News Can the market alone fix the economy?

[mheslep]

Skyhunter,

NanoSolar has made a breakthrough with their new technology. They have achieved 1 GW production at the test speeds of 100 ft/min.

That's misleading. It is made on the throughput basis of the printer, if it could be run 24/7 for a year, and then that the film be attached continuously to mechanical supports and electric power cabling. They can do this in bursts; there's no evidence that they can do this continuously for a year.

 

[rcgldr]

I think this subject, but not that exact wording, was brought up in an interview with Greenspan on a show like 60 minutes. I also seem to recall it was the interviewer making a similar statement (about deregulation, specifically derivatives) and Greenspan simply agreeing.

No. It is wrong to attribute the '...unfettered' statement to Greenspan, or to call it 'similar'.

I was only trying to point out that it was the interviewer making a similar statement, not Greenspan. The only thing I do recall is what you mentioned, that Greenspan stated mistakes were made.

self policing of the corporate world doesn't work. ... derivatives

There are 72,000 pages of federal regulations, and that is just federal. How does this qualify as unfettered or self-policing?

It doesn't. I was pointing out that legalizing derivatives was an example of self-policing gone bad. So was the relaxation for home loan qualifications. In both cases, individuals personally benefitted from these activities without assuming any of the risks. This is why we have 72,00 pages of regulations, and it's still not enough.

 

[WhoWee]

That's misleading. It is made on the throughput basis of the printer, if it could be run 24/7 for a year, and then that the film be attached continuously to mechanical supports and electric power cabling. They can do this in bursts; there's no evidence that they can do this continuously for a year.

I see your point, but I'm not sure the manufacturing process is continuous. I thought they spooled the printed material and completed the process on another line(?)...really not sure. Otherwise, they're going to need quite a few lines to meet demand...good thing they have the funding in place.

Also, as you stated they can run in bursts and the printer is rated at a much higher speed...again, who knows what they can ACTUALLY achieve?

I just wanted to make a positive statement regarding advances that are being achieved.

 

[mheslep]

I was only trying to point out that it was the interviewer making a similar statement, not Greenspan. The only thing I do recall is what you mentioned, that Greenspan stated mistakes were made.

It doesn't. I was pointing out that legalizing derivatives was an example of self-policing gone bad.

Ok, I am closer to your view in this narrow case, though saying 'derivatives' is still too broad. As Greenspan said on Oct 23, derivatives in general are doing just fine - the majority of them are used in currency trading. The specific problem seems to be credit default swaps; they need some rules.

So was the relaxation for home loan qualifications. In both cases, individuals personally benefitted from these activities without assuming any of the risks. This is why we have 72,00 pages of regulations, and it's still not enough.

A common view, but I think a fools errand to simply add more pages, as the same thing will just happen again after doubling the regs (I submit) and exploding the costs. The question to ask here is how did some of these loan resellers assume they could get away with making a reckless loan and then resell it, again and again, as if they had a game of musical chairs where the music never stops? Normally self preservation and not regulations would prevent them, you, me or anyone else from doing so. In this case I assert that Fannie Mae and Freddie Mac, on behalf of the government, were acting as the both the last chair in the game and the never ending music player.

 

[rcgldr]

The US market is not the main issue; auto sales are down world wide. The problem is that, in the US, the domestic companies spend more to make comparable cars than their foreign owned domestic competitors.

I'm not so sure about this, GM has been able to make cheap cars under the Saturn name. As I mentioned before, labor related costs only account for about 8% of the price of a car. I don't know about the level of technology used in manufacturing, because the USA companies have a mix of older and newer plants.

The foreign owned seem to have a more flexible production process and have very nimbly turned to making, say, fewer SUVs and more small cars in a short time.

I'm not so sure about this. I'm going a bit off topic here with a sub-segment of the auto market.

The Japanese car makers floundered in the higher end sports car market. For example, the Toyota Supra and Nissan NSX stagnanted somewhat compared to the USA Corvette and the European cars like the "low end" Porsche 911's. The Supra eventually got overpriced, and the price dropped from about $55,000 to $46,000 in a single year, the largest percentage decrease in price for any car. In the meantime, GM kept evolving the Corvette, and by 1997 with the C5 version, it was cheaper, more powerful (345 hp versus 320 hp for the turbo Supra) and lighter (3250 lbs versus 3480 lbs for the turbo Supra) and had a better perceived image in the USA market. 1998 was the last year Supras were sold in the USA, and 2002 was the last year of production, because of issues meeting ever tightening emmisions requirements (I'm not sure why Toyota didn't try a newer technology engine in the Supra).

