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FRED

08-22-08, 09:12 AM

http://www.itulip.com/images/bdayjanszen.jpgInflating the next bubble

by Eric Janszen - Business Day (http://www.businessday.co.nz/comment/4665376) - Friday, August 22, 2008

Re-printed with permission of Business Day. All Rights Reserved.

Editor's Note: Entrepreneur and Venture capitalist Eric Janszen, in a February article for Harper's magazine, dispelled the myth that asset price inflations, commonly called 'bubbles', result from the madness of crowds. Instead, the process is driven by a combination of economic, financial market and government policies and practices unique to the United States. Janszen revisits his hypothesis at the Independent's invitation and finds recent US legislation is pumping up the next bubble.

In the United States in modern times, asset bubbles form within the political and market framework of an economy dominated, financially and politically, by the finance, insurance and real estate (FIRE) industries.

No bubble has occurred since the 1980s without government creating, by changes in regulation and tax policy, the initial market for speculation that later developed into a bubble.

Tax subsidies, loan guarantees, loose monetary and regulatory policy, and a heavy marketing campaign supported by the FIRE economy trade media, created the housing bubble.

Bubbles require a new source of credit, such as the mortgage securities that financed the loans used to purchase homes. Governments of nations dominated by a FIRE economy enable asset inflations to assist failing economies and to generate capital gains to tax and finance government.

After a government lays the foundation for a bubble it requires monetary stimulus to evolve in the case of the housing bubble, after the US Federal Reserve quickly lowered short-term interest rates from 6.5% to 1.75% in 2001.

The London Inter-bank Offered Rate (LIBOR), the rate banks use to lend to each other, fell to 2.5%. Adjustable-rate mortgages, tied to LIBOR, fell more than 50%, cutting monthly mortgage payments proportionately.

Builders need years to buy land, gain permits, hire construction teams and build homes several times longer than the nine months it took the central bank to cut the monthly cost of homes in half. Home prices rocketed as too much credit chased too few homes. Meanwhile, new credit products, such as no-doc or so-called "liar loans'', were created to expand the pool of available homebuyers.

A FIRE economy, in contrast to an industrial economy, grows mainly by FIRE industry companies generating capital gains on sales of inflated assets instead of by manufacturing companies earning profits from sales of goods and services.

The FIRE economy was America's answer in the early 1980s to increased competition from rising industrial giants in Europe and Asia in the 1960s that began to out-compete the US industrial economy in the 1970s.

The ideological cover for the FIRE economy was to lower taxes that financed infrastructure development and maintenance, among other public goods, ostensibly to free households and businesses to use the added disposable income to allocate spending more efficiently than government.

What occurred instead is that all of the money households spent on taxes for the benefit of infrastructure to support the entire economy is now spent to service debt for the benefit of FIRE industries. Ultimately, the debts are financed by foreign borrowing.

After prospering as a net creditor, enjoying a positive balance of trade and running a current account surplus for its entire existence until the 1960s, by late that decade the US not only ran up large net foreign debts, but debts that it could not repay in gold the international currency established after World War II.

The US defaulted on its gold debts and promised to pay only in irredeemable national currency. Never in history had such an arrangement existed. Initially, the US dollar went into a tailspin, but after a brief period of chaos a new international currency regime established itself and irredeemable US dollars became the world's reserve currency under a floating exchange-rate system.

The new system created global demand for dollars used for major transactions outside US borders, including oil purchases, reducing the need for the US to earn foreign exchange as other nations do, through a positive balance of trade, and causing a build-up of dollars in the US to fund current account deficits. The US trade partners least happy with the arrangement were oil producers. The Economist reported in its 1999 cover article, "Drowning in Oil'': "What'', sneered Abdurrahman Salim Atiqi, Kuwait's one-time oil minister, "is the point of producing more oil and selling it for an unguaranteed paper currency?''

By inflating the purchasing power of dollars, the value of oil was suppressed, distorting market signals and causing depletion far more rapid than would occur in a global free-currency market based on a commodity standard. The exchange of finite oil for infinite dollars came back to haunt the world decades later.

This unique arrangement established the FIRE economy by attracting foreign capital beyond the ability of the US economy to absorb it productively. The FIRE economy funded many financial exploits, from the leveraged buyout (LBO) bubble of the 1980s, to the technology, stock and housing bubbles that followed.

More than 20 years ago, foreign central banks arrived as the source of funding for America's FIRE economy. The New York Times said at that time: "The chief guardian against a free fall of the dollar is Paul A Volcker, chairman of the Federal Reserve Board. He told congress that the United States had largely escaped the adverse consequences of the `insidious combination' of low savings rates and high federal deficits by drawing on capital from abroad; its flow last year exceeded all the savings by United States households.

"That situation, Mr Volcker said, cannot last: it is not sustainable economically to pile up foreign debts while failing to make the investments needed to generate growth and earn the money to service the debts; it is not sustainable politically, as pressures on the American industrial base are transmuted into demands for protection, and it is not sustainable internationally, as the confidence that underlies the flow of foreign savings will be eroded.

"'Sooner or later,' Mr. Volcker said, `the process will stop. The only question is how.'''

Twenty years later and counting. Did the US economy "get its act together'' or did the FIRE economy have more than a few surprises for Paul Volcker and company?

Volcker thought, and perhaps still thinks, the US economy has to make capital investments to grow. Through the magic of the finance-based economy funded by foreign capital flows, returns can be generated without capital investment, for as long as the money flows in and the FIRE economy operates. The only problem is that FIRE economy expansion leaves behind piles of debt that cannot be repaid through production. Only the interest can be paid, and even then new FIRE economy inventions, such as the technology stock bubble starting in 1995 that revived the dollar, are needed.

In "The Next Bubble (http://www.harpers.org/archive/2008/02/0081908)'', I asserted the collapsing housing bubble would lead to rapidly falling prices and defaults on mortgages, causing major dislocations in global financial markets that are "polluted with credit risk'' from years of issuance of mis-priced securitised mortgage debt by US securities firms, sold across the US and Europe to pension funds, but not to Asia where fund managers, with a recent financial crisis still fresh in their minds, said "no thanks''. I also claimed the housing bubble crash, after producing gradual but profound negative wealth effects and knock-off effects on consumption, from home furnishings to car sales, will bring on the first consumer-led recession in the US in a generation, and that the Federal Reserve and Congress will be forced to take bold moves to staunch the bleeding and reflate the economy.

As I told the audience during my keynote speech at the Hard Assets Conference in Las Vegas a year ago, with the dollar already weak and inflation rising from years of negative real short-term interest rates, a hangover from the reflation measures taken following the collapse of the technology stock bubble, US policy-makers are limited to using dollar depreciation to boost economic growth through exports.

Indeed, an unofficial weak dollar policy has been the cornerstone of post housing-bubble reflation policy. I also warned that weak dollar policy, while reasonable in the short term will, if extended for years on end, drive inflation higher; the US economy will then face the dual scourges of recession as fallout from the housing bubble combined with an inflation cycle as rising import prices, especially energy, cut household disposable income just as job growth begins to dry up. How well did the theory forecast events?

Home sales and prices have declined more than during The Great Depression of the 1930s. Credit contraction has spread to business and student loans. Unemployment is rising in every state in the US except for anaemic 0.2% to 0.4% declines in lowly populated Arkansas, Oklahoma, South Dakota, and Wisconsin states that benefit from higher energy and food prices but together account for just 2.5% of the US population.

Unemployment in California, the country's most populous and in gross domestic product (GDP) terms the eighth largest "nation'' in the world, reached 7% in June this year, up from 4.9% just two years ago at the top of the housing bubble.

Debate continues over whether the US as a whole is still in recession, as it was in the fourth quarter of 2007, defined as two consecutive quarters of negative GDP growth. But data ranging from unemployment to retail sales to declining tax revenues flash clear recession warnings.

Evidence of economic contraction in the US is obscured by rising inflation. Real GDP growth reversed in the fourth quarter of 2007 as nominal GDP growth declined 0.2% and consumer price inflation (CPI) increased to 3.6%, not including energy and food prices. The source of the inflation is the outsized impact of rising energy import prices of food and other goods and services that are sensitive to rising energy input costs.Can wage rate inflation be far behind? The Federal Reserve does not believe so and behaves as if it believes that, even while holding short-term rates below the inflation rate, maintaining negative real interest rates, rising unemployment will take care of the inflation problem by lowering demand.

But the inflation was not caused by excess demand in the first place but from falling demand for dollars causing rising energy input costs for businesses and households. If the US cannot attract new foreign private investment to support the dollar, the Fed's wait-and-see policy will not lower inflation.

"The Next Bubble'' concluded the only way to clean up America's structural stagflationary mess is to use the apparatus of the FIRE economy to shift the US economy from dependence on asset price inflations to "re-industrialise'' America. Policies need to focus on rebuilding essential transportation and communications infrastructure left in shambles by the FIRE economy, increasing energy efficiency to reduce US dependence on energy imports, and increasing national and household savings. Such a politically inexpedient set of policies will require strong leadership spurred by economic and financial crisis.

If this thesis strikes you as far-fetched, consider that at the time "The Next Bubble'' appeared, candidates for the upcoming US presidential election were not talking about the economy, or alternative energy, or infrastructure. Now they talk about little else.

"Next Bubble'' development proceeds according to the inexorable logic of the US political economy. Two examples make the point.

