A Tale of Two Economies...

[Milton Kuo]

Re: A Tale of Two Economies...

While Prime Minister elect Justin Trudeau said repeatedly during the campaign that hardly anyone had “$10,000 lying around”

If Trudeau actually believes such an idiotic statement, then I suspect Canadians are going to be in for some seriously rough sailing as they will eventually have to figure out how to get out of the chasm of a housing bubble wipeout all the while keeping the government from spending every penny of "somebody else's" (saver's) money.

[touchring]

Re: A Tale of Two Economies...

Doubtful. The Liberals want to take Canada away from being seen as an aggressor nation, and return to what they see as our "peacekeeper heritage". First up will be the removal of our CF18 fighters from the Kuwait base where they are currently conducting anti-ISIS campaigns. The money "saved" will apparently go to building ships in the high unemployment Maritimes region.

Personally I think the day of the manned fighter are over. It makes far more sense for Canada to develop better unmanned aircraft for coastal and Arctic surveillance, and defence purposes. The CF18 was chosen in the late 1970s primarily for an interceptor role with the twin engine redundancy (over rivals such as the General Dynamics F16) felt needed for far northern operations. Russia doesn't factor into the equation in the same way as back then, so a fighter aircraft no longer fits the script.

I would think that Canada should invest in better land border controls instead, and tsunami protection for Vancouver. That is looking 30 years into the future...

[GRG55]

Re: A Tale of Two Economies...

I would think that Canada should invest in better land border controls instead, and tsunami protection for Vancouver. That is looking 30 years into the future...

I think Canadians would be better off just selling all of Vancouver and surrounding suburbs to the Chinese now. Then buy whatever is left of it back after the tsunami.

As for land border controls, are you saying we have to build walls to keep the taxpayers from defecting?

News flash from Vancouver

The Navy intercepted a boatload of people off the coast of BC today.
This placed the Navy in an awkward position, as the boat was not heading to, but away from Canada, towards Asia.
Another surprise finding was that they were loaded with white Canadians who were all seniors of pensionable age.
Their claim was that they were trying to get to Asia so as to be able to return to Canada as illegal immigrants,
and therefore be entitled to far more benefits than they were receiving as legitimate Canadian pensioners.
The Navy it is believed gave them food and water and assisted them on their journey.

[Southernguy]

Re: A Tale of Two Economies...

pH of your comment....between 0 and 1...

[Fiat Currency]

Re: A Tale of Two Economies...

If Trudeau actually believes such an idiotic statement, then I suspect Canadians are going to be in for some seriously rough sailing as they will eventually have to figure out how to get out of the chasm of a housing bubble wipeout all the while keeping the government from spending every penny of "somebody else's" (saver's) money.

My 24 year old daughter graduated about a year ago and is lucky to be employed as a Chem. Engineer.
She said, and I quote, "Even I can save $10K a year. What a moron!"

As for the housing bubble, it continues for now. Some citizen groups are already pushing back ...

Cutting TFSA limit unfair when our tax dollars pay for gold-plated public pensions, citizens group charges

The non-profit Working Canadians group headed by Catherine Swift is appealing to the new Liberal-Government-in-waiting to leave the $10,000 TFSA limit intact.

One of Justin Trudeau’s platform planks was to reduce the $10,000 annual contribution limit for Tax Free Savings Accounts (TFSAs) to the previous ceiling of $5,500, which happened this summer when, as promised, the Conservatives balanced the books.

Swift, formerly chair of the Canadian Federation for Independent Business, said in a press release issued this morning that in the ongoing dialogue about retirement preparedness, “short shrift has been given to the fact that the 80% of Canadians who do not work in government collectively contribute tens of billions of their tax dollars every year so that government workers can enjoy very generous, defined-benefit pensions, indexed to inflation, with additional post-retirement extended health and dental benefits.”

This goes to the heart of an issue identified by Wealthy Barber author David Chilton at a conference last Saturday, when he decried the growing gap between retirement readiness by those employed by the public sector and those in the private sector. In a nutshell, those in the former group are able to retire years earlier than those in the latter.