The NSX was stuck at 290hp apparently because of a Japanese gentlemans agreement not to exceed 300hp during its years. Few other improvments were made, while the rest of the car makers continued to improve their sports cars. The NSX was expensive, about $80,000, (USA), a price hard to justify for what was considered antiquated technology. Then again Harley Davidson manages to extract high prices on motorcycles based on antiquated technology with it's "mystique", an example of perceived value.

The new Nissan GTR is the first new sports car to come out of Japan in a long time. I'm not sure why sports car are so difficult for the Japanese automakers. Perhaps Japan's automakers feel that the sports car market is too volatile.

Getting back to your post, I'm not sure how long it takes USA or foreign companies to retool a line to make a different type of car, or what issues are involved in retooling.

Getting back on topic, in the current situation, it's a drastic reduction in overall sales because fear factor has dramatically changed the behavior of consumers world wide. I'm not sure if the mind set of current generations is ever going change back to what it was 2 years ago. I think that conservatism of consumers is going to be around for quite a while, with an associated impact on any consumer based economy. I don't know if there's any real fix for this.

 

[rcgldr]

derivatives.

Ok, I am closer to your view in this narrow case, though saying 'derivatives' is still too broad. As Greenspan said on Oct 23, derivatives in general are doing just fine - the majority of them are used in currency trading. The specific problem seems to be credit default swaps; they need some rules.

Maybe I'm not understanding how derivatives interact with currency exchanges, but what is the point in derivatives for currency trading? The exchange banks seem to be doing a good job with currency trading, so why allow people to place the equivalent of side bets on currrency instead of dealing directly or indirectly (via investment funds) with the exchange banks?

relaxing home loan regulations was bad

A common view, but I think a fools errand to simply add more pages, as the same thing will just happen again after doubling the regs (I submit) and exploding the costs. The question to ask here is how did some of these loan resellers assume they could get away with making a reckless loan and then resell it, again and again, as if they had a game of musical chairs where the music never stops? Normally self preservation and not regulations would prevent them, you, me or anyone else from doing so. In this case I assert that Fannie Mae and Freddie Mac, on behalf of the government, were acting as the both the last chair in the game and the never ending music player.

I think this gets back to my point about personal gain for individuals at the expense or risks of others. Consider the fact that the ideal behind corporations is to shield the founders from corporate debt. I don't know of a good way to fix this. It seems that policing of the economy will just continue to grow, to stop the corporate equivalent of looters in a disaster when the police are absent.

 

[Skyhunter]

Can you please provide a source? Just one?

I did provide the Nanosolar link.

Their production cost is about 30 cents a watt. and the panel is 14% efficient.

Nanosolar sold out the entire 2008 production before they even produced a single panel. This is the only company currently manufacturing panels for sale but http://www.sunrgi.com/index.html" also looks very promising and they are claiming 5 cents per kWh.

 

[mheslep]

I did provide the Nanosolar link.

Their production cost is about 30 cents a watt. and the panel is 14% efficient.

Nanosolar sold out the entire 2008 production before they even produced a single panel. This is the only company currently manufacturing panels for sale but http://www.sunrgi.com/index.html" also looks very promising and they are claiming 5 cents per kWh.

Your previous post said $1.00/W retail. I'm familiar with Nanosolar and other thin film vendors. Please, where does Nanosolar say they are NOW producing $1/W panels, much less $0.30? The industry site Solarbuzz says as of December the lowest price on the market is over $3/W (peak).

 

[Skyhunter]

That is misinformation. I saw the testimony, and he said nothing even approximately describing the current situation as 'unfettered capitalism' or 'run wild with no restrictions'.

I would not characterize it in those terms either. I was quoting someone else and making the point that Greenspan's tacit admission is a testament to failed Reaganomics.

He admitted he made a mistake in believing that that that the market could regulate itself. That those in charge of the financial institutions understood their business. Like most Ayn Rand protege's he believed that capitalists, motivated by greed, would somehow regulate themselves and their greed so as not to kill the host economy.

