I read a brief article in the WSJ this past week about how there's a cycle of bubbles that investors themselves create. The basic premise is that investors pour financial capital into an industry on the premise that asset prices will rise. As capital is poured in, the asset prices of course rise so it's a self-fulfilling prophecy. Then, when the bubble bursts in that industry, investors make up their losses by pouring their money into a different sector, creating another bubble, more artificially high asset prices, another bust, and the need for yet another bubble. So where's the next bubble? Alternative-energy!
Read an interesting article a couple weeks back in the WSJ on how biofuels may actually increase carbon emissions in the medium to long-term. Apprently the shifts in land-use necessary to support the production of bio-materials like soybeans, corn, or palm could in fact release more carbon emissions. The time it takes to get carbon-neutral on some of these projects is pretty crazy - 319 years for soybean biodiesel from Brazil (assuming you're clearing rainforest), 93 years for corn ethanol from the U.S. (assuming you're clearing grasslands), 86 years for palm biodiesel from Indonesia (assuming you're clearing rainforest). I suppose biofuels really aren't meant to reduce carbon emissions, but just crazy that they potentially exacerbate the problem so much.
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