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Issue 40.0/January 11, 2002

HEADLINES:

* The Week/ A Corporate Crime Wave?
* Friday Feature/ Wesbury Tops List of Forecasters
* Friday Bonus/ Homeland Security
* Storewidth Update
* Poll Question/ The fall of Enron
* Readings
* Subscribe / Unsubscribe Information

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THE WEEK/ A Corporate Crime Wave?
By George Gilder
The Wall Street Journal
January 11, 2002

Crime may have declined in the streets but, by the recent inflammation of
the pundits, you would think there has been an outbreak of corporate
criminality. The Internet, communications, and stock-market booms of the
1990s, it seems, were based on a pervasive series of felonious acts. A
wide array of businesses, from Global Crossing to Loral, from General
Electric to Enron, artfully inflated the worth of their shares through the
creation of Potemkin businesses. If you believe the news coverage,
corporate leaders are racing to despoil, mulct, defraud, poison, pillage,
and ruin their own businesses, their nation's soils and waters, their
retirement funds, and the world economy.

This flood of factitious crimes, this parade of snaffled fat cats and
scapegoats, happens every recession. Rather than ruing economic reverses
as effects of public policy errors and miscalculations, public officials
turn the tables and treat bankruptcy and crash as culpable schemes of
particular white-collar criminals.

Some of these alleged crime lords are familiar. Gary Winnick was party to
a previous potlatch at Drexel Burnham, where he played a key role in
financing the communications infrastructure through MCI,
Telecommunications Inc., Turner broadcasting, and McCaw Cellular. Then he
and his associates were alleged to have ravaged savings and loans by
inducing some of them to buy those companies' high-yield securities before
a government ban briefly destroyed their value. Finally Mr. Winnick boldly
launched the world-wide fiber-optic networks of Global Crossing, with, it
is implied, the intention of bilking investors and crashing bandwidth
prices in what Fortune calls "perhaps the greatest executive ripoff in the
history of enterprise" but what is better described as the most efficient
global buildout in telecom history.

Read the Entire Article at http://www.gilder.com
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~~~~~~~~~~~~~~~~
FRIDAY FEATURE/ Wesbury Tops List of Forecasters
From The Wall Street Journal, January 7, 2002:

"Bearish Wesbury Tops List of Forecasters
In a Rough Year for Economic Divination"

"It was a rough year to be an economic forecaster. Few economists
anticipated a full-fledged recession. Fewer still expected the aggressive
response of the Federal Reserve that sent short-term interest rates to
their lowest level in 40 years. Then the Sept. 11 terror attacks occurred,
forcing everyone to revise their forecasts all over again.

"But for a small group of bearish economists, everything seems to have
gone as expected, leading them to the top spots in The Wall Street
Journal's economic-forecasting survey for 2001.

"Atop the pack was Brian Wesbury, chief economist at Griffin, Kubik,
Stephens & Thompson, a Chicago investment bank that specializes in
fixed-income securities. Long before the National Bureau of Economic
Research finally declared last month that the U.S. had fallen into
recession in March, Mr. Wesbury had factored recession into his forecasts.
He called for meager economic growth in the first half of 2001 and then a
contraction by the third quarter. As it turns out, he was right on."

What the Journal forgot to mention, of course, is Brian's other perch --
chief economist of The American Spectator. Brian's columns are everything
we want from the otherwise dismal science: sharp, solidly backed and
infused with the deeper wisdom of the supply side. Brian brings political
wits as well -- he was chief economist for the Joint Economic Committee of
Congress during the epic budget battles with the Clinton White House. And
now he's got a year's worth of bragging rights.

By the way, last year's rampage notwithstanding, Brian for the long-term
is among the biggest bulls around (which is another reason we like him).
In the Journal's 2002 survey, he's one of only five economists -- out of
fifty polled -- to peg the potential long-term U.S. productivity growth at
greater than three percent.