Why they believe this is beyond me since it has never been demonstrated. In fact the opposite seems to be the norm.

 

[Skyhunter]

Your previous post said $1.00/W retail. I'm familiar with Nanosolar and other thin film vendors. Please, where does Nanosolar say they are NOW producing $1/W panels, much less $0.30? The industry site Solarbuzz says as of December the lowest price on the market is over $3/W (peak).

Sorry mheslep,

If you want to play childish gotcha games I don't have time.

 

[mheslep]

Sorry mheslep,

If you want to play childish gotcha games I don't have time.

This forum has standards against blatant misinformation, observing them is not a gotcha game.

 

[Skyhunter]

This forum has standards against blatant misinformation, observing them is not a gotcha game.

Look first you accuse me of not providing a link. I provided it, you missed it. Your mistake not mine.

Nanosolar's production cost is $0.30 a watt and they are currently producing and selling panels to utility companies for ~$1.00 a watt. Someone as familiar with Nanosolar as you claim to be would know that.

My point is that the technology for solar power competitive with coal is available today. Granted the product is only being sold to strategic partners and utility companies, but it is here now, it is proven, and it works. Scaling up production is the next logical step. This is an area of investment that will put people to work and help green the economy.

 

[mheslep]

Electricity, mainly coal based, for industrial customers costs ~$0.05/kWh now. Large industrial sized solar photovoltaic power costs four times that, $0.21/kWh, in the sun belt, and more than double that cost again outside the sun belt ($0.47 or 9x). The main reason for this is the variability of received solar radiation. A sun belt area receives only 5.5 hours of peak equivalent sun hours per day, so that ~four watts of peak PV panel must be installed to keep up with one watt of fossil or nuclear power that generates 24/7. Furthermore, the pricing listed here does not include the cost of any storage devices to collect most of the PV generated power during the day and then release it at night. Thus without subsidies photovoltaic power is not yet comparable to coal, though it is slowly closing the gap.
http://www.solarbuzz.com/SolarIndices.htm

 

[russ_watters]

Look first you accuse me of not providing a link. I provided it, you missed it. Your mistake not mine.

Nanosolar's production cost is $0.30 a watt and they are currently producing and selling panels to utility companies for ~$1.00 a watt. Someone as familiar with Nanosolar as you claim to be would know that.

mshlep is right: you are making very specific claims and they need to be specifically referenced. You need to actually quote the source (and it needs to be reliable), not just link the company website.

Solar power is a holy grail and as a result, the internet - and the world - is rife with solar power scams. We see press releases and claims from companies who claim they have made an advancement and are just about ready to bring it to market -- and it never happens. So this extrordinary claim requires explicit verification.

Please understand: I'm not saying such a thing is impossible, just that we need to be careful with extrordinary claims.

This skepticism is not uncommon: http://en.wikipedia.org/wiki/Nanosolar#Discussion

 

[WhoWee]

Looking at the situation from where we were, or where we thought we were, versus now where we are, something needs fixing.

The government needs to adopt more effective, and fair, oversight.


Importantly, the entire (US and global) economy needs to be deleveraged, and people need to live within their means.

Low interest rates, a robust stock market and a housing boom all pulled cash from savings accounts...http://financial-education.com/2008/06/07/what-is-behind-the-decline-in-us-savings-rates/

It became apparent in 2005...we talked about it in 2006
http://www.msnbc.msn.com/id/11098797/

Now we want to save, but don't...http://articles.moneycentral.msn.com/Investing/Extra/USSavingsRateFallsToZero.aspx

And yet here we are (as a country)...with a current deficit of roughly 10% of the economy...$1.2 Trillion

http://www.washingtonpost.com/wp-dyn/content/article/2009/01/06/AR2009010602849.html

...plus, Obama says we'll need to borrow about $775 Brillion now to stimulate the economy

http://news.yahoo.com/s/ap/20090107/ap_on_go_pr_wh/obama

...and over a $Trillion per year for years to come.

http://www.huffingtonpost.com/2009/01/06/obama-trillion-dollar-def_n_155710.html


I hope inflation isn't the governments answer to increasing US savings rates.

 

[mgb_phys]

You know the economy is in trouble when you can't tell the difference between the WSJ and The Onion http://online.wsj.com/article/SB123120525879656021.html

 

[mheslep]

...plus, Obama says we'll need to borrow about $775 Trillion now to stimulate the economy

That's billion not trillion.

