Is the Crystal Ball Clearing? | 148 comments (147 topical, 1 editorial, 0 hidden)

Re: A shift in expectations (none / 0)

Because it might be cheaper to build a new one compared to buying an already existing one, depending on market valuations.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Tue Mar 13th, 2012 at 04:37:02 PM EST
[ Parent ]

Re: A shift in expectations (none / 1)

But that involves lags and risks that buying an existing asset doesn't have.

Also, if you buy the existing asset on credit, the existing asset acts as collateral. If you borrow to build, there's no collateral until the thing is built.

Therefore, the banking sector has a bias against lending for capital formation and for lending towards asset bubbles.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Carrie (migeru at eurotrib dot com) on Tue Mar 13th, 2012 at 04:42:56 PM EST
[ Parent ]

Re: A shift in expectations (none / 0)

But that involves lags and risks that buying an existing asset doesn't have.

True. Which is why people talk about risk-adjusted returns, and why choosing the highest risk-adjusted return is what you should, given that the absolute level of risk is something you can stomach.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Tue Mar 13th, 2012 at 06:06:54 PM EST
[ Parent ]

lending for construction (none / 1)

is what project finance is about.
And - again, it works, it's quite safe, but it's also quite a bit of work. Which may be the problem...

(Also - project finance bankers do not get million-dollar bonuses)

Wind power

by Jerome a Paris (etg@eurotrib.com) on Wed Mar 14th, 2012 at 08:48:21 AM EST
[ Parent ]

Re: lending for construction (none / 0)

I have been wondering, how much of banks lending is project financing and how much is based on existing assets?

Ball-park figures is what I am looking for really.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Mar 14th, 2012 at 09:07:23 AM EST
[ Parent ]

Re: lending for construction (none / 0)

most bank lending is still to corporations, and it is impossible to tell if that money is used for investment (and if so, in what) or for other purposes.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Wed Mar 14th, 2012 at 01:08:52 PM EST
[ Parent ]

Re: A shift in expectations (none / 0)

Still, a a lot of non project-finance new construction projects are done by established actors, not startups, which actually have collateral available to pledge.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Wed Mar 14th, 2012 at 10:44:01 AM EST
[ Parent ]

Is the Crystal Ball Clearing? | 148 comments (147 topical, 1 editorial, 0 hidden)

Top Diaries

Bidenomics made real

Energy (and Other) Events Monthly - October 2024

Of Childless Cat Ladies and other matters...

Recent Diaries

Zelenskyy's Dream of Victory over Russia

Gaza and Ukraine Wars Digging Gold for Profiteers

Yom Kippur and Genocide

Schizophrenic Disorder ICC The Hague

Building a Regional Superpower in a New Middle East

Brussels and Washington In Geopolitical Union

Starmer's Government Complicit In Gaza Genocide

Todd: The Disappearance of US Hegemony

Biden Willingly Entrapped by Netanyahu

Final Joint US-IL Assault On Iran

Hate Preachers Wilders-Ben Gvir-Smotrich

German Industrial Weakness in Charts

Gaza Massacre One Year On

America's Revenge On the Islamic State of Iran

Post Neoconic Wars, Hypocrisy Thrives In the West

Aysenur's Death a Targeted Murder by IDF

3rd Day Rutte Next Stop Moscow

1st Day on the Job - Mark Rutte

Harsh Lesson On Humanitarian Law and Israel

Bidenomics made real

Occasional Series