Saturday, June 20, 2015

Greens cannot ignore the fundamentals of finance



There is clearly a big gap in most of the commentary from the ‘bright side’ of the green arguments ---no understanding of capital.

The reason I say the good guys are winning is that all capital flows globally will now avoid fossil fuels like the proverbial plague.  (here is my rant) .  Not even ethanol.

MOST DO NOT REALIZE THAT PRIOR INVESTMENTS ARE SUNK CAPITAL THAT CANNOT BE REVERSED  The coal fired power plants, the crappy oil cars, the miserable electric grid, and even the production of resistant antibiotics are all funded by capital that is through the pipeline of annuities and pensions and insurance policies and coupons that grandmothers (of politicians)clip. Stopping the use of old oil cars stops payments to pensioners (in pensions that are already under water).  So the main enemy is time*…..it will take time for these things to work through our capitalist system.

Old coal fired power plants are a good case (and our most egregious environmental sin) ---  even the operators do not like them and are happy to pay fines and insurance policy bills as long as they make their bond payments.  Raising capital for scrubbers and conversion is not possible at this time.  Same for Duke energy (current poster child) who would love to raise capital to properly entomb coal ash but is stuck (at least until their bankruptcy).

My favorite case right now is used batteries…..clearly a plague on the green scene.  It was announced this week that they have found a way to take (some not all) of used batteries and make them into a home (stationary) storage system in a financially viable way.  Same for spent nuclear fuel rods….but all of this takes time* AND  CAPITAL.  So (end of rant coming) keep to the ‘right is right and wrong is wrong’  theme, but watch the capital…

*some cheeky guy might site the existence of GADD  --Green attention deficit disorder

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