The Green New Deal: Stocks That Stand to Benefit 11 comments
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Last week I spent some time at my hunting and fishing club in Northeastern Pennsylvania. During our social hour, much of the conversation centered on the possible auto company bailouts, 401Ks that have been decimated, and with the recession firmly in place, concerns about the best ways to make money in 2009.
In 1932, the problems were hauntingly familiar: a stalled economy, banks on the verge of insolvency, a housing industry in shutdown, ballooning entitlements, soaring unemployment. This is what Franklin D. Roosevelt was faced with when he tried to lift America out of the Great Depression.
But unlike 1932, none will be more difficult – or more important -- than weaning this nation off its 100-year dependence on fossil fuels, and repairing our aging, crumbling infrastructure.
The scope of the need is unprecedented: collapsing bridges and pothole-filled roadways, 100 year-old water and sewer systems bursting on a regular basis, outdated airports and shipping terminals, an under-powered national electricity grid and antiquated flood-control dams and locks.
There are solutions, however, and many exciting investment opportunities will be afforded to investors who position themselves properly.
The Stark Reality: Our Fossil Fuel Addiction is Killing Us
We’re all too familiar with the energy side of the problem. Economic growth grinds to a halt without readily available, cheap sources of energy. But the engine of our economy – and that of the rest of the world has been designed to run from the ground up on fossil fuels.
Nearly 1 trillion barrels have already been burned up… and half of that in just the last 10 years.
The current demand destruction has some experts suggesting crude could drop as low as $20 a barrel. But supply destruction is right behind the current drop in demand. The big drop in oil prices has rendered many expensive oilfield development projects no longer financially viable.
Anything below $90 a barrel blows a hole in the balance sheets of Canadian tar sands companies as well as those of Iran and Venezuela.
OPEC – with 40% of the world’s oil supply under its control, isn’t going to stand by and continue to sell oil at bargain prices either. It plans to cut production – and keep cutting it -- until oil is back up over $100 a barrel again. But an outsized demand for oil isn’t our only problem…
Look Out Below: American Infrastructure Is Falling Apart
How has our infrastructure fallen into such neglect? The reality is that once it’s created, it’s largely ignored… until something breaks and needs fixing. Sadly, we’ve reached the point where falling bridges, collapsing dams, and water main breaks are destined to become commonplace stories on the nightly news.
What would it cost to fix these and other crucial infrastructure problems? The American Society of Civil Engineers puts the number at $1.6 trillion dollars, more than half of the entire annual federal budget of the United States. How will we pay for it? People power.
You see, if enough people are put back to work, tax revenues increase, consumer spending rises and we’re back on track economically. It’s a bit of an over-simplification, but in general that’s how economic growth happens.
There’s only one thing missing… the fuel to get the economic engine moving again.
Back in the early 30s, in the midst of the Great Depression, the U.S. was in far worse shape than it is today, but the problems were hauntingly familiar: high unemployment, banking failures, and a swiftly shrinking economy.
Franklin D. Roosevelt, Democratic candidate for the upcoming election, said that if elected "I pledge you, I pledge myself, to a new deal for the American people."
Subsequent to his inauguration in 1933, FDR followed through on his promise with his New Deal.
He created the Civilian Conservation Corps. He pushed Congress to pass banking reform laws, emergency relief programs, worker relief programs for the unemployed, and agricultural programs.
And it was just what the doctor ordered: millions were put back to work, and the U.S. economy began to slowly recover.
It’s Energy and Infrastructure to the Rescue: The "Green New Deal"
While the slowdown we are experiencing is nowhere near as severe as the Great Depression, the solution will be the creation of similar New Deal programs in two specific areas: energy and infrastructure.
Some areas I think you’ll see addressed early on are making alternative forms of energy our mainstream sources, and building the green infrastructure to support what will be our growing energy independence. More importantly, these programs will provide millions of meaningful jobs to displaced blue- and white-collar workers.
Expect the new government to provide tax incentives for these and other programs as short-term incentives to save.
Here’s a few of the many big, blue-chip companies that stand to benefit from "Green New Deal" programs:
- Owens Corning (NYSE:OC) makers of insulated glass and building insulation.
- General Electric (NYSE:GE) wind turbines, energy control, infrastructure products.
- Johnson Controls International (NYSE:JCI) energy management systems for buildings and vehicles, hybrid vehicle batteries.
Clearly, wind, solar and geothermal energy companies stand to benefit, too:
- First Solar, Inc. (NASDAQ:FSLR) manufactures thin-film solar panels.
- Ormat Technologies, Inc. (NYSE:ORA) geothermal and recovered energy power producer.
- Vestas Wind Systems (VWSYF.PK) world’s largest wind turbine manufacturer.
As new green sources of energy begin to come on-line in a big way, the nation’s electrical grids will have to be upgraded to move the power to where it’s needed. This is a huge project, and one of the biggest winners will be ABB, LTD (NYSE:ABB) a provider of power and automation technologies.
President-elect Obama and his administration have an opportunity to turn the recession ship around, before it runs aground. By implementing new energy and infrastructure projects, thousands of new jobs will be provided at a time when they are desperately needed, and most importantly, these projects will provide the fuel to restart the world’s economic engine. We’ll be charting his progress and researching exciting investment opportunities in the weeks and months ahead.
