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The Next Crisis; A Green Bubble?

MistahKurtz
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12/25/2009 10:14:29 AM
Posted: 6 years ago
DDO really needs an economics forum.

Anyway, I've been considering putting a little cash into the stock market recently (because if you can't beat Capitalism, you may as well profit from it) but rather than just throwing money into the typical corporations, I thought about doing some ethically responsible investing (environmentally-friendly manufacturers, non-sweater shop labourers, etc.) so naturally one of the best things I could think of was renewable energy companies.

Then my mind turned to the crux of this topic, a conversation I briefly had someplace, maybe on this forum; will a green bubble be created? Naturally there are those who say so, but I intend to argue otherwise, so excuse the fact that I'm essentially attacking strawmen here.

Let's look at the past decade first. In America, and to a lesser extent elsewhere, there have been two large bubbles formed; telecommunications and housing.

The first began to expand around the turn of the century; .com startups were dime-a-dozen and investors were buying stocks, companies were buying companies and teenagers were becoming millionaires. To satisfy the demand for bandwidth, companies began laying insane amounts of fibreoptic cable across the Atlantic, and these companies were seen a the harbinger of prosperity, because more cable = more bandwidth = more money, right? This was flawed on several levels, the first is that if these companies did their homework, they'd know that the technology allowed for much better results by improving the receptors on each end of the fibreoptic cable, whereas laying more cable was seen mostly as a waste of time. Technically, the world could run off just a few cables with ultra-sophisticated endpoints. So, once this was discovered, those companies laying the cable went bust as there was simply no demand for the level of cable that they were pumping out. The bubble begins to pop. At practically the same time, people realize that although these start-ups were insanely popular (who doesn't want to see a bunny in a blender?), clicks do not equal cash. None of these companies had any business models (save a few like EBay and Amazon) and they went under quite suddenly, making Silicon Valley look like Flint, Michigan.

So, naturally, the internet is not to blame, but rather we should blame the blinding greed of these companies that compromised their business sense.

Now, I'm going to stop myself from going too far into the housing bubble, but I think it sums it up quite well to say that, from a direct point of view that disregards those responsible for regulatory oversight, the banks are to blame. They were given directives to give houses to those who couldn't otherwise afford it, and they complied but made razor-thin profits, so they made a market for bad mortgages. This, of course, went bust after rates skyrocketed and people walked away from their homes. I don't think it's fair to pass blame onto investors because they didn't actually know what they were trading. With names like 'the platinum package', the banks managed to make a lot of money by selling boxes of worthless mortgages to investors in Dubai for a lot of money.

So that brings us to the point of the thread; the possibility of a green bubble. Where we currently stand, economic interested in green technology is stalled. With no global deal on climate change, there is uncertainty about the extent governments will invest in these companies, and considering how badly burned a lot of investors are after the housing bubble, most are weary of government-directed purchasing. There are three things that will change this;

1. The U.S., Chinese, Indian and/or European governments begin a massive investment into green technology.
2. The U.S. or U.N. establishes a large Cap and Trade scheme.
3. Worldwide growth begins to boom and central bank rates remain low

All three of these things will happen, it is a mater of what will come first.

I think, perhaps, I'll save the rest of my diatribe for a bit.

So, my questions to you are;

Will a bubble form?
If so, will it burst?
wjmelements
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12/25/2009 10:23:41 AM
Posted: 6 years ago
Riding government action is the way to win at stock markets. I'd buy in now, but I don't have any money. You need to get in now before Cap and Trade passes. And it will. As long as you can pull out before the next recession (4 years or so), you'll be fine.
in the blink of an eye you finally see the light
MistahKurtz
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12/25/2009 10:28:20 AM
Posted: 6 years ago
Well, this thread really isn't about stock advice. Regardless, I'm way too broke to be investing at the moment. Buying a place to live > investing.

Anyway, cap and trade won't actually interfere with the stock prices for green technology. Not immediately, anyway, it would take upwards of a year for any real impact to take place.

And I'd do better to weather out the next recession and sell during the recovery.
Vi_Veri
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12/25/2009 10:39:04 AM
Posted: 6 years ago
Green is going to be the new internet for investment. Good thinking.
I could give a f about no haters as long as my ishes love me.
Vi_Veri
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12/25/2009 10:41:52 AM
Posted: 6 years ago
So, naturally, the internet is not to blame, but rather we should blame the blinding greed of these companies that compromised their business sense.