Working Canadians spokesperson Swift states in the release that “this situation is profoundly unfair to the vast majority of Canadians. Canadians in the private sector would be much more able to adequately save for their own retirement if they were not pouring so much of their money into gold-plated pensions for government employees.”

Introduced in 2009, the TFSA gave hope to private-sector Canadian taxpayers that they now could access a program that would permit them to save their own money for a decent retirement. Since TFSA contributions have already been taxed upfront when the money is earned, Swift notes that Ottawa has already received significant monies on this income. It’s only the appreciation in TFSA investments that can be accumulated tax-free. Really, the TFSA is only serving to eliminate double taxation: first income tax on earnings, then of investment earnings generated from what’s left of the capital after income tax. (never mind the third level of consumption taxes!) “The enthusiasm with which Canadians have embraced TFSAs is a good indication that such a tool was needed for the large majority of Canadians who do not have the immense advantage of a government employee pension,” Swift added.

Given that more than half of adult Canadians (age 18 and up) have TFSAs, personally I was surprised the Liberal promise to cut the limit almost in half would not have dissuaded more of them to vote for the party. The group says of the TFSA holders who have topped up their contributions to the maximum limit, 60% earn less than $60,000 per year. During the campaign, the Liberals more than once expressed the view that few people “have $10,000 lying around” for TFSAs. In my blogs and columns I attempted in vain to rebut this, by pointing out two major groups who have hundreds of thousands of dollars ready to convert to TFSAs: affluent baby boomers who are approaching retirement and have large-non-registered portfolios that can be “converted in kind” to TFSAs to the extent there is contribution room.

Second, and as Swift points out, TFSAs are an excellent tool for seniors who can no longer contribute to RRSPs after age 71. “TFSAs have been criticized by some as being a tool for the rich – yet these statistics show that is simply not true. Canadians currently pay about 43% of their income in taxes – more than they spend on food, shelter and clothing combined. And many of those tax dollars go to provide very generous pensions to government workers – pensions that the average Canadian cannot afford for themselves,” said Swift.

She concludes, and I agree, that “leaving the TFSA limit where it currently stands at $10,000 is the least a government can do to enable 80% of Canadians to put away some funds for a proper retirement for themselves.”

Even if we were permitted to max out at $10,000 per year, it would still not be as generous as the rich public-sector pension plans. But at least we’d have a fighting chance to make up for our collective youthful error of not going into politics, teaching or joining the civil service.

Jonathan Chevreau founded the Financial Independence Hub and can be reached atjonathan@findependencehub.com

[GRG55]

Re: A Tale of Two Economies...

My 24 year old daughter graduated about a year ago and is lucky to be employed as a Chem. Engineer.
She said, and I quote, "Even I can save $10K a year. What a moron!"

As for the housing bubble, it continues for now...

An estimated 54,000 jobs have been lost ytd in Alberta. Most of those were very well paying jobs tied to the oil patch. Probably approaching $0.5 B of incomes no longer there. That excludes the downstream effect on construction, housing, retail spending and incomes.



Shell to halt Carmon Creek in situ project

27 Oct 2015

Royal Dutch Shell plc (“Shell”) today announces that the company will not continue construction of the 80,000 barrel per day Carmon Creek thermal in situ project located in Alberta, Canada.

Shell originally sanctioned the project in October 2013 and announced in March 2015 that the project would be re-phased to take advantage of the market downturn to optimise design and retender certain contracts. After careful review of the potential design options, updated costs, and the company’s capital priorities, Shell’s view is that the project does not rank in its portfolio at this time. This decision reflects current uncertainties, including the lack of infrastructure to move Canadian crude oil to global commodity markets.

“We are making changes to Shell’s portfolio mix by reviewing our longer-term upstream options world-wide, and managing affordability and exposure in the current world of lower oil prices. This is forcing tough choices at Shell,” said Chief Executive Officer, Ben van Beurden.

