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Green Energy Boom/Bubble

Following up on yesterday's poll:

link: http://www.scott-edwards.com/2007/04/30/new-investment-bubble-forms-in-green-ventures/

There were several side effects from the first dot com crash that shaped the way the internet evolved. The first and most important trend was the over-investment in fiber-optic cables. This over-investment sent transmission prices plunging, resulting in prices being so low that today they are almost nonexistant. While this was a disaster for investors, consumers and everyone who uses the internet benefited from the vast increase of bandwidth available to them at rock bottom prices.

The same thing will happen when the green energy bubble bursts in a few months or few years. While investors in those companies will be hurt, the stock market will decline, and employees in green companies will be laid off, the over-investment will drive the cost of green technologies lower than previously thought possible. This means solar and wind power will be truly competitive on the energy market. Adoption of alternative energy will skyrocket because it will likely be cheaper and more efficient than traditional sources. All this has nothing to do with environmental concerns and everything to do with economic concerns. The side effects of the bubble in this case have tremendous positive effects for the environment and for green energy. As someone who has no investments in green energy and who would love to see the country more rapidly adopt clean energy solutions, I see this VC boom in green energy as a good thing, rather than as something which should be feared.

Not a bad outcome. I hope it pans out that way.


( 7 comments — Leave a comment )
Aug. 19th, 2008 06:58 pm (UTC)
I hope it pans out that green technologies become competitive in the marketplace without their investors going bankrupt.
Aug. 19th, 2008 10:39 pm (UTC)
No sympathy for capitalists
I doubt any of the venture capitalists who have had to turn away investors with more dollars than ideas about what to do with them will have to take up manual labor or even start flying coach when their investments tank. They'll still enjoy a measure of privilege and luxury unknown to the overwhelming majority of humanity.

Just as in the dot com bust, fabulous sums of sequestered capital will enter the economy and be transformed into jobs and technological innovation. I will lose no sleep nor shed any tears over the losses of venture capitalists.

What I hope is that we can avoid a repeat of the housing bubble where regular people got swept up in the money-for-nothing bubble mentality and went into enormous debt in an effort to join the free money bonanza and ended up saddled with debt they could never pay off.

Sure, some people took out loans in the late 90s to buy tech/internet stocks, but back then Wall Street wasn't buying all the debt they could lay their hands on to turn it into fraudulent securities, and banks weren't creating as much debt as they possibly could by giving out half million dollar loans to working shmoes with mediocre credit and no documented income. Normal people weren't given nearly as much rope with which to hang themselves.

I tend to subscribe to the view that enormous fortunes are made on enormous crimes, and when enormous sums of wealth are transformed into salaries and the means by which normal people provide for their families, that counts as a correction in my book.

The part of the described scenario I don't like is the part where all the people working for the green tech companies that fail when the bubble bursts (and that will be most of them) find themselves suddenly jobless. But every surfer knows that no wave lasts forever. Eventually the ride ends and you have to start paddling and looking for the next wave.

Aug. 19th, 2008 11:32 pm (UTC)
Re: No sympathy for capitalists
Then I think you and I have basic disagreements that will not be sortable in any reasonable amount of time. I will leave you with just two thoughts:

I am a working schmoe who is investing in green tech. I have bills and kids to feed and I fly coach, when I fly at all.

If it weren't for capitalists, both of the wealthy and the working kinds (as well of course of the wealthy, working kind), you would have neither green technologies to look forward to nor a computer on which to type your opinion thereof.
Aug. 20th, 2008 12:00 am (UTC)
expected utility
I am a working schmoe who is investing in green tech. I have bills and kids to feed and I fly coach, when I fly at all.

Then all ideology aside, you might want to re-think your goals and intentions as they relate to your personal investments in green tech.

[Edit] Actually, you "goals and intentions" are probably correct. I won't presume to offer financial advice, as I'm broke as a bum, and I certainly wouldn't take financial advice from someone who had less money than I do. I'll just state that I think that individuals who trade the hours of their lives for just enough money to get through the month should avoid involvement in bubbles of speculation and that the rush to invest in green technology and energy seems to have some of the hallmarks of a bubble.

Edited at 2008-08-20 12:13 am (UTC)
Aug. 20th, 2008 12:25 pm (UTC)
Re: expected utility
Avoiding risk is the best way to ensure I'd be trading my months for food until I die. No thanks :/
Aug. 20th, 2008 12:27 pm (UTC)
Re: expected utility
And I meant to say, thanks for clarifying in your edit. The initial reply sounded surprisingly accusatory. I do find the whole 'rich capitalists are teh eeeevil' philosophy tiresome, for a couple of reasons. It is almost solely espoused by people who already have it better than 95% of the global population, and it is also almost solely espoused by people who would take the money in a heartbeat if they were given the opportunity.
Aug. 20th, 2008 02:45 am (UTC)
I was just about to say something to this effect... that the dot-com bust was horrible for people who lost their jobs or the value in their stock portfolios, but in terms of infrastructure, it was quite a boon.

Similarly, assuming this "green bubble" is true, it's bad news for investors in those companies, but it doesn't mean that the technologies themselves aren't quite viable in the long term- any more than the dot-com bust meant that the whole "Internet" thing was just a flash in the pan.
( 7 comments — Leave a comment )

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