Financial Sarcasm Roundup for 08/05/13

I don't follow pop music, movies, celebrity gossip, or other nonsense.  Plenty of other snarky sites cover those subjects.  This is financial sector sarcasm, folks, plus whatever else I see about business that makes me shake my head.

Uncle Sam is finally overcoming local NIMBYism in renewable energy development with BOEM's first ever lease sale for an offshore wind farm.  The main obstacle to these types of deals has typically been small groups of well-heeled locals who don't want their ocean views ruined.  Let's play the world's smallest violin for these saps.  I hope they have hissy fits the next time they settle into their breakfast nooks and peer out their bay windows at brand new wind farms.  Smart energy policy eventually bets parochialism but you have to give it a few decades.

Michael Dell almost has his computer company back in hand but Carl Icahn isn't giving up his fight for control.  I respect Mr. Icahn's track record but this is one deal he just needs to walk away from.  He's already hurting the company by forcing Michael Dell's team to pay out an extraordinary dividend just to convince shareholders to approve the buyout.  The company could have used that cash productively but oooohhhh nooooo, the buyout king just had to extract one more pound of flesh.  

The Amazon guy bought the Beltway's main gossip rag.  There has to be a hidden agenda.  No way is an e-commerce visionary going to run a printed newspaper the old-fashioned way.  Warren Buffett praises Jeff Bezos' business acumen even though Amazon's net income turned negative after three years of rising revenue.  I suspect WaPo will soon be an online-only news outlet to compete with the Huffington Post, another overrated digital portal.  

Did you know that you won't be getting much of a pension if you're a municipal government employee?  Well, now you do, and you can thank chronic underfunding.  City workers in Vallejo, Stockton, and Detroit can pioneer new odd jobs after hours that other government employees can copy nationwide.  Of course, you would have known this if you'd been reading my blog for a couple of years.  

Speaking of odd jobs, a few idiots who've been ripping off the San Francisco veterans' community really ought to find more honest lines of work.  They'll need to earn cash to cover their legal fees.  

The Haiku of Finance for 11/30/12

Offshore wind farm lease
Uncle Sam will spoil your view
Green power done right

Alternative Energy Not Getting Any Second Wind

Another alternative energy company is giving up the ghost.  A123 has concluded that it can't profitably make lithium-ion batteries and is going into Chapter 11.  DOE should never have tried to pick winners but the temptation to look "green" is too strong to resist.  So where's all the green tech going to come from that's going to generate green jobs?  I guess it will have to come from green companies that don't need government help.

Some green sectors are addicted to government help.  Wind energy companies are scaling back in advance of the expiration of tax breaks for their sector.  Renewable energy seems to come and go in fads, and investors fall out of love with the sector when they realize how difficult it is to compete with hydrocarbons on cost.

Tonight's second presidential debate paid scant attention to renewable energy.  The rhetorical action centered on domestic production of oil, gas, and coal.  Both contenders had something to say about permits for drilling on federal land but little to say on what entrepreneurs needed to do to obtain permits.  One thing energy entrepreneurs can do is use the JOBS Act to raise capital.  Wildcatters who are serious about drilling can now crowdfund an equity raise for a project.

The energy story for America in the next few years will have little to do with the scant promise of green tech. That train left the station and went off the tracks before it could build up a full head of steam.  The promise of renewable sources has always been very selective.  Entrepreneurs can bid for the right to commercialize green tech developed in DOE labs.  The Southwest is full of acreage ripe for concentrated solar PV development.  Green approaches work when they're focused.

Financial Sarcasm Roundup for 08/06/12

It is time for business malcontents to take their turn at my whipping post.