Shell will retain the Carmon Creek leases and preserve some equipment while continuing to study the options for this asset. The company expects to take net impairment, contract provision, and redundancy and restructuring charges of some $2 billion as a result of this decision with the third quarter 2015 results, which will be included as an identified item. The project SEC Proved Reserves estimated at 418 million barrels bitumen at end 2014 will be de-booked and the project estimated recoverable petroleum resources will be classified as Contingent Resources. Carmon Creek is 100% Shell owned.



Husky Energy job cuts reach 1,400 as company ponders asset sale

Energy giant posts $101M adjusted loss in Q3, net loss of $4.1B including impairments and write downs

CBC News Posted: Oct 30, 2015 7:38 AM MT Last Updated: Oct 30, 2015 8:23 AM MT

Husky Energy announced its job cuts this year now total 1,400 as the company posted a third-quarter loss and revealed potential plans to sell assets in response to the crash in oil prices.

About 1,120 of those jobs were contractors while the other 280 were full-time employees, and the cuts aren't done, yet.

"Additional workforce adjustments will be undertaken as required in line with the business plan," Husky said in a statement, adding the company-wide salary freeze will also be extended...

Husky recorded an adjusted net loss of $101 million in the third quarter, which doesn't include charges for impairments and write downs.

The net loss was $4.1 billion when factoring in an after-tax impairment of $3.8 billion and a write down of $167 million related to legacy oil and natural gas assets in Western Canada,..



Cenovus says about 700 jobs cut in second half of 2015 — double earlier prediction

Published on: October 29, 2015 | Last Updated: October 29, 2015 11:59 AM MST

Cenovus Energy Inc. said a workforce reduction will help lower costs this year and next as the Canadian oil producer tackles the oil-price slump.

The 700 positions that have been eliminated since earlier this year, along with other measures, will save the oil-sands producer about $400 million in 2015, Cenovus said in a statement Thursday. The Calgary-based company has also frozen wages and reduced capital spending. The number of eliminated positions is about double the 300 to 400 anticipated in July...

...The job cuts mean the company will have 24 percent fewer staff at the end of the year than in 2014...



Government can't directly help energy industry, Notley says

Published on: October 30, 2015 | Last Updated: October 30, 2015 6:59 PM MST

As one of Canada’s largest petroleum producers became the latest to slash its workforce, Premier Rachel Notley said Friday there’s little the province can do to help the ailing energy industry directly, beyond doing its best to boost the entire Alberta economy.

At an announcement in Calgary to highlight the province’s plan to spend an extra $50 million on venture capital, Notley said problems battering the energy sector — hammered by oil priced at US$46.59 a barrel — are beyond the province’s scope.

“We’re trying to find different ways to kick-start the economy overall,” Notley said at the office of local technology company Chaordix...

...A series of layoffs have been announced in Canada’s oilpatch this week and senior producer Husky Energy confirmed Friday it’s already trimmed 1,400 jobs this year and is planning further reductions.

Husky CEO Asim Ghosh said Friday “the downturn has turned out to be more protracted and more severe than even our conservative assumptions” from last fall.

Husky’s announcement came a day after fellow oilsands producer Cenovus Energy said it has parted ways with 1,500 staff and contractors so far this year. Suncor Energy, Canada’s largest oil company, said this summer it’s made 1,300 job cuts.

RBC Dominion Securities said Friday the number of wells licensed across the Western Canadian Sedimentary Basin this year is 4,882 wells, down 44 per cent compared to the same time in 2014.

Pressure pumper Calfrac Well Services CEO Fernando Aguilar said the current downturn is “one of the worst in decades” and he doesn’t expect any meaningful improvement throughout 2016.

The downturn is having a direct impact on the provincial treasury.

In Tuesday’s provincial budget, the sale of Crown drilling rights to energy companies this year is forecast to fall to $183 million, off 62 per cent from a year ago.

