Monday, March 12, 2012

consuming investments

CONSUMING INVESTMENTS
I just got done reading “21st Century Great Global Depression” by Orest Harrison.  Thank you, Elko County library.  If I had actually spent real cash money on the book I would have been a bit peeved.  This thing is nothing more than a rehash of hundreds of other books, namely, the evil real estate crash put us into a recession and if we just buckle down and don’t get into any more debt and pay back all we owe to those nice little fuzzy foreigners and to our nice central bank, and, oh yeh before I forget while we are at it invest in renewable energy, all will be well and we will live happily ever after.  I hear the ghost of Rush Limbaugh- if we just elect the right people all will be well.  Good Lord Baby Jesus Himself on rollerblades, are you people naïve or just uneducated?  Printing dollars and spending them wisely is not the economy.  Tangibles must support those currency units.  Yes, wise leadership helps, but once there is nothing behind the economy it is game over.  Whether it be fertile land or oil, SOMETHING has to be behind trade.  Something that feeds people ( okay, it should have been land, oil or an invading military ).  Which reminds me of the dustup about a soldier in Afghanistan going out and killing a bunch of civilians.  Notice how, as usual, we get zero details but rather a bunch of analysis based on disinformation?  Why, how could a soldier slip past the main gate armed and on his own kill a bunch of people?  Focus on the act rather than the motivation.  I’d say, if there was a bunch of retaliation shootings over the Koran burning, wouldn’t this likely just be a revenge killing over one of our own being a victim of that?  Sounds copasetic to me.  Go back to your pathetic coverage of the coming election and stop trying to sound like you know what the heck is happening in the world.  At least with campaign coverage we know it is all bullcrap.  The bankers have already selected the winner.
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When an “expert” writes about renewable energy, I wish to hell he would do a bit of research besides reading an op-ed piece from the east coast newspapers.  You insist our entire country can switch to renewables, yet this flies in the face of both economic reality and the laws of physics.   Our economy is contracting ( unemployment is going down, officially, as they shrink the total number of eligible workers- quite a feat during population growth ).  Hyperinflation is being used to give the illusion of growth ( oh, sorry, no need to panic.  Doubling the deficit in two years or so is no big deal, go back to sleep ).  And almost no credit is being extended.  How do you switch the country over to renewable energy without credit to build the infrastructure?  Assuming we have the needed raw materials in the first place?  We are, almost across the board, digging into the bottom of the barrel for all raw materials, using extra energy to extract the finest of ore deposits and using the lowest BTU content of fuels.  This isn’t enough to keep our economy of five years ago running, let alone today’s economy, yet we have extra to build all this new energy supply?  I hardly think so.  And that ain’t all.
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Renewable energy has never been a net producer of energy.  Whether it is the needed steel for wind towers or the silicon needed in solar panels, you use more BTU’s in the manufacture of these power producers than they ever return ( you need to factor in the machinery and infrastructure used to produce that raw material ).  You are using a consumable product, not an investment into a producer.  Now, there is nothing wrong with renewable energy for individual use.  If your choice is to consume energy from the power company, assuming you want power, your choice is to consume it as it is produced or consume it all up front.  It is still just consumption.  Consuming from the grid gives you cheap power now, with the future rates being a gamble.  Consuming off the grid gives you a fixed rate for the future, even if it is currently higher.  It is still consumption though.  They are both still just petroleum consumption.  This works for any consumer, but it does not work system wide as a lifeboat after a certain point.  Remember, you don’t achieve surplus energy, you are just saving some petroleum BTU’s to use for the future after “on demand” petroleum is gone, shrinking or intermediate in supply.  If you don’t invest in it while it is available, it does you no good.  Right now, as petroleum shrinks ( yes, the global supply is currently steady on a plateau but only because we are substituting crap fuel for the now shrinking sweet crude ), it is too late on a large basis to switch over.  There isn’t a surplus available to build.  On an individual basis, fine.  Actually, it is a winning strategy as you use worthless cash to buy future petroleum BTU’s.  As the system contracts, cash is still given undeserved status.  You use it to buy taxpayer subsidized grain and Chinese peasant and coal subsidized solar panels before it loses that status. 
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But if you look at the problem globally, you have to look at it from a resource standpoint.  If there is no surplus, there is no switchover.  Just take one small component, the new LED light bulbs that will allow us to use a lot less energy for our lighting needs ( it doesn’t matter if the bulb is thirty bucks if electricity shoots to fifty cents and higher a kilowatt ).  Would they be as cheap as they are, relatively speaking, if it hadn’t been for the billions, or hundreds of billions, already invested into chips used to power our  computer revolution ( which only took off because of both government seed money and the immediate payoff of private industry laying off workers by replacing them with computers, in effect putting them on the public unemployment trough- privatizing profit while getting the public to pay for loses )?  There is no such beneficial adaptation from other sectors with renewable energy.  Even with cheap Chinese subsidized costs, solar is still $5 a watt.  You can barely light a residence on that affordably.  There is no running modern civilization on it.
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Smarter minds than mine have been repeating this forever.  I’d just like to point out that renewables are consumables, not investments. 
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5 comments:

  1. "Renewable energy has never been a net producer of energy."

    Dutch windmills, and centuries of sailing vessels.

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  2. russell- in the context of returning more energy than the petroleum used in its manufacturing, modern era.

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  3. With Respect to Russel's point, the so-called Modern Era, is nothing more than a grossly perverted episode in the history of the species. When the long-slow slide towards energy entropy is complete, and those much louder than I have been long digested at the bottom of the stewpot, the species will return to its natural Equilibrium, in balance with everything else. This is when the Classic Design of Windmills and Sailing Vessels will come into their own again. Not to be a complete idiot, but it seems especially lately, nature has always has the last laugh at us silly humans.

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  4. Investment as compared to other types of stock market gambling? If I put $10,000 into solar I can get about $50 a month worth of electricity, off grid, compared to the costs of a grid connection and similar amounts of power. This is a 6% return, and if someone tries to steal it, I have a good chance of tracking them down, recoverring the equipment, and shooting them in the process. If I was to trust it to Wall Street, when (not if) they steal it, it is almost impossible to identify and/or get close enough to shoot the guy resposible. That amount is a chunk of money for most, but you have probabbly given that much to wife #2 over the years, so the money is available.

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    1. $50 per month represents 6% annual yield on a $10000 investment not 6% return. A 6% return would mean that you have $10600 in your pocket at the end of the year. This analysis is false economics because your capital investment is not maintained - your 10K is gone and a depreciating asset that has a limited functional life is in its place. Take away tax credits and subsidies and you wont even break even before the unit has degraded to the point of obsolescence. 10years @ 600yr is 6K. You need the cost of electricity to increase dramatically over the next 10 years(and it may) for this to a prudent expenditure.

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