Thursday, September 11, 2008 0 comments ++[ CLICK TO COMMENT ]++

Miscellaneous Articles

Here are some insightful articles I found on the net. The topics vary as usual and you may find some of them useful.

  • Wind power the next (ethanol-like) bust? Speculative article but it's not clear how viable this industry is without government subsidies. From a report I looked at a few years ago, wind is the best alternative energy and is viable if there are carbon taxes. Europe seems to be cracking down on carbon so it seems viable over there but it may not be viable in America. If there are no carbon taxes, wind power will likely depend on government subsidies forever (since coal and oil are far cheaper.)
  • John McCain proposes $315 billion backing for nuclear power: Well if wind power needs subsides nuclear does as well. Nuclear produces constant power and can produce a lot more near urban centers but there is always the downside with nuclear waste, not to mention the potential for a meltdown. The linked Bloomberg piece points out that practically no one would be willing to finance nuclear power plants so you need the government to provide support. Nuclear power has been very poor, with constant cost over-runs, so this isn't a surprise (anyone living in Ontario, Canada, would know about the huge sums spent fixing and upgrading nuclear power plants and they are still unreliable.) Should the US government take on another $300+ billion plan? Sounds like a Fannie Mae or Freddie Mac in the working. As with wind, the problem is that nuclear energy is far more expensive than coal or oil (if there are no cost over-runs then it is cost-competitive but that is an optimistic scenario.)
  • Deflation can be good: Austrian economists tend to be fans of deflation, whereas practically no one in the mainstream (including me, although I'm not an economist) supports that view. Deflation can be good but it can also be bad. The problem is how to allow mild deflation without it turning into a deflationary bust. Deflation was more common in the 1800's because of the gold standard (another item favoured by Austrian economists.) But that basically meant we had many nasty deflationary busts, whereas we have only had one--the Great Depression--in the last century. Anyway a dissenting view that you may find interesting.
  • Institutional innvestors fingered as culprits behind oil boom: Possibly a biased report since it is coming from someone who is long airlines and autos, but a new report fingers institutional investors are the main cause of the recent run up in oil prices. The huge run-up in oil prices early this with very little new information, along with the recently unfolding collapse with very few changes in fundamentals lends credence to the speculation argument. I don't doubt that instituational investors play a role but the question is whether they are reacting to fundmentals they see in the world, or whether they are just blindly speculating.
  • China's real estate bust: Not a surprise to me: it seems that China's real estate prices are declining. Several people had been warning about a huge real estate bubble in urban coastal areas of China (rural is fine) for several years now and it looks like it is finally collapsing. Next ones to fall: urban areas in India and Russia.
  • Next big power play in Russia, this time over aluminum: Russia is more akin to the late 1800's or early 1900's America than anything. Lots of fights; people attempting to corner markets; government heavily involved; dubious legal system; and lots of money to be made.
  • Saudi Arabia privately goes against OPEC: I am always skeptical of private promises so not sure what to make of this NYT story that Saudi Arabia is promising in private to go against OPEC agreement to cut production.
  • Money matters when it comes to marriage: Singles out there may find this interesting. Nothing earth-shattering but important to keep in mind that financial compatibility can help.

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