During the height of the energy boom, the province sold $3.3 billion in drilling rights in 2011-12, including one massive sale that fetched $842 million on June 1, 2011 — the highest one-day sale in provincial history.

This week’s provincial land sale fetched only $2.3 million, the lowest-single sale amount in records dating back to 1995, according to NBF Energy Research Group.

Mark Scholz, president of the Canadian Association of Oilwell Drilling Contractors, said the drop in land sales reflects the pessimism from exploration and production firms...

...“Our active rig count today is where it was in about 1983.”...

...In Calgary, Notley noted the government’s plan to ramp up infrastructure spending will potentially provide more business to contractors who, under normal circumstances, would be working for the oil and gas sector...

...The Notley government’s first budget projects a $6.1-billion deficit and a string of shortfalls before the province’s books are again balanced by 2019-20...

[santafe2]

Re: A Tale of Two Economies...

An estimated 54,000 jobs have been lost ytd in Alberta. Most of those were very well paying jobs tied to the oil patch. Probably approaching $0.5 B of incomes no longer there. That excludes the downstream effect on construction, housing, retail spending and incomes.

Yup, it's sunny for as far as the eye can see...


Why No One’s Worried About the Recession in Canada

"Best. Recession. Ever."

The Canadian economy is technically in a recession with two consecutive quarters of contracting GDP. However, the recession does not seem to be bothering most Canadian economists — or, for that matter, most Canadians. The sentiment was best summed up by a quote from Doug Porter, Chief Economist at the Bank of Montreal. “Best. Recession. Ever.”

Why would a recession be treated in such a cavalier fashion? It appears to be atypical in several ways. Canadians have good reason for optimism based on other economic aspects.

First, the GDP contractions are quite small. First quarter GDP was revised downward to a 0.2% loss from a 0.1% loss, and the first estimate of the second quarter GDP also came in at a 0.1% loss (0.8% and 0.6% annualized respectively). Given the slump in oil prices and the energy industry, it’s surprising the damage was not greater. The energy sector accounted for just under 28% of Canada’s 2014 GDP in goods-producing industries, according to Statistics Canada (Statscan).

Further, while the previous five monthly GDP values showed contraction, the June reading produced a growth of 0.5%. Growth was broad-based and headed by the problematic oil industry, which posted its first gain in over seven months.
Other economic indicators defy the typical recession. Jobs are being created at a healthy pace, and consumer spending is still robust.

According to economists at Scotiabank, since oil and commodity prices began to crash in June 2014, the Canadian economy has actually added over 180,000 jobs. Statscan reported that 54,000 jobs were added in August even though the unemployment rate rose to 7.0%. Even that development was interpreted as good news, because the rise is due to more unemployed Canadians re-entering the workforce and raising the labor participation rate — a problem that the US has found difficult to shake.

In the words of CIBC Chief Economist Avery Shenfeld, “Sometimes a rise in the unemployment rate is actually something to cheer about.” You have to love the Canadian attitude. Perhaps we can import some of their optimism to the US?

Meanwhile, consumer spending fueled by housing and big-ticket item sales were great enough that the economy would have grown in the second quarter if the energy sector were excluded.

The Bank of Canada expects the Canadian economy to grow slowly its way out of the recession, with 1.5% GDP growth in the third quarter and 2.5% in the fourth quarter. Given that oil prices probably will not recover during that time and the world economy is not looking much better, it is hard to foresee a faster growth rate.

Fortunately, the US economy is continuing to grow (despite the volatile stock market) and Canadian businesses are likely to prosper from that growth. US exports from Canada totaled $312.4 billion in 2014, and are on a higher growth pace for the first half of 2015.

One true downside of the recession that is being glossed over is the amount of debt. The Canadian savings rate has dropped to 4% from 5.2% at the beginning of 2015, and the rate of total debts of Canadians rose 4.9% in June, the highest year-over-year debt increase in over two years. Canadians seem to have concluded that the recession is a temporary oil-induced drop and will simply dip into savings to get by in the interim.

