Your House, My Broadband

Posted by: Michael Mandel on May 26

David H comments that “So, try to make the case to me that Tech is a better place to spend my money.”

Well, David, I can’t make that case as long as mortgage rates stay so low and home values keep going up. But that’s the whole point. Ultimately, we’d all be better off if just a bit of the $700 billion being used for residential investment—up from $500 billion just 3 years ago—was shifted to building out the broadband network instead. Spending $700 billion on housing is just a bad use of resources.

Incidentally, David has a wonderful website called “The Symphonic House.”

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Reader Comments

Jack Krupansky

May 26, 2005 08:20 PM

I agree that broadband should (continue to) be built out, but out of cash flow, not by loading companies up with tons of additional debt or shareholder dilution. *None* of the money currently being used to finance the housing boom is needed to finance broadband build-out. Verizon seems to be putting in a fair amount of fiber right to the home. Yes, more broadband build-out is needed, but lets not encourage anybody to throw money where it won't earn a decent return.

In fact, I would expect a continuation of some form of housing boom to simply present an even bigger target for broadband providers to aim at.

I do know of one area of technology that is *sorely* in need of a significant leap in financing from *any* and all sources: basic, long-term computing research. Much of our basic research in computing has been essentially gutted over the past decade (or even two) by corporate cost-cutting, closing or dramatic reduction of corporate labs, decline in federal interest in research, and an extreme focus on short-term "practical" results. Unfortunately, I don't expect the existing trend to reverse, even were the housing boom to dramatically moderate.

-- Jack Krupansky

Nikos Christoforou

May 31, 2005 03:19 AM

i agree with you 100% my friend. i think that housing is a sure bubble, all over the world. i wrote an article about my country's (Cyprus) housing bubble in my blog also.. real estate developers in Cyprus have gone to far with high prices and medium quality...

Thank you for your interest. This blog is no longer active.

 

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Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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