I think that sentenced summed it all up, actually.
I could give a f about no haters as long as my ishes love me.
MistahKurtz
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12/25/2009 10:44:53 AM
Posted: 6 years ago
Aye. So I guess the risk here is multifold, but all caused by the same people. There has been (alarming) talk that companies like Goldman Sacchs will be allowed to oversee cap and trade instead of arms-length government offices like the EPA. Then there is the risk of greenwashing companies who are out to sell "green" technology which really isn't that green at all (e.g. biomass companies who clearcut forests to power generators.) These companies will, in the end, fail as regulations get tighter but not before they cause damage to the market and walk away with a nice sum of money.
Vi_Veri
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12/25/2009 11:04:11 AM
Posted: 6 years ago
But the companies will regulate themselves because they don't want their customers protesting their products! ;)

lol Sorry, I've been hearing that comment from Libertarians for weeks now and It's making my veins pop.
I could give a f about no haters as long as my ishes love me.
MistahKurtz
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12/25/2009 11:13:08 AM
Posted: 6 years ago
At 12/25/2009 11:04:11 AM, Vi_Veri wrote:
But the companies will regulate themselves because they don't want their customers protesting their products! ;)

lol Sorry, I've been hearing that comment from Libertarians for weeks now and It's making my veins pop.

But don't you understand, the only reason it's not working now is because THE GOVERNMENT is involved!
Volkov
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12/25/2009 11:27:05 AM
Posted: 6 years ago
One of the biggest worries I have about the green industry initiative is its reliance on the technology. It costs a lot to put in and run, and if it doesn't work and/or doesn't attract as much extra profit as expected, any government regulation requiring such technology put in place will be harming those companies, which is never good.

However, I suppose the way to get around this is that instead of the government requiring companies by green technology for their industry at the costs that those tech companies decide, it would be better for the government to invest and help lower the price of the technology itself, either by investing in research or offsetting the prices (if a company buys, say, air scrubbers, the state pays for a quarter, or half, or whatever), but rather than mandating companies to buy it, let them come voluntarily. And if you do make it profitable for companies to invest and take the risk, they more often than not will come.

What I see that doing is creating the opportunity for investment and essentially for a trial-run of the products on the probable few companies that will choose to invest. If it is worthwhile, then more investors will come, and eventually the market will sustain itself and allow the state to pull out eventually; if it isn't, then we know its a dud and the damage is minimal.

Does this all make sense?
Danielle
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12/25/2009 12:04:11 PM
Posted: 6 years ago
At 12/25/2009 11:27:05 AM, Volkov wrote:
One of the biggest worries I have about the green industry initiative is its reliance on the technology. It costs a lot to put in and run, and if it doesn't work and/or doesn't attract as much extra profit as expected, any government regulation requiring such technology put in place will be harming those companies, which is never good.

However, I suppose the way to get around this is that instead of the government requiring companies by green technology for their industry at the costs that those tech companies decide, it would be better for the government to invest and help lower the price of the technology itself, either by investing in research or offsetting the prices (if a company buys, say, air scrubbers, the state pays for a quarter, or half, or whatever), but rather than mandating companies to buy it, let them come voluntarily. And if you do make it profitable for companies to invest and take the risk, they more often than not will come.

What I see that doing is creating the opportunity for investment and essentially for a trial-run of the products on the probable few companies that will choose to invest. If it is worthwhile, then more investors will come, and eventually the market will sustain itself and allow the state to pull out eventually; if it isn't, then we know its a dud and the damage is minimal.

Does this all make sense?

No, I don't like the idea of playing Russian Roulette with tax dollars. If the company goes under, tax payers lose. If the company doesn't go under, tax payers still don't gain. Even if the company will charge lower prices (since they didn't have to fit the bill for all of the costs), it won't help the average consumer / tax payer all that much... certainly not as much as the business profits from it anyway.