 

[Astronuc]

...and over a $Trillion per year for years to come.

This is what really worries me. And Obama made some statement about exerting some discipline on federal spending.

We already pay more than $400 billion in interest on the debt. It looks like we'll end up paying more than $500 billion or $600 billion . . . . ! Does that make sense?

Perhaps the government will just print up $1 or 2 Trillion.


I was wondering this morning that AIG is supposed to repay their load of billions. Aren't the current bailouts suppose to be repaid with interest as well?

 

[Skyhunter]

I understand Russ.

And thanks for the Wiki link.

I am fairly confident that they disclosed their production costs to the http://www.nanosolar.com/blog3/?p=138"

Either way we will know this year, since that is when their consumer product will become available.

My underlying point is still valid. We are at the technological and economical tipping point. The size and scale of rebuilding our energy infrastructure is such that the solar industry alone could provide 5 million new jobs in the next two years Especially if you include all of the support such an industry would require in raw materials, transportation, logistics, sales, installation, and maintenance. Then there is the secondary jobs as the 5 million spend their money for goods and services.

That is only one area and it probably won't employ 5 million people in two years because there are many other areas that will see explosive growth. As we shut down or retrofit coal plants to sequester carbon. The http://www.eprida.com/eprida_flash.php4" of turning coal emissions into fertilizer is another industry that will see growth as we seriously address the climate crisis. DOE conducted the tests and their findings are consistent with the flash presentation.


Bottom line is the way Obama is going to fix the economy is by creating jobs. And he will create jobs by smart investment in sustainable energy technologies and infrastructure.

 

[WhoWee]

That's billion not trillion.

...typo...sorry

 

[mgb_phys]

That's billion not trillion

...typo...sorry

I think that explains how the whole thing happened?

 

[misgfool]

Obama's public construction plan seems like a correct remedy to the US situation. If people/corporations save for example 25% of income, from tax cuts/rebates of 100$ only 75$ go back to the economy. In contrast public investments spend 100$ straight away. If invested in energy infrastructure, it reduces the dependence on foreing energy imports and lays a foundation for cheap energy to manufacturing industry in the beginning of the next growth cycle as the railroads did to transportation. Second good move is to print money and get the inflation going so that banks have no choice but to start lending and people consuming.

 

[WhoWee]

This is what really worries me. And Obama made some statement about exerting some discipline on federal spending.

We already pay more than $400 billion in interest on the debt. It looks like we'll end up paying more than $500 billion or $600 billion . . . . ! Does that make sense?

Perhaps the government will just print up $1 or 2 Trillion.

I was wondering this morning that AIG is supposed to repay their load of billions. Aren't the current bailouts suppose to be repaid with interest as well?

This report shows $451Billion in 2008...up from $214Billion in 1988.
http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

There's an old adage..."you can't borrow your way out of debt"...more true than ever now. Maybe the adage should be changed to "borrow or print" for the government?



By the way...Putin says Merry (Orthodox) Christmas!

Is anyone following the Russia/Ukraine/Europe natural gas situation
http://www.latimes.com/news/printedition/asection/la-fg-gazprom4-2009jan04,0,563599.story

http://news.yahoo.com/s/ap/20090107/ap_on_bi_ge/eu_ukraine_russia_gas

This may impact oil prices as well.
http://www.silobreaker.com/DocumentReader.aspx?Item=5_944660501

Total chaos...not good.

More than anything right now...we need stability, leadership, certainty, clarity and discipline.

 

[misgfool]

This report shows $451Billion in 2008...up from $214Billion in 1988.
http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

There's an old adage..."you can't borrow your way out of debt"...more true than ever now. Maybe the adage should be changed to "borrow or print" for the government?

The (nominal) GDP in 1988 was $5.1 trillion and in 2006 $13.2 trillion. So debt costs as percentage of GDP are at about the same level.

http://en.wikipedia.org/wiki/Economic_history_of_the_United_States

It's interesting that the dollar sign is put before the figure when it's spelled after it.

 

[mheslep]

The (nominal) GDP in 1988 was $5.1 trillion and in 2006 $13.2 trillion. So debt costs as percentage of GDP are at about the same level...

