I'm curious as to how this will shift once the shift towards more electrification continues. This is only about electricity generation, not total power consumption.
Nowadays, for very energy intenive things like heating or driving a car, fossil fuels still are more prevalent than electric alternatives. Once demand shifts in favor of the electrified alternatives, electricity demand is continuing to raise (although not as steep as the drop in demand for the fossil fuels will be). Particularly in heating, where peak demand is in times with very little solar generation, it seems like this will be challenging.
While the prices of energy storage have come down significantly and are projected to continue to drop, there is still a noteable lack of cost effective long term storage solutions.
> Particularly in heating, where peak demand is in times with very little solar generation, it seems like this will be challenging.
Heating is actually likely to be one of the easier questions here, because heat is just fundamentally an easier problem to tackle than most other intensive uses of energy in the modern world.
1. Solar isn't the only incredibly cheap form of intermittant renwewable energy production. Wind is also great, tends to support local manufacturing economies more than solar, and is anti-correlated with peak-sunshine. The wind tends to blow hardest in the winter and around sunset.
2. Heatpumps can pretty comfortably achieve 300+% coefficients of performance, meaning that for every joule of energy you put into a heatpump, you'll get 3+ joules of heat pumped into your home, office, or city-scale heat thermos
3. Heat energy storage is cheap compared to batteries. You just store large quantities of water or sand and heat it up with a resistor or a heat pump. The scaling of surface area versus volume ensures that the bigger you make the heat-battery, the less energy you'll lose from it over time (percentage wise).
4. Heat is a waste product from many other forms of energy usage, and can be harnessed. For instance, gas peaker plants aren't going away any time soon, and cities which aren't harnessing the waste heat from those peaker plants and using it in a district heating system are wasting both money and carbon.
Just a couple kilometers from my home for instance is a gas power plant that stores waste heat in giant thermoses, and pumps hot water to my building to to be used for heating. They currently have the largest heat pump in europe under construction on the same site intended to supplement the gas plant, both to take up slack from the fact that it'll be running less often, and to expand the service to yet more households.
Regarding the affect of EV adoption on electricity consumption the site https://robbieandrew.github.io/EV/ has some interesting data. I'd recommend looking at the following graphs:
* Distance travelled by passenger cars in Norway
* EV electricity consumption and total power generation in Norway
EVs now make up approximately 1/3 of miles travelled, but the increase in total electrcity consumption is fairly small.
This is just objectively untrue. Source: I live in Germany, a country with some of the highest electricity prices, I drive a BEV and I heat my home with a heatpump. My systems SCOP hovers around 3.5, which means that my kWh of heat made from my heatpump with electricity is cheaper than my current gas rate.
My heatpump electricty bill is significantly lower as compared to my apartment (Gas furnace), despite both buildings being roughly comparable late 80s construction.
I charge my car at my standard electrcity rate of 32ct/kWh, and I pay now about half for the same usage.
Electricity is expensive, yeah. But electrified stuff is also significantly more efficient than fossil tech
You pay less vs gas heating because of co2 tax.
And it's just an individual case. Germany's electrification percent is lower vs China's amd the rate of changing is lower too. In other words Germany has more energy used indirectly instead of electricity and electrification percent increase per year is lower than China's too
Amd Germany isn't even the worst example in terms of electricity prices. UK is even worse which will slow it down even more
> Electricity/heating and gasoline in the EU is many times more expensive than in the U.S.
Maybe because Europe as a whole has little to no signifcant oil reserves ready for extraction? Very much unlike the US.
> I would think that most people would happily choose lower prices over clean energy and paper straws.
The US does have plenty of cheap energy and yet its industrial output is dwarfed by Chinas, which is increasingly relying on domestically products green tech. Also, people seem to be not very concerned with energy prices. If they were, they would not act as irrational when it comes to topics like heatpumps or electric vehicles.
> that it almost makes you think that politicians are being bought by Chinese companies/government.
Looking at the energy policy of some countries (Germany specifically), it seems vastly more likely that politicans are bought by oil companies.
True, there is no oil and we just relied on cheap gas from Russia--which I guess it didn't turn out to be a good strategy after all.