The seeds of US government sponsorship of an alternative energy boom were planted in legislation intended to rescue the US economy from the damage done by the collapsing housing bubble. Emergency legislation titled "Housing and Economic Recovery Act of 2008'' passed recently. It provides loans to new home buyers, and has controversial provisions that allow the US Treasury to directly purchase the bonds and stock of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac a policy not allowed under the US Constitution.

The bill, rushed through congress and signed by the president with alacrity not justified by the gradual pace of economic decline is really about reassuring foreign central banks that hold nearly $US1 trillion of US agency debt the US government intends to guarantee the GSE's credit, and even stock if necessary, to avoid foreign official sales of agency securities that will cause a spike in mortgage rates at this precarious time for the US housing market.

The bill is also about getting the new alternative energy and infrastructure boom going. Tagged on to the end of the bill is Title X: "Clean Energy Tax Stimulus Act of 2008''. To the uninitiated the add-on is incongruous. Why include energy-related tax subsidies in a bill to rescue home owners and mortgage lenders? What does alternative energy have to do with home foreclosures and failing mortgage companies?

Students of "The Next Bubble'' understood the implications immediately: US Congress is eager to get a new boom going before the collapse of the previous one pulls the US economy, likely already in recession, into an uncontrollable tailspin.

The second example is proposed government bailouts of US car-makers. Proposed legislation has an alternative energy focus. Michigan lawmaker John Dingell is pushing for $US25b in government loans to convert General Motors, Ford and Chrysler factories to build alternative-fuel vehicles.

Legislation to seed the next bubble is in train as the previous bubble collapses. New investment vehicles and sources of foreign capital are needed to grow it. Keep an eye out for new securities from Wall St firms and watch for sovereign wealth funds as the primary foreign buyers.

Is there a better way?

A book I am writing, titled New New Deal: Re-industrialization of Post Depression America, proposes an alternative approach to FIRE economy post-bubble economic recovery. Instead of a Next Bubble, remove government subsidies of FIRE industries and use the funds generated to finance tax cuts and other subsidies to boost the productive sectors of the US economy by leveraging the US's unique innovative capacity.

Debts will be restructured to free households and businesses of high interest burden they carry today to allow them to increase savings and capital investment. Revenue from exports of goods and services will exceed exports of financial assets, eventually, and the US trade balance and current account will turn positive.

The US will gain a constructive role in the world economy as the nation that invents the next generation of vehicles and communications substitutes for transportation, and develops for export the leading technologies that allow nations to conserve energy and use petroleum alternatives.

Eric Janszen is the founder and president of iTulip, Inc. He was formerly managing director of venture capital firm Osborn Capital, chief executive of Autocell and Bluesocket and entrepreneur in residence for Trident Capital.

iTulip Select (http://www.itulip.com/forums/showthread.php?t=1032): The Investment Thesis for the Next Cycle™
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Rantly McTirade

08-22-08, 10:50 AM

08-22-08, 11:26 AM

Frankly, I think we'd be better off taking our Depression like adults and let the economy and financial system projectile vomit/explosively defecate into true bottoms; it'd be the best way, as well, to ensure the end of America's witless interventionism around the globe and stop the perversity of 'globalization'.

I am in 100% philosophical agreement. However, there has never been nor will there ever be an economy or financial system free of government intervention. From the first moment a tribe was able to generate one goat or basket of wheat of economic surplus, the local chief began to take a piece of it as taxes to develop infrastructure for all the tribes to use to further their ability to produce even more economic surplus, and – not coincidentally – increase the rulers' tax collections. Same goes for regulation. The question, then, becomes what sort of taxation and regulation, to what purpose, and for whose benefit? That is the adult conversation.

phirang

08-22-08, 11:28 AM

Jeff

08-22-08, 01:21 PM

I was just thinking about this (http://jefflikestorant.blogspot.com/2008/08/coming-depression.html) this morning...

orion

08-22-08, 01:26 PM

I really like the idea because we would have a bubble that when it pops we still have something useful, but I wonder how it gets funded / paid for. In the Harper's article you mention some 20 trillion dollars. Ok they are hyperinflated or bonar type dollars ( a new bubble with a new type of dollar sounds scary) but somebody is going to want real money for all the materials this project will take. We pulled it off in the Great Depression probably because we had savings and it was the first time to use government debt big time. This time we are at the bottom of the bucket. Maybe we can do it if we promise to use lots of stuff made in China and let the Gulf States name the things. Possibly this becomes a global depression that requires a global currency to inflate a really big bubble, hmmmm

santafe2

08-22-08, 01:57 PM

The bill is also about getting the new alternative energy and infrastructure boom going. Tagged on to the end of the bill is Title X: "Clean Energy Tax Stimulus Act of 2008''. To the uninitiated the add-on is incongruous. Why include energy-related tax subsidies in a bill to rescue home owners and mortgage lenders? What does alternative energy have to do with home foreclosures and failing mortgage companies?

Students of "The Next Bubble'' understood the implications immediately: US Congress is eager to get a new boom going before the collapse of the previous one pulls the US economy, likely already in recession, into an uncontrollable tailspin.

EJ - This legislation has not passed and this version is not likely to pass, as the House is opposed to offering tax credits without a funding source. The other version has the oil and gas industry as the funding source and the current Senate has been quite clear that they don't back that version. Even if they do manage to get this through the Senate the President has made it clear he will veto a version of the bill that takes from oil and gas to give to our little industry.

This issue is virtually shutting down the commercial photovoltaics business in the US, as we speak. The installation activity today is frenzied as everyone is trying to get their projects implemented, commissioned and signed off before 12/31. But financing has gone completely dry for new projects until this is resolved. By far the largest PV installation in the US is the proposed PG&E 800MW arrays. That consists of 2 huge projects, both of which require the 30% Federal ITC. This program is still scheduled to sunset 12/31.

LargoWinch

08-22-08, 02:11 PM

I was just thinking about this (http://jefflikestorant.blogspot.com/2008/08/coming-depression.html) this morning...

Jeff; are "stimulus package" not a form of electronic bread line?

FRED

08-22-08, 02:44 PM

EJ - This legislation has not passed and this version is not likely to pass, as the House is opposed to offering tax credits without a funding source. The other version has the oil and gas industry as the funding source and the current Senate has been quite clear that they don't back that version. Even if they do manage to get this through the Senate the President has made it clear he will veto a version of the bill that takes from oil and gas to give to our little industry.

This issue is virtually shutting down the commercial photovoltaics business in the US, as we speak. The installation activity today is frenzied as everyone is trying to get their projects implemented, commissioned and signed off before 12/31. But financing has gone completely dry for new projects until this is resolved. By far the largest PV installation in the US is the proposed PG&E 800MW arrays. That consists of 2 huge projects, both of which require the 30% Federal ITC. This program is still scheduled to sunset 12/31.

H.R. 3221: Housing and Economic Recovery Act of 2008 was passed by both the house and senate and signed by the President July 30, 2008. If there is any doubt in your mind that the bill was used to carry forward a number Transportation and Energy Infrastructure programs to get a new boom going, we recommend you read the 237 amendments to the bill (http://thomas.loc.gov/cgi-bin/bdquery/L?d110:./temp/%7EbdasUq8:1%5B1-237%5D%28Amendments_For_H.R.3221%29&./temp/%7EbdpT1n), that begin as follows:
Items 1 through 150 of 237<center>Amendments For H.R.3221

