Uncommon Wisdom

Oct 26 2010   1:37PM GMT

Message to FCC: Wireless policy won’t cure U.S. economic issues

Tom Nolle Tom Nolle Profile: Tom Nolle

There’s a significant potential for some swings in stock prices this week (not that we haven’t seen them in the past!) because of the volume of economic news and the number of earnings reports due out this week. The number to watch closely is 3Q gross domestic product (GDP) growth, which our model pegs at about 2.1% in annualized form. While very few now expect a double-dip recession, the stock market will see this number as an indicator of likely near-term future economic health, and hedge funds will certainly short the market aggressively if it dips. I think it’s a bit of a tempest in a teapot, but whatever it is, it’s almost certainly better than 1Q and worse than 4Q, so we’re slowly recovering.

The FCC is getting itself behind a wireless-based thrust to cure national broadband ills, but I don’t much like Genachowski’s style here. He opened a recent talk with comments about the slide in U.S. economic standing worldwide, and then jumped to spectrum. To me that implies that we can lever our way into the top economic spot with wireless broadband. If there’s any truth to that, it’s yet to be substantiated by one piece of objective data. Sure we might start a wireless bubble, but it’s not going to transform our economy to facilitate Twitter updates or let teens watch music videos.

If we have an economic problem (which we clearly do), it’s because we can’t produce substantive products any more; we’re trapped in social networks and deceptive advertisements for herbal supplements and consumer product gimmicks. We became an industrial and economic giant by building the fundamentals—steel, cars, ships, planes.  Heavy industry is the base of everyone’s economic stability, and figuring out how to provide government and technology incentives there should be our top priority.

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