A recession with optimism… what a novel concept! And here we are in the US, continually edgy and nervous because of slow steady growth. Maybe it really is time to add some Canadian optimism to our import list.

http://time.com/money/4035562/canada-recession/

[GRG55]

Re: A Tale of Two Economies...

Yup, it's sunny for as far as the eye can see...


Why No One’s Worried About the Recession in Canada

"Best. Recession. Ever."

The Canadian economy is technically in a recession with two consecutive quarters of contracting GDP. However, the recession does not seem to be bothering most Canadian economists — or, for that matter, most Canadians. The sentiment was best summed up by a quote from Doug Porter, Chief Economist at the Bank of Montreal. “Best. Recession. Ever.”

Why would a recession be treated in such a cavalier fashion? It appears to be atypical in several ways. Canadians have good reason for optimism based on other economic aspects.

First, the GDP contractions are quite small. First quarter GDP was revised downward to a 0.2% loss from a 0.1% loss, and the first estimate of the second quarter GDP also came in at a 0.1% loss (0.8% and 0.6% annualized respectively). Given the slump in oil prices and the energy industry, it’s surprising the damage was not greater. The energy sector accounted for just under 28% of Canada’s 2014 GDP in goods-producing industries, according to Statistics Canada (Statscan).

Further, while the previous five monthly GDP values showed contraction, the June reading produced a growth of 0.5%. Growth was broad-based and headed by the problematic oil industry, which posted its first gain in over seven months.
Other economic indicators defy the typical recession. Jobs are being created at a healthy pace, and consumer spending is still robust.

According to economists at Scotiabank, since oil and commodity prices began to crash in June 2014, the Canadian economy has actually added over 180,000 jobs. Statscan reported that 54,000 jobs were added in August even though the unemployment rate rose to 7.0%. Even that development was interpreted as good news, because the rise is due to more unemployed Canadians re-entering the workforce and raising the labor participation rate — a problem that the US has found difficult to shake.

In the words of CIBC Chief Economist Avery Shenfeld, “Sometimes a rise in the unemployment rate is actually something to cheer about.” You have to love the Canadian attitude. Perhaps we can import some of their optimism to the US?

Meanwhile, consumer spending fueled by housing and big-ticket item sales were great enough that the economy would have grown in the second quarter if the energy sector were excluded.

The Bank of Canada expects the Canadian economy to grow slowly its way out of the recession, with 1.5% GDP growth in the third quarter and 2.5% in the fourth quarter. Given that oil prices probably will not recover during that time and the world economy is not looking much better, it is hard to foresee a faster growth rate.

Fortunately, the US economy is continuing to grow (despite the volatile stock market) and Canadian businesses are likely to prosper from that growth. US exports from Canada totaled $312.4 billion in 2014, and are on a higher growth pace for the first half of 2015.

One true downside of the recession that is being glossed over is the amount of debt. The Canadian savings rate has dropped to 4% from 5.2% at the beginning of 2015, and the rate of total debts of Canadians rose 4.9% in June, the highest year-over-year debt increase in over two years. Canadians seem to have concluded that the recession is a temporary oil-induced drop and will simply dip into savings to get by in the interim.

A recession with optimism… what a novel concept! And here we are in the US, continually edgy and nervous because of slow steady growth. Maybe it really is time to add some Canadian optimism to our import list.

http://time.com/money/4035562/canada-recession/

There's no doubt that the fiscal spending plans of our recently elected leftward leaning governments will also supply some underpinning to economic activity in Canada. Any of the remaining center-of-the-political-spectrum incumbent governments are also being pushed fiscally leftward so as not to be seen out of step with current public sentiment when re-election time looms. The spending starts now, the tax rises come slower and later.

The scenario of concern is that Canadian governments cannot borrow at the same cost as most of their US equivalents. One has to wonder if the coming flood of public borrowing in Canada is going to push up intermediate and longer rates. If so it will probably knock down the Loonie some more, and perhaps force the hand of the Bank of Canada to raise short rates to deal with the consequent inflation.