</center> 1. H.AMDT.743 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:1:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment requires natural gas utilities to integrate energy efficiency resources into the plans and planning processes of the natural gas utility; and adopt policies that establish energy efficiency as a priority resource in the plans and planning processes of the natural gas utility.
Sponsor: Rep Blumenauer, Earl (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Blumenaue r++Earl%29%29+00099%29%29) [OR-3] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Blumenauer amendment (A001) Agreed to by voice vote.
<hr> 2. H.AMDT.744 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:2:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment authorizes $1.2 billion for the Weatherization Assistance Program for fiscal year 2007.
Sponsor: Rep Shays, Christopher (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Shays++Ch ristopher%29%29+01048%29%29) [CT-4] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Shays amendment (A002) Agreed to by voice vote.
<hr> 3. H.AMDT.745 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:3:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment requires the Administrator of the Environmental Protection Agency to enter into an arrangement with the Secretary of Education and the Secretary of Energy to conduct a detailed study of how sustainable building features such as energy efficiency affect multiple perceived indoor environmental quality stressors on students in K-12 schools.
Sponsor: Rep Hooley, Darlene (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Hooley++D arlene%29%29+01491%29%29) [OR-5] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Hooley amendment (A003) Agreed to by voice vote.
<hr> 4. H.AMDT.746 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:4:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment provides an exception to boilers that operate without electricity from energy efficiency requirements in the bill.
Sponsor: Rep Pitts, Joseph R. (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Pitts++Jo seph+R.%29%29+01514%29%29) [PA-16] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Pitts amendment (A004) Agreed to by voice vote.
<hr> 5. H.AMDT.747 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:5:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment encourages the use of geothermal technology in government buildings.
Sponsor: Rep Terry, Lee (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Terry++Le e%29%29+01566%29%29) [NE-2] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Terry amendment (A005) Agreed to by voice vote.
<hr> 6. H.AMDT.748 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:6:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment requires electric suppliers, other than governmental entities and rural electric cooperatives, to provide 15 percent of their electricity using renewable energy resources by the year 2020.
Sponsor: Rep Udall, Tom (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Udall++To m%29%29+01567%29%29) [NM-3] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Udall (NM) amendment (A006) Agreed to by recorded vote: 220 - 190 (Roll no. 827).
<hr> 7. H.AMDT.749 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:7:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment adds language asking state regulatory authorities and nonregulated utilities to consider offering home energy audits, publicizing the financial and environmental benefits associated with home energy efficiency improvements and educating homeowners about all existing federal and state incentives, including the availability of low-cost loans.
Sponsor: Rep Van Hollen, Chris (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Van+Holle n++Chris%29%29+01729%29%29) [MD-8] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Van Hollen amendment (A007) Agreed to by voice vote.
<hr> 8. H.AMDT.750 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:8:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment requires Federal agencies to consider the environmental benefits of the vendors with which they contract for meetings and conferences.
Sponsor: Rep Schwartz, Allyson Y. (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Schwartz+ +Allyson+Y.%29%29+01798%29%29) [PA-13] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Schwartz amendment (A008) Agreed to by voice vote.
<hr> 9. H.AMDT.751 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:9:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment sought to repeal the availability of Federal eminent domain authority for use by companies permitted by FERC to construct or modify transmission lines within National Interest Electric Transmission Corridors and require companies to proceed in accordance with state law for obtaining a right-of-way.
Sponsor: Rep Arcuri, Michael A. (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Arcuri++M ichael+A.%29%29+01867%29%29) [NY-24] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment not agreed to. Status: On agreeing to the Arcuri amendment (A009) Failed by recorded vote: 169 - 245 (Roll no. 828).
<hr>10. H.AMDT.752 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:10:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment requires the Secretary of Energy to conduct a study of the renewable energy rebate program for homes and small businesses contained in the Energy Policy Act of 2005.
Sponsor: Rep Hodes, Paul W. (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Hodes++Pa ul+W.%29%29+01862%29%29) [NH-2] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Hodes amendment (A010) Agreed to by voice vote.
<hr>11. H.AMDT.753 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:11:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment modifies section 9502(a) to ensure that the Energy Information Administration restores its previously terminated collection of data on solid by-products from coal-based energy producing facilities and makes improvements on these data.
Sponsor: Rep Barton, Joe (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Barton++J oe%29%29+00062%29%29) [TX-6] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Barton (TX) amendment (A011) Agreed to by voice vote.
<hr>12. H.AMDT.754 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:12:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) An amendment numbered 12 printed in Part B of House Report 110-300 to require the FERC to hold one public meeting before issuing a permit, license, or authorization that will affect land use when a public meeting is requested by at least five individuals or an organization representing 30 or more people. If a request for reconsideration is granted and the request was filed before enactment of this section and a hearing had not been held before the permit or authorization concerned was issued, the Commission must hold a hearing.
Sponsor: Rep Murphy, Christopher S. (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Murphy++C hristopher+S.%29%29+01837%29%29) [CT-5] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 By unanimous consent, the Murphy (CT) amendment was withdrawn.
<hr>13. H.AMDT.755 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:13:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment to provide a sense of the Congress to recognize and support large and small scale conventional hydropower.
Sponsor: Rep Sali, Bill (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Sali++Bil l%29%29+01847%29%29) [ID-1] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Sali amendment (A013) Agreed to by recorded vote: 402 - 9 (Roll no. 829).
<hr>14. H.AMDT.756 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:14:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment establishes a grant program to support energy sustainability and efficiency projects on college and university campuses.
Sponsor: Rep Welch, Peter (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Welch++Pe ter%29%29+01879%29%29) [VT] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Welch (VT) amendment (A014) Agreed to by voice vote.
<hr>15. H.AMDT.757 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:15:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment requires the Secretary of the Interior, acting through the Minerals Management Service, to submit a report to Congress on the status of regulations required to be issued under section 8(p)(8)) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(p)(8)) with respect to the production of wind energy on the Outer Continental Shelf.
Sponsor: Rep Castle, Michael N. (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Castle++M ichael+N.%29%29+00183%29%29) [DE] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Castle amendment (A015) Agreed to by voice vote.
<hr>16. H.AMDT.758 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:16:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment authorizes the establishment of a competitive grant program, in a geographically diverse manner, for projects submitted for consideration by institutions of higher education to conduct research and development of renewable energy technologies.
Sponsor: Rep Wu, David (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Wu++David %29%29+01598%29%29) [OR-1] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Wu amendment (A016) Agreed to by voice vote.
<hr>17. H.AMDT.759 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:17:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment provides for the creation of a Solar Energy Industries Research and Promotion Board and a Solar Energy Research and Promotion Operating Committee.
Sponsor: Rep Giffords, Gabrielle (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Giffords+ +Gabrielle%29%29+01831%29%29) [AZ-8] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Giffords amendment (A017) Agreed to by voice vote.
<hr>18. H.AMDT.760 (http://thomas.loc.gov/cgi-bin/bdquery/D?d110:18:./temp/%7EbdpT1n::) to H.R.3221 (http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR03221:) Amendment requires the Secretary of Transportation to establish and implement a pilot program to carry out vanpool demonstration projects in not more than 3 urbanized areas and not more than 2 other than urbanized areas.
Sponsor: Rep Tauscher, Ellen O. (http://thomas.loc.gov/cgi-bin/bdquery/?&Db=d110&querybd=@FIELD%28FLD003+@4%28%28@1%28Rep+Tauscher+ +Ellen+O.%29%29+01533%29%29) [CA-10] (introduced 8/4/2007) Cosponsors (None)
Latest Major Action: 8/4/2007 House amendment agreed to. Status: On agreeing to the Tauscher amendment (A018) Agreed to by voice
Now, what were you saying? :D

Rantly McTirade

08-22-08, 03:50 PM

If we had a real depression here, the soldiers in Iraq would have to hitch-hike home...

Think about it.

Occupational hazard of Hessianing.

Rantly McTirade

08-22-08, 04:09 PM

I am in 100% philosophical agreement. However, there has never been nor will there ever be an economy or financial system free of government intervention. From the first moment a tribe was able to generate one goat or basket of wheat of economic surplus, the local chief began to take a piece of it as taxes to develop infrastructure for all the tribes to use to further their ability to produce even more economic surplus, and – not coincidentally – increase the rulers' tax collections. Same goes for regulation. The question, then, becomes what sort of taxation and regulation, to what purpose, and for whose benefit? That is the adult conversation.

Sort/purpose/benefit= for the benefit of the mass of citizens(not merely
'residents') and the nation as a whole.:)
Of course, that is oh so rare.:mad:
And, that is the real reason the American founders included the 2nd
amendment-power to try and ensure a responsive & representative
gubbermint. They knew what Mao spake of nearly two centuries later.:D

Finally, not to get into a whole 'thing', but it seems that the 'adult' thing
is that when what 'should' happen, sans unjustified finagling, coincides with what one's intellectual analysis reveals to be as the optimal outcome,
one strives to ensure that outcome, perhaps with some pallitives for the
inevitable human tragedies that ensue. Unfortunately,I now find the adjective use of the terms 'adult' and 'serious' rather irritating, probably because they're favorite weasel words used by the idiot-con delusionists at the WSJ iditorial pages, etc., when the sheer stupidity of their fantasies is revealed in a rude and direct manner. And I'm certainly not insinuating your support or advocacy of those specific stupidities, nor any of any similar level of nonsense.

seanm123

08-22-08, 04:54 PM

The Bill was definitely passed and signed by GWB post haste, I took the time to follow the legislation and posted the Title X info here.

The more I read legislation generated out of DC whether passed or not solidifies my belief in the FIRE economy as outlined here on iTulip.

As a student of the next bubble I have been researching for the second wave of Alt Energy investments. A Hedge Fund I have been following was busy shorting Alt Energy this year, they may lose their shorts literally if they haven't already.

I also am considering changing my full time job at a Fortune 500 to a Alt Energy start up, since it is hard to resist the potential for huge gains in stock options as well as actually helping America prosper and cleaning up the environment.

My biggest hurdle right now is I may need to lean to read, write, and speak Chinese to get the kind of lift that I am looking for.

santafe2

08-22-08, 05:04 PM

H.R. 3221: Housing and Economic Recovery Act of 2008 was passed by both the house and senate and signed by the President July 30, 2008. If there is any doubt in your mind that the bill was used to carry forward a number Transportation and Energy Infrastructure programs to get a new boom going, we recommend you read the 237 amendments to the bill (http://thomas.loc.gov/cgi-bin/bdquery/L?d110:./temp/%7EbdasUq8:1%5B1-237%5D%28Amendments_For_H.R.3221%29&./temp/%7EbdpT1n), that begin as follows:
Now, what were you saying? :D

That your assumption about the solar tax credit being in this bill as passed and signed is incorrect. Here's an article from yesterday that captures the issues well. I'm working every day in an industry which is preparing to shut down.

Will US Solar Businesses Weather the Coming Storm? by Glenn Harris, SunCentric Incorporated
California, United States [RenewableEnergyWorld.com]
With just over 120 days left before federal incentives expire, solar businesses in the U.S. are taking action to protect their core business. Layoffs, announced and unannounced, have started. Construction projects are being canceled or postponed and new sales have dropped dramatically. Uncertainty is forcing our solar businesses into difficult decisions -- not if, but when to cut and, how deep to cut. The coming loss of talented people and companies should be viewed as a loss of our country's intellectual property -- and a national tragedy.
It has been my habit over the years to look for the silver lining when it comes to the solar business in the U.S. But today, it's tough to find one.