That's interesting about oil companies. Is that who's lobbing to pass laws that just seem (to me) to be written on purpose to make our companies less competitive? How does that work, how do oil companies profit from that?
Yes, and against bike lanes so more people have to drive, and against subsidies for public transport, and against public transport entirely, and so on.
big part is co2 tax. EU now has neptune deep and could explore north sea too. In Germany current transition pathway of ren+gas and no nuclear was defined when Energiewende got introduced with red greens under Schroeder, a gazprom lover and later extended by red blacks
Nuclear does not cause prices to be lower. Putting that aside, political discourse here in Germany was "interesting" to say the least.
The shift to renewables started off pretty well in the early 2010s before it came to a grinding halt thanks to some wierd debates around the topic. For the past few years, buildout of solar has been remarkably fast, especially considering the slow pace of other projects. In 2025, 16.4 GW of solar power went live.
The biggest issue that drives prices here is the grid. New high voltages transmission lines have faced intense local oppsition, so transmision between North and South is limited, which is problematic given the focus of the north on (offshore) wind and the south on solar PV. Since Germany is a single electricity price zone, the low to negative electricity prices from wind turbines do not reflect the reality of grid capabilities, resulting in significant redispatch costs.
The solution would be obvious. Split Germany into n electicity price zones (with n>1). However, there is a lot of political opposition, specifically from the conservative CDU/CSU against this.
So yeah, Germany is struggling with relatively expensive electrcity prices, complaining about it, but refusing to implement a borderline free solution for it.
Nuclear that was built a long time ago would probably have lowered the prices in DE right now, if they weren't shut down. I understand that building new ones right now makes little sense.
Refurb costs are for the entire fleet which is 50+GW and are in fact dirt cheap. Refurbs are in 1-3bn/unit range. CF of say solar in this region is roughly 10-12%. To have same average output as a single 1GW npp you would need about 10GW solar and much more if you want to achieve firm generation. French refurbs will happen anyway. In fact, carenage is already undergoing.
You need to read precisely what's happening. Ontario wants to front finance all refurbs and SMRs instead of spreading the financing over years like it's usually done.
BWRX is expensive for sure. It'll cost more per GW than the failed french FLA3 or Vogtle. To me this seems a mistake considering Canada had Candus, an own authentic design that doesn't rely on enriched fuel and they did some very serious refurbs recently on time and on budget. On the other hand, bwrx is american tech and needs enriched fuel and SMRs will always have worse economics than large units, there's a reason humanity scales everything up, be it nuclear, be it wind turbines or solar fields
Again. Refurbs are extremely cheap. At 1-3bn/unit you get 1GW of firm power. That would be vastly cheaper vs deploying say solar, that would have the same TWh/y averaged even with China's costs. And this doesn't even account for firming.
Heck, even Barakah built as new by Korea is competitive vs renewables in the west. And it's understandable considering they spent per unit 1/3 of what FLA3 did cost... In under half of the time
The question is rather why they want front financing. But I have some clues considering who is their current head of govt
> The question is rather why they want front financing. But I have some clues considering who is their current head of govt
I assumed it was, like the UK, because it let them avoid committing to a specific price like all the other competing technologies so they could raise the price later once the project was too far along to cancel.
Maybe for smr, but for refurbs it doesn't make sense - all recent refurbs were either on time or ahead of planned timeline and on budget. Heck, even if refurbs would suddenly triple in price it would still be dort cheap vs any alternative for 1GW of firm power.
And they kinda committed to a price with Hitachi, that's why we can say it'll be worse even than recent failed big projects.
UK has other problems to tackle, mostly heavy overregulation. UK's HPC and french FLA3 are very different in many aspects, ranging from more concrete &steel use, up to a parallel analog system on top of a parallel digital system because UK regulation is 'special'. Maybe things will change, we'll see
To me this front financing looks like a cash grab from political entities since nobody guarantees money will be used in this direction, especially with current Ontario's 'governor', that dude is local trump equivalent but maybe a bit more tempered. Another possible reason is political - this frontload means project can't be easily cancelled if relationship with US gets even worse, since Hitachi GE is an US company. So who knows. Either way, IMO bwrx decision wasn't smart and front loading isn't smart too. But this has nothing to do with refurbs cost which are dirt cheap
I know about it, affected components were replaced. They still built it relatively on time and on budget
"On 7 February 2014, the Nuclear Safety and Security Commission declared that its investigation since mid-2013, they found eight cases out of 2,075 samples of foreign manufactured reactor components that were supplied with fake documents."