Gross debt as a percentage of GDP has increased substantially since 1988:
1988: 51.9%
2007: 65.5%
2009: 69.3% (estimated)
http://www.whitehouse.gov/omb/budget/fy2009/pdf/hist.pdf , table 7.1
also see
http://upload.wikimedia.org/wikipedia/en/thumb/3/3b/USDebt.png/350px-USDebt.png

 

[russ_watters]

I understand Russ.

And thanks for the Wiki link.

I am fairly confident that they disclosed their production costs to the http://www.nanosolar.com/blog3/?p=138"

Perhaps they did, perhaps they didn't - perhaps they lied, perhaps they were overconfident. None of that is relevant here: that statement of yours is completely useless because we don't know what they said, much less if it was true!

Either way we will know this year, since that is when their consumer product will become available.

We'll know if it is true, we won't know if it isn't. That's how these scams work.

My underlying point is still valid. We are at the technological and economical tipping point.

Well, it seems to me that that point requires evidence and what you provided, if true, would have been that evidence. Since you are unable to provide evidence, your point is therefore not valid, or rather, not verified: Maybe we are at a tipping point and maybe we aren't. We just plain don't have any evidence to suggest that we are. And given a situation where we have no evidence of an extrordinary event, it is prudent not to assume that the extrordinary event has happened.

The size and scale of rebuilding our energy infrastructure is such that the solar industry alone could provide 5 million new jobs in the next two years Especially if you include all of the support such an industry would require in raw materials, transportation, logistics, sales, installation, and maintenance. Then there is the secondary jobs as the 5 million spend their money for goods and services.

That is absolutely true. My concern, however, is that we'll spend a couple of trillion dollars over the next 10 years and end up with essentially nothing to show for it. This is a serious concern.

If, instead, we spend a couple of trillion dollars over the next 10 years (and spend it well) on nuclear power plants, at the end of those 10 years, we'll be about ready to start up 250 new nuclear reactors (at a pessimistic $8 billion apiece), roughly doubling our nuclear capacity and allowing us to shut roughly half of our high-polluting coal capacity.

If the goal is to create jobs, fine, we can just start mailing out checks for people to do anything, but if the goal is for that money to actually benefit society (in addition to creating jobs), we should do something we know will benefit society instead of something we hope will benefit society. This isn't a $10 billion research grant we're talking about (where if it doesn't pan out, it doesn't hurt us much) - a couple of trillion dollars spent incorrectly can have a devistating effect on the economy.

Bottom line is the way Obama is going to fix the economy is by creating jobs.

He's going to spend money to create jobs, yes. Whether that fixes the economy or not is debateable.

And he will create jobs by smart investment in sustainable energy technologies and infrastructure.

We shall see. So far, it does not appear that that is the case.

 

[WhoWee]

If your brother owned a restaurant and was struggling, you wouldn't go to the bank for a $500 or $1,000 loan so that you could take your family to the restaurant for dinner(s) and therefore stimulate your brother's restaurant...would you? I wouldn't.

This is basically how the "tax cut" will work...we just don't have to pay it back now...our relatives will pay for it later.

Russ is correct. We absolutely must have substantial long term returns on ANY amount of borrowed funds injected into the economy...especially when the amounts are estimated in the $Trillions.

Unfortunately, Obama doesn't seem likely to agree to tripling the number of the nuclear facilities anytime soon. http://www.newsweek.com/id/170348

I'm looking for his quote from around lunchtime today...he mentioned something about creating jobs installing insulation in government buildings to conserve energy and lower government utility costs...if anyone can find it, please post.

 

[WhoWee]

Here we go...Obama plans to conserve energy and create green jobs.

http://www.guardian.co.uk/business/feedarticle/8209973

 

[DrClapeyron]

I believe the best thing the US could do now to fix its economy is to sell as many weapons as it can to the Middle East, step up oil exploration of South America and perhaps most of all take away all duties, excise taxes, quotas, etc on imported automobiles like VW. I'll bet that gets the Big Three in gear.

 

[WhoWee]

I believe the best thing the US could do now to fix its economy is to sell as many weapons as it can to the Middle East, step up oil exploration of South America and perhaps most of all take away all duties, excise taxes, quotas, etc on imported automobiles like VW. I'll bet that gets the Big Three in gear.

Create a little chaos and shake things up?

I like the idea of making all home improvements and auto repairs tax deductible.