If government subsidies & tax favors caused malinvestment into silicon valley in the 1990’s, thus causing the Dot-Com Bubble; and a similiar deal happened just now with the oil bubble, save the tragic destruction of the dollar; and the federal reserve & congress created false demand and artificially low rates to cause the housing bubble – then what can we take from this?
President-elect Obama has been droning on about a green revolution and how he would invest $150B over ten years in the industry. Seeing as approx. 31/40 of his appointed team are directly from Clinton’s administration thus far, wouldn’t it be rational to assume that the same system will be used for green technology as it was for silicon’s nonsense?
Of course, one could only expect an eventual collapse in this system for a variety of reasons (lack of global effort, lack of sustainable “job growth,” etc. (whatever they make up as an excuse)). However, wouldn’t it be soft of a smart-ass austrian idea to play their hysteria over the next few years?
Basically my question is that if we know that the government is the source of such irrationality, and we know how exactly they do it, and we know exactly what they’re going to do next, AND we know exactly how to keep ourselves safe (gold) – wouldn’t it be a brilliant idea to bank at least some of the coming Green Bubble and then convert the profits into gold so that as soon as the Green Bubble bursts, the perpetually falling dollar wipes out what ever profits that the general market indices have retained, but the value our investment would be mostly preserved in the intrinsic worth of gold?
I’m not a genius, just a student – if this was demented, please say so nicely and I’ll believe you.
You are not demented. You’re thinking like a businessman, recognizing an opportunity.
This site has a lot of young intellectuals, many of whom will probably follow unprofitable liberal arts degrees. But we need money for scholarships, conferences, media, hosting, books etc to spread liberty. Profiting from the market by understanding statist policies is a good idea.
You’re already much smarter than most people with poli sci degrees. You are a self-educator, paying someone to reinforce or certify what you know, if it doesn’t produce a profit, is pointless IMO.
I’d like to get in on some Green Bubble action, too. I predict that a large portion of the Pickens Plan will be put into action in the next 3-5 years. That is to say that hybrid and electric cars for personal transportation, powered by hydroelectric, solar and wind energy, as well as a conversion to LNG for cargo transport.
But where to invest? Putting your money into a bubble is risky. There is no way to know which firm will end up being the government’s favorite. Remember Corn Ethanol?
Buy gold. It’s safer, and you know it will hold its value.
Maybe it would be possible to invest with a venture capital firm that invests in green companies? I think that solar thermal and wind will be profitable in the near future. Wind will probably be profitable in the long run even without a bubble.
We have ICLN (a “clean” energy etf) & we have GLD (a gold etf).
Here’s my plan: we (under a collective Austrian Economist title) actually make these predictions and document our doing so. It would be imperative to logically map out the hypothesis and all decisions before hand. It would also be important to cite references in austrian literature that support how we arrived at each hypothesis and why we ultimately decided on how to approach this bubble. This would be most efficiently carried out in a blog style format – sort of a “Green Bubble Institute” blog.
THE FUN PART: In 4-6 years when the bubble starts to deflate, we collect the information we had been keeping, and form it into a book and publish it as a giant ironic “look-austrian-economic-theory-is-indisputedly-running-circles-around-your-statist-ignorance” piece.
Would anyone be interested in contributing to this?
As far as I understand, stocks of many “green” companies have been plummeting in the wake of the global financial crisis as well.
If I were you, I wouldn’t invest immediately but rather wait a few months until we see some government-backed stabilization in capital markets. Until then, a number of especially small to mid-size businesses might go bust, and we don’t want to throw money into a hole.
When it comes to green energy, I’d invest in reliable, non-weather-dependent energy sources such as geothermal power plants. No doldrums or drought will ruin your investment then.
Oh, and if you happen to be a gas tycoon, I’d go for wind energy. At least in most parts of the EU, every wind turbine has to be covered by a gas turbine that is able to produce the same amount of energy, just in the case the wind won’t blow satisfactorily one day. That’s also why so many big names in the petroleum industry are now championing renewable energies. Them greedy businesspeople.
You could do that and withdraw into gold, or you could start short-selling when it starts to go down and profit from the bust as well. Anticipating busts is tricky, but contrarians have some pretty good ideas. (In essence they say the time to reverse the position is when even the last sceptic has jumped on the “gravy train”. As you would expect from people calling themselves “contrarians” I suppose.)
you have a good point, it would be better to wait for the government to actually take the first action. one cannot counter a move that hasn’t been made.
also a good point. i think that this would work in best if the investment was switched to gold once it was determined that the rational market value of the investment (if any) had been reached. after that, we follow the hysteria until it’s academically undeniable that expectations are ridiculous – then we additionally short the investment and compare it to the long position in gold.
Just buy gold or silver. You can get industrial-grade, .999-percent pure of either metal easily, and at just slightly over spot price from several reputable online dealers. I’ve been buying a 10oz. bag of silver of the above mentioned quality over the last several pay periods. If I were able to, I’d get one of gold, too, but that’s a bit out of my price range at the moment.
