Category Archives: Economy

Research Paper “On the Threshold to a New Energy Age” and Survey Results

http://www.whatmattersweblog.com/2010/02/06/survey-results/

As part of the research for my research paper “On the Threshold to a New Energy Age“, I conducted a survey in order to find out how “prepared” people are for the transition to a new age of energy generation and use as well as to gather opinions on current trends in energy issues.

In the coming days I will publish the results of the question-by-question analysis. The questionnaire contained 14 questions. 73 people took part in my survey. More than three quarters of participants came from the United States. I interviewed the remaining quarter in Japan, Singapore, Germany and Portugal.

All questionnaires had been distributed and returned between April 2009 and September 2009.

You can find the survey results on the Main Menu page “Energy Survey”:

http://www.whatmattersweblog.com/energy-survey/

Check out the  ‘RP: New Energy Age’ Category for the downloadable version of my 50-page research paper and further commentary on the survey results:

http://www.whatmattersweblog.com/category/rp-new-energy-age/

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Filed under Auto Industry & Electric Cars, Economy, energy, Environment, Global Issues

debt, oil and renewables [by Maximilian Staedtler]

download U.S. debt chart: http://www.whatmattersweblog.com/wp-content/uploads/2009/10/us-gross-debt-1910-2010.pdf

In recent years, the U.S. turned to cash-rich China to finance its enormous budget deficit. Few believe that China made a good investment. And yet, China keeps lending money to America for one simple reason: if it refused to do so, the U.S. dollar would nosedive and wipe out the value of Chinese currency reserves. Moreover, the U.S. consumer is vital to China’s economic growth. Therefore, China will continue to lend America billions of dollars until the Chinese consumer is ready to step in and drive domestic consumption. But that will take quite some time. The Chinese have the world’s highest personal savings rate and this won’t change unless the Chinese government manages to establish a reliable social security and insurance system.

The obvious reason why the U.S. will never pay back its debt to China is that it’d be impossible for a U.S. president to explain to Americans why he wouldn’t use the money to invest in the American education system, rebuild the ailing infrastructure or prop up the broken health care system.
As I said before, reducing the total amount of debt is illusory, but that doesn’t mean that debt as percentage of GDP can’t be reduced. As you can see on the chart above, gross national debt accounted for roughly 94% of gross domestic product in 1950, but while the total amount of debt more than tripled from $257.4 billion in 1950 to $909 billion in 1980, the percentage of GDP went down to 33.3%. How come this is possible?
Well, GDP was growing  faster than debt.
Rather than worrying about how to pay back mounting debt, we should think about how to grow the U.S. economy.
To achieve the growth rates we need to get the debt level under control again, we need a new key industry, something similar to the IT revolution.
 
Fortunately there is an industry which has the potential of becoming the driver of a new period of high growth rates: clean energy technologies.
Energy is the biggest business in the world. According to Fortune magazine, America’s five largest corporations are ExxonMobil (1), Wal Mart (2), Chevron (3), Conoco Phillips (4) and General Electric (5). 
Have you noticed something? Yes, 3 of the top 5 largest corporations in the U.S. are oil companies. Probably that doesn’t come as a surprise for you.
Since global oil production is close to its peak, western oil companies are falling behind state-run oil giants from the Middle East and South America and because of the harmful effects on the environment, the U.S. will be forced to shift to alternative sources of energy. This should be reason enough for Big Oil to invest in alternatives, even if just to remain a big player in the energy business.
Gradually we’re becoming more sensitive to the true cost of oil. America’s addiction to oil is not only harmful for Mother Earth but also for our security and the well-being of our economy. Domestically produced energy from both conventional and new sources of energy are keeping money locally and creating jobs instead of funding petro dictators and global jihad.
Too often I hear concerns about whether renewable energies can be scaled up fast enough to replace ever more expensive and dirty fossil fuels. The point is that once the development and production of clean energy and energy-efficient cars, homes, etc.. is getting kicked off, the American market will take charge of growing that business to a scale we need and at the same time bringing down costs.
The great thing about a green energy revolution is that it will help the U.S. economy regain strength (and solve our problem number one) and at the same time counteract climate change which is our second major problem. 
In addition, once the U.S. and much of the developed and developing world can effectively reduce oil consumption, this will reduce the threat of terrorism and radical religious groups which depend primarily on Saudi and Iranian oil income. As oil revenues go down, populist leaders from Venezuela to Iran will be forced to become more humble and reform their countries rather than distribute oil wealth.
Contrary to James Quinn’s predictions, I am convinced that there are reasons to be optimistic. As bleak as the outlook may be, one may not underestimate the innovative potential of the American market. Since there are enormous opportunities for profit, it won’t take long until creative entrepreneurs come up with countless ideas of how to generate energy more sustainably and how to use it more efficiently and earn a fortune along the way. The next Google or Microsoft will likely come from the energy tech sector. Let’s do everything we can to make sure that this  industry takes off and sparks a revolution that puts America back on track.
The profit potential in that market will be unprecedented. A strong energy tech sector is bound to drive up exports as global demand will be mind-boggling. Especially energy-thirsty China which is struggling with its spoiled environment will import whatever technologies it can get to satisfy its economy’s energy demand while keeping the impact on its environment as small as possible. Remember, this is not about CO2 emissions, it is about meeting future energy demand at a reasonable price without jeopardizing security and the environment.
Last but not least, alternative energies will not just be needed to replace fossil fuels but also to make up for unavoidable oil supply shortages. The availability and the cost of renewable energies will be increasing forever while at the same time the availability of crude oil is falling and the cost will be sky-rocketing.
Energy tech is America’s and the world’s best bet for the future. It is America’s turn to take action for two reasons:
#1: the U.S. consumes one quarter of the world’s oil though it just has 4% of the world’s population.
#2: America is the only country that can invent the technologies needed and bring them to the market quickly enough with its unequaled network of research universities, venture capitalist industry and millions of creative entrepreneurs willing to take on these challenges.
This article was originally published on www.whatmattersweblog.com on October 22nd 2009.
 
