Krugman Should Have Read EJ's "The Next Bubble"

[santafe2]

Re: Krugman Should Have Read EJ's "The Next Bubble"

Those last three words are interesting indeed. When the switch is thrown most users probably care a great deal more that the living room lamp illuminate than whether the current is the result of converting from coal, hydro, nuclear, natural gas or some other energy source.

So how can solar energy providers, whose installations generally require more time, effort, money from the end user [than a utility hook-up], compete if they just sell the same fungible commodity as the local power company?

Are you not really selling something more? A higher level of security of supply? Or independence from the grid? Securing corporate green credentials? Or some other tangible or intangible that the buyer is convinced justifies the additional cost & complexity of the installation?

Sure, like all industries, we sell a lot of things other than solar panels, not the least of which is hope for a sustainable and more secure world. Most readers and contributors at iTulip know I think this is a worthwhile endeavor, (whether they think so or not is an entirely different issue). I was making a statement stripped of my usual embellishments in an attempt to reveal the essence of my work to anyone who might think it's more than that. Who better on iTulip to understate the value proposition of solar than me?

If we can all agree on the most simple proposition that the purpose of solar panels is to deliver electricity, we may someday agree that installing solar panels that deliver a kilowatt hour of electricity for 25 cents is an amazing value. This costs more like 35 cents per kWh in Canada as the light resources are 30-35% less than the US Southwest.

You're correct of course, most users of electricity don't care where it comes from, only that it works. People feel that way about all products. I type away on a Compaq laptop and I know absolutely nothing about its real life cycle cost to the environment or to US workers jobs. Like electricity, it's a tool I paid for and as long as it turns on everytime I need it to, I'm happy. But this tool, like a solar panel or any other product has a very real, measurable, and not insignificant, embodied energy cost.

There is so much bad, (or maybe just dumb), information available to people, I'm going to try on iTulip to strip my knowledge of as many superlatives and adjectives as possible and present options as I see them. Before we can question the value of delivering electricity via other sources, we have to agree that solar panels are simply that, a conduit to reliable power.

[GRG55]

Re: Krugman Should Have Read EJ's "The Next Bubble"

How about the FIRE economy is over, done, kaput, dead, finished...therefore, no "next bubble"?

There is no amount of infrastructure spending that could possibly replace the global real estate bubble that governments, Central Bankers and the private financial sector created this decade. How are US consumers going to borrow against their newly rebuilt bridges, highways, alternate energy "infrastructure", as they did with residential housing ATMs?

The only way I can see an "infrastructure" bubble really develops is if the government [Treasury] and the Fed concoct a way to support the creation [by Wall Street] of multi-level levered paper backed by alleged "infrastructure", and successfully flog it to European banks and communities in Norway north of the Arctic Circle or in the Aussie outback, on the basis that "infrastructure never goes down" :rolleyes:

[This scenario is not entirely theoretical either; but if it is allowed to happen I suspect the majority of the paper will be written against the existing publicly owned infrastructure as it is sold off, and US citizens will be looking in vain for all the new roads and waterworks their tax dollars were supposed to provide. The final insult will be that US taxpayers, that enabled the pillaging, will see their cost of service from the PPPs keep going up.]

EJ wrote in that Harper's article that the only thing worse than another bubble would be no "next bubble". That's were we are headed. It is going to be a long, slow, painful process to dig out of this one. And, given the desperation governments everywhere are showing to bring back the glory years of the FIRE economy by deluging the banking system with taxpayer bailout money, the oxygen has been cut off from every other productive sector of the economy that might have helped reduce the pain of transition.

Harper's, February 2008, "Given the current state of our economy, the only thing worse than a new bubble would be its absence." -- Eric Janszen

April 2009; Krugman's still at it:

Krugman: ‘Maybe we need a new bubble to invest in!’

April 4th, 2009, 2:00 pm

Paul Krugman – Princeton professor, Nobel Prize winner, New York Times columnist – was in the SoCal desert on Friday night to speak to the Desert Town Hall lecture series at the Renaissance Esmeralda in Indian Wells.



Here’s a transcript of our Twitter (@jonlan) coverage of the event:

• All is going to hell. He sees no end soon to job losses around the globe. Even China!
• How did this happen? We forgot the Great Depression! We exposed ourselves 2 a repeat. May not be a repeat BUT close.
• I too failed 2 notice that financial system had created huge # of UNREGULATED bank-like entities.
• Debt levels before this crash approached pre-Depression levels. And we had “the mother of all housing bubbles.”
• Crazy borrowing! Look at Iceland … 300,000 people with $100 billion in debt.
• It is too easy to make business downturn into morality play. Forget the excesses of the past. Focus on the fix.
• We had 2 much faith in Fed’s ability 2 fix the mess. Fed pushes rates to 0%. Not really working, not much more 2 do.
• By one professor’s math interest rates should be at minus-8% based on the economy’s plight
• Problem looks much like Japan’s “Lost Decade” that hammered that nation’s economy throughout the 1990s.
• We were building up to this! 1990-91 recession needed 3% rates to stop. 2000-01 recession needed 1% money 2 be cured
• Paradox of thrift. Everyone saving can actually be destructive! We want high savings rates … just NOT NOW!
• When business will not invest … like now … government spending is only fix. Obama stimulus is too small.
• Maybe we need a new bubble to invest in!
• Big banks are in trouble. Some insolvent. “Socialist” bank seizures in US every week. But giant holding companies?
• Are we doing enough? If you think this ends soon, then “Yes!” But if this runs on then “No!” This looks inadequate.
• I never imagined the scope of this problem and challenges it created.
• US is at least doing more than most of the rest of the world. I am worried!
• Stock rally on good news? Not good news just things not getting much worse!
• US unemployment will surpass 10%.
• We are not clueless. We have not done enough. I am terrified. Hope we find the audacity to fix it.

[nero3]

Re: Krugman Should Have Read EJ's "The Next Bubble"

These things alternate. In the 80-s it was commercial construction. in the 90-s and 2000-s residential, and now it could move back to commercial. I am not saying real estate will be a big thing, but I think commercial, especially industrial construction is just getting started.