Before this time the options for central banks were limited and so was the coordination between them. We now live under a set of new rules, and whether these will make solving the crisis easier or harder is hard to say. I certainly won't try to predict, but personally, I not doing anything to change the balance of my portfolio investment. On what basis could I make a sensible decision?
My guess is that the panic is overblown, just because people are looking back at other crises and make historical analogies which aren't appropriate.
My second point is more of a question.
Is European "capitalism" any different than the American variety? As far as I can tell the major differences have to do with limits on CEO greed and labor having a bit more say in governance than in the US. Neither of these factors really has any effect on how firms pursue their goals. Shell seems just as unsavory as Exxon. European (and Asian) banks have been getting caught up short just as have the US banks. Rational assessments of risk seem to be lacking in all markets.
I understand that talking about American style capitalism is mostly a code for getting rid of labor's power in the EU, but aside from that are there really any important differences? Policies not Politics ---- Daily Landscape
Is European "capitalism" any different than the American variety?
Of course it is different. Perfect example--Vestas of Denmark. The USA has WAY more prime wind site than Denmark. The USA has just as big a real interest in harnessing non-carbon-based power as Denmark. Both countries have similar access to international markets.
Yet Wall street did NOT finance the wind turbine industry. In fact, it seems impossible that could have done so considering what their goals are. Wall Street is the epicenter of pirate capitalism, while there was still enough left of producer capitalism in Denmark to get a wind turbine industry off the ground.
Is there a difference between the forms of capitalism? I would maintain that the difference between pirates and producers is the single greatest social distinction on earth. "Remember the I35W bridge--who needs terrorists when there are Republicans"
Yes, they were also helped by Danish installations, also funded by tax credits, but the Danish credits were also used to fund US projects.
Wall St money did tend to emphasize US manufacturers, but was by no means limited to them.
It is most certainly "pirate" money today, based in the global financial centers, which funds the mature wind industry. In the US, the lead venture funder in windpower is Goldman Sachs, while they, Lehman, Morgan and many banks fund the projects and companies.
Particularly when discussion Anglo Disease, we see the effects of pirate vs. producer capitalism, but the logic breaks down when referring to windpower. "Life shrinks or expands in proportion to one's courage." - Anaïs Nin
Particularly when discussion Anglo Disease, we see the effects of pirate vs. producer capitalism, but the logic breaks down when referring to windpower.
Or is it that the sector is still in growth/early maturation and there isn't enough to raid yet?
But....I believe you grossly underestimate the investment it requires to get to the point where something is actually offered for sale. Funding an enterprise when there is already a working prototype and a sales brochure may SEEM like brave investment strategy, but compared to the folks who got the project to that place, such investment is virtually irrelevant.
Or perhaps you could explain to the rest of us exactly WHY there is no USA version of Vestas. There are no parts of wind turbines we could not have manufactured, but aside from some pathetic attempts, it never happened. "Remember the I35W bridge--who needs terrorists when there are Republicans"
You make a good point about the Danish farmers and machinists who actually built the early turbines. They did bootstrap themselves into becoming companies. Vestas was already a company, making something for agriculture when I visited the factory in Lem back in 1879, or was it 1979, can't quite remember.
btw, Here's a site on windpower's history put together by an old friend of mine, the builder of the blades for all those initial Danish machines.
As to your 2nd question, part of the reason the US never developed viable manufacturers can be laid at the hands of the government research program. Large machine contracts were awarded to defense industry companies who didn't give a shit about windpower. The small turbine companies scuffled along as best they could. But even the commercial turbines at the same scale as Vestas in those days were a bit higher technology, and were perhaps too far ahead of the curve. As we all know, the robust, primitive technology of the Danes won out.
It took some time before NREL (then SERI) got with the program, but by then it was too late. Another factor was the continual boom and bust cycles, which did not allow for long term investment. Look at Zond/Enron, who never built a reliably working machine. "Life shrinks or expands in proportion to one's courage." - Anaïs Nin
In order to build something as difficult as a reliable wind turbine, two things are required--a compelling vision and patient capital.
Pirate capitalism has neither. Good producers have both.
Wind turbines may not be the best example of these phenomena but it is one I thought appropriate for this site. "Remember the I35W bridge--who needs terrorists when there are Republicans"
Hope you enjoyed Eric's windpower site (above comment). I think it's gorgeous and a great template of the industry. Wish lot's of people would go there and check it out. He's the perfect example of the antidote for pirate capitalism. (But then some of us did do it for the greater good, and not because there was so much money to be made... which really hurt the industry.) "Life shrinks or expands in proportion to one's courage." - Anaïs Nin
Without this kind of government-funded research programmes, it is highly unlikely that the Danish wind industry would have ever gotten off the ground. And considering the sway that the drill-and-burn lobby holds over Washington in general and the Repugs in particular, I seriously doubt that such a programme would have survived past the first US Congress committee.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
Also, of course, the fact that support has been yanked away, and has generally been inconsistent (sse still today the on/off nature of the PTC mechanism and the yearly uncertainty as to its renewal). In the long run, we're all dead. John Maynard Keynes
The current situation is the first international monetary crisis since the world went off the gold standard (the US under Nixon).
In British politics and economics, Black Wednesday refers to 16 September 1992 when the Conservative government was forced to withdraw the pound from the European Exchange Rate Mechanism (ERM) due to pressure by currency speculators--most notably George Soros who made over US$1 billion from this speculation. In 1997 the UK Treasury estimated the cost of Black Wednesday at £3.4 billion.
The crisis started in Thailand with the financial collapse of the Thai baht caused by the decision of the Thai government to float the baht, cutting its peg to the USD, after exhaustive efforts to support it in the face of a severe financial overextension that was in part real estate driven.[neutrality disputed] At the time, Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency. The drastically reduced import earnings that resulted from the forced devaluation then made a quick or even medium-term recovery impossible without strenuous international intervention. As the crisis spread, most of Southeast Asia and Japan saw slumping currencies, devalued stock markets and asset prices, and a precipitous rise in private debt.[1]
Now, the fallout when OPEC stops trading in $ is going to be... interesting - particularly considering that the US has very little control over the timing of such a move.
As an aside, I believe you forgot Argentina, which is arguably an even better analogy to the current US situation.
ie the gold standard was backed by bullion reserves.
The US were not the ones exchanging oil for dollars: they were creating and exchanging dollars for oil.
It wasn't that the the US was on an "Oil Standard" - it's that the rest of the world (and the oil nations in particular) has been on the Dollar Standard, and kept reserves in dollars, thereby giving the US a free ride on the seignorage on the dollars.
The solution IMHO is that we get on to an energy standard backed by an energy-based value unit, and "pools" of energy, whether carbon-based or renewable.
This would allow the monetisation (and hence inescapable taxation/levying) of the energy content of carbon, not the completely fatuous concept of monetising the carbon content of emissions, or carbon credits.
These are both "deficit-based" solutions brought to us by the same people who brought us the Credit Crunch, and as the guy said...
"...if you want to keep a donkey healthy you don't regulate what comes out of it, you regulate what goes in...". "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
The fallout will still be interesting, but for different reasons than I thought...
I fear that the panic is understated, for the same reason. There is no appropriate analogy.
Credit intermediation, in the US at least, is finished for at least a generation.
On the other hand, maybe it's possible to create a successful US economy without credit intermediation. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