(C) 2009 by Maximilian Staedtler – WHAT MATTERS WEBLOG
(C) 2009 by Maximilian Städtler – www.whatmattersweblog.com
 
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the next oil price spike is ahead…

from my new blog:

and again, oil prices are heading up…. updated oil price chart (WHAT MATTERS WEBLOG)

(http://www.whatmattersweblog.com/2009/10/16/and-again-oil-prices-are-heading-up-updated-oil-price-chart/)

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Abu Dhabi’s green ambitions

Abu Dhabi – the capital of the United Arab Emirates – is trying to reduce its dependence on oil exports by diversifiying its economy. Part of the emirate’s strategy is to become a leader in clean energy. The eco-city Masdar is one example which shows Abu Dhabi’s determination to become a greener place.

Abu Dhabi’s Aabar Investments PJSC bought a  9.1% stake of the German car maker Daimler last week. The cooperation between the emirate and the auto company should create jobs and accelerte the development of electric cars. For more information, check out my new blog: Abu Dhabi and Daimler teaming up: oil, electric cars, eco-cities and lots of money

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Filed under Economy, energy

“America’s best days lie ahead”, Warren Buffett

I totally agree with Warren Buffett that “America’s best days lie ahead“. The extraordinary challenges facing the U.S. at the moment are unprecedented, but the current crisis is also an opportunity for America to reinvent itself and emerge stronger. America can lead the green energy revolution, create millions of jobs and counteract global warming.

Since no country is immune to the global economic crisis, there’s no shift of power or something similar. There’s no country that could become nearly as powerful as the United States – not even in the long term. When you take look at the following table, you’ll see that America’s share of the world’s GDP is extremely huge in comparison with all other countries. Though China has surpassed Germany – and is about to surpass Japan in the not-too-distant future – to be the world’s third-largest economy, the United States is by far the largest economy in the world. China and America should seek to become partners which is in their best interests. Both countries would benefit from intense cooperation and mutual support. Moreover, the old and the new global superpower could help to stabilize the world and bring peace to unstable regions.

You might also be interested in The Post-American World, China and the global economy

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California is running out of liquid resources, literally.

My comment on The Huffington Post article “Schwarzenegger Declares California Drought Emergency“:

California is running out of liquid resources, literally.
(checkout http://www.whatmattersweblog.com/2009/02/28/california-running-out-of-water-and-cash/)
The “Golden State” fails to balance its budget and in addition, the worst drought in decades forces utilities to restrict water use. The Californian governments have failed to raise taxes where necessary and cut unnecessary spending. Now the state is in that dire financial straits that even schools have to scale back. That’s ashaming and undermining efforts to prepare American kids for the challenges of a 21st century global economy. While public spending in CA has got out of control in the last decade, the country’s water infrastructure is chronically overburdened and rusting away. Central Valley farmers will have to turn to smart irrigation technologies that could help to save immediately 40% of the water required today to maintain the soil productivity of the San Joaquin Valley.
While droughts and wildfires will occur much more frequently in the future due to the impact of global warming, California should turn to the sun for future growth. The energy technology sector is a unique opportunity for Silicon Valley. Thin-film solar panels could cover sky scrapers in L.A. as well as roof shopping mall parking lots. If outlets were installed at most retail parking lots in CA, the batteries of electric cars could be recharged while drivers are doing their shopping. President Obama recently made it clear that energy will be one of his top priorities.

