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Leawood911 said:
3)40 years to remodel cities? Our cities are very dynamic and will continue to be remodeled. I really doubt all the development we have seen is due to the need to adapt to cheap energy


While it was not caused by cheap energy, it was made possible by cheap energy. Cheap energy and transportation made the whole "x miles = y lower sqf prices" equation appealing. However, if you take away cheap energy, the current structure of American cities is no longer viable. Unfortunately, while developing empty space is easy, remodeling a busy district populated by vocal citizens is another story (at least in a democracy).

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Leawood911 said:
I suspect strongly that this trend will continue - that damn flexible market will make certain of this to the point of providing energy at a fraction of today's price in the next 20 years. Keep in mind that consumption will skyrocket during this time - and this is why the price of energy will go down - although it may no longer be oil - so what.


Past performance is a poor predictor of future gains.

There is no physical or economic law that dictates stock prices have to go up or energy prices have to go down. It's only a matter of structural supply and demand.

You seem to assume that exponential demand will always drive the price down. That's wrong and you know it. Exponential demand only drives the price down if supply can be made exponential. If supply is somehow limited, exponential demand will always translate into exponential prices.

In the case of energy, while I agree that demand is likely to grow, I fear that demand growth will outstrip supply growth. Actually, I'm unsure there will be any supply growth at all.

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Leawood911 said:
Certainly you can introduce enough taxes in the EU to ensure the cost outstrips inflation but that is not the market (real world) determining the price now is it?


The market is not always right at a given time. If it were, Warren Buffet would have gone out of business long ago.

If you want to be more than a follower, you have to think ahead of the herd. A smart investor anticipates the market and makes a killing selling to not-so-smart investors later. Similarly, a smart state anticipates the market and makes the right decisions to ensure its competitivity when the forecast materializes.

Fiscal policy to steer it in the right direction. In our case, it implies raising taxes on energy now, and invest the proceeds into alternative energy research, mass transit, and nuclear power plants.

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Leawood911 said:
5) The standard of living in this world has been improving since the dawn for friggin time. The pace in the last 50 years has been astounding. I do not see the next 20 years as slowing down much less turning around.


Again, past performance is no predictor of future gains. There is nothing that dictates that the only way is up. Many factors are at play. IMHO the largest is the availability of cheap energy.

It was the conjunction of increased availability of cheap energy and increased "energy productivity" (actual production per BTU) that allowed the standard of living to increase. If you take the former away, then it all bets are off. Can we increase our "energy productivity" faster than the cost of energy increases? That is an open question.

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Leawood911 said:
6) Your argument against the Dow is that only one company name is the same and all the others are gone? What has been the average rate of return for market investments? What other 'market system' do you propose? One which is part of the 'real world'?


The market is the best way to set a price for a given supply and a given demand. However, don't mistake it for what it's not. Stock markets provide no magical guarantee of positive long-term returns. Moreover, as they currently work, they are inefficient as long-term predictors simply because "long-term" is not a priority of many players.

Once again, there is nothing that dictates that the Russell 5000 has to go up. It all depends on the structural balance of supply and demand, which itself depends on the demographic structure of the population and in particular the key 30-65 / 65+ (a proxy for net investors / net divestors) ratio.

If you had invested $1m in a diversified stock portfolio on 10/01/1929, your rate of return would have been negative until the early 1980s. Shockingly enough, this appears to be strongly correlated with a defavorable demographic structure between 1945 and 1980, followed by a structural change in the 30-65/65+ ratio. When a massive cohort (baby boomers) started arriving on the market, they drove prices up.

However, when they start retiring, they will become net divestors. Boomer net divestors will outnumber new "Generation Y" net investors in the next 20 years unless the Chinese bail us out. That's about when you should start running for the hills. The stock market is just another pyramid scheme, really.

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Leawood911 said:
I agree that there is some place for the State to see to the common good and to ensure our safety. I do not think they can solve scientific and economic problems.


I believe you're vastly underestimating the contribution of the government to science and the economy.

I suppose the Manhattan project and the Marshall plan did not exist. How about the computer you wrote this on, which might have been powered by a nuclear power plant and delivered to you using the Federal Interstate system?

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Leawood911 said:
IMHO the best thing the State can/should do is to offer some tax relief or collaborative help to companies willing to develop solutions to alternative energy needs and enviromental clean-up where required.


You have to finance your tax cuts somehow. If you're providing tax relief to "green" companies, you have to raise the taxes of "not-so-green" companies. How is that any different from higher fuel/energy taxes?

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Leawood911 said:
Porsche selling 'slower models' in the EU (and sending the 'fast' one to the US)


The current profit margins in Europe shows that most Porsche customers are willing to buy them at any price. As long as we're only talking about increased taxes (as opposed to an outright ban), this is not going to happen.

It's about as likely as me writing short posts on political threads.