P.S. The Spectator economics crew is having a great season all around. Our
great friend Larry Kudlow of New York's Kudlow & Co. (and now of CNBC's
excellent "America Now," with Wall Street provocateur James J. Cramer)
came in right behind Brian at number five in the Journal's 2001
forecasting derby. See the Spectator Interview with Larry in our April
2001 issue, accessible online at http://www.gilder.com/amspec/
~~~~~~~~~~
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~~~~~~~~~~
FRIDAY BONUS/ Homeland Security
The Heritage Foundation Homeland Security Task Force was formed days after
the September 11. Comprised of some of the best homeland security experts
in the world, the Task Force was asked to make specific proposals on how
best to eliminate the vulnerabilities exposed on September 11. The Task
Force was co-chaired by two veteran policymakers regarding terrorism and
homeland security: former Attorney General Edwin Meese III and L. Paul
Bremer, Chairman of the National Commission on Terrorism and
Ambassador-at-Large for Counter-Terrorism under President Ronald Reagan.

The Task Force this week released a comprehensive study entitled
"Defending the American Homeland" that "calls for significant changes in
the way government at all levels -- local, state and national -- works to
counter terrorism." The report also focuses on: Infrastructure Protection
and Internal Security; Civil Defense Against Weapons of Mass Destruction;
Intelligence and Law Enforcement; and, Military Operations to Counter
Terrorism.

The entire 115 page report can be found, free of charge, at Heritage's
website
http://www.heritage.org/homelanddefense/welcome.html
~~~~~~~~~~
STOREWIDTH UPDATE
Storewidth is exploding with terabytes of new content!
Just confirmed, special presentations by
Compaq
Adeptec
MTI
Nortel
Corvis

Just announced:
A Special bonus session with over 25 of the most talked about private
Storewidth companies. VCs are salivating from coast-to-coast.

More new speakers than we can list here. Check it all out at
http://www.storewidth.com/conferences/
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Gilder.com Poll: Who would you pick as the 2001 person of the year?
Over 50% of you picked George W. Bush

Up Next: The fall of Enron is:
A scandal in the making
Just a business failure

Let us know at http://www.gilder.com/
~~~~~~~~~~
GOING, Going, going, but not yet quite gone...
We still have a limited number of tapes and CDs from our 2001 Conferences
-- Dynamic Silicon Conference, Powercosm 1 and 2, Storewidth, and the
Gilder Technology Research Conference.  Each set has 10 to 12 tapes and
covers three days of conference material. Go to
https://www.gilder.com/tapes and check out the great deals.
~~~~~~~~~~~~
READINGS
Sprint's Next-Gen Showcase
http://www.siliconvalley.com/docs/news/tech/019071.htm

Qualcomm Ships 3G Phones
http://www.siliconvalley.com/docs/hottopics/telecomm/056948.htm

Telematics
http://www.siliconstrategies.com/story/OEG20020110S0084

NTT DoCoMo Falling Short of Target
http://news.zdnet.co.uk/story/0,,t269-s2102377,00.html

2 Computer Giants Hope to Avoid Pitfalls of Past Mergers
http://www.nytimes.com/2002/01/01/technology/01HEWL.html

States Ask for No Delay on Microsoft
http://www.nytimes.com/2002/01/01/technology/01SOFT.html

Qwest Stirs Protest Over Privacy
http://www.nytimes.com/2002/01/01/technology/01QWES.html

Web Services
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3YN1801WC&live=true&tagid=ZZZC00L1B0C&subheading=information%20technology


The Benefits of Being Small
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3MMWHV0WC&live=true


EMC's New Battlefront
http://www.forbes.com/2002/01/03/0103storage.html

E-Commerce 2002
http://www.ecommercetimes.com/perl/story/15499.html

Internet Taxes
http://news.cnet.com/news/0-1014-201-8354714-0.html?tag=bt_bh

10 Personal Tech Trends
http://www.siliconvalley.com/docs/news/ptech/trend010302.htm

The Next Computer Interface
http://www.latimes.com/technology/custom/techtimes/la-010302cover.story

Tools and Toys
http://www.msnbc.com/news/676223.asp?0si=-

AOL's Hacker Hole
http://news.cnet.com/news/0-1005-200-8336037.html?tag=mn_hd

Data Analysis Software
http://www.computerworld.com/storyba/0,4125,NAV47_STO66913,00.html

Top 10 Personnel Moves
http://www.lightreading.com/document.asp?doc_id=10582

Optical Chips
http://www.computerworld.com/storyba/0,4125,NAV47_STO67042,00.html

.Net, Coming To A Platform Near You.
http://www.infoworld.com/articles/hn/xml/02/01/09/020109hnmsnet.xml

Fight For the Living Room
http://www.wired.com/news/business/0,1367,49585,00.html

The New iMac
http://www.wired.com/news/technology/0,1282,49565,00.html

China Goes CDMA
http://www.newsbytes.com/news/02/173456.html
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FRIDAY LETTER STAFF
~~~~~~~~~~~~~~~~~~~~~~~
Dave Dortman (ddortman@gilder.com)
John Hammill (jhammill@gilder.com)
Aaron Charlwood (acharlwood@gilder.com)

CONTRIBUTORS THIS WEEK: George Gilder, Mark Ziebarth, John Hammill, Dave
Dortman, Spencer Reiss, Sandy Fleischmann, Aaron Charlwood

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