Disclosure: no positions
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This article has 11 comments:
"But unlike 1932, none will be more difficult – or more important -- than weaning this nation off its 100-year dependence on fossil fuels, and repairing our aging, crumbling infrastructure."
I'd say weaning ourselves off our dependence on foreign debt is even more important to the economic health of this country - though it is certainly linked to our dependence on foreign energy (but it also has something to do with our excessive consumption of goods from foreign nations as well and our willingness to borrow against future earnings).
Our dependence on foreign energy is a major problem that needs to be fixed - and is being fixed as we speak. Look at companies like Sterling Energy Systems with their multi-billion dollar contracts to build solar concentrators in the desert. There are a ton of companies doing research as we speak and have been doing research over the last five to ten years. We are, and have been, working on the problems - the USS America is a big ship and doesn't turn on a dime.
All that said, I have my doubts about whether Obama, or any single man, can turn the ship around in short order by utilizing more debt and running the printing presses full steam ahead. I think if you take a closer look at the New Deal, you would see the only reason we came out of that recession was a world war. The New Deal didn't really help things...
and the depression is not like today....today banks have a whole lot of bad loans out there....and are that much more leveraged.....hedge funds on the lines of 30:1 and some banks on the lines of 60:1 or fanny/freddie 100:1 or so.
The depression was a case of a run on the banks and the banks ran out of money.....but they had solid loans.....their businesses were solid...they just ran short of cash.....and the fed reserve shrank the money supply during the same time frame. As if they wanted these banks and the morgans and such could buy all these distressed assets at pennies on the dollar.....almost like the downturn was planned.
Now....is a different story and a different game.....we need tighter lending...we need some banks to go under......and start from a fresh solid base....unfortunately.... goes against what the government wants because it brings in less taxes....all around...and unemployment.
I still don't understand how financial types can make so much money by literally moving money around.......I see this economy out of balance....and the bankers/hedge funds/mortgage brokers need to get wiped out.....as IMO don't add that much value to the system.
The "Green New Deal" is the real deal:
- It weans us from fossil fuels
- It curbs greenhouse gases and other pollutants
- It creates an economically and ecologically sustainable industry
- It will facilitate the next industrial revolution - the green energy revolution
- It creates well-payed domestic jobs
- It helps dig us out of the recession
Expensive in the beginning? Yes, but the moon program of the sixties was expensive, too and yielded many unforeseen technological benefits.
How to pay for it now? (Isn't is interesting, how the same people who threw money out of the window in the past 8 years (piling up as much new debt as _all previous presidents combined_) for their pals in the military industrial complex and for Big Oil, now suddenly ask this question?)
Tax the super-rich. Big Oil. The corrupt CEOs. The filthy bonus-collectors of Wall Street. Plenty of money to be had there. They robbed us blind - time to salvage some of their loot.
CCC began in 1932 under hoover, one of the few meaningful steps taken by herb. my dad managed a CCC camp in maine during 1932. RFC began under FDR. some of the steps taken by FDR were later struck down by the supreme court because the steps taken were disliked by the capitalists.
> jack
should be easy and quick! there was a plan? right?
"I think if you take a closer look at the New Deal, you would see the only reason we came out of that recession was a world war. The New Deal didn't really help things... "
That is revisionist history at it's worst. The reason is took WW2 to finally pull the country out of the depression was because of how deep the depression was, not because the New Deal wasn't working.
It was the new deal policies that led to the growing middle class in the fifties and sixties. Some would like to go back to the robber barron days that brought about the depression to begin with. We have almost achieved that under Reaganomics, which has left behind 80% of Americans over the past 25 years.
Many economists believe the New Deal worsened the Depression - it sure didn't create a real economy. The war changed our economy in a lot of fundamental ways that can't be ignored. Economists can debate whether the New Deal helped or not, but it didn't lift us out of Depression and it wasn't responsible for the mobilization of our economy either. A NEW DEAL, such as the author is discussing, might work better as long as it's aimed at creating a real economy - but even it won't work out as well as most "hope" if we are all completely waiting for government to do it all - private companies and individuals must be involved in a big way and they MUST be sustainable even without any government subsidies - and many companies are! So, thankfully, with or without government help, things are being done. I know dozens of companies that have been around for over five yeas and are well on their way to accomplishing amazing things, without government subsidy.
On Dec 16 01:02 PM frflyer wrote:
> Robert Nabloid
>
> "I think if you take a closer look at the New Deal, you would see
> the only reason we came out of that recession was a world war. The
> New Deal didn't really help things... "
>
> That is revisionist history at it's worst. The reason is took WW2
> to finally pull the country out of the depression was because of
> how deep the depression was, not because the New Deal wasn't working.
>
> It was the new deal policies that led to the growing middle class
> in the fifties and sixties. Some would like to go back to the robber
> barron days that brought about the depression to begin with. We
> have almost achieved that under Reaganomics, which has left behind
> 80% of Americans over the past 25 years.
In any case, the enduring effect of depression-era works projects was a post-war economic boom as the fresh new bridges, roads, railroads, irrigation projects, electrical and phone wires, and buildings were utilized for decades to create the world's most powerful economy. By now, most people have forgotten where that enabling infrastructure came from.
In the 21st century, the best things we can do for our economy are to expand education, acheive greater energy independence, reduce losses from our wasteful healthcare system, and eventually dig ourselves out of debt. As the saying goes, it takes money to make money.