By having the government help fund this, you're essentially forcing people to invest in a company that they may not want to and may not stand to benefit from. Unlike social programs (most of which I oppose anyway), there's not even a social incentive such as helping the poor or whatever. I think the shift needs to happen by figuring out how green technology will be profitable or how to make it profitable (less expensive). Let companies and their investors figure that out. At best, I'd be okay with the government investing in science to help, and giving big tax breaks for companies who lead the way in figuring that out or for investing in green technology.
President of DDO
MistahKurtz
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12/25/2009 12:53:00 PM
Posted: 6 years ago
There is absolutely a social benefit to investing in green technology. Now, I don't think that governments really need to get involved too much, as local energy green producers seem to be one of the leas shady sectors.

However, people have generally voted to support investments in green technology so it's not fair to say that they don't support it. Also, governments can make money from their investments. Consdering the situation, governments would have to be stupid to not set aside a little bit of profit to pay down the debt
johngriswald
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12/25/2009 1:44:31 PM
Posted: 6 years ago
At 12/25/2009 10:14:29 AM, MistahKurtz wrote:
I thought about doing some ethically responsible investing

LOL @ poor investing ideas

Enjoy your return that fails to beat inflation!

Protip: No load indexes + Hardest hit sector of the economy (real estate and emerging markets) = win

Win + Tax advantageous vehicles (Roth 401k, Roth IRA, 529) = Super Win

Super Win + investing during a low point = Epic Win

Investing based on ethics is a great way to be retarded and useless waste money. When the government starts offering major financial incentives and major tax hikes for the baddies then we'll talk.
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johngriswald
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12/25/2009 1:45:46 PM
Posted: 6 years ago
At 12/25/2009 10:14:29 AM, MistahKurtz wrote:
like Flint, Michigan.

Someone adores Michael Moore
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johngriswald
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12/25/2009 1:46:48 PM
Posted: 6 years ago
At 12/25/2009 10:14:29 AM, MistahKurtz wrote:
the banks are to blame.

Lol @ poor knowledge
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Danielle
Posts: 21,330
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12/25/2009 2:15:20 PM
Posted: 6 years ago
At 12/25/2009 1:46:48 PM, johngriswald wrote:
At 12/25/2009 10:14:29 AM, MistahKurtz wrote:
the banks are to blame.

Lol @ poor knowledge

How is that poor knowledge? The banks had their hand in the financial crisis. Was it solely their fault? Absolutely not. But when the fed lowered their interest rates which increased demand for credit, the banks should have still been responsible to make important crediting decisions. You can't give a loan or credit to everyone wants one. And if that's what you decide to do, then that risk should be yours alone. To practice bad lending in the hopes of turning over a huge profit... and then ask the same people for help that you're charging out the a-ss in interest rates (and even the ones who have nothing to do with it) is ridiculous.
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Danielle
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12/25/2009 2:18:31 PM
Posted: 6 years ago
At 12/25/2009 1:44:31 PM, johngriswald wrote:

LOL @ poor investing ideas

Investing based on ethics isn't exactly the smartest route, but it is if what you're investing in happens to be both lucrative and ethical. I believe that Green Technology will be the next .com boom of the financial world. It's not even so much about being environmentally responsible as it is finding alternative means of energy to decrease dependency on foreign oil and fuel new job markets.
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MistahKurtz
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12/25/2009 2:59:01 PM
Posted: 6 years ago
At 12/25/2009 1:46:48 PM, johngriswald wrote:
At 12/25/2009 10:14:29 AM, MistahKurtz wrote:
the banks are to blame.

Lol @ poor knowledge

lol @ being unable to answer my points in another thread about the recession, so you ignore it and come in here to make short, stuck up posts like a moron.

At 12/25/2009 1:45:46 PM, johngriswald wrote:
At 12/25/2009 10:14:29 AM, MistahKurtz wrote:
like Flint, Michigan.

Someone adores Michael Moore

Or Sufjan Stevens. Or things that sound like 'clit.'

You're seriously a massive tool. If you're going to get all snotty with me, at least debate me rather than just popping into threads and firing off a few of your...*ahem* clever one-liners, that way I can despise but at least respect you.
Cerebral_Narcissist
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12/26/2009 3:21:24 PM
Posted: 6 years ago
I think there may well be a green bubble and burst type situation.