I was in Vancouver for a few days early last week. Absolutely no evidence of a recession, or any caution in that respect down there. The home next door to mine was the subject of a recent estate sale as our lovely elderly, long-time neighbour of 41 years passed away recently. Purchased by a young gentleman (late '20s?) and his wife. He runs a boutique construction company (renovations, etc.) with his brother. I met them both when they were at the house. Said brother and his wife are also looking for a home in the neighbourhood. Ordinarily one would expect the couple to clean it up and move in. Wrongo. Going to clean it up and rent it out. Even with the ridiculous rents being commanded out there it will have to be subsidized. They are of Italian descent. No Chinese money involved in this transaction as far as I could detect.

[santafe2]

Re: A Tale of Two Economies...

There's no doubt that the fiscal spending plans of our recently elected leftward leaning governments will also supply some underpinning to economic activity in Canada. Any of the remaining center-of-the-political-spectrum incumbent governments are also being pushed fiscally leftward so as not to be seen out of step with current public sentiment when re-election time looms. The spending starts now, the tax rises come slower and later.

The scenario of concern is that Canadian governments cannot borrow at the same cost as most of their US equivalents. One has to wonder if the coming flood of public borrowing in Canada is going to push up intermediate and longer rates. If so it will probably knock down the Loonie some more, and perhaps force the hand of the Bank of Canada to raise short rates to deal with the consequent inflation.

I was in Vancouver for a few days early last week. Absolutely no evidence of a recession, or any caution in that respect down there. The home next door to mine was the subject of a recent estate sale as our lovely elderly, long-time neighbour of 41 years passed away recently. Purchased by a young gentleman (late '20s?) and his wife. He runs a boutique construction company (renovations, etc.) with his brother. I met them both when they were at the house. Said brother and his wife are also looking for a home in the neighbourhood. Ordinarily one would expect the couple to clean it up and move in. Wrongo. Going to clean it up and rent it out. Even with the ridiculous rents being commanded out there it will have to be subsidized. They are of Italian descent. No Chinese money involved in this transaction as far as I could detect.

All leads me to believe there's still a long run ahead before the economy rebalances, (again).

[GRG55]

Re: A Tale of Two Economies...

All leads me to believe there's still a long run ahead before the economy rebalances, (again).

Yep. Canada's love affair with real estate isn't limited to "homeowners" borrowing the downpayment from their parents. The insanity has spread widely:


Empty Floors, Shadow Vacancies New Norm for Calgary Tower Owners

November 9, 2015 — 10:00 PM MST

Office-tower owners in Canada’s energy hub are about to feel the full force of the oil-price crash.

Vacancy is already at a five-year high in Calgary and rents are the lowest since 2006 after thousands of office jobs were cut. Energy company tenants have now begun to ask for rental relief and are offering subleases for as little as half the going rate, according to real estate brokers including Jones
Lang LaSalle Inc. and Avison Young Canada Inc.

That’s before five new office towers with about 3.8 million square feet (353,031 square meters) of space hits the market in the next three years.

"It is a bloodbath," said Alexi Olcheski, an office-leasing principal at Avison Young from his office in downtown Calgary. "We’re at the highest point of fear and uncertainty now.”...


...In downtown Calgary, the vacancy rate jumped to 14 percent in the third quarter, the highest since 2010 and compared with 5 percent for downtown Toronto, according to CBRE Group Inc. Companies are subleasing a record 2.7 million square feet, the brokerage said. That doesn’t include as much as 2 million square feet of so-called "shadow vacancy" or space leased but sitting empty, which would push vacancy to 16 percent, the most since the mid-1980s...

...Even Calgary’s most iconic tower, completed just a few years ago, isn’t immune. The 58-story Bow, Canada’s second-largest office building at 2.0 million square feet, is owned by H&R REIT and leased until 2038 to Encana Corp., the real estate firm’s largest tenant by revenue. Encana subleases 1 million square feet to Cenovus Energy Inc., which in turn aims to vacate and sublease half of that, according to Reg Curren, a Cenovus spokesman.