Nuclear was cheapest firm power in the german merit order. So yes, nuclear does have an impact, especially if it outplaces higher cost units
There is a lot of opposition because zone split would mean erasing southern industry and I may be wrong, but southern regions are pumping most of the money into state budget. Cutting those means cutting own legs.
The high voltage DC transmission lines from north to south are being built right now and for example SuedLink is expected to be operational in 2028. Their transmission capacity will be more than enough. Why would you split Germany into electricity zones now, if in a few years the transmission problem will largely be fixed?
> But it is by no means obvious that carbon taxes are the right path.
When the government says that the market should do something, people complain about government interference. When the government lets the market do something, but sets the right incentives, people are complaining about it again.
Co2 taxation is effectively internalizing the cost of co2 pollution. The price goes up the more we pollute, because we have less budget until we cannot reach our goals anymore.
That is good, because it is a lie that others are not following.
People love to point to China for their emissions, completely avoiding that China, as the workbench of the world, essentially is burdened with the emissions of the world.
Developing nations skip the fossil fuel stage entirely because Solar in particular and at a ceratain point wind is just cheaper than buying Oil and natural gas. Chinese EVs are also increasingly popular in emerging markets, not because they are more environmentally friendly, but because they are more cost effective to operate.
Wether or not it is because of environmental concerns or not, the world is moving towards cleaner technology, specifically it is also more efficient.
Considering that we in Europe have a remarkable absence of easily accessible fossil fuels, Europe should be continuing to push towards renewable technologies
German precision was not only about engineering, it has always also been about having a precisely defined bureaucratic process for everything.
Also, people never explicitly say they do want more bureaucracy. More often, the bureaucracy is more often a result of what people don't want to. They may want more roads, but they don't want them near *their* home, thus they fight for something to prevent construction there. They may want this subsidy, but they most certainly do not want person X to get it as well.
GDP is not useful to measure how good an economy works. The core problem of GDP is that it does not account for usefulness of spending.
GDP also ignores volunteer work and other non market transactions, completely dismisses externalities for health and the environment, and also has no indication of the distribution of said wealth.
If you had a Rawlsian veil pulled over your eyes and someone said to you "You won't know how rich you will be in that society, but would you rather live in a top ten GDP per Capita country or a bottom ten?" I think we all know what we would reply.
Granted it might not be fine grained enough to distinguish between Number 4 and Number 5 on the list.
Might still be a useless indicator considering that many of the low GDP countries also rank badly in other indicators that are often taken into consideration more broadly, like quality of life indicies, corruption indices or just the Gini coefficient. Correlation does not mean causation
I find the S&P500 to be interesting as a demonstration for currency risk. Denoted in US, it went up ~18% or so. For me as an EUR investor, it went up just 4.6% when accounting for the loss of the USD. Comparing that to indicies that usually do not perform that well, Euro Stoxx 50 is up ~22% and MSCI Emerging Markets ~21%.
I could be misunderstanding this, but you know that you can buy ETFs that are currency hedged?
Taking Vanguard for example, VGS is global equities, but VGAD is global equities that are AUD-hedged (my home country).
The only downside is that you pay more in fees (and they're less tax efficient). People generally don't bother with it though, because on a long enough time-line currencies usually revert to their long-term average, so if you're holding for retirement there's generally little point.
This is a _huge_ downside for index funds, though. Even quite a small fee difference has a huge compounding impact over time; people often miss just how much.
AIUI, assuming you're investing in a global equity fund, currency hedging is almost never worth it. It _may_ be worth it in some cases if you're investing in a foreign index (eg S&P for Europeans), but even then not usually.
Let's say I'm close to retirement. And let's say I'm in US dollars, and the dollar isn't doing well right now, and might continue to not do well for a long enough time frame to matter to me.
On the other hand, my expenses will also be in US dollars. To what degree should I hedge against the dollar?
