Monday, October 20, 2008

The Green New Deal

Taipan Publishing Group:

Time for a New Motor?


George Soros thinks the conclusion is foregone.

For the last 25 years, Soros observes, the “motor of the world economy” has been the American consumer. And not only has the American consumer been aggressively consuming, he “has been spending more than he has been saving.”

“So that motor is now switched off,” says Soros. “It’s finished. It’s run out of -- can’t continue. You need a new motor.”

The declines of that truly awful week when the Dow lost 18% were tied to the credit crisis. Before governments across the globe stepped up, there was a fear that nothing would be done.

The declines that followed Monday’s rally, however, were tied to a separate issue... rooted in fears that the U.S. consumer may, after many years and countless false alarms, be well and truly tapped out. If so, we don’t know what the new “motor of the world economy” is going to be.

Soros has a notion of what that new motor could be. Moral aspects aside, I think he is right. It’s an idea some readers will like and others will hate...

“We have [another] big problem,” Soros says. “Global warming. It requires big investment. And that could be the motor of the world economy for years to come... instead of consuming, building an electricity grid, saving on energy, rewiring the houses, adjusting your lifestyle where energy has got to cost more until you introduce those new things. So it will be painful. But at least we will survive and not cook.”

The Green New Deal

Concerns over global warming and the high cost of fossil fuels are closely aligned. Whether or not you embrace the concept of global warming -- and there is still real debate on the subject -- you no doubt remember the sky-high fuel prices the world had to deal with earlier this year.

Energy prices are falling now, mainly due to deflation fears and the phenomenon of “demand destruction.” But when global growth resumes, energy prices will go right back up again. And then there are the indirect costs, like the rampant pollution and quality-of-life issues that plague China and India.

Many top thinkers thus agree with Soros. There is a very strong feeling that the world needs a “Green New Deal”... an alternative-energy-focused motor that can get the global economy humming again.

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