Thursday, February 14, 2008


The US economy continues to show strength. How can we be in a recession if retail sales are strong, unemployment claims are mild and exports are booming?

Of course, a strong world economy combined with a weak dollar means that sales from America should continue. One of the boom, boom, boom businesses in America is the production of newly created health products. US companies, including one head quartered in Winston-Salem NC, are making human tissues grown in labs. There is some really exciting stuff being done.

I am sure you know that a salamander can regrow a broken let or tail. Did you know that if a 2 month old human fetus loses an arm, it grows it back? Did you know that a child, under the age of 5 is able to grow back a cut off finger tip? With the support of a new material, produced in an American lab, a 78 year old man was recently able to grow back a cut off finger tip. The material has also been used to heal diabetic ulcers. It is anticipated that it will help burn victims grow back skin.

Alan Russell has asked the question, "Why Can't We Grow New Body Parts?" and his answer is we can! In Winston-Salem, human bladders and other tissues are being grown in labs. By using the patients cells to grow the body parts, there is no problem with rejection. It turns out that stem cells can be harvested by performing liposuction on the patient. The stem cell debate use to be about how to harvest enough stem cells. In America, there are plenty of fat cells to harvest.

Over the past 50 years, around the world, longevity of humans has been increased. You ain't seen nothing yet. It is anticipated that within 20 years or so, huge gains will be made in repairing worn out body parts. It has already been shown that an injection of stem cells into a worn out heart can perform a rejuvenation miracle. What is next? Reputable scientist believe humans will soon be living to 135 years. In fact they believe people who are born today could possibly reach 1,000 years. The most interesting idea is that the person who lives to be 500 will be born only 10 years or so later than the first guy to live to be 150! There will be tremendous advances in knowledge during the last 50 years of this mans life!

The speed of technological change continues to follow a geometric growth pattern. We know this well through our observation of computer technology. In 1968, one dollar would buy one transistor. At the time, there were still a lot of vacuum tube TV's and radios still around. By 2002, $1 would buy 10 million transistors. I wonder how many the current dollar would buy?


The big drop in US interest rates from 5.25% to 3% is a big deal. While the stimulus package passed by congress will goose the economy a little by the third quarter, the repayment of the borrowed money will start immediately such that the stimulus is really nothing more than the "broken window syndrome" or another instance of "robbing Peter to pay Paul". However the power of the big cut in interest rates has yet to be fully felt. A key point is that China, Saudi Arabia, Hong Kong and others rely on the FOMC to manage their monetary policy. The peg of other currencies to the dollar gives congressional members something else to whine about but the reality is that the links give the US all the more power. The big drop in rates will stimulate China just as much as the USA.


The price of oil keeps staying stubbornly high. The fundamental reason is that world demand remains strong. The goosing of the world economy through lower interest rates in the USA, has served to give oil market bulls the hope and even the expectation that oil prices will remain very high. Those waiting for a decline in the price are left watching the scramble to build new refineries and to develop new fields. Refinery construction is going on around the world, including in North America. In Port Arthur, Texas, Shell is in the process of renovations that will make its refinery the largest in the world. In the mean time, Total has announced that it will also expand its Port Arthur unit.

China is using more oil than ever before but it is also spending money on technology like there is no tomorrow. China will make the move to a fuel efficient economy in record time. In the digital age, the substitution of information transfer for physical activity is finding ever more ways to reduce the consumption of energy.

In the example used above in regard to transistors, the thing not mentioned is that the each one of the 10 million transistors bought in 2002 were far more efficient than the 1 purchased in 1968. Last week, Texas Instruments demonstrated technology that allows 10 times or 1 billion transistors to operate on less energy than was used by the one in 1968!


We are living in exciting times. The world of tomorrow will be very different from the world of today. For those who dream of living good healthy lives of 150 years or more, the progress cannot happen fast enough. The rate of change is changing rapidly. Major innovation takes lots of time and the timing is unpredictable, but an injection of cells to repair a heart or the use of tissue to build a bladder are not science fiction. These technologies will be developed rapidly. Ten years from now, a lot of hearts will be repaired well before they are prime for a heart attack. A strong heart solves a lot of other health problems. Readers who are 30 years of age had better start investing for the long term!

BUY, BUY, BUY. The economy is already strong, innovation is remarkably strong and innovation drives growth!