Hard question to answer without understanding your circumstances.
Ultimately the point of hedging is to diversify. So the degree you should hedge is relative to the degree with which you have exposure to your home currency. So for example, if you already own a home in that country + you already own lots of shares in that home currency, then hedging might be less important.
The recommendation I've seen is around 25% of your portfolio in hedged global equities, assuming you have another 25-30% in non-hedged global equities.
You also can't predict when you might need to sell you stake, so that's ultimately the value of hedging. If you're forced to sell in 5-10 years, then hedging would be valuable.
Everyone wants to park some money and have other people work hard to increase the real value of said parked money. Not everyone can win big. Storing value is actually pretty amazing thing and that it can be profitable is magic. Of course the environment and poorest pays some of the free lunch.
An investor friend once told me that the US needs to always be in debt because treasuries give investors a risk-free place to park their money between investments. The sense of entitlement was astounding.
I don't think this is necessarily entitlement. There are heteredox but popular economic theories (such as MMT) that view public debt issuance at least in part as a method to satisfy the demand for private savings.
it really depends on whether or not there is a global capital shortage. this is very easy to do when the economy requires much more capital than is available. and in the inverse, it is self explanatory
There is no 'cure' per se as a non-US investor currency risk is just something to accept (or swap return for a hedge but then it ends up being a wash mostly), for example if you invest in a World equities ETF, it's a bit pointless to be hedging exposure to all the currencies. Even if you decide to slant away from the US, it's likely a majority of non-US large caps have USD exposures.
It's more a psychological thing, you see absolute USD return and think you could've made that but there's not the actual return, your actual return is post conversion, if you'd have hedged you wouldn't have that abosulte return either, so you've never had it.
Additionally, if you're like most people and investing regularly or DCA-ing from now on you can buy at lower USD
Actual return is for non-US investors having to convert back to say Euros for retirement, after having the dollar weaken, you get less Euros for example
Small caps and emerging markets in the long run should outpace advanced high cap markets as they have more room to grow.
There's also some other interesting aspects of emerging markets specifically: they never went more than 4.5 years before recovering from a crash to ath, whereas it took the SP500 12 years and EU 600 index 14 to recover from the 2000 one.
Google etc may be a US based company, but they can leverage emerging markets just fine.
There’s a stronger argument to be made for small caps, but stock buybacks allow any company’s stock to effectively experience exponential growth even with flat earnings. IE there’s little long term difference between buying back 2% a stock every year and ~2% actual growth every year assuming you never hold the majority of shares. (as in 1/0.98 ~= 1.02)
You can buy "into a market" by investing in a ETF following the MSCI EM or SP500. In any case not sure what's your point about single stock companies in a discussion about market indexes.
> You can buy "into a market" by investing in a ETF following the MSCI EM or SP500.
Nope. A more accurate description is saying you’re buying into a specific subset of a Market by buying shares of specific companies. Hand waving them as if they are the same thing doesn’t actually make them the same thing.
The MSCI EM, SP500, etc etc are simply a collection of public companies not the market of a given country. Which is why index funds all behave in fundamentally different ways than the actual markets we’re talking about.
Now if you do want more exposure to the upsides of a growing economy there are options, it’s just not a simple as buying an index fund.
This thread is about indexes and it started by a user stating that emerging markets indexes have been in line or outpaced global and even most of the advanced economies ones.
What these indexes are and how they behave is definitely on topic. Some of the indexes we can point to have in the past seen outsized returns, but many haven’t especially over specific timeframes. Currency fluctuations play a huge role, as does perception of risk etc.
Your previous statement about why in general they would have an advantage was inaccurate. As you have seemingly realized.
The logic isn't flawed. If you are a European investor, then you care about the returns in your currency, and the fact is your pile of money only grew by 4%.
Inversely, as a US investor, if you invested 100€ in the eurostoxx 50, your pile of money would have grown to about $140 (20% index growth, 15% dollar debasement). It absolutely makes a difference, that's $20 more in your pocket compared to the index.
Your comparison with temperatures is wrong. Celsius and Fahrenheit are fixed units, whereas the value of currencies fluctuate.
