Tuesday, January 15, 2008

The Energy Bubble

RM over at Informed Reader summarizes an article on the next economic bubble -- supposedly being created as capital is moved into research, development, and marketing of new technologies in alternative energy. (Caveat: I haven't read the Harper's article.) Thoughts?

The small fashion among economic commentators that our entire trajectory of economic growth is a (wink-wink) sanctioned Ponzi scheme, shifting capital and hype from one sector to another, is pretty terrifying. Particularly when the debts and assets left behind from one level to the next are being bought up by foreign interests.

In general, I guess it is a good thing that this capital is being moved into alternative energy. Even if there is an eventual collapse, the initial investment should yield dividends in terms of new technologies and markets. Casualties of the Internet boom aside, that Google, Yahoo, Amazon, Facebook, Wikipedia, and all the online media were wrought from that initial investment surely has been a significant and positive change in our lives.

If the bubble is starting now, I guess I'm going to be late to the party again. Damn my timing!


Informed Idiot said...

Something the summary leaves out is that Janszen thinks that investment in alternative energy is fundamentally a sound idea. He just thinks that the prices of these assets and products is going to be inflated way beyond their true worth.

Ritik Dholakia said...

Thanks for the comment. Partly my take, as well. Artificially inflating unproven sectors may not be good for the economy, as a whole, and has the potential to destroy un-savvy individual investors, but as far as stimulating innovation and new product development, over-exuberance is second only to wartime funding, I'd imagine...