A delay in a new federal program until a new administration can act in Q2 2009 is now a realistic scenario. This possibility makes it easy to imagine that U.S. grid-connected installations could fall to well below 100 megawatts (MW) in 2009, down from forecasts of 300 to 500 MW, which would represent a radical decline after years of steady growth. Each part of the channel and each business sector will be impacted.

Integrators and installation companies across the U.S. are most at risk. These local and regional businesses have no realistic way to create profitable new markets or work outside of the U.S. For those who focus on commercial projects, no Investment Tax Credit (ITC) means zero installations. Potential solar system owners won’t purchase and install systems without ITC certainty. Some well-managed and established residential installers will likely scrape by, but many companies will lay their work force off and go out of business. California’s residential installers, our largest market, have already been suffering because of high costs and low incentives. The loss of the US $2,000 ITC for homeowners will make a bad situation worse. Solar on new homes, which has been getting some traction despite the downturn in the new home construction market, will virtually stop as even the most progressive solar homebuilders and their partners lose the foundation of their business plan.

Solar distributors will be hard hit as many of the under-capitalized small and medium solar installation companies they serve will disappear overnight. If they are unable to sell the PV modules they have committed to, those modules will be sent to other countries, severely impacting revenues. Most of these companies have been through tough times before and will adapt again by downsizing and shifting their emphasis to the small off-grid segment and other markets allowed by their supplier relationships.

U.S. PV manufacturers and those international PV companies that support the U.S. market face many challenges and may consider the U.S. slowdown a minor market disruption. They will reallocate their products internationally and, based on world selling prices, make better margins. Some planned investments in U.S. manufacturing, organization and infrastructure growth will be canceled or postponed and some companies will scale back U.S. operations.

http://www.renewableenergyworld.com/assets/images/story/2008/8/21/1332-will-us-solar-businesses-weather-the-coming-storm.jpg

Other U.S. based manufacturers of inverters, mounting structures, balance of system components and data monitoring who have already diversified their businesses into international markets have a fair chance. Few have done this. Those who were counting on a robust U.S. market will need to scramble to adapt their products for international markets. For the unprepared it’s difficult to imagine gaining traction near-term without significant investments in product and market development. The scale of the international markets and our favorable exchange rate, if it continues, gives those who are properly capitalized a fighting chance.

Power Purchase Agreement companies and others who provide financing for solar systems, may continue to sell and do some preliminary work on projects, but with only a 10% ITC there is no scenario short of radical electricity price increases or radical decreases in installed system cost that would allow investors to authorize many projects. Some have low overhead operations and will likely take a “solar vacation” and wait out the storm. Other more vertically integrated organizations will likely downsize while the industry is offline. A few risk takers may double down hoping to build a significant backlog of business that they can complete when the market restarts.

Last week PG&E announced two PV projects totaling 800 MW (http://www.renewableenergyworld.com/rea/news/story?id=53348&src=rss) — the type of projects that prove solar electricity can be relevant to utilities today. The press release includes the following statement: “Both projects are contingent upon the extension of the federal investment tax credit for renewable energy and processes to expedite transmission needs.” OptiSolar (http://www.optisolar.com/), a U.S. based thin-film startup will supply 550 MW to the project, an amount that would certainly help create jobs, as well as grow a potentially profitable U.S. manufacturer — the exact reasons why governments around the world support developing industries.

It has been my habit over the years to look for the silver lining when it comes to the solar business in the U.S. Today, it’s tough to find one. The worse case, the idea that we will have to take a giant step backwards and then rebuild, is coming true. Our people have worked tirelessly to move our fledgling industry ahead and gain momentum against enormous inertia and countless barriers. It is beyond my comprehension how 535 people in congress and 1 in the White House could let partisanship rule at a time when the right decision for the country is so obvious. Our industry’s objectives of job creation, energy independence, and environmental stewardship should be treated as an urgent national priority.

Glenn Harris is CEO of the consultancy firm SunCentric Incorporated (http://www.suncentricinc.com/aboutus.html).

phirang

08-22-08, 05:32 PM

That your assumption about the solar tax credit being in this bill as passed and signed is incorrect. Here's an article from yesterday that captures the issues well. I'm working every day in an industry which is preparing to shut down.

If McCain wins, let's just say there'll be a buying opportunity for solar equities.:eek:

FRED

08-22-08, 06:21 PM

That your assumption about the solar tax credit being in this bill as passed and signed is incorrect. Here's an article from yesterday that captures the issues well. I'm working every day in an industry which is preparing to shut down.

Regret that the amendment that effects you personally was not included among the hundred or so that support EJ's point: next bubble tax amendments were a major feature of this last bubble bill, and contrary to your assertion, it did pass.

bill

08-22-08, 06:34 PM

In regards to future energy policy I recommend a recent event by CSIS.
Tax credits and government loan guarantees will help promote capital investments.

<O:p>http://www.csis.org/component/option,com_csis_events/task,view/id,1750/</O:p>
<O:p></O:p>

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD vAlign=top><TABLE id=expertbox cellSpacing=0 cellPadding=4 width="100%" align=left border=0><TBODY><TR><TD vAlign=top align=left width="20%">
</TD><TD vAlign=top align=left>July 31, 2008 </TD></TR><TR><TD vAlign=top align=left>
</TD><TD vAlign=top align=left>9:00 am - 12:00 pm </TD></TR><TR><TD vAlign=top align=left>
</TD><TD vAlign=top align=left>CSIS B1 Conference Center
1800 K Street, NW
Washington, DC 20006
</TD></TR><TR><TD vAlign=top align=left width="50%">Associated Programs:

</TD><TD vAlign=top align=left width="50%">Energy and National Security
(http://www.csis.org/index.php?option=com_csis_progj&task=view&id=6)
</TD></TR><TR><TD vAlign=top align=left width="50%">Related Research Focus:

</TD><TD vAlign=top align=left width="50%">Energy
(http://www.csis.org/index.php?option=com_csis_topics&task=select&id=14)
</TD></TR></TBODY></TABLE></TD></TR><TR><TD>Description:

This session is part of an ongoing series of conferences that examine the role of nuclear energy as an option to meet urgent climate and energy needs. In this program, several panels of experts offered analyses of the economics of nuclear power as well as discussed issues with financing a fleet of new reactors. A final panel commented on the potential to scale some of the inputs necessary to support an expansion of nuclear power: human capital and the nuclear supply chain.
Agenda, Audio, and Presentations

AUDIO (http://www.csis.org/media/csis/events/080731_energy_1.m3u) (mp3, 01:05:44)

9:00 am – 9:05 am: Welcome and Introduction

Frank Verrastro, CSIS
9:05 am – 10:05 am: Assessing the Economics of Nuclear Power

Moderator: William Magwood, IV,Secure Energy North America Corporation
Richard Myers, Nuclear Energy Institute-Presentation (http://www.csis.org/media/csis/events/080731_nuclear_myers.pdf) (pdf)
Justin Falk, Congressional Budget Office-Presentation (http://www.csis.org/media/csis/events/080731_nuclear_falk.pdf) (pdf)
Dr. Joe Turnage, Constellation Generation Group-Presentation (http://www.csis.org/media/csis/events/080731_nuclear_turnage.pdf) (pdf)
AUDIO (http://www.csis.org/media/csis/events/080731_energy_2.m3u) (mp3, 00:37:04) 10:05 am –10:55 am: Financing Issues with a New Nuclear Fleet

Moderator: Robert Ebel, CSIS
John Gilbertson, Goldman Sachs-Presentation (http://www.csis.org/media/csis/events/080731_nuclear_gilbertson.pdf) (pdf)
John Matthews, Morgan, Lewis & Bockius LLP-Presentation (http://www.csis.org/media/csis/events/080731_nuclear_matthews.pdf) (pdf)
AUDIO (http://www.csis.org/media/csis/events/080731_energy_3.m3u) (mp3, 01:11:59)
10:55 am –11:55 pm: Scaling-up Human Capital and the Supply Chain

Moderator: Carol Berrigan, Nuclear Energy Institute
Craig Hansen, Babcock and Wilcox
Yoshitaka Sato, Japan Steel-Presentation (http://www.csis.org/media/csis/events/080731_nuclear_sato.pdf) (pdf)
Dr. Sekazi Mtingwa, MIT-Presentation (http://www.csis.org/media/csis/events/080731_nuclear_mtingwa.pdf) (pdf)
</TD></TR></TBODY></TABLE>

santafe2

08-22-08, 06:35 PM

If McCain wins, let's just say there'll be a buying opportunity for solar equities.:eek:

I don't think this issue is about the election. Either candidate will likely support a renewable energy tax credit going forward. McCain will extract more for the oil and gas industry in trade than will Obama. If the renewable energy tax credit extensions are not passed in September they will not likely be passed until Q2 2009. The US Solar industry will have been eviscerated by that time.

phirang

08-22-08, 06:44 PM

I don't think this issue is about the election. Either candidate will likely support a renewable energy tax credit going forward. McCain will extract more for the oil and gas industry in trade than will Obama. If the renewable energy tax credit extensions are not passed in September they will not likely be passed until Q2 2009. The US Solar industry will have been eviscerated by that time.

