The next bubble | stockbee

3/11/2008

The next bubble

This article predicts next bubble will be alternative energy and it will dwarf the housing bubble.


The next bubble must be large enough to recover the losses from the housing bubble collapse. How bad will it be? Some rough calculations:the gross market value of all enterprises needed to develop hydroelectric power, geothermal energy, nuclear energy, wind farms, solar power, and hydrogen-powered fuel-cell technology—and the infrastructure to support it—is somewhere between $2 trillion and $4 trillion; assuming the bubble can get started, the hyperinflated fictitious value could add another $12 trillion. In a hyperinflation, infrastructure upgrades will accelerate, with plenty of opportunity for big government contractors fleeing the declining market in Iraq. Thus, we can expect to see the creation of another $8 trillion in fictitious value, which gives us an estimate of $20 trillion in speculative wealth, money that inevitably will be employed to increase share prices rather than to deliver “energy security.” When the bubble finally bursts, we will be left to mop up after yet another devastated industry. FIRE, meanwhile, will already be engineering its next opportunity. Given the current state of our economy, the only thing worse than a new bubble would be its absence.


From a speculators perspective bubbles are very good as discussed in my earlier Cantillon Effect post.

1 comment:

Editor said...

I've read that about alt energy, before, but I would have to see a lot more optomism and hype. I'm definately watching that sector though.

Although Agriculture is in strong demand, the graphs are parabolic, and at some point they're going to fall back to the original support line.

The Bubble's are usually in areas where the last thing that people expect is for it to go down. It could even be gold and silver, as the fed eventually after cutting and cutting rates will have to hike them, or force us all to endure hyperinflation. But I believe at some point there will be a bubble on oil and nat gas drilling and exploration companies. Despite there being less and less of it, at some point if peak oil theory is true, people will... out of neccessity be required to return to alternative energy, individual companies will run out of places to drill. Might be another 15 years, probably be shortly after the time they finally start drilling in Alaska, Kansas, and Colorado, but that's just a thought.