Green tech: USD20tr of fictitious wealth
According to Eric Janszen:
Eric Janszen is an angel investor and founder of the contrarian market website iTulip.com, which The New York Times credited with “accurately predicting that the [internet] bubble would pop.” Now Janszen believes the American economy needs a fundamental restructuring away from its foundations in finance, insurance and real estate. His prescription: a new bubble based on green technologies.
In a widely discussed Harper’s article in February, “The Next Bubble: Priming the Markets for Tomorrow’s Crash,” Janszen argued that clean tech is the only sector that could create enough “fictitious value” to replace the losses from the housing bubble, if only temporarily.
Much more interesting than the (so far, for me) dull world of current financial meltdown (meltdowns? Melts-down? I don’t know). Janszen made an interesting argument in his Harper’s essay:
Nowadays we barely pause between such bouts of insanity. The dot-com crash of the early 2000s should have been followed by decades of soul-searching; instead, even before the old bubble had fully deflated, a new mania began to take hold on the foundation of our long-standing American faith that the wide expansion of home ownership can produce social harmony and national economic well-being. Spurred by the actions of the Federal Reserve, financed by exotic credit derivatives and debt securitiztion, an already massive real estate sales-and-marketing program expanded to include the desperate issuance of mortgages to the poor and feckless, compounding their troubles and ours.
That the Internet and housing hyperinflations transpired within a period of ten years, each creating trillions of dollars in fake wealth, is, I believe, only the beginning. There will and must be many more such booms, for without them the economy of the United States can no longer function. The bubble cycle has replaced the business cycle.
“The bubble cycle has replaced the business cycle.” I shall have to remember that one, come macro (a few lectures hence). Back in his Wired interview, he had something even more creative:
Wired: What do you see as the nascent financing and credit vehicles that could come up with the trillions of dollars needed to finance clean tech without creating a bubble?
Janszen: One way to do it is to put a floating tariff on the price of oil and gradually raise the price up to $200 or $300 a barrel. As long as you do it gradually, the economy can respond to it. That’s the beauty of our system. It has responded very calmly to an increase from $20 to $100. The economy hasn’t collapsed. It’s definitely slowing, but it’s not wrecking it. You could create a process that gradually forced a lot of relatively painless transition without wrecking the economy.
That’d certainly make things a lot more interesting…