I have personally kept away from solar equities until this is settled: the agency MBS bailouts may (further) bankrupt the US till even the ITC is compromised for a few quarters.

santafe2

08-22-08, 07:02 PM

Regret that the amendment that effects you personally was not included among the hundred or so that support EJ's point: next bubble tax amendments were a major feature of this last bubble bill, and contrary to your assertion, it did pass.

Fred - When you reach for the patronizing broad brush it doesn't suit you or the site well.

I understand you have a lot to cover here but I did not say the Housing and Economic Recovery Act legislation didn't pass. I said it didn't pass with the renewable/alternative energy component as EJ contended in his article. I didn't critique EJs article, only that piece of research. With regard to the article, I agree with it.

But, in his article, EJ sited a specific portion of legislation; Title X: "Clean Energy Tax Stimulus Act of 2008'', and then went on to comment that "the bill", referring to the Housing and Economic Recovery Act of 2008", contained an alternative energy component when that part of the bill did not pass. That was my only point.

raja

08-22-08, 08:21 PM

"Next Bubble'' development proceeds according to the inexorable logic of the US political economy. Two examples make the point.

The seeds of US government sponsorship of an alternative energy boom were planted in legislation intended to rescue the US economy from the damage done by the collapsing housing bubble. Emergency legislation titled "Housing and Economic Recovery Act of 2008'' passed recently. It provides loans to new home buyers, and has controversial provisions that allow the US Treasury to directly purchase the bonds and stock of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac a policy not allowed under the US Constitution.

Doesn't the question of the Next Bubble and how it will unfold have to be considered in light of other threats to the global economy . . . ?

For example, I have read that the $480 trillion derivatives market is a "ticking timebomb" that could destabilize the global economy should there be a meltdown. And what if the FTD issue blows up, paralyzing markets? :eek:

08-22-08, 09:00 PM

remove government subsidies of FIRE industries
there are a lot of high priced lobbyists and - even more important - big money political donors on the other side of this issue. i think that any realistic [meaning actually likely to happen] solution will not only NOT remove fire industry subsidies, it will include a cut for the financial types, perhaps in the form of ppp's with bonds to float and revenue streams to securitize.

gasull

08-22-08, 09:54 PM

Keep an eye out for new securities from Wall St firms and watch for sovereign wealth funds as the primary foreign buyers.

Is there an easy way of keeping track of this? What news sources are interesting besides iTulip?

metalman

08-22-08, 11:03 PM

Fred - When you reach for the patronizing broad brush it doesn't suit you or the site well.

I understand you have a lot to cover here but I did not say the Housing and Economic Recovery Act legislation didn't pass. I said it didn't pass with the renewable/alternative energy component as EJ contended in his article. I didn't critique EJs article, only that piece of research. With regard to the article, I agree with it.

But, in his article, EJ sited a specific portion of legislation; Title X: "Clean Energy Tax Stimulus Act of 2008'', and then went on to comment that "the bill", referring to the Housing and Economic Recovery Act of 2008", contained an alternative energy component when that part of the bill did not pass. That was my only point.

i counted a few grammar errors, maybe one or two factual errors, out of 93 facts, several dozen unique insights, and a revelation or two. all in all, a decent article.

nit·pick http://cache.lexico.com/dictionary/graphics/luna/thinsp.png <script type="text/javascript"> // <=!=[=C=D=A=T=A=[ var interfaceflash = new LEXICOFlashObject ( "http://cache.lexico.com/d/g/speaker.swf", "speaker", "17", "18", "<img src=\"http://cache.lexico.com/g/d/speaker.gif\" border=\"0\" /> (http://itulip.com/forums/\"http://dictionary.reference.com/audio.html/lunaWAV/N01/N0159700\")", "6"); interfaceflash.addParam("loop", "false"); interfaceflash.addParam("quality", "high"); interfaceflash.addParam("menu", "false"); interfaceflash.addParam("salign", "t"); interfaceflash.addParam("FlashVars", "soundUrl=http%3A%2F%2Fcache.lexico.com%2Fdictionar y%2Faudio%2Fluna%2FN01%2FN0159700.mp3"); interfaceflash.write(); // ]=]=> </script><noscript>http://cache.lexico.com/g/d/speaker.gif (http://dictionary.reference.com/audio.html/lunaWAV/N01/N0159700)</noscript> Audio Help (http://dictionary.reference.com/help/audio.html) /ˈnɪtˌpɪk/ Pronunciation Key - Show Spelled Pronunciation[nit-pik] Pronunciation Key - Show IPA Pronunciation –verb (used without object) <table class="luna-Ent"><tbody><tr><td class="dn" valign="top">1.</td><td valign="top">to be excessively concerned with or critical of inconsequential details. </td></tr></tbody></table> –verb (used with object) <table class="luna-Ent"><tbody><tr><td class="dn" valign="top">2.</td><td valign="top">to criticize by focusing on inconsequential details. </td></tr></tbody></table> –noun <table class="luna-Ent"><tbody><tr><td class="dn" valign="top">3.</td><td valign="top">a carping, petty criticism. </td></tr></tbody></table> –adjective <table class="luna-Ent"><tbody><tr><td class="dn" valign="top">4.</td><td valign="top">of, pertaining to, or characteristic of a nitpicker or nitpicking.</td></tr></tbody></table>

skidder

08-23-08, 07:49 AM

"Evidence of economic contraction in the US is obscured by rising inflation. Real GDP growth reversed in the fourth quarter of 2007 as nominal GDP growth declined 0.2% and consumer price inflation (CPI) increased to 3.6%, not including energy and food prices. The source of the inflation is the outsized impact of rising energy import prices of food and other goods and services that are sensitive to rising energy input costs.Can wage rate inflation be far behind? The Federal Reserve does not believe so and behaves as if it believes that, even while holding short-term rates below the inflation rate, maintaining negative real interest rates, rising unemployment will take care of the inflation problem by lowering demand."

Don't rising energy input prices squeeze margins for practically all industry? Don't recessionary forces generally suppress wages? I'm trying to understand the reference to the wage rate inflation that appears contradictory to all the points mentioned in this paragraph? Am I not looking far enough down the chessboard or what?

phirang

08-23-08, 09:13 AM

FRED

08-23-08, 10:43 AM

skidder

08-23-08, 02:27 PM

Fred, Thanks for pointing me to EJ's response! Regards.

akrowne

08-23-08, 03:53 PM

Do we have to keep having these mega-bubbles??? I think your analysis is very sharp Eric, but I think it almost comes off as advocating bubbles. The very essence of a bubble is that an anomalously large portion of the activity is pure economic waste. We shouldn't be neglectful of this fact.

To illustrate by analog, the late 90s were of course great for the launching of the internet as a major vehicle of commerce and much more -- but most regular folks still got wiped out on connected investments. I wouldn't wish a repeat upon the public, alternative energy or otherwise.

I would also dispute the assumtion that governments *have* to be extremely prone to intervention. It didn't used to be this way. My personal opinion is that we should seek to dismantle FIRE chiefly by returning to sound money. This takes the government and money center banking out of the nexus of the large scale wealth flows of the country. But they aren't needed (indeed, their net benefit is negative); let the market itself channel investment to areas that need it, without coercing it from the populace as some sort of tithe.

These problems with infrastructure and energy dependence have natural solutions that can be provided by the market, in response to price signals. Same as always.

However as long as we stick to fundamentally unsound money, I agree, everyone will of necessity look to the government to determine where the mass benefit/largesse should flow. I think that is a shame.

I realize the foregoing prescription is not a popular opinion these days, generally dismissed out of hand, but I can't see why we keep coming back to this severely dysfunctional FIRE/fiat system for any reason other than a collective psychosis. The conventional wisdom is to speak of "growth", but as we've seen, much of that is fictitious, due to either to bubble froth, or inflation.

I'm also a more than a little skeptical on whether a sizeable bubble can even be mustered. The last two bubbles were nurtured inside a gargantuan dollar bubble that will only continue to deflate from here on out. So any alt. energy/infrastructure activities will have to go on at a much smaller scale. But by definition, then, they cannot "restore" our economy to recent prior levels.

Of course, you may be more cognizant of that than legislators ;)

08-23-08, 04:26 PM

I think your analysis is very sharp Eric, but I think it almost comes off as advocating bubbles.

If you read the whole article you will see that I do not advocate bubbles, and the proposals I offer in my book will strike many readers as radically pro-market, such as reducing income taxes for entrepreneurs to zero. Peaking away the facade of neo-liberalism reveals some painful truths about our country that few want to look at. Speak to VCs who are trying to fund the development of new energy and transportation technologies to take us forward and make the US competitive, and they tell of unimaginable layers of regulation and bureaucracy designed to protect vested interests. Makes Italy and France appear dynamic by comparison.

bill

08-23-08, 06:05 PM

Speak to VCs who are trying to fund the development of new energy and transportation technologies to take us forward and make the US competitive, and they tell of unimaginable layers of regulation and bureaucracy designed to protect vested interests. Makes Italy and France appear dynamic by comparison.