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Filed under Economy, Environment

Singapore determined to master the storm

 

Read the updated version on my new blog:

http://www.whatmattersweblog.com/2009/02/20/singapore-determined-to-master-the-storm/

Given these turbulent economic times, it’s not surprising that the Southeast Asian city-state of Singapore is also suffering from a deep recession.  Global demand for Singapore’s exports and services has collapsed since the financial crisis has spread to nearly every country on this planet and has emerged as a global economic crisis of unprecedented scale.

Since Singapore’s independence, it has become one of the richest nations worldwide with a modern high-tech and service industry relying on the country’s highly-skilled workforce. The combination of a capitalist society, a strong work ethic and smart government policies have proved extremely successful and have created numerous sources of income for the “Lion-city”. Despite its lack of raw materials, Singapore has become a major exporter and international financial and trade hub. Next to the pro-business and pro-export policy of the government, the excellent infrastructure has supported the country’s economic rise. The financial services and high-tech industry in addition to oil refining and re-exportation of imported and up-graded goods have been the foundation for Singapore’s economic success. However, Singapore’s strength in finance and international trade turned out to expose Singapore to the effects of the global economic crisis. (check out: https://economatters.wordpress.com/2009/01/10/grim-outlook-for-the-container-shipping-industry/) Container lines are struggling with costly over-capacities and are slashing some routes resulting in a major setback for the world’s busiest port. When international trade suffers, so does Singapore’s economy.

As the Singaporean government has already admitted, the city-state is in it’s deepest recession ever. The GDP is expected to contract by 5% this year. Nevertheless, the country has an abundance of financial resources. The Finance Minister announced a $13.6 billion (20.5 billion Singapore dollars) economic stimulus package to ease the effect of the recession on the people and revive the economy. Considering the size of the stimulus, this is a bold and determined step. The money should be spent to preserve jobs by subsidizing wages, guaranteeing bank loans to help businesses and families in trouble. Employers receive help to pay part of the salaries and benefit from tax reductions in order to ensure that as many people as possible keep their jobs and incomes. To stimulate banks to lend money, the government shares the risk of bank lending and jumps in when a business fails to pay back. Huge investments in education healthcare and infrastructure are part of the package, too.  The advanced subway system is to be expanded, public housing projects receive more money, more roads and parks will be built.

Apart from these countermeasures, Singapore might also weaken its currency to tackle the recession. This should strengthen the city-state’s export sector. Besides, this measure could halt the fall in consumer prices and reduce deflation risks. A large share of the consumer goods sold in Singapore are previously imported. Therefore, a possible devaluation of the Singapore dollar would stop the price fall by making imports more expensive.

Despite the grim outlook for the this year, Singapore’s future is bright. The government has invested billions of dollars into biotech and chemicals as well as telecommunications which should ensure the continuation of the economic success story. Singapore will overcome this crisis as it managed the Asian crisis in the 1990s and the outbreak of SARS. Pfizer and Lanxess are just two examples of foreign companies that have invested hundreds of millions into new research & development facilities. Pharmaceuticals already contribute decisively to Singapore’s GDP. However, the fast-growing biotech sector is still in its infancy and requires massive investments. In the medium term, especially biotech could become a big money-spinner. Singapore attracts many bright-minds from abroad. Scientists from foreign countries are fascinated by the vast research opportunities. The country’s innovative high-tech industry is making strides towards surpassing other Asian high-tech centers in Japan, Taiwan and South Korea.

The bottom line is that Singapore was hit by the crisis at the wrong point in time since it proved to be still too dependent on the financial sector while prospective sunrise industries are not yet ready to fill the gap.

If you’re interested in how Singapore manages this crisis and prepares for the future, you will be able to get first-hand information right here. In April, I’ll travel to Singapore and report daily about this intriguing global city at the tip of the Malay Peninsula.

http://edition.cnn.com/2009/WORLD/asiapcf/01/22/singapore.stimulus/index.html?eref=rss_latest

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Filed under Economy, Global Issues