23 August 2015


Another in the many themes of these endeavors is that human knowledge of the macro world (as distinct from both cosmology and the sub-atomic/quantum) is, perhaps has, reaching the asymptote. In others, more than ever, there's nothing new under the sun.

Now comes an anonymous post, arguing that Intel should sell off its fabs. The reasoning is very Financial: with very low physical capital, the ROI for that capital can be quite high. This financialization of the USofA economy has been in process for at least three decades. It is somewhat amusing that, as I type, the comments are truly vitriolic.
Clearly, with the cost of wafers going up, by Intel's account 30%, processor sizes will decrease, as the PC market clearly would not react well to a significant price increase, given how fragile it already is. Also, outside of GPUs, the benefit of increasing size is not in proportion with the costs. As such, with overall smaller processors, and Intel's struggling grow, the difficulty of fully utilizing fabs will become even more difficult.

Put another way: the hedgies count only moolah, and assume that hard assets are really liabilities. In due time, if financialization continues, the USofA will look like Bermuda. Or so the hedgies wet dream. (Who would have guessed that The Donald would channel Progressives? Well, every now and again.) Without the USofA's consumer demand, all the financial engineering will end as galloping Gertie.

May we live in interesting times. Oh, and no, the market crash last week isn't motivated by anything like The Great Recession. But that doesn't mean, alas, that Mr. Market is smart enough to realize that.

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