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New Key technology points of Chairman Alan Greenspan's testimony
On CNN earlier today, Lou Dobbs stated something to the effect that productivity gains have increased more in the last 5 years than in the previous 15, thanks to technology (according to Mr. Greenspan). Ironically, it is now the tech companies that are taking the hardest hit. Does that seem strange to anyone besides me?
[link|http://www.federalreserve.gov/boarddocs/hh/2001/july/testimony.htm|
Testimony of Chairman Alan Greenspan]

Federal Reserve Board\ufffds semiannual monetary policy report to the Congress
Before the Committee on Financial Services, U.S. House of Representatives
July 18, 2001

I appreciate the opportunity this morning to present the Federal Reserve's semiannual report on monetary policy.

Monetary policy this year has confronted an economy that slowed sharply late last year and has remained weak this year, following an extraordinary period of buoyant expansion.

By aggressively easing the stance of monetary policy, the Federal Reserve has moved to support demand and, we trust, help lay the groundwork for the economy to achieve maximum sustainable growth. Our accelerated action reflected the pronounced downshift in economic activity, which was accentuated by the especially prompt and synchronous adjustment of production by businesses utilizing the faster flow of information coming from the adoption of new technologies. A rapid and sizable easing was made possible by reasonably well-anchored inflation expectations, which helped to keep underlying inflation at a modest rate, and by the prospect that inflation would remain contained as resource utilization eased and energy prices backed down.
....
Despite the recent economic slowdown, the past decade has been extraordinary for the American economy. The synergies of key technologies markedly elevated prospective rates of return on high-tech investments, led to a surge in business capital spending, and significantly increased the growth rate of structural productivity. The capitalization of those higher expected returns lifted equity prices, which in turn contributed to a substantial pickup in household spending on a broad range of goods and services, especially on new homes and durable goods. This increase in spending by both households and businesses exceeded even the enhanced rise in real household incomes and business earnings. The evident attractiveness of investment opportunities in the United States induced substantial inflows of funds from abroad, raising the dollar's exchange rate while financing a growing portion of domestic spending.
....
In addition, a deterioration in sales, profitability, and cash flow has exacerbated the weakness in capital spending. Pressures on profit margins have been unrelenting. Although earnings weakness has been most pronounced for high-tech firms, where the previous extraordinary pace of expansion left oversupply in its wake, weakness is evident virtually across the board, including most recently in earnings of the foreign affiliates of American firms.
....
The surge in energy costs has also pressed down on profit margins, especially in the fourth and first quarters. In fact, a substantial portion of the rise in total costs of domestic nonfinancial corporations between the second quarter of last year and the first quarter of this year reflected the increase in energy costs. The decline in energy prices since the spring, however, should be contributing positively to margins in the third quarter. Moreover, the rate of increase in compensation is likely to moderate, with inflation expectations contained and labor markets becoming less taut in response to the slower pace of growth in economic activity. In addition, continued rapid gains in structural productivity should help to suppress the rise in unit labor costs over time.

Eventually, the high-tech correction will abate, and these industries will reestablish themselves as a solidly expanding, though less frenetic, part of our economy. When they do, growth in that sector presumably will not return to the outsized 50 percent annual growth rates of last year, but rather to a more sustainable pace.
....
A central bank can contain inflation over time under most conditions. But do we have the capability to eliminate booms and busts in economic activity? Can fiscal and monetary policy acting at their optimum eliminate the business cycle, as some of the more optimistic followers of J.M. Keynes seemed to believe several decades ago?

The answer, in my judgment, is no, because there is no tool to change human nature. Too often people are prone to recurring bouts of optimism and pessimism that manifest themselves from time to time in the buildup or cessation of speculative excesses. As I have noted in recent years, our only realistic response to a speculative bubble is to lean against the economic pressures that may accompany a rise in asset prices, bubble or not, and address forcefully the consequences of a sharp deflation of asset prices should they occur.
New No surprise
Does that seem strange to anyone besides me?

Seems perfectly normal to me. The real productivity gains come from putting the new tech to work in the old guard companies. ERP systems didn't do it themselves but they >did< lay the groundwork for these brick and mortars to take advantage of the web.


Also, some of the newer Supply Chain software...most notably planning software has really helped some of the bigger manufacturing concerns plan production better to minimize working capital levels...this means big changes in the debt levels and inventories these companies keep...significantly improving their turnover...which would directly translate into the productivity figures Greenspan alludes to.
Um...er...well...

I have no choice!

[link|mailto:bepatient@aol.com|BePatient]
New Thanks, that helps explain a few things.
... but why didn't tech companies use their own software to reduce inventories, etc, when the slow down began? Is it because their sales forecasts were off? How does the bursting of the dot-com bubble fit in? The consumer confidence index? The world economy?

I'm just surprised at how quickly orders dried up. Here the tech sector is booming like never before and then BAM, it hits a brick wall around October-December 2000. That makes forecasting rather difficult, does it not?

