Green Versus the Economy

Olivier El Mekki

Wed Nov 26 05:21:16 -0800 2008

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I keep listening in the media, here in France, that clean cars and renewable energies will be the factor for a new start of the economy.

Listining to them, it seems to be an international consensus. Is it fake? I mean : does not politicians say such in your countries?

I know saying it and doing aren't the same thing (espacially in politics), but your article makes me doubt even of what is said here.

Green Versus the Economy

phred14

Wed Nov 26 06:40:35 -0800 2008

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It may be a concensus, it may be international, but it may not matter.  The people in the fossil fuel business have gotten extremely rich on the status quo, and they're eager to see that continue.  In fact, if any sort of green revolution gets stalled or abandoned, the fossil fuel business only gets more lucrative.  Money speaks, and right now that money is speaking on its own behalf.

Well, they may want to..

zogger

Wed Nov 26 06:55:31 -0800 2008

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..but just not be able to. All the nations have been riding a huge and quite involved credit bubble. I won't begin to claim I fully understand all of it-and I doubt many of them do, either.

I think the main point is the "real" economy got so involved with the "investment/gambling" economy that once it got to the point that the big gamblers stopped trusting each other it started to collapse fast. That is why they want all these stimulus packages and bailouts, but unless that money goes primarily into reviving the real economy, we'll just postpone the inevitable and the collapse will continue.

Alternative energy and new forms of vehicles and new medical advances and more research etc are all good things, so we'll have to see where all this new money really goes.

I heard an interesting take on the Detroit/auto industry "bailout" last night. What if..instead of handing those companies a huge check, they gave all the car drivers a proportional decent sized coupon to buy a new car, with a caveat the car had to be one of the new tech kinds, great mileage, electric or plug in hybrid, etc? The same money, but which method would really both improve the car companies, give them the incentive to really work hard, and also stimulate the economy in general? The car companies wouldn't see a cent of it until after they had really sat down internally with their own managers and investors and labor and decided how to go about it realistically if they all wanted to remain employed. That's a big incentive. The method they want, though, is yet another "trickle down economics" theory, keep pumping in money at the top where it has already gone in large part, just hand them a check, whereas the car coupon or credit to a million drivers is the float up and sideways theory. The same "liquidity", just "injected" at a different point.

The same with the big bank bailouts, like do we really need to "bailout" some of the larger banks that have huge blocks of shares owned by extremely rich foreign "sovereign investment funds"? (citi for the obvious example) Do we really want to keep employed the same exact set of bosses and Cxx folks who got us to where we are today? If they are so smart and successful, then they shouldn't be needing any bailout money. If their theories worked, if all their complicated derivatives and repackaged debt schemes worked, why do we have this big problem? And the answer according to the current practice is to hand them hundreds of billions more..to do the same thing with the same folks in charge? Nuts, does not compile..

As to where you are, perhaps you can pull it off. Your nation is a lot closer to being fully energy independent, and nissan/ renault look (to me) to be the company with the best plan overall to transition to a mass-adoptable and affordable new mode of road transport with their collaboration with project better place on the electric vehicle/charging stations concept. You also seem to be more willing to protect your food supply than other nations, something critically important. Food is never going to be a lusury.

If you can maintain a good mix of manufacturing and agriculture I think you'll do better than nations that are heavy "service" and casino styled "banking". Wealth creation versus wealth rearranging, which is better long term? I'd put my bet on wealth creation.

And it is a given that fossil fuels will remain highly volatile as to supply and suffer big price swings and eventually a huge spike in costs, so transiting to alternatives seem a much better longer range view, and of course it will result in a cleaner/greener environment.

Just by keeping money trading internally you (anyone) would be better off, that is much better to maintain a sustainable less bubble prone national economy than having to export your cash for critical necessities like energy. Exporting your cash is paying to remain dependent on x-thing, being independent on production means just that. It may have a temporarily higher price tag, but in the long run it will always be cheaper and provide more national security.

Well, they may want to..

phred14

Wed Nov 26 11:34:16 -0800 2008

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I think the main point is the "real" economy got so involved with the "investment/gambling" economy that once it got to the point that the big gamblers stopped trusting each other it started to collapse fast.

I think this is touching on the real issue, but not quite there...

I suggest that the problem we're having now is that the investment/gambling economy got too big.  In  other words, in "adjusting the tax policy to favor capital and investment over labor," the "capital and investment" side got too much money.

Slight corollary - it's inflation.  The classic definition of inflation is too much money chasing too few goods.  In this case, its too much investment money chasing a shrunken real marketplace.  In other words, investment is supposed to ride on top of the real economy.  But as an example, when there's too much investment money chasing too little crude oil, the price of crude oil rises more than the real-economy supply/demand curve would suggest.  When there's too much investment money chasing too few houses, the price of houses rises more than the real-economy supply/demand curve would suggest.

But the side problem with all of this is that the real economy is... real.  It's tied to physical things, and can't move that fast from one place to another - there's a certain amount of inertia, or damping built in.  But the investment economy has much less of that, in fact with modern electronics and software, we've increased the speed of money as fast as we can.  As such, the money can all rush quickly into oil/housing/what-have-you, creating bubbles everywhere it goes.

Unfortunately the real economy is stuck going along for the ride, both up and down.

To tie back to the topic - the green economy also looks like a good idea because it's less centralized, and hopefully less susceptable to investment money rushing to and fro.

Well, they may want to..

Charles E Hill

Wed Nov 26 20:19:45 -0800 2008

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What if..instead of handing those companies a huge check, they gave all the car drivers a proportional decent sized coupon to buy a new car, with a caveat the car had to be one of the new tech kinds, great mileage, electric or plug in hybrid, etc?

Because they'd go broke at super-sonic speed building cars that most people don't want?

In 2007, electric and electric-hybrid models represented only 2.7% of all automobiles sold in the United States.  That means 97.3% were the normal internal combustion kind.

THE PROBLEM ISN'T THE KIND OF CAR GM IS MAKING.  People are buying their cars as is.

The problem is their biggest cost is retirees and retiree health.  In 1962 GM had 11.1 people working for every 1 retired and could easily handle generous retirement packages.  In 2005 they had 1 person working for ever 3.2 retired!  In 2008, with early retirement incentives over the last few years, that number is around 1:4 now.

FOR EVERY 1 PERSON EMPLOYED, GM IS SUPPORTING 4 WHO GENERATE NO INCOME, ONLY EXPENSES.

GM made some short-sighted deals back in the 1950s & 1960s and it is now ripping them apart.  Until those are resolved, no matter where you inject the liquidity, this bloated carcass isn't going to float.

GM can re-tool for hybrids, electrics and dual-fuels on their own just fine, if they can find a way to deal with the crushing retiree burden.

Green Versus the Economy

President4242

Wed Nov 26 08:44:24 -0800 2008

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Here's what it is going to take:  Direct government spending on nationalized factories to push "green" past the hump of economy of scale.

Nothing less will do.