Most are aware of what is happening in Europe at the moment, so let me take a leap and look at Australia and Canada. I believe both of these economies may be in for considerable softening. Just like the US, the UK and Spain, these two countries are now in the midst of huge housing bubbles. It is particularly bad in Australia. A figure of merit is home cost to household income ratio. A rough rule of thumb is that it should be around 3. During the peak in the US, the ratio was around 4.5, but has now dropped close to its historical norm of 3. In Australia, the ratio is now close to 7! In Canada, it is currently around 4, but it is still growing and in Vancouver, it has hit and incredible 9(and still rising), while in the Toronto area it is around 5. A moderating factor is that both Australia and Canada have balanced govt. budgets while their households have positive savings rates. Still, if I had property in Australia's eastern cities, I would sell NOW. Ditto for anyone living in Vancouver. The prices there are simply not sustainable.
With regards to clean energy, I would say the sector, specially solar has taken a big hit due to reductions in subsidies in Germany (50% of the market) and Spain, leading to serious over capacity. Another factor has been the failure of the Copenhagen talks. Regardless, the long term trends are still clear. Wind is currently 20-40% more expensive than coal, while Solar is around double the cost of coal which means that they cannot compete without subsidies. The 30% US federal tax credit that was extended at the end of Bush's term has helped this sector to grow considerably, so much so that the US overtook Germany to become the largest installed base of wind last year. Like ICs and flat screens, the technology continues to improve, which means that costs continue to come down. By the end of this decade, if not earlier, we should see large swaths of the world where wind and solar will become the cheapest form of energy, without subsidies. In fact in Europe and the US, the MAJORITY of new energy capacity that is currently being added is in the renewable sector. Finally, one cannot ignore China. It is already the world's largest solar and wind producer and based on current trends it is only a few years before the majority of its new added capacity will be based on renewables as well. Marlon Gabe Menezes wrote: > Well, we are well into the New Year; my prediction that Gold would hit 1,200 > before Spring came true last year end. ----- Original Message ---- From: Mervyn Lobo <[email protected]> Hi Gabe, Congrats! You got the price AND timing correct. Something rather difficult to do. When gold went by $1,200 I was wondering if anyone here would remember your words. Gold is the anti-US dollar. It has been appreciating about 16% annually ever since George Bush (43) took a huge budget surplus and converted it into a humongous deficit. Hussien Obama has just presented another mind blowing budget deficit. The US will not be able to balance its budget for the next nine to twelve years. Any individual holding the currency during this period is essentially committing financial hari-kari. Gabe Menezes wrote: > Best to buy some India Mutual fund and lock it away for five years. ----- Original Message ---- From: Mervyn Lobo <[email protected]> Locking away any mutual fund for five years is always a good idea. The question is, why Indian mutual funds? Mervyn1113Lobo BTW, last year I mentioned five alternative energy stocks here. They all doubled in price within three months. Let me repeat, they all doubled in price within three months. The only other person I am aware who made money from this is the alternative energy specialist here. Concern for global warming does have its benefits........
