the Wall
Street Journal had an article using the word “febrile.” I can”t say
I have ever used this word. Hopefully, I”m not the only one who
didn”t know that febrile means feverish. And while we”re at it, I
just noticed the word “febrifuge,” a medicine for relieving fever.
Now I have a headache.
–Seen at the Lakers-Pacers game, Tony Dow! Aw gee, Beav…
–In every clip you see of John Rocker he”s on his cell phone.
Now who in their right mind would want to talk to him?
–A study of “disability-adjusted” life expectancy places Japan
1st at 74.5 years. The U.S. is 14th at 70. Sierra Leone is last at
26…as in over there, I”m already dead 16 years. Basically the
whole bull market!
Gold closed at $284
Nymex Crude Oil, $30.20
U.S. Treasury Yields
1-yr. 6.21% 2-yr. 6.55% 10-yr. 6.13% 30-yr. 5.90%
Returns for the week, 6/5-6/9
Dow Jones -1.7%
S&P 500 -1.4%
S&P MidCap -1.4%
Russell 2000 +2.0%
Nasdaq +1.6%
Returns for the period, 1/1/00-6/9/00
Dow Jones -7.7%
S&P 500 -0.8%
S&P MidCap +11.4%
Russell 2000 +3.6%
Nasdaq -4.8%
Bulls 48.1%
Bears 34.3% [Source: Investors Intelligence]
Brian Trumbore
Note: Next week this column will be posted at its regularly
scheduled time, by noon on Saturday.