However it strikes me that the telecommunications bubble was an easy one for an investor to avoid. I can't remember exactly when it was but there was a period in which the market was booming, though I can't say I had the sense to realise what was happening at the time it is obvious that canny investors had enough time to pull out there money.

If you invest $100 and that becomes $1000 maybe it's time to pull out... of course it might be if you say in then your investment will rise to $2000, or $20,0000 or whatever. But it's better to pull out too soon than too late.

But I don't know anything about economics.
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mongeese
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12/26/2009 5:16:05 PM
Posted: 6 years ago
At 12/25/2009 11:04:11 AM, Vi_Veri wrote:
But the companies will regulate themselves because they don't want their customers protesting their products! ;)


Situation A:
The customers value product quality over company energy efficiency.
The customers buy the most marketable products.

Situation B:
The customers value company energy efficiency over product quality.
The customers buy decent products from energy-efficient companies.

The thing is, Situation B is rather rare, because customers tend to prefer quality to energy efficiency.
Ragnar_Rahl
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12/26/2009 5:18:53 PM
Posted: 6 years ago
the banks are to blame. They were given directives
Wat.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
MistahKurtz
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12/26/2009 11:30:37 PM
Posted: 6 years ago
At 12/26/2009 5:18:53 PM, Ragnar_Rahl wrote:
the banks are to blame. They were given directives
Wat.

They were part of Clinton's housing strategy. The name escapes me at the moment, but I would be surprised if you did not know what I was taking about.

I assume you're alluding to the fact that the two sentences sound like a contradiction, when they are not. The banks were given directives to give mortgages to those who could not afford them, not to start trading them as super-risky stocks.

I also stipulated that the banks are directly to blame, in terms of exact actions while disregarding what should have been to stop it. It was pretty foreseeable that the banks would trade the mortgages in such a way; it was the fault of the government to not oversee and regulate this. If you want to go back to the beginning, it was the fault of the government to try and manipulate the stock market into achieving social goals, that is the job of the government because the government isn't (or rather shouldn't be) motivated by profit. But in terms of those who are to blame for trading the stocks that caused the collapse, blame must be put on the banks.
Ragnar_Rahl
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12/27/2009 12:07:53 AM
Posted: 6 years ago
The banks were given directives to give mortgages to those who could not afford them, not to start trading them as super-risky stocks.
Were they supposed to trade them as something other than they were?

I also stipulated that the banks are directly to blame, in terms of exact actions while disregarding what should have been to stop it. It was pretty foreseeable that the banks would trade the mortgages in such a way; it was the fault of the government to not oversee and regulate this. If you want to go back to the beginning, it was the fault of the government to try and manipulate the stock market into achieving social goals, that is the job of the government because the government isn't (or rather shouldn't be) motivated by profit.
If that were the only job of the government I'd be an anarchist :).
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
johngriswald
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12/27/2009 12:10:05 AM
Posted: 6 years ago
At 12/25/2009 2:15:20 PM, theLwerd wrote:
the banks should have still been responsible to make important crediting decisions.

Yeah in the soviet union people could work harder and produce quality goods.

Did they?

We're an incentive based society.

You can't give a loan or credit to everyone wants one. And if that's what you decide to do, then that risk should be yours alone. To practice bad lending in the hopes of turning over a huge profit... and then ask the same people for help that you're charging out the a-ss in interest rates (and even the ones who have nothing to do with it) is ridiculous.

Oh so the people who took the loans weren't responsible? It was just those fat-cat bankers trying to scam poor innocent people who were just confused into thinking they could afford houses that had no real backing?

Plus 90% of the loans weren't from banks, they were from government agencies (Freddie Mac, Fanny Mae). Those aren't banks.
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johngriswald
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12/27/2009 12:12:20 AM
Posted: 6 years ago
At 12/26/2009 11:30:37 PM, MistahKurtz wrote:
At 12/26/2009 5:18:53 PM, Ragnar_Rahl wrote:
the banks are to blame. They were given directives
Wat.

They were part of Clinton's housing strategy. The name escapes me at the moment, but I would be surprised if you did not know what I was taking about.

I assume you're alluding to the fact that the two sentences sound like a contradiction, when they are not. The banks were given directives to give mortgages to those who could not afford them, not to start trading them as super-risky stocks.