Together, the firms cut about 1,500 jobs this year, part of the 36,000 job losses at energy companies across Canada since the oil rout began...

...Subleasing is in overdrive and has helped buffer landlords from the impact of the oil slump. Avison Young’s Olcheski said he made his first quadruple sublease earlier this year, when a technology firm rented space from a company several leases removed from the main energy tenant.

But the subleases are being done at as little as 50 percent of the original cost, according to Damien Mills, executive vice president and managing director of Western Canada for JLL. Rents have dropped to C$20.75 a square foot in downtown Calgary, the lowest since at least 2006, according to the brokerage...

...In addition to the current glut of space, five office towers -- each with at least 430,000 square feet -- are due for completion in the next three years in Calgary, some only 36 percent leased as of October...

[ProdigyofZen]

Re: A Tale of Two Economies...

This is also happening in Houston. 33% of all jobs in Houston are commodity related. The city has massively overbuilt office space with brand new towards in downtown Houston. A friend who lives there and works in finance remarked "I don't know who is going to move into all those office towers."

[jk]

Re: A Tale of Two Economies...

i'm curious to know re both calgary and houston how all this is affecting the residential rental markets. any info? [my curiosity is motivated by the number of texas properties owned by eastham]

[santafe2]

Re: A Tale of Two Economies...

..."It is a bloodbath," said Alexi Olcheski, an office-leasing principal at Avison Young from his office in downtown Calgary. "We’re at the highest point of fear and uncertainty now.”...

With commodities be they oil or real estate, any extra capacity is death for pricing. Demand can turn on a dime. See 2000 and 2007 in the US for reference. In the solar energy business this played out exactly as it does in every other commodity business. Solar was the red headed step child of the silicon industry for decades. Then as it grew and became the primary consumer and silicon. Prices move from $25 a kilo to $450. Everyone wants to invest in silicon production. Three years later, there's too much silicon and over the next two years prices drop from $450 to $40 a kilo. Everyone is breaking contracts and suing each other. By 2010, lots of bankruptcies. In 2015, the supply is growing with the industry and costs increment down. Solar panels have gone from $4.50 per watt to about $.80 cents per watt. Who can name the "important" companies who moved this business forward? No one cares, almost all of them are out of business.

[touchring]

Re: A Tale of Two Economies...

With commodities be they oil or real estate, any extra capacity is death for pricing. Demand can turn on a dime. See 2000 and 2007 in the US for reference. In the solar energy business this played out exactly as it does in every other commodity business. Solar was the red headed step child of the silicon industry for decades. Then as it grew and became the primary consumer and silicon. Prices move from $25 a kilo to $450. Everyone wants to invest in silicon production. Three years later, there's too much silicon and over the next two years prices drop from $450 to $40 a kilo. Everyone is breaking contracts and suing each other. By 2010, lots of bankruptcies. In 2015, the supply is growing with the industry and costs increment down. Solar panels have gone from $4.50 per watt to about $.80 cents per watt. Who can name the "important" companies who moved this business forward? No one cares, almost all of them are out of business.

There's also coal. US coal companies are in very bad state.

[Chris Coles]

Re: A Tale of Two Economies...

With commodities be they oil or real estate, any extra capacity is death for pricing. Demand can turn on a dime. See 2000 and 2007 in the US for reference. In the solar energy business this played out exactly as it does in every other commodity business. Solar was the red headed step child of the silicon industry for decades. Then as it grew and became the primary consumer and silicon. Prices move from $25 a kilo to $450. Everyone wants to invest in silicon production. Three years later, there's too much silicon and over the next two years prices drop from $450 to $40 a kilo. Everyone is breaking contracts and suing each other. By 2010, lots of bankruptcies. In 2015, the supply is growing with the industry and costs increment down. Solar panels have gone from $4.50 per watt to about $.80 cents per watt. Who can name the "important" companies who moved this business forward? No one cares, almost all of them are out of business.

Classic creative destruction!