<?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-comhttp://www.itulip.com/forums/ /><st1:country-region w:st=<ST1:pJapan</ST1:p</st1:country-region> government makes a move to confront the energy crisis.
http://www.yomiuri.co.jp/dy/business/20080824TDY02309.htm
(Aug. 24, 2008)
Eco-tech wealth fund planned

The Yomiuri Shimbun
The government is planning to establish a sovereign wealth fund in fiscal 2009 that would place priority on innovative technologies using new energy sources and natural resources, government sources said Saturday.
Amid surging prices of crude oil and other resources, the fund--tentatively named Innovation Sozo Kiko--will invest mainly in solar power generation, wind power generation, fuel cells, and other new energy technologies and natural resources.
The government is aiming to prevent excessive outflows of national wealth to countries rich in natural resources, and to build a mid- and long-term base for future economic growth.
The government hopes these new policies will transform the economy into one that functions on drastically reduced resource consumption.
Initially, the government saw the fund as an entity to buy up dormant patents owned by companies and universities, aiming to use them to produce high-value-added goods across a wide range of industries.
But the government shifted to a policy that concentrates on certain specific purposes due to a recent surge in prices of various natural resources.
Among its practical investment targets, the government is considering a project to collect and pool technologies from major manufacturers, emerging companies, universities and other research institutes that can lead to the production of innovative fuel cell technologies.
In the solar power-generation field, the fund would help companies select and concentrate on promising business projects.
In the wind power-generation field, the fund would help develop a battery system that would continue suppling electricity when winds are weak.
The fund also would sell this system to other countries.
In addition, the fund would help secure supplies of industrial materials even when natural resources are very expensive by developing rare metal alternatives.
To ensure such investments form part of a national strategy, the majority of stocks comprising the fund would be government held.
The government would have the authority to appoint or dismiss members of the fund's management committee.
The committee would make decisions on issues such as selecting investment targets.
The fund would hold about 200 billion yen in total investment.
Of that amount, the government would contribute 50 billion yen.
The remaining funds would be collected from sovereign wealth funds in the Middle East and other countries, and from the private sector.

phirang

08-23-08, 08:31 PM

<?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-comhttp://itulip.com/forums/ /><st1:country-region alt=</st1:country-region><ST1:pJapan</ST1:p government makes a move to confront the energy crisis.
http://www.yomiuri.co.jp/dy/business/20080824TDY02309.htm

good stuff and good precedent for our fearless leaders...

santafe2

08-23-08, 11:58 PM

i counted a few grammar errors, maybe one or two factual errors, out of 93 facts, several dozen unique insights, and a revelation or two. all in all, a decent article.

nit·pick http://cache.lexico.com/dictionary/graphics/luna/thinsp.png <script type="text/javascript"> // <=!=[=C=D=A=T=A=[ var interfaceflash = new LEXICOFlashObject ( "http://cache.lexico.com/d/g/speaker.swf", "speaker", "17", "18", "<img src=\"http://cache.lexico.com/g/d/speaker.gif\" border=\"0\" /> (http://itulip.com/forums/\"http://dictionary.reference.com/audio.html/lunaWAV/N01/N0159700\")", "6"); interfaceflash.addParam("loop", "false"); interfaceflash.addParam("quality", "high"); interfaceflash.addParam("menu", "false"); interfaceflash.addParam("salign", "t"); interfaceflash.addParam("FlashVars", "soundUrl=http%3A%2F%2Fcache.lexico.com%2Fdictionar y%2Faudio%2Fluna%2FN01%2FN0159700.mp3"); interfaceflash.write(); // ]=]=> </script><noscript>http://cache.lexico.com/g/d/speaker.gif (http://dictionary.reference.com/audio.html/lunaWAV/N01/N0159700)</noscript> Audio Help (http://dictionary.reference.com/help/audio.html) /ˈnɪtˌpɪk/ Pronunciation Key - Show Spelled Pronunciation[nit-pik] Pronunciation Key - Show IPA Pronunciation –verb (used without object) <table class="luna-Ent"><tbody><tr><td class="dn" valign="top">1.</td><td valign="top">to be excessively concerned with or critical of inconsequential details. </td></tr></tbody></table> –verb (used with object) <table class="luna-Ent"><tbody><tr><td class="dn" valign="top">2.</td><td valign="top">to criticize by focusing on inconsequential details. </td></tr></tbody></table> –noun <table class="luna-Ent"><tbody><tr><td class="dn" valign="top">3.</td><td valign="top">a carping, petty criticism. </td></tr></tbody></table> –adjective <table class="luna-Ent"><tbody><tr><td class="dn" valign="top">4.</td><td valign="top">of, pertaining to, or characteristic of a nitpicker or nitpicking.</td></tr></tbody></table>

Et tu, Metal? Is it not possible to critique research mistakes around here? First Fred and now you? Alternative energy is a core pillar in EJs next bubble thesis. He sited "The Clean Energy Tax Stimulus Act of 2008" as THE support for its progression. I pointed out that this was incorrect. Not because I need to be right about something, not because I want to "nitpick", because I care about his thesis. It's not a mainstream thesis so it has to be bulletproof. He certainly can't publish this update outside of iTulip with that level of error. It was a key miss.

metalman

08-24-08, 06:51 AM

Et tu, Metal? Is it not possible to critique research mistakes around here? First Fred and now you? Alternative energy is a core pillar in EJs next bubble thesis. He sited "The Clean Energy Tax Stimulus Act of 2008" as THE support for its progression. I pointed out that this was incorrect. Not because I need to be right about something, not because I want to "nitpick", because I care about his thesis. It's not a mainstream thesis so it has to be bulletproof. He certainly can't publish this update outside of iTulip with that level of error. It was a key miss.

you win today's 'not paying attention' award...
'Re-printed with permission of Business Day. All Rights Reserved.'

that's Business Day (http://www.businessday.co.nz/comment/4665376)

maybe you can get a job as fact checker for business day? except you were wrong... the bill did pass. the bill has 100+ energy related amendments... including a bunch of solar stuff that must be good for your business. you didn't find 'that level of error'. get over it.

08-24-08, 08:24 AM

metalman

08-24-08, 09:33 AM

i agree with santafe2 that fred's remark was condescending, and inappropriate for a moderator.

i find santafe2's contributions here substantial and always worth reading.

there is an occasional touchiness on the part of the leader/owner-ship of this site - an unwillingness to brook criticism or correction, and a grasping for credit for ideas - that is unbecoming and, even more important, detrimental to the site's mission and the general culture of the site. most of the time, the site embodies an openness to discussion and ideas that i very much appreciate. but occasionally fred gets snappish.

on the substantive issue, if the investment credit for solar wasn't in the bill, that's an important fact to point out. if solar companies are hung out to dry because of uncertainty, that's an important fact to point out. if we can usefully distinguish between pay option and subprime and alt-a, between cdo's and cdo-squared, we should be capable of discussing a variety of solar-supporting legislative possibilities, whether the right or wrong ones are being passed, and whether the alternative energy industry will be stillborn in the u.s. and developed instead in asia and europe.

didn't say satafe's contributions aren't valuable. where did i say that? as a professional writer, nit picking bugs me. you and santefe are the head nit pickers here, so it doesn't surprise me to see you defending his nit picking. you guys should try writing thousands words of well crafted original thought and see what it's all about. you'd quickly lose your taste for trying to find the one or two imperfections in a diamond... and you'll get more out of the diamond. i say this as a reformed nit picker myself. really... try writing to come up with your own ideas... it's really hard.

08-24-08, 10:06 AM

didn't say satafe's contributions aren't valuable. where did i say that? as a professional writer, nit picking bugs me. you and santefe are the head nit pickers here, so it doesn't surprise me to see you defending his nit picking. you guys should try writing thousands words of well crafted original thought and see what it's all about. you'd quickly lose your taste for trying to find the one or two imperfections in a diamond... and you'll get more out of the diamond. i say this as a reformed nit picker myself. really... try writing to come up with your own ideas... it's really hard.
i didn't say you said "satafe's [sic] contributions aren't valuable." where did i say that?

one man's nits are another's useful distinctions. as i said in my previous post, i thought we had usefully distinguished between various types of gimmicked mortgages. we used that information to predict the timing of waves of resets. you thought that useful, iirc, metalman. perhaps, just perhaps, there are some useful predictions that could be made about different kinds of solar developments, if only we had a full discussion of them. can you imagine that?

i think a more useful response to santafe2's comment would have been to elicit more information from him about what was and what wasn't in the bill relative to solar power [and other alternative power sources if he had knowledge thereof], and what the implications are for companies here and abroad.

Lukester

08-24-08, 12:38 PM

Rajiv

08-24-08, 12:46 PM

Santafe2 - Regardless of any uneven solar industry backing within this package, implementation of robust tax credits for solar have an extremely high likelihood of being fully implemented in the US within 4-6 years, simply because the oil price itself will "take care of this" and light a fire under legislator's butts to ensure the outcome. If you have present worries on this account, just watch Cantarell's production declines (as a US primary supplier exemplifying the "major problem" straight ahead) and the notion that US legislators won't receive a swift boot in the rear on this legislation becomes improbable.

However, if in those 4-6 years people have been laid off, companies gone bankrupt, and IP lost, then that does not serve the purpose of enhancing solar ev cells.

But maybe that is the purpose! Kill it in the short run, and acquire assets on the cheap in the belief that cheap help can always be hired later!

Lukester

08-24-08, 02:30 PM

But maybe that is the purpose! Kill it in the short run, and acquire assets on the cheap in the belief that cheap help can always be hired later!

