The Recession & Alternative Energy?

[Michael]

There's an excellent op-ed in this week's Economist that points to the fact that recessions are a very good time for governments to advance new spending programs - especially on infrastructure or anything that can spur jobs and/or direct economic activity as soon as possible.

At the same time, there is a strong world-wide need for new energy solutions to get past our fossil-fuel addiction. The Economist notes that these two ideas do fit together rather nicely. I agree - this would be an excellent way to spur the economy in a productive manner. A nice mixture of grants, free loans and tax credits for new energy investments and super efficient consumer devices.

Anyone else think this is a good idea?

[drgoodtrips]

You might get to see exactly that. If I'm reading his campaign rhetoric correctly, I believe Obama has this very thing in mind for his legacy - I think he'll (try to) make it a priority.

I find it interesting largely because I'm a technophile... :)

[Michael]

I find it interesting largely because I'm a technophile... :)
Obama certainly has made some noises about this topic.

Speaking of which, I believe Denmark has moved quite considerably in this direction over the last half-dozen years. Perhaps one of our Danish members might enlighten us about this... ;)

(good quick edit on the "technofile"!) :D

[drgoodtrips]

lol... yeah. I depend heavily on editing posts after I make them, rather than checking spelling as I go, for some reason.

[partofme]

This is a topic getting quite a bit of attention in U.S. media. Specifically coming from T. Boone Pickens (from what I can tell it sounds like he wants subsidies for his business more than anything) and Thomas Friedman.

[Americano]

It makes a lot of sense (Pickens wind farms aside) as I don't see any existing US industry(s) capable of leading an economic turnaround. If we're borrowing money let's invest in something offering potential return rather than prolonging the eventual death of failed entities.

[Michael]

It makes a lot of sense (Pickens wind farms aside) as I don't see any existing US industry(s) capable of leading an economic turnaround. If we're borrowing money let's invest in something offering potential return rather than prolonging the eventual death of failed entities.
Yes, that's my point. If one is going to stimulate economic activity with borrowed money, one really needs some actual economic growth to pay that back with. Old-corrupt industries like finance/banks/insurance or the dying US auto sector are 'contracting' industries with unsustainable growth prospects. Throwing money at them just slows the rate of rot.

Spending that money on tax incentives, tax credits, rebates, no-interest loans and whatnot in support of new energy technology does have a potentially large economic payoff down the road.

[partofme]

Yes, that's my point. If one is going to stimulate economic activity with borrowed money, one really needs some actual economic growth to pay that back with. Old-corrupt industries like finance/banks/insurance or the dying US auto sector are 'contracting' industries with unsustainable growth prospects. Throwing money at them just slows the rate of rot.

Spending that money on tax incentives, tax credits, rebates, no-interest loans and whatnot in support of new energy technology does have a potentially large economic payoff down the road.

Well it looks like with Obama's supporter the auto industry will be either bailed out now or at least once he is in office even further. He isn't even president yet and he is disappointing me with that one.

[Americano]

Yes, that's my point. If one is going to stimulate economic activity with borrowed money, one really needs some actual economic growth to pay that back with. Old-corrupt industries like finance/banks/insurance or the dying US auto sector are 'contracting' industries with unsustainable growth prospects. Throwing money at them just slows the rate of rot.

Spending that money on tax incentives, tax credits, rebates, no-interest loans and whatnot in support of new energy technology does have a potentially large economic payoff down the road.

I consider it a Manhattan Project level of emergency for the US to develop viable alternative energy sources. That can't be accomplished without nationalization of that industry to provide the necessary capital. Current energy circumstances make any investment in a debtor nation maintaining a high standard of living on credit while consuming more than it produces undesirable to private capital investment.

[JHC]

The Environmental Protection Agency blocked a permit for a new coal power plant in Utah yesterday. The significance of the ruling was in the reasons given: too much CO2 and a lack of EPA standards. It was a shock to me since this is the opposite sort of reaction I'd come to expect from the EPA under the Bush administraton. Odd.