It is flawed because it's conflating two different independent variables. It's also looking for a specific weak point where there is none, more as if it is trying to state a narrative.
If you want to talk about EURUSD then just state it.
It makes sense if you're looking at it from the perspective of a European investor. e.g. You start with 1000 EUR, convert and buy into an S&P500 fund, wait a year, sell and convert back to EUR.
Celsius and Fahrenheit doesn't work as an analogy because the rate does not change over time as it does with currencies.
I think it depends on whether you're planning on holding it in currency or using the currency to buy other things. Does the cost of material goods and services mostly stay the same in EUR, or does it somewhat follow the S&P? If more the latter, then converting to EUR is just a very temporary exchange and its nominal amount doesn't exactly matter.
> Does the cost of material goods and services mostly stay the same in EUR, or does it somewhat follow the S&P?
I don't understand this question, are you asking if material goods and services in Europe, which uses EUR, "somewhat" follows the S&P, a US stock market index?
If you have to hold USD to buy and sell USD products (as a European) it doesn't make sense to compare your SPY position vs EURUSD because you have to use those USD to buy something or pay some debt.
> If you have to hold USD to buy and sell USD products (as a European)
Approximately no individual does this. Some companies may hold some foreign currency reserves, but even there it is not _particularly_ common in most cases.
As a European, I have never, in 40 years, had any USD, except a small amount of paper currency. If I'm buying something made in the US, I'm probably buying from a local vendor, or else will convert on the fly. If I'm visiting the US, I'll convert on the fly (this is even cheap, now, thanks to neo-banks). I own a bunch of US equity, but indirectly via a euro-denominated global market index fund. This is fairly standard. In general it's only common for individuals to hold foreign currency where the local currency is particularly unstable.
> If you have to hold USD to buy and sell USD products (as a European)
Do people do this? Up until some months ago, I was heavily invested in some US companies, and I never actually held USD in my accounts at any point. I used EUR to buy those stocks, the conversion happening together with the purchase, and same thing when I sold them, I received EUR ultimately.
I know I could have another account in my bank with USD set to the currency, I just don't know why'd anyone would want to, when you can convert at the point of sale/purchase. Of course, if you're doing forex trading or whatever, that might make sense, but I don't think generally people hold USD to buy/sell US stocks, because you don't have to.
I mean, for retail investors outside the US, the question you're asking boils down to „does purchasing power parity follow popular US domestic market indices?“, to which the answer is a resounding no.
There may be some offset for goods imported from the US, but that's a minority of consumer goods globally, and even then, the purchase currency will usually still be the local fiat, and then the attractiveness of the US index fund still has to be weighed against the performance of non-US-based indices in that same local currency as opportunity cost.
> Does the cost of material goods and services mostly stay the same in EUR, or does it somewhat follow the S&P?
... Wait, why would you expect the price of goods to follow the valuation of, well, any market index, never mind one specific foreign market index? Like, I don't understand why you think that would happen. If anything, you'd expect a minor inverse relationship, at least on a global scale; rapid growth of cost of goods indicates inflation, which implies central bank tightening, which tends to depress stock values a bit.
Also an American investor, really; an American investor who'd pulled out of S&P and moved to Eurostoxx at the time would have made something like 40% in their local currency (about half of it due to the decline of the dollar).
If you are in USA and invest outside USA. Do you look at returns in USD or in nominal value of the market you invested in? Say there is hyperinflation where you invested. You should be extremely happy. After all the nominal value of your investment is massively up. Even if USD value is now fraction...
The roi is unfortunately not the same if you earn your money in euros and need to pay your taxes in euros. At one point one has to do a forex trade and that will be a loss for the euro investor
Only if you convert it at a loss and are unable to wait for USD to recover. If (and it is, admittedly, a big assumption) we assume that USD and EUR are broadly stable currencies over the long term, then short term changes in the ratio don't matter for long term investors. You're buying a share of productive capacity, the currency it is listed in doesn't matter.
It's reasonable to assume they're broadly stable, but being broadly stable doesn't mean a drop will "recover". There's no specific ratio that the currencies are being pushed to. Permanent changes in the baseline can and do happen.
> You're buying a share of productive capacity, the currency it is listed in doesn't matter.