Rajiv - There it is again ... conspiracy and collusion creep right back into your analyses. They are everywhere in your analyses. They may be right in some, or even many cases, but when they become ubiquitous, you might do well to examine the predisposition. Might this predisposition be why you see nothing amiss in the ubiquitousness of this same POV in Sapien's analyses?

The excruciating delays in fully backing solar and alt-energy initiatives in the US, when they are conjoined with the critical distress of some fledgling or microcap solar tech startups, could easily lead to a sense of victimization. It is probably not victimization - it is merely our old friend, crass stupidity, lethargy and lack of vision on the part of our legislators. But start meantime keeping a tally of how many of your posts contain a presupposition of conspiracy. You may notice the percentage is high!

Friends can disagree. Yes or no?

Respectfully.

santafe2

08-24-08, 03:06 PM

you and santefe are the head nit pickers here, so it doesn't surprise me to see you defending his nit picking.

I don't agree with your point of view regarding the error as being inconsequential but at least now you're using humor which is a great trait of your writing style. I'll drop this one, but it's unlikely I'll ignore the next oversight like this.

santafe2

08-24-08, 03:17 PM

It is probably not victimization - it is merely our old friend, crass stupidity, lethargy and lack of vision on the part of our legislators.

This analysis seems correct to me. Just add in a big dose of politics as usual. The Dems are not in a mood to give in any longer and they don't have enough power yet to override a veto. We're not the first industry to be ground through the political meat grinder and we won't be the last. I don't think Rajiv's analysis is correct because most of the product that would be installed in the US under normal circumstances will move to other countries where robust renewable energy programs are in place.

Rajiv

08-24-08, 04:07 PM

Having been burnt by skillfully manipulative (Lukester.s words!) financiers, and knowing how political favours are done, delaying the solar funding bill to the next House could be beneficial to both parties (pun intended!)

metalman

08-24-08, 06:36 PM

I don't agree with your point of view regarding the error as being inconsequential but at least now you're using humor which is a great trait of your writing style. I'll drop this one, but it's unlikely I'll ignore the next oversight like this.

you can write businessday and tell them what a crap publication they're running and they'd better hire you to fact check all their future articles if they want to maintain their reputation. :D

frankly, if i were the itulip guys i'd just ignore you.

08-24-08, 07:55 PM

frankly, if i were the itulip guys i'd just ignore you.
although you're not the itulip guys, you have that option.

Lukester

08-24-08, 08:06 PM

Rajiv - I can vividly understand your difficulties as to some extent we share them down here in San Diego. My situation is not entirely the same because we are a 100% privately owned corporation funded entirely by our EU sales (and in better years our US ones too, for the fledgeling US subsidiary!). We have resisted the tempation to expand with venture capital, and it is helping us in this admittedly vicious environment of reduced lending. Therefore you have my full understanding. It is entirely possible that in your individual company's case there has been some notable bad faith at the financing end, which incidentally is where most of the potential for bad faith most often is manifest. Your point is well taken here!

Having been burnt by skillfully manipulative (Lukester.s words!) financiers, and knowing how political favours are done, delaying the solar funding bill to the next House could be beneficial to both parties (pun intended!)

metalman

08-24-08, 08:12 PM

Rajiv - I can vividly understand your difficulties as to some extent we share them down here in San Diego. My situation is not entirely the same because we are a 100% privately owned corporation funded entirely by our EU sales (and in better years our US ones too, for the fledgeling US subsidiary!). Therefore you have my full understanding. It is entirely possible that in your individual company's case there has been some notable bad faith at the financing end, which incidentally is where most of the potential for bad faith most often is manifest. Your point is well taken here.

can't help thinking... aren't the congress critters blocking the solar legislation trying to squeeze more blood from the solar industry before letting the bill pass? more pain is more gain. the deal isn't done until oct/nov as an amendment to some other pending bill. by the the solar guys are bleeding out their ears and giving away the farm, but the deal will be done.

Rajiv

08-24-08, 08:32 PM

This was in ventures past -- lessons learnt and experiences not repeated.

However, the current funding environment is actually the worst I have seen in 20 years -- probably a bit worse than 2001-2003. Everybody is trying to find a safe haven and hence are not putting money into anything other than sure things.

Also the personnel turnover in the FIRE economy is quite astounding.

raja

08-24-08, 08:42 PM

i agree with santafe2 that fred's remark was condescending, and inappropriate for a moderator.

i find santafe2's contributions here substantial and always worth reading.

there is an occasional touchiness on the part of the leader/owner-ship of this site - an unwillingness to brook criticism or correction, and a grasping for credit for ideas - that is unbecoming and, even more important, detrimental to the site's mission and the general culture of the site. most of the time, the site embodies an openness to discussion and ideas that i very much appreciate. but occasionally fred gets snappish.

on the substantive issue, if the investment credit for solar wasn't in the bill, that's an important fact to point out. if solar companies are hung out to dry because of uncertainty, that's an important fact to point out. if we can usefully distinguish between pay option and subprime and alt-a, between cdo's and cdo-squared, we should be capable of discussing a variety of solar-supporting legislative possibilities, whether the right or wrong ones are being passed, and whether the alternative energy industry will be stillborn in the u.s. and developed instead in asia and europe.
As the individuals on this Forum show their "different sides", it makes me wonder to what degree certain personality quirks influence their economic analysis. I don't care whether people are acting according to my idea of what is "right", but I do care if their judgment is impaired, which could affect my investment success.
Just one more thing to factor in when developing one's investment strategy . . . . :rolleyes:

(Even thought I am replying to your post, jk, this is not directed at you.)

FRED

08-24-08, 09:48 PM

As the individuals on this Forum show their "different sides", it makes me wonder to what degree certain personality quirks influence their economic analysis. I don't care whether people are acting according to my idea of what is "right", but I do care if their judgment is impaired, which could affect my investment success.
Just one more thing to factor in when developing one's investment strategy . . . . :rolleyes:

(Even thought I am replying to your post, jk, this is not directed at you.)

EJ writes in:
The favorite guru of one of our members in the UK doesn't have a forum. Ever wonder why?

How about the guy in Connecticut with the great extended track record for gold? No forum there, either.

The reason is that there is that management at those sites thinks: I am the guru and you are audience receiving the guru's great wisdom. Who wants to hear from the peanut gallery?

That is how they think.

I think that everyone has wisdom, but not my wisdom.

Then there are finance and economic blogs designed to sell a fund: the guru lectures, the readers "comment," and the caravan moves on.

Then there are the brand name financial outlets, like FT and the WSJ. Again, it's the guru vs the unwashed masses again, except with a major brand behind it. What's their track record? you be the judge.

iTulip is unique because not only is its management top notch but it's members are taken seriously.

With that comes far higher standard of discourse than elsewhere.

Some readers might think, EJ can't be all that important. After all, he talks the me.

That is not how I think. Perhaps I am idealistic. We shall see.

All seriously developed, relevant criticisms are not only welcomed here but encouraged. Is the theory of the tech bubble wrong? Stuck to our guns in 1999 but the criticism was valuable. Our theory of gold and reflation from 2001? Still holding, in spite of five bouts of doubt per year since then from readers. Our theory of the housing bubble from 2002? Many critics, but again events worked out in our favor.

How about today? Is the Dollar Ratchet theory wrong? Is Ka-Poom Theory kaput? We all learn from tests of these theses. But they have to be serious.

Jim Nickerson

08-24-08, 09:56 PM

EJ writes in:
The favorite guru of one of our members in the UK doesn't have a forum. Ever wonder why?

How about the guy in Connecticut with the great extended track record for gold? No forum there, either.

The reason is that there is that management at those sites thinks: I am the guru and you are audience receiving the guru's great wisdom. Who wants to hear from the peanut gallery?

That is how they think.

I think that everyone has wisdom, but not my wisdom.

Then there are finance and economic blogs designed to sell a fund: the guru lectures, the readers "comment," and the caravan moves on.

Then there are the brand name financial outlets, like FT and the WSJ. Again, it's the guru vs the unwashed masses again, except with a major brand behind it. What's their track record? you be the judge.

iTulip is unique because not only is its management top notch but it's members are taken seriously.

With that comes far higher standard of discourse than elsewhere.

Some readers might think, EJ can't be all that important. After all, he talks the me.

That is not how I think. Perhaps I am idealistic. We shall see.

All seriously developed, relevant criticisms are not only welcomed here but encouraged. Is the theory of the tech bubble wrong? Stuck to our guns in 1999 but the criticism was valuable. Our theory of gold and reflation from 2001? Still holding, in spite of five bouts of doubt per year since then from readers. Our theory of the housing bubble from 2002? Many critics, but again events worked out in our favor.

How about today? Is the Dollar Ratchet theory wrong? Is Ka-Poom Theory kaput? We all learn from tests of these theses. But they have to be serious.

From what I can perceive at the moment Ka-Poom may be closer to reality than at any time since I found iTulip back in Q1/06.

flintlock

08-26-08, 09:08 AM

LOL, can I borrow that term?

Rajiv

08-26-08, 09:30 AM

Occupational hazard of Hessianing.

