Monday, 24 November 2014

Financial Crash waiting to happen ?

Green bubble update

I have since been contacted on my green bubble article here and updated it accordingly. The results sound pretty ominous. Are our politicians and Dept officials about to make the same mistake again ? 

This puts the total capital cost at € 8 billion, with Irish/EU banks exposed to € 6.4 billion in loans to a sector that must be kept afloat by long term unsustainable subsidies in the form of REFIT. Surely, as ESB pointed out in their recent submission on the Green Paper, these subsidies are not sustainable for a mature technology such as wind energy ? So you have to ask the question: are the banks really expecting these loans to be repaid ?


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  3. It seems that boom bursts are an inescapable part of economics since the Holland tulip one in the 1600's. According to Par Wimmer on you tube, 80% of green energy capital is leveraged and the rest equity. This shows a lack of private confidence but it has another ominous signal. If there is a green energy burst, with high equity, private citizens get poor, but if there is a high leverage burst the banks get poor. Banks rely on deposits and deposits rely on banks having good loan books. Bank depositors and equity holders are from the same pool of monied people. If confidence drops, deposits flow out. If green subsidies are cut and companies go belly up, there will be a massive hole in the banks and as most are systemic, the taxpayer will have to bail them out. Proplem is voters have a distain for politicians who bail out banks and people are already poor. As more wind is added to the Irish system, increased curtailmane fees must be paid to turn off. These would be the first to be cut by a future govenment and form a large part of the income stream. So far the euphoria for wind has kept bank interest rates low, but as an increasing amount of their laon book becomes reliant of future goverment policy they may increase interest rates crippling firms on tight margins. Its a dangerous situation and just as dangerous for the wind companies as it is for the rest of us. Outside of that, we all know current politicians are loo-laa - hoola hoopers reared on computer games and political correctness. Boom bursts are to be expected anytime soon. With falling oil prices, green energy is about the best canditate. If the report in the SBP about mainstream is anything to go by it may already have started.