Anyway, yes, this is the perfect time to get crackin'. And Partofme, I'm with you on the auto makers thing. Grrrrr. But I'm not sure there is time to absorb those employees, resources to pay their pensions and health care outright, etc...

If Obama pulls off half of his campaign agenda, we'll be worshiping at the Church of BHO because he would be a god.

[Americano]

Well it looks like with Obama's supporter the auto industry will be either bailed out now or at least once he is in office even further. He isn't even president yet and he is disappointing me with that one.

I looked hard at that issue and decided he has no other choice than ongoing initial support of bailing them out until he actually takes office to retain congressional support. I'm giving him the benefit of the doubt until he actually has office and will judge him from that point on. If at that point he does support continuing to use borrowed public funds to maintain the failed domestic auto industry, I'll be submitting my usual nasty letters to him and everyone down the political food chain.

Those companies are badly mismanaged dinosaurs with generations of inbred management offering products rejected by the market. There simply isn't enough domestic market share left for their overpriced products and union strangleholds to continue existing at public expense.

[Michael]

I looked hard at that issue and decided he has no other choice than ongoing initial support of bailing them out until he actually takes office to retain congressional support. I'm giving him the benefit of the doubt until he actually has office and will judge him from that point on. If at that point he does support continuing to use borrowed public funds to maintain the failed domestic auto industry, I'll be submitting my usual nasty letters to him and everyone down the political food chain.

Those companies are badly mismanaged dinosaurs with generations of inbred management offering products rejected by the market. There simply isn't enough domestic market share left for their overpriced products and union strangleholds to continue existing at public expense.
I agree.

Public money only for dealing with the 'fallout' of unemployed workers. Propping up the US auto industry is a waste of taxpayer money.

Even a universal healthcare plan in the US will not be enough to save them. As Americano notes here, these companies have been disfunctional for decades of bad management. They are so far out of the loop on current industry trends - they are ten-fifteen years behind the competition.

They should let these companies hit bankruptcy and perhaps they can come out of that at half their present size.

But I strongly doubt Congress & Obama are going that route. I'd bet on a full 'bailout' package of freebee money that will just prolong the agony for another few years while the companies continue to bleed market share. Obama made the promise to Michigan during the campaign.

[Americano]

I agree.

Public money only for dealing with the 'fallout' of unemployed workers. Propping up the US auto industry is a waste of taxpayer money.

Even a universal healthcare plan in the US will not be enough to save them. As Americano notes here, these companies have been disfunctional for decades of bad management. They are so far out of the loop on current industry trends - they are ten-fifteen years behind the competition.

They should let these companies hit bankruptcy and perhaps they can come out of that at half their present size.

But I strongly doubt Congress & Obama are going that route. I'd bet on a full 'bailout' package of freebee money that will just prolong the agony for another few years while the companies continue to bleed market share. Obama made the promise to Michigan during the campaign.

It looks like current administration is doing everything in its power to spend the first $700B. Paulson is getting ready to approach congress for the remaining $450B to buy yet more bank stock. Why do they need more capitalization? They aren't doing any lending.

[bug]

Today in history class, my Go-Team-Government teacher who uses his education platform as a pulpit for his far-left opinions said that he would advise Obama to take FDR's lead with the WPA and employ people to advance alternative energy. He cited the past as reason to belive it would help the unemployment problem and, being govenment funded, would not be warped by personal interests and big buisness questionable motives tht might hinder forward progress with developing this energy. Opinions aside, I've never been politically aware when there was a democrat in office so I'm wondering if this is anything people think Obama might actually do.

[Michael]

I would expect Obama's Adminstration to move on introducing some program of tax credits or rebates for new alternative energy projects.

That being said, the USA is well on track to break just about every fiscal deficit record in history over the next two years, so its hard to say that every one of Obama's campaign goodies will in fact be enacted into law.