Any guesses as to when the tech sector might see another spurt like 98-2000?
Maybe when IA's finally take off?
New Tech companies built out the infrastructure . . .
. . . but once it's built, you need a lot fewer tech companies. That's what's happened. Everyone already has all the computers they need, has purchased the software, has network connections. Now it's just maintenance and expansion.

This is simple evolution of a new market, very predictable. What people didn't know was just when it would end, and many were in denial that it would end.

The next big tech boom will come when something new comes up that everyone needs. Of course it will turn into a bust too.
[link|www.aaxnet.com|AAx]
New Re: No doubt in my mind what the next wave is ...


It is based on XML where XML becomes the middleware for passing data objects between compatible and incompatible technologies & platforms and where specific sets of XML Schemas are adopted as standards within various industries & by industry groups and where web services proliferate to process XML based messages in SOAP format.

- Web Services based on UDDI, SOAP & WSDL will start the ball rolling
- Companies like IBM Microsoft, Oracle, Sun, Software AG, SilversStream etc: etc: (ad nauseum) will provide XML based messaging and Web Services tools
- ebXML will be the big brother & become the Enetrprise Web Services framework

This will be just another revolution but will be pretty much what Gates described at Fusion World conf (I know he is a plagiarist & opportunist in making the remarks he did - but he is still 100% spot on)

The base technologies are with us already - most major software vendors have either already added Web Services support (the UDDI based variety) to their products & XML is far more entrenched than most people might realise.

I see late 2001 thru to 2005 as being the Web Services ERA, before some part of our industry dreams up the next wave to get us all on a roll.

Cheers

Doug Marker

New XML is the next big wave
HTML was for presentations and display, XML is for content and data. XML will become the medium that data will get passed around in. Sort of like when Databases used to pass data in DBase and CSV text files because any Database could read them and import the data. That, to me, is sort of what XML is like. A standard that can be used to pass data between different programs.
"I can see if I want anything done right around here, I'll have to do it myself!"Moe Howard
New Re: XML is the next big wave
"A standard that can be used to pass
data between different programs."

Yup but that is only a small part of the impact that XML is having.

XML is a standard and in technological terms it is not perfect, but, it is what this standard
allows and is achieving that make it one of the biggest impacts to hit IT in its history.

Firstly - the world has gone OOT for application development - objects & message passing
between them - XML allows data objects to be deserialized (flattened out) and passed
between otherwise incompatible objects, languages and technologies, historically this
allows us to move on from passing data between incompatible systems & software by
way of data manipulation middleware be it from back in the days of modularized &
structured programs thru to todays OOT languages and OSes & application products.
In OOT we had the usual hostile camps creating incompatible means of communicating
between objects - COM+, CORBA, RMI etc: and then there was the burgeoning middleware
mess that attempted to glue these incompatible object technologies together with messy
things like IDL and Object Request Brokers - plus the messages passed were usually in
binary & meaningless to humans wanting to observe the data flow.

XML is a meta-language - i.e. it can be redefined for as many different uses as users want
- the DTD or Schema defines a particular data format and these schemas are devised in a
way that allows them to be accessible universally so that any party who wants to work with
a particular data definition can do so.

But one of the greatest things of all about XML is that almost everybody from IT competitors
thru to industry groups and standards bodies, are endorsing XML and XML sub-languages.
The concept is so simple but so amazingly powerful that it can be said that XML paved the way
forward for the whole IT industry and the world of electronic business where passing messages
(data) is what drives business.

Web Services is one concept that can be built on XML - in a sense it can be called
an XML based technology.

Also unlike previous IT advances, XML does not require businesses to throw out their existing
systems or investments - XML will allow add-on wrappering of existing data such that current
investments are protected.

XML is the basis for the 'new wave' of middleware and it is compatible no matter
what language or OS or server or application. Providing the schema is common
each system should be able to recognise the message - and humans can read the data in a
more meaningful way than was possible with COM+, Corba/IIOP & RMI messages.

The impact on IT is somewhat equivalent to when world trade changed for ever once
everyone adopted Container standards for shipping goods.

It changed the designs of Aircraft, trains trucks roads ports etc: etc: etc: & world trade
boomed.

Cheers

Doug
New Re: No doubt in my mind what the next wave is ...
From programmer/network engineer point of view, XML may be a revolution. But it's not the kind of revolution that drives economy. From a more general point of view, XML fits into maintenance/improvement cathegory. Nothing comparable to advent of PC or WWW.
     Key technology points of Chairman Alan Greenspan's testimony - (brettj) - (7)
         No surprise - (bepatient) - (6)
             Thanks, that helps explain a few things. - (brettj) - (5)
                 Tech companies built out the infrastructure . . . - (Andrew Grygus) - (4)
                     Re: No doubt in my mind what the next wave is ... - (dmarker2) - (3)
                         XML is the next big wave - (orion) - (1)
                             Re: XML is the next big wave - (dmarker2)
                         Re: No doubt in my mind what the next wave is ... - (Arkadiy)

Tasty little nuggets of alien technology...
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