Protip: Banks =/= Freddie Mac and Fannie Mae

I also stipulated that the banks are directly to blame, in terms of exact actions while disregarding what should have been to stop it. It was pretty foreseeable that the banks would trade the mortgages in such a way; it was the fault of the government to not oversee and regulate this.

More specifically the fault of the democratic congress during Bill Clinton that abolished this regulation. It was previously regulated.
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wjmelements
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12/27/2009 12:12:22 AM
Posted: 6 years ago
At 12/25/2009 10:28:20 AM, MistahKurtz wrote:
Anyway, cap and trade won't actually interfere with the stock prices for green technology. Not immediately, anyway, it would take upwards of a year for any real impact to take place.

The Stock Market is largely speculative. The week Cap and Trade passes, we can expect the masses to be buying in to green companies. If you fore-see this, you'll reap a large return.
in the blink of an eye you finally see the light
johngriswald
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12/27/2009 12:14:08 AM
Posted: 6 years ago
At 12/27/2009 12:12:22 AM, wjmelements wrote:
At 12/25/2009 10:28:20 AM, MistahKurtz wrote:
Anyway, cap and trade won't actually interfere with the stock prices for green technology. Not immediately, anyway, it would take upwards of a year for any real impact to take place.

The Stock Market is largely speculative. The week Cap and Trade passes, we can expect the masses to be buying in to green companies. If you fore-see this, you'll reap a large return.

LOL if you're a short term buyer/seller. If you are you'll realize the fundamental rule that you can't time time the market. Stock prices are tied to profit long term. Fail to recognize this and you'll lose, big.
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johngriswald
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12/27/2009 12:17:59 AM
Posted: 6 years ago
At 12/25/2009 2:18:31 PM, theLwerd wrote:
At 12/25/2009 1:44:31 PM, johngriswald wrote:

LOL @ poor investing ideas

Investing based on ethics isn't exactly the smartest route, but it is if what you're investing in happens to be both lucrative and ethical. I believe that Green Technology will be the next .com boom of the financial world. It's not even so much about being environmentally responsible as it is finding alternative means of energy to decrease dependency on foreign oil and fuel new job markets.

Until Fusion becomes widely used, forget about it. Unless the government decides to start taxing forms of energy to the cost of the pollution (which it won't do any time soon for obvious reasons) or starts subsidizing green energy with imaginary tax dollars, you can forget about it.

Don't waste your time ethically investing. Don't waste your time attempting to play the stock market. Pick a sector of the economy that was hardest hit by the recession, invest when you start to hear the word depression, wait 3-4 years, profit and reevaluate your circumstances.

No Load Indexes > Stocks.
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johngriswald
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12/27/2009 12:19:25 AM
Posted: 6 years ago
At 12/26/2009 3:21:24 PM, Cerebral_Narcissist wrote:
But it's better to pull out too soon than too late.

How is it better? Either way you lose in opportunity cost.
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wjmelements
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12/27/2009 12:23:49 AM
Posted: 6 years ago
At 12/27/2009 12:14:08 AM, johngriswald wrote:
At 12/27/2009 12:12:22 AM, wjmelements wrote:
At 12/25/2009 10:28:20 AM, MistahKurtz wrote:
Anyway, cap and trade won't actually interfere with the stock prices for green technology. Not immediately, anyway, it would take upwards of a year for any real impact to take place.

The Stock Market is largely speculative. The week Cap and Trade passes, we can expect the masses to be buying in to green companies. If you fore-see this, you'll reap a large return.

LOL if you're a short term buyer/seller. If you are you'll realize the fundamental rule that you can't time time the market. Stock prices are tied to profit long term. Fail to recognize this and you'll lose, big.

The long term gain is suddenly in the green companies, largely favoured by Cap and Trade. The long-term market goes there after it is passed, because there will be returns. The price of the stocks go up. Profit.
Of course this is a short term capital gain, but it anticipates shifts that will occur and profits from them.
in the blink of an eye you finally see the light
GeoLaureate8
Posts: 12,252
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12/27/2009 1:48:32 AM
Posted: 6 years ago
Lol @ Fannie Mae Freddy Mac as being the cause of this crisis. Thats what the media tells you. The global elites are pulling the strings from the Federal Reserve.
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