Setting record deficits is not a very condusive time for introducing new tax-spending programs.

[Americano]

I would expect Obama's Adminstration to move on introducing some program of tax credits or rebates for new alternative energy projects.

That being said, the USA is well on track to break just about every fiscal deficit record in history over the next two years, so its hard to say that every one of Obama's campaign goodies will in fact be enacted into law.

Setting record deficits is not a very condusive time for introducing new tax-spending programs.

Nor reducing tax revenue. US rates need to be bumped back up to pre-Reagan levels. The demographics that contribute the highest numbers to consumer buying are not big earners, after all the allowances most pay only SS and the upper classes don't spend all that much due to their low numbers. Unless creditor nations see a viable 100% effort in the US pulling itself out of this expanding pit, they'll lose interest in our markets and concentrate on producing internal growth with their investments.

If we're going to spend like drunken sailors, we need to pay the price. I'd like to see all 401k contributions put into T-bills and watch the inefficient companies producing nothing but obviously useless leverage be drained out of the gene pool. Let's bite the bullet now.

This should probably have gone in the rant forum but I do have a reputation of board cynic to maintain.

[Americano]

Today in history class, my Go-Team-Government teacher who uses his education platform as a pulpit for his far-left opinions said that he would advise Obama to take FDR's lead with the WPA and employ people to advance alternative energy. He cited the past as reason to belive it would help the unemployment problem and, being govenment funded, would not be warped by personal interests and big buisness questionable motives tht might hinder forward progress with developing this energy. Opinions aside, I've never been politically aware when there was a democrat in office so I'm wondering if this is anything people think Obama might actually do.

I agree with the theory behind his proposed solution, but developing alternative energy won't employ all that many due to start-up education and management levels required until it reaches production stage. The Manhatten project took how long? WPA employed primarily unskilled labor. Even the limited management was semi-volunteer out of need. One of our community buildings still in use was constructed by a CCC (civilian conservation crew) program.

We need a program with multiple priorities and alternative energy should be right up there in priority with the social challenge of keeping the citizenry, those who want it, sheltered, fed and clothed. Even 10% unemployment by government calculation will put an enormous strain on our social system, especially with government spending facing an average 6.5 million baby boomers/yr becoming eligible for SS over the next decade while facing declining tax revenue.

Hopefully we'll (USA) lose some of our arrogance and apply some of the financial engineering skills that brought us to the edge of this cliff by involving other nations with dedicated revenue streams from their lending proceeds on a share basis for an alternative energy product. Like China does with foreign investment, we keep 55% of rights for doing it and they share the balance. But I'm not holding my breath on that one.

[john]

The altenative energy sources are already available with working technologies (wind and solar). What is needed are the incentives for companies to build them AND, more importantly, for consumers to be able to afford to buy and operate them.

[Michael]

The altenative energy sources are already available with working technologies (wind and solar). What is needed are the incentives for companies to build them AND, more importantly, for consumers to be able to afford to buy and operate them.
Actually, I believe "the grid" is the real bottleneck/problem issue here.

Its all well and fine for individual sites to install solar-panels or windmills, but that's not really workable at any scale until you can plug these into 'the grid' and sell your surplus.

And THAT is a huge project frought with legal, commercial and regulatory issues (and a thousand legal jursidictions in the USA by county).

[Michael]

The altenative energy sources are already available with working technologies (wind and solar). What is needed are the incentives for companies to build them AND, more importantly, for consumers to be able to afford to buy and operate them.
I don't agree that incentives are necessary. That implies a) subsidies or tax credits must be financed by the taxpayer, and b) solar/wind technology is not commercially viable without subsidies.

If these technologies are viable, they don't need subsidies to sell. Putting subsidies on them only reinforces the belief that they are 'fake' or 'bandaid' solutions.

Rather, the real issue is to REMOVE the existing subsidies from oil/gas/coal/nuke industries which would do more to 'level the playing field' than adding yet another layer of subsidies and tax credits.