Let's lead off with Helicopter Ben in his own words.  The esteemed Fed Chairman told a rapt audience that economists should frame their studies as a window into human happiness.  I get the hypocrisy.  He expects the public to accept economists' interest in their well-being.  It should be obvious that no one at the Fed really believes this line.  He must be aware, at some level of his psyche, that a massive monetary stimulus can destroy the well-being of the prosperous middle whose wealth he claims to champion.  The degree of doublethink needed to mouth these words must be staggering.  The Fed already wields enormous influence over the career paths of economists who define consensus thinking.  Ben's audience this time was an obscure academic association that would probably never have me as a member.  No one must be allowed to escape the conditioning program.

The never-ending saga of the Yucca Mountain nuclear waste disposal site has entered a new phase of completely unnecessary meddling.  A federal court has delayed deciding whether the NRC's delay in finalizing a waste disposal site deserves further delay.  This is sickening.  Apolitical scientific experts settled on Yucca Mountain decades ago as a safe place for spent nuclear fuel and the federal government has spent money since at least the Reagan Administration to prepare the site.  The NRC's totally political decision to play to a handful of Nevada voters will now jeopardize the safety of communities around the country where nuclear plants must store spent fuel in unstable configurations.  Way to go, geniuses.

Another political genius is displaying his wondrous knowledge in Maine, dismissing wind energy to satisfy the objections of locals who like a pristine view.  Boutique or not, wind turbines diversify the energy sources available to utilities at peak times.  Ratepayers outnumber lodge tour guides; the former should be up in arms over pandering to the latter.

Greece played the financial media for suckers once again, entertaining the European troika and touting promises of renewed growth by September.  The troika isn't fooled by these empty promises but you'll never hear that from them.  The fake happy talk coming out of both sides of everyone's mouths will continue until the bond market calls Brussels' bluff, and then the Fed pushes the red button launching its trillion-dollar swap lines.  Shell is pulling cash from European banks to avoid getting hit in the crossfire.

I'm done for now.  There will undoubtedly be more stuff to ridicule pretty soon.

DOE Reached Same Conclusion On Wind Rare Earths As Alfidi Capital

Some of my fine readers may have noticed my recent interview in The Gold Report where I named dysprosium as the rare earth metal most likely to remain strongly in demand.  I mentioned it in the context of continued strong demand for wind turbines that also used neodymium in their magnets.  Well, lo and behold, the U.S. Department of Energy reached a similar conclusion in its 2011 Critical Materials Strategy.  It specifically named dysprosium and neodymium as two of five metals that may pose supply challenges for the clean energy sector.  The Gold Report has a good article pointing out implications for the rare earth mining sector.

The DOE report also has some great details on alternative technologies that may ameliorate the rare earth supply crunch when they are fully mature.  This is another subject I mentioned in my interview.  Listen up, Wall Street!  Keep reading this blog if you want to hear about emerging industry issues.  

Sauer Energy (SENY) Brings Yet Another VAWT To Market

I got a glossy promotional brochure from Carpenter Global Stock Advisory about some wind company called Sauer Energy (SENY).  I'm uniquely qualified to evaluate companies pushing vertical axis wind turbines (VAWT) because I consulted for one in 2007.  It went nowhere.  Other companies won't have much better luck.

Sauer Energy would have to do everything right and then some to ever be profitable.  VAWT configurations only generate a fraction of the energy a horizontal  (HAWT) configuration can generate.  I won't bore you with the improbability of ever capturing an economically worthwhile amount of energy in the urban market from small wind turbines.  That's discussed admirably well at Paul Gipe's site.  I shake my head whenever I see small wind turbine makers tout their product as perfect for the urban market, complete with photos of a solitary turbine propped on someone's building.  Mounting turbines will be unworkable in most urban areas due to permitting restrictions and structural limitations.  Vibrations from these things will shake your home.  Noise will bother your neighbors. 

The management team has zero expertise in engineering.  Their other claims of expertise are irrelevant for a technology-intensive enterprise.  OMG, the photo of a glass-walled office building on their "About Us" page is disquieting; I wonder whether their offices look anything like that in reality.