But I don't own a fixed percentage of production, I own a fixed number of shares and the number of shares can change. If the number of shares doubles, then my investment is worth half as much.
> But I don't own a fixed percentage of production, I own a fixed number of shares and the number of shares can change. If the number of shares doubles, then my investment is worth half as much.
How is that related to currency changes? That can happen anyway regardless of the currency.
It can happen in other situations, but the fact that it always happens with currency fluctuations is what's important here. When the dollar loses value, everything I own that's anchored to dollars loses value too. "buying a share of productive capacity" implies a counteracting effect, but there isn't one, because the amount of productive capacity represented by each share shrinks too.
yes, but could one also argue that due to currency weakening, the S&P's growth can simply be due to the weakened currency?
If I can say something has an "absolute" value of X, but I denominate it in USD, which is normally 1:1 to X, then it's value in USD in X.
but if USD drops to being worth half an X, but its absolute value hasn't changed, it will now appear to be worth 2X in USD.
so why can't one argue, if the dollar weakened by 15%, but everything else being equal, one would expect dollar denominated stocks to appreciate (in dollars) by the same amount? And if the dollar would strengthen, we would expect the stock price to depreciate?
Because the SP500 is a better indicator of the market than USD. Also if you look at the global dollar index, it is right at par historically.
The companies in the 500 are mostly global companies, if the USD shrunk so much they would either be losing money, or it doesn't matter because the US market is so strong it dwarfs the others.
> The companies in the 500 are mostly global companies
Isn't that saying exactly what the parent comment mentioned? Since those companies are global, the growth of the S&P 500 which is USD denominated will track the devaluation of the USD as the underlying companies haven't lost value, the dollar has, and the S&P 500 would track that as growth in percentage to balance it.
I don't understand why they would be losing money since as you said they're global, and more untethered to the USD than the S&P 500.
This is clearly the USD Global index dropping a few basis points, which is an active strategy. Look at the USD Index over 15 year period, there is nothing wrong with USD today.
I'm not arguing if the S&P is a better indicator of the US economy than USD or not.
What I'm asking, to me it seems if the USD drops in value, but everything else stays the same (i.e. GOOG hasn't lost any real value if measured in any other currency for instance). I'd expect GOOG to rise in USD terms (as its value has stayed constant).
Why wouldn't this be true (yes, there are a bunch of assumptions/complexities, and perhaps those assumptions/complexities break the argument), but at a very simplistic level is what I said wrong?
The USD and EURO being nearly on par was the exception. And given the current admins stated goals, I’m not sure we’re going to see the USD strengthen anytime soon. In fact, it’s more likely to get weaker.
> If (and it is, admittedly, a big assumption) we assume that USD and EUR are broadly stable currencies over the long term
Yeah, er, that's a very big if. There's no real reason to assume that, and history doesn't really bear it out.
If anything in the near term you'd probably expect the USD to weaken further vs the Euro; Trump seems _very_ keen to install a fed chair who'll cut rates even where not supported by inflation and employment numbers, whereas the ECB is more disciplined and less subject to political interference.
You're the one making a big assumption: that this is a short term movement in the dollar.
Trump has made it clear he wants a cheaper dollar to make US exports more competitive and JPM is forecasting another 10% drop in the value of the dollar this year.
Just because the dollar and euro have been roughly level for over a decade doesn't mean that will remain true, currencies often go through pretty fast changes in relative values every few decades as their financial and geopolitical positions change.
The pound drop around 2007~2009 is a good example of one such sudden but long term price shift.
I try to see it positive. With the AI bubble, I finally habe a tangible example to point to when I say that GDP growth is a bad indicator for economic success
You could have used the example of Ireland before. They score extremely well on GDP, and yet the quality of life of an average Irish person is on par with the rest of the Western Europe, with the costs of housing pressuring everything else.
Yeah, but everyone knows why. The IMF has called out that 40% of Ireland’s GDP isn’t real because it flows into and back out (back to the US mostly) due to tax schemes.
Unless you can demonstrate that there is in fact an AI bubble, that is simply begging the question.
Notice how the term “housing bubble” is used much less frequently today than 10 years ago? That’s because that so-called bubble has been ballooning in size for three decades now, and almost nobody still believes that it will “burst” in any meaningful sense. The Dotcom bubble was in many ways an outlier.
