Saturday, September 7, 2013

Ain't No Sunshine...L&C

With yet another American contribution in the know-how to make solar energy, people and businesses are realizing that the sun gives us more than warmth and light. However, the sun does not shine every day, not to mention rain, sleet or snow. Just as humans take for granted things that are free like water, fresh air and sunshine, it takes a crisis to understand some aspects of life like the beauty of nature.
Water Pipe Break
and everyone acts crazy, running to stores, buying every water bottle available. If you can make money or save money with solar, then soon, the market has more sticks than you need to start a fire.
There are some other new truths out there.
American Know-how
let someone in our country tinker and create a new product, idea or formula, and the global community will copy it, mass produce it with state support and generally, control whatever it is that finds mass appeal.
because unless the rich or vision gifted find a way to run with it, there is no incentive to do something with it in America. No one thinks that this gizmo will develop new jobs, increase our standard of living, while at the same time, give me a return on my investment.
This is one sad side of the coin. The other is the make-up of state economies. In these vast structures, there are individual incentives along with government plans. The age old problem is greed and it is showing itself in alternative energy.
did the world a great service by showing it that a cold climate nation can develop solar energy. It use to be that Japan or Korea would enter a market if the return was there. Now, China is that nation that enters and unduly influences a market. It is the world's largest maker of solar products.
China, like almost every other nation in the global community, tries to appear as capitalistic, but it is a state supported economy. One positive aspect to this is investors find safety because the government will back a company or at least until now. The new regime in China is weening away from government support of local government actions and company projects. This showed itself to be factual when LDK Solar Co., failed to pay its debt of $23.8m last month and is trying to restructure another $240m of securities due in 2014. They are not alone. Suntech Power Holdings Co.'s, is asking or demanding, depending on your side of the desk, to renegotiate, its loan of $8.4b in renewable energy bonds due in 2014.
Like I previously stated, the Chinese government is letting the chips fall when it comes to bailouts of local government or corporate bonds. Although China's predecessor, Wen Jiabao turned China into the world's biggest maker of solar panels by spending $47.5b in support, the new administration says, it needs to stand on its own. Not to distract you, dear reader or this train of thought, but I feel that the new leader is worried about the potential real estate bubble that will run into the trillions and he does not want the same public complaint of helping with bailouts for the rich and putting people out of homes, if it comes to that like in the US.
This alternative attitude indicates Chinese energy bonds are in trouble when due in 2014. China's 10 biggest photovoltaic companies have debt of more than $100b yuan($16.3b US). Notes like 600m yuan for GCL Poly Energy Holding's LTD., the world's biggest maker of polysilicion, and 100m yuan of bonds from ZK Energy Science & Technology Co., a wind/solar hybrid maker.
Not all of Chinese solar companies are suffering. Gingli Green Energy Holding(YGE), the nation's largest and Jinko Solar Holding Co., are returning to profitability after two years of losses, but the world market is saturated and the global community is slowing while at the same time, the Chinese Photovoltaic Industry Alliance between companies and the state expects to double solar installations. I don't think the sun will shine on these type of investments for a while.
Liars and Crooks: I could give it to Obama for rejecting the advice of the G-20 on intervening in Syria, but I'll wait until the word from Congress. With that said, I'm gonna share it between the Basil Committee in Europe and the US chief on derivatives, Gary Gensler. In Europe banks got the committee to relax the fees to strenghten the derivative market by not requiring banks and brokerages to post a margin for these trades not passed through a "clearing house." They said it might harm the economy. Ha! This $633t market has the US with half of the valuation and our banks said that they would lose business to Europe which will harm the economy. Pure B.S.! Gensler bowed to the new US treasurer, Jacob Lew who bowed to the banks.
Why? Because they know the Fed is their back-up. End the Fed!