What are Hessians? (http://en.wikipedia.org/wiki/Hessian_(soldiers))

During the American Revolutionary War, Landgrave Frederick II of Hesse-Kassel (a principality in northern Hesse) and other German leaders hired out thousands of conscripted subjects as auxiliaries to Great Britain to fight against the American revolutionaries. About 30,000 of these soldiers were sold into service, and they came to be called Hessians, because 16,992 of the total 30,067 men came from Hesse-Kassel. Some were direct subjects of King George III; he ruled them as the Elector of Hanover. Other soldiers were sent by Count William of Hesse-Hanau; Duke Charles I of Brunswick-Lüneburg; Prince Frederick of Waldeck; Margrave Karl Alexander of Ansbach-Bayreuth; and Prince Frederick Augustus of Anhalt-Zerbst.

The troops were not mercenaries in the modern sense of professionals who hire out their own services for money. As in most armies of the eighteenth century, the men were mainly conscripts, debtors, or the victims of impressment; some were also petty criminals. Pay was low; some soldiers apparently received nothing but their daily food. The officer corps usually consisted of career officers who had served in earlier European wars. The revenues realized from their service went back to the German royalty. Nevertheless, some Hessian units were respected for their discipline and excellent military skills.

Chris Coles

08-26-08, 10:11 AM

Here in the UK we call it bickering, as when the weather is bad and we cannot get out into fresh air to blow off the dust, so to speak. The whole idea of debate is to draw the very best out of the OTHER party. Once you start to bicker, it is best to move on to another debate at another time. Me, having just helped a good friend win, (as his crew), a minor gliding championship, I will wait for the next major post to circumvent the cloud of your dusty and may I say, temporary, misassociations. ;)

tombat1913

08-26-08, 11:22 AM

Jeff; are "stimulus package" not a form of electronic bread line?
electronic bread line, Brilliant! I couldn't have said it better.

Jim Nickerson

09-03-08, 12:44 PM

http://www.bloomberg.com/apps/news?pid=20601039&sid=a6HMtlVh5Rhk&refer=home

9/3/08

Five Places to Look for Next Investment Bubble: Matthew Lynn

Commentary by Matthew Lynn

Sept. 3 (Bloomberg) -- Dot-coms? Done that. Property? Oil? Corn? Been there, got the T-shirt and nursed the losses, as well.

One thing we know for sure about today's global economy is that there is always an investment bubble somewhere. If you get in early enough, you can make a fortune riding the boom.

So with property prices collapsing faster than a tent on a stormy day and with the oil-and-commodity bandwagon gone, where should investors be looking for the next big thing? There are five areas worth thinking about: Old Europe, automobiles, stockbroking, the dollar, and private islands.

Anyone looking at the financial markets over the last 20 years would have noticed one common thread: Something is always the flavor of the month. Investors spot a trend, and everyone piles in until valuations become overextended and the whole thing collapses in a heap of bankruptcies and lawsuits.

At the turn of the decade, we saw the bubble in dot-com shares (http://www.bloomberg.com/apps/quote?ticker=CCMP%3AIND). More recently, we have witnessed the same in real estate -- fueled by the availability of subprime mortgages -- as well as in oil, food and commodities.

We have seen buying frenzies in the much-hyped BRIC economies -- Brazil, Russia, India and China. And there have been bubbles in financial instruments, such as collateralized debt obligations, that helped trigger the subprime meltdown. Along the way, we have some minor bubbles in the things purchased by the people who made money out of the other bubbles. Look at how the price of art or English Premier League soccer teams has soared.

Basic Truth

Of course, bubbles are never entirely ludicrous. The boom always has some basis in reality. The Internet was an important new technology, and a few companies would make a lot of money from it over time. The dot-com boom took that basic truth, and blew it out of proportion.

Likewise, adding China and India to the developed world is going to mean commodities get more expensive. And yet the natural-resources boom took that upward-sloping graph and assumed it carried straight on into the sky.

So where are the next bubbles? You need to find something where there are solid reasons for expecting good growth, but which can also be puffed up into a mega-trend once some smart investment bankers get to work on it.

Here are some places to start looking, bearing in mind that bubbles come in five basic types: places, industries, financing, currencies and luxuries.

FIGs Beat BRICs

First, the place: Old Europe. Forget about the BRICs. The next decade will belong to the FIGs -- France, Italy and Germany. We have written them off for so long that we're in danger of forgetting that all three have been among the richest societies in the world for more than 1,000 years.
As the Chinese and Indian middle classes expand, they will spend money on the kind of upmarket, design-led, history-rich products the FIGs are so good at making. After the credit crunch, their mix of stable, export-led, self-financing growth will look more attractive than the debt-fueled U.K. and U.S. models.

Next, the industry: automobiles. It has been almost a century since we last witnessed a gold rush in cars, suggesting it's high time for a replay. After oil prices reached records, some of the world's smartest people began looking more seriously at creating cheap and non-polluting electric cars. If they crack it, a few hundred million vehicles will be replaced within a few years. Think about the fortune the music industry made when we replaced our vinyl records with compact discs and then multiply it by 10,000 or more. It sure sounds like a boom.

Stockbroker Boom

How about the financial bubble? That will be stockbroking. It's so long since it was in fashion, there aren't even many left in business. Most are just divisions of investment banks. And yet, there are now thousands of companies with shattered balance sheets from the credit crunch. They need advisers who have strong relationships with investors and can raise money for their clients by selling shares.

That's what stockbrokers used to do. If you are smart, quietly shut down that hedge fund, and become a stockbroker. In a few years, UBS AG will pay a fortune to buy you out.

The currency bubble will involve the dollar. The markets have kicked it around for a long time, and yet by next year it may well be the U.S. that has the world's strongest economy. The weak dollar will spark an export boom. Pretty soon we'll be describing the U.S. as the new Germany -- an export-led, manufacturing economy, held back only by the reluctance of its consumers to spend money.

And how will the mega-rich, who make their money from those bubbles, put their new wealth on display? Forget about a Matisse to hang on the wall. That is too vulgar. As for soccer teams, that is just another bubble waiting to pop. The new FIG- automobile-stockbroker billionaires will value privacy and discretion above all else.

There is no better way of doing that than by buying part of a country. Grab yourself a windswept, Scottish island now, ignore the gales howling in from the North Sea, and you'll be able to sell it for a fortune in a few years' time. Just remember to get out before all the bubbles burst.

(Matthew Lynn (http://search.bloomberg.com/search?q=Matthew+Lynn&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) is a Bloomberg News columnist. The opinions expressed are his own.)

dave_cohen

09-08-08, 10:34 AM

The bill, rushed through congress and signed by the president with alacrity not justified by the gradual pace of economic decline is really about reassuring foreign central banks that hold nearly $US1 trillion of US agency debt [that] the US government intends to guarantee the GSE's credit, and even stock if necessary, to avoid foreign official sales of agency securities that will cause a spike in mortgage rates at this precarious time for the US housing market.

I think the remarks of China's He Fan, an economist with the Chinese Academy of Social Sciences, might be of interest after the bailout of the Fannie and Freddie.

The U.S. Treasury's takeover of Fannie Mae and Freddie Mac is good news in the short term for China, the biggest holder of the giant mortgage lenders' debt, but Beijing's huge U.S. exposure still poses a serious risk, a prominent government researcher said on Monday. China owned $376 billion of debt issued by U.S. government agencies, principally Fannie and Freddie, as of mid-2007.

The seizure of the two firms, prompted by worries over their shrinking capital, was the latest in a series of emergency steps taken by U.S. authorities to quell a year-long credit crisis that has helped push many economies toward recession.

"China has bought a lot of asset-backed securities, and there might be short-term improvement in price," said He Fan, an economist with the Chinese Academy of Social Sciences.

But, taking a longer view, he said the bailout posed a problem: if the Treasury issues new debt to fund the rescue, should China be a buyer or not?

"For China, whether or not you buy the new treasuries, there will be losses: if you buy them, you're getting deeper in the hole; if you don't buy, your existing holdings will lose value," He said...

Although the takeover of the mortgage lenders was a reminder of the investment risks China is taking, He said the country had little room to diversify its $1.8 trillion in currency reserves.

Buying non-government dollar bonds would be even riskier, while the euro is expensive and yields in Japan are low.

"If we don't buy U.S. treasuries and ABS, what else we can buy?" He said. "China just has no way to avoid the risks. Whatever we do, we have to bear the losses."

babbittd

09-25-08, 08:35 AM

Chris Coles

09-25-08, 03:28 PM

Army and NRC Sign Interagency Agreement (http://www.marketwatch.com/news/story/army-nrc-sign-interagency-agreement/story.aspx?guid=%7B242CA93A-63E5-4E54-817C-F0BBCC020317%7D&dist=hppr)

Assistant Secretary of the Army (Civil Works) John P. Woodley, Jr., and Nuclear Regulatory Commission (NRC) Executive Director for Operations Bill Borchardt have signed a revised interagency agreement to improve the effectiveness and efficiency of the regulatory processes related to the development of new nuclear power plants and the expansion of existing plants. The two agencies agree to coordinate early in a project's life to ensure that the purpose and need, the suite of alternatives, and evaluation presented in the environmental documentation are suitable for carrying out their respective regulatory responsibilities.

It is interesting to see the differences between our two nations with regard to arguably the most important element, energy, within a long term successful national strategy; here in the UK we just sold out our overall policy, generating capacity, sites for new nuclear power stations and of course, the engineering to the French. Nothing against the French, but would the US ever contemplate such stupidity?

http://business.timesonline.co.uk/tol/business/industry_sectors/utilities/article4821330.ece?&EMC-Bltn=LQZDL9