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175 sats \ 8 replies \ @gabybaby 30 Oct 2023 \ on: Meta Econ Takeover Day 13 meta
In financial quarters, car loans. Car payments and terms have skyrocketed in the past couple years as fewer cars are being made to sell for < $30K in USA.
In non-financial terms, some corners of the clean energy market, primarily offshore wind and carbon credits, in my estimation.
Offshore wind is basically completely unviable without direct federal subsidy. Carbon credits are just straight up a scam, with some high-profile carbon "markets" being exposed as such, with purchased credits just going to nonsensical projects that use creative emissions accounting to justify their existence.
If one believes fossil fuels are here to stay for myriad reasons, then the failure of the above would likely be cheered on. But if one believes clean energy is the future, I would argue that person should also cheer on the demise because fewer dollars would get wasted on obvious BS.
I've been hearing about the car loan bubble for a while. What are people concerned about with that? One of the big problems with the housing crisis was that people were counting on being able to sell their homes and at least payoff their remaining principle. That doesn't seem relevant with car loans.
What's going to precipitate the clean energy bubble bursting? It seems like it can keep going as long as those stupid programs are politically profitable.
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It's about the knock-on effects of substantial defaults on car notes where the owners are very underwater. Sure, you can get some recoveries from impounding and selling the underlying cars, but with how leveraged lenders are as a business practice it can compound into something much larger given the scale and scope.
Clean energy bubble is already bursting to a certain extent. Broader ESG movement is quietly dying and it's clear clean energy funds aren't doing well (no surprise there). It could keep going on theoretically but even political capital gets exhausted at some point when there's nothing economically productive to show for clean energy projects.
Since energy security is extremely important at the sovereign level, countries can realistically only tolerate inefficient use of investment dollars for so long. Especially when taxpayers are fed up with lack of progress/are skeptical of the premise in the first place.
What do you think?
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Those are good points. I figured the car loan issue had to be something like that.
I hope you're right about the energy sector. I could see it, but I also still see a lot of people drinking the Kool-Aid.
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That car loan issue exists in some form or another all over the credit industry just by virtue of how many middlemen exist between the Fed and the end users. Having worked in credit risk for a personal lending startup, I got to see this dynamic firsthand and was just gobsmacked by how dumb it is in practice. Everyone along the way is leveraged to varying degrees and the health of that system is only as strong as the weakest link.
I agree that a lot of people are still drinking the Kool-Aid, but reality just has a habit of not caring at some point, especially when fiat money is fake and energy demand is very much not. So, I'm optimistic that eventually the stupidity will work its way out of the system.
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fiat money is fake and energy demand is very much not
I wonder how much the huge natural gas shortage helped prop up the clean energy bubble. Whenever oil prices return to normal (or whatever the new normal is going to be) it might make the picture a bit more clear. Right now, wind and solar don't look that much worse, depending on which rigged metrics people use.
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It also depends which use cases we're talking about. For dependable electricity generation, I'm sure that wind/solar are very competitive in certain geographic regions (assuming power lines and infra are in place).
More importantly, I think, are the uses of energy that go into logistics/transportation and emergency (backup) power generation. And there's just no substitute for oil and natural gas there. They just have such astounding advantages in terms of energy density, portability, etc. that anyone claiming otherwise is a paid shill and/or a charlatan.
I personally subscribe to Lyn Alden's view on the oil market over the next 5-10 years and think there'll be a structural bull run just due to limited capex in the past 15 years. The world isn't going to run out of oil just yet and if clean energy sources can't compete with oil in a world with elevated fossil fuel prices, then it doesn't deserve to be shilled as ridiculously as it is today.
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I'm sure that wind/solar are very competitive in certain geographic regions
It's more that they can be made to look competitive. By focusing on marginal costs, all the issues with intermittency, grid design, base load, and regional suitability can be papered over.
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Yeah couldn't agree more with that characterization, it's a very, very deceptive use of data and statistics. Go figure!
While the clown world continues arguing about these manipulated statistics I'll just keep quietly investing based on what I see with my own two eyes and what I interpret from the data independently.
Thanks for the great discussion, I really enjoyed it. Awesome start to my Monday evening. Cheers!