--- On Tue, 2/17/09, Mario Goveia <[email protected]> wrote: Mario responds:
I looked in vain for something wrong in my quote above. . . Anyone familiar with American business cycles would know that even pessimists like you, after being wrong for seven years, will eventually be correct as a business cycle ends. ---- Hmm, the US is in worse shape today than when Bush took control 8 years ago in pretty much all figures of merit and we have not even hit bottom yet. Interestingly however, you gave Bush credit for the phony debt driven boom of the first 7 years, but then abruptly disavow all responsibility for the 8 year! If you contend that ending worse off that what you started with is something to be "smug" about, then I contend your condition is worse than that of the US economy! Furthermore, if you think this is a "normal" business cycle you have to be kidding yourself. You are obviously out of touch with economic reality, which should not be a surprise, since you have not worked in the real world for who knows how long. Normal business cycles do not result in a 40% drop in sales in say cars in a matter of a few months, or a 60% drop in industrial equipment sales. Just look at the prices of commodities - steel, oil, you name it. This is unprecedented. We may see a temporary blip now and then, but based on the information I can see, this downturn will be a long one. Mario responds: Will "clean tech" survive the Obama administration's subsidies when the US will return to more free market policies? Billions of government subsidies in clean tech over the last 25 years have gone down the drain. Boone Pickens has lost billions in clean tech. ---- Most of the stimulus is a waste of money as it focuses on consumption, which is actually the root of the problem (too much of it). WRT clean tech, there is a lot more than meets the eye and I think this is one of the few smart long term investments that are being made. The other is increased funding for basic science research at US universities. Back to clean energy, there are several reasons why it is a good bet: For one thing, there is inevitably going to be a carbon tax of sorts that is going to be imposed in most of the world which is going to shift the balance against fossil fuels. This tax will eventually reflect the true cost of damage to the environment. The laws are changing, whether you like it or not. This will obviously assist in making clean tech more cost competitive. I suggest you do some research on the increasing number of coal powered electric plants that have been canceled in the past year. Second, there is an increasing consensus that military cost of securing fossil fuel supplies from unfriendly nations, be it in the middle east, Russia is a financial burden that is not sustainable. Thirdly, regardless of the above factors, the cost per watt-hour of energy derived from these sources continues to follow steep declines. Wind is already competitive with dirty coal in many regions of the world, while solar is expected to reach grid parity (even without carbon taxes) in the next 5-10 years. 30 years ago, solar was 20-100x more expensive than grid. Today it is 2-5 times more expensive than coal grid. The rate of progress is if anything accelerating. Last, but not least is the concept of a distributed grid or smart grid which some also more ambitiously refer to as the "energy internet". Right now, the US grid only operates at 50% of capacity because there are many choke points that prevent the long distance distribution of energy. The solution for this is to either fix these bottlenecks (expensive) or move to a distributed/diffuse energy production model. The former is more in line with the old style centralized power generation systems, while the latter is more in line with the newer clean technologies. It also does not help that the US grid is for the most part controlled by the federal government, which is not conducive for local utilities or home owners. The current grid is also very dumb because it does not allow for two way real time communications of information (supply/demand/price) between the producers and consumers of energy. The future may be like this: Individual homes will be able to buy or sell energy to the grid at will based on their personal parameters, thus further enhancing the drive towards distributed energy production from say roof tops. Appliances etc will be networked into the grid to allow the homeowner to control loads based on energy costs, local surplus energy production etc. It is even possible that we may see the re-emergence of DC grids that were last seen over a century ago. Bottom line, these changes will increase efficiency and reduce costs to the end consumer. In the final analysis the wealth of a society is determined by how economically productive it is, not by how much it consumes. Mario responds: Now, critics like you have given us the most left wing administration in US history. You are going to get regulation like you have never seen before. I hope you are happy. ---- I am happy because I knew this big downturn was coming and made what until very recently seemed to be tough decisions to deal with it. This basically meant de-leveraging things like property in a couple of places in order to maintain a cash rich position. I take it you did not take up my free advice I proffered to you in 2005! Marlon