Their financial results . . . well, the numbers speak for themselves.  Sauer had zero revenue in 2009 and 2010, and so far in 2011 they haven't earned any revenue.  Their net income went from ($13k) in 2009 to ($215k) in 2010.  They have burned through all of the cash they raised from issuing equity and now must borrow to keep pouring money into . . . what exactly?  Their 10-Q for the quarter ending May 31, 2011 shows them spending far more on consulting fees and investor relations than on R&D.  Most successful tech entrepreneurs would tell you that's the reverse of the emphasis needed to win. 

Folks, there are other ways to invest in wind energy besides small VAWT makers.  Throw away glossy promotions and do plenty of homework, including calculations of a fan's swept area (the single most important factor in wind energy). 

Full disclosure:  No position in SENY at this time (nor will I ever have anything to do with this company). 

Wind Energy Costs Decline Despite Transmission Obstacles

Wind energy may be catching its second wind lately.  How's that for a pun?  The cost of generating electricity from wind is now close to the cost of coal-fired generation.  That's good to know for utilities planning capital outlays.  That study only pertains to onshore developments, which can sometimes be sidelined by NIMBY objections (noise, ruined views, and other baloney excuses) and relevant reasons (like the fact that tall wind towers can interfere with FAA and DOD radars).  Offshore wind developments are becoming increasingly attractive and may not fall prey to the same obstacles as onshore developments.  They may of course pose a whole new set of problems, like locations that fall in the middle of shipping channels or prime fishing areas. 

Cost competitiveness isn't the only feasibility factor relevant to planning wind farms.  Energy providers need to consider the capacity of the transmission grid that serves a proposed wind project.  Lack of convenient transmission lines was the Achilles heel in T. Boone Pickens' plan for a giant wind farm in Texas.  Wind power enthusiasts in China have yet to figure this out.  China's vaunted leadership in building wind installations may prove meaningless if grid upgrades lag behind new generation.  Wind power is a waste without the grid lines to bring it to market. 

Utilities planning wind projects should tread carefully.  All of the relevant ducks need to be in a row - including enablers like transmission infrastructure and environmental considerations - before a green energy project gets a green light. 

Untapped Resources Set The Stage For Domination

Earth is a finite sphere.  There are only so many ounces of recoverable ore left to mine.  The point of diminishing returns from resource extraction will appear some day.  That day will herald the world's transition from a perpetual growth economy to a steady-state economy. 

Until that day comes, it's game on in a scramble for untapped mother lodes of metals and energy.  The winners in this scramble will be able to dictate the future structure of the world's political arrangements.  There's plenty of potential in the U.S. for wind energy, and the company that lays the grid to collect and distribute wind-derived electricity will hold a perpetual monopoly. 

Some resource-rich countries still have relatively accessible mineral deposits.  These countries will be able to name their own prices for extraction as long as those deposits last.  Such countries also risk becoming battlefields for Great Powers if the price they name for their mother lodes is too high.  I am willing to bet that the military leaders of China and India are wargaming options that will maintain their countries' access to resources if a rival cuts them off.

Map out the remaining resource deposits in emerging markets and draw lines from there to Chinese and Indian ports.  The flash points for future naval confrontations lie at points where those trade lines cross natural geographic choke points.  I will invest accordingly. 

Lots Of Energy Out There

Here's a quick stream-of-consciousness capture of recent energy developments.

Romania is launching a wind park that will become the largest of its kind in the world.  China is also a big market for wind energy and U.S. firms can deliver the infrastructure they need.  They're all prepping for some form of Peak Oil.  The good news is that Peak Oil may be delayed if supermajors like Shell keep increasing production in North America.  Note to Americans:  Get over your NIMBY attitudes towards energy exploration in any form. 

The Gas Exporting Countries Forum is a pale imitation of OPEC.  The funny thing is that the world is swimming in gas right now thanks to giant new discoveries.  Even the U.S. has plenty of natural gas in shale deposits.  Cartels are supposed to limit production; good luck doing that with a glut of supply. 

Full disclosure:  No position in any companies mentioned.