People often use it instead of 'raises the question'. E.g "There was very little fallout to the Y2K bug, which begs the question: was the Y2K crisis real and well handled or not really a crisis at all?"
The longer it takes to burst, the worse the outcome.
Housing is being propped up by the governments of the west because it was already so problematic if it fails that millions of people would be severely impacted.
Even the housing backed mortgage crisis of 2008 was as large a shock as the great depression, the reason we’re not all using money as toilet paper is due to government intervention. Rightly or wrongly. Some people believe that this intervention makes something worse bound to happen later- and based on the cost of housing I tend to believe them. It is not sustainable to keep housing at its current cost, and the financial model requires that they continue to increase in price. If house prices fall it is a disaster for millions.
There are a few noticeable differences between housing as an asset and AI datacenters. Beyond the obvious difference that a house has a depreciation in the order of decades, whereas AI GPUs are a few years.
Then there is the fact that housing is a fundamental human need whereas AI, as frequently demonstrated, isn‘t even a want by many people.
I am not saying that AI cannot demonstrate todays value 20 years into the future. But there is zero reason to believe the short to medium term payoffs on AI investment will be proportional to the investment we‘ve seen over the past few years
> a house has a depreciation in the order of decades, whereas AI GPUs are a few years.
That’s no longer true for datacenter-class GPUs. The A100 came out six years ago, and it still sells for $15k+, with no meaningful drop in the foreseeable future.
I think housing as an appreciating is a weird Western capitalist socio-cultural artifact - in order to enter the middle class, you have to buy one, and the way to go about it smartly is to get a bank loan. Most people have no way of affording one otherwise, and if they did, paying sticker price for it would be dumb.
So everyone who's not considered a deadbeat shall be indebted to the bank for decades to come. Their prices are also supported by the collective power of the people - for whatever unreasonable price they're charging for it, you can be certain that someone (or some bank) has paid it, therefore it's in the best interest of significant chucks of regular folks that house prices don't go down.
Imo something similar is going on with retail investing.
Btw housing in China is not an appreciating asset, because you don't own the land, you merely lease it from the government for 70-100 years, which is about the natural lifespan of a lot of buildings, after which maintaining them becomes more expensiv than rebuilding them.
> That’s because that so-called bubble has been ballooning in size for three decades now, and almost nobody still believes that it will “burst” in any meaningful sense.
That's because Boomers live far longer than prior generations thanks to medical advances. The housing bubble will collapse (at least outside of the megalopolises) once the Boomers finally start to die en masse due to their over-representation in demographics.
But before that, the pension systems will crash hard. For people in systems with redistributions (like most of Europe), there simply aren't enough working age people contributing payments for the pensioners, and for people in stonk-based systems (e.g. US 401k), they will run into the issue that someone has to buy the stocks that the pensioners sell off to fund their retirement, and ain't no one of my generation buying stocks, thanks to us having to spend insane amounts of rent.
The problem is, people more and more can't manage to pay these rents, so they're either cutting back on any absolutely not necessary spending or going homeless outright. For now, there are enough desperate people that still have some money to pay rent... but retail, no matter which industry, is feeling the impact of people having no spending money hard.
Without the AI bubble artificially propping up the GDP, it is most likely the US economy is in a recession [1].
The book the 'Growth Delusion' has some great examples on this as well. To quote the FTs[1] review of the book.
"The official protocols define the scope of GDP as measuring all monetised activity between willing parties in a given period. It is a pragmatic definition, but leads to some counterintuitive results. The sale of stolen goods for cash contributes positively to GDP, for example — so theft is good for growth. A parent’s housework and childcare, however, being unpaid, are excluded — resulting, by one recent evaluation, in a $3.8 trillion underestimate of the size of the US economy."
I vaguely remember a similar one around traffic jams as well.
The UK is just starting official statistics that include the value of household self supply. I do not know whether there is good enough historical data to compare it with.
> That would be against everything european governments stand for.
I really struggle to understand why the hell this is always only applied to european governments? The idea to take 1984 as a book of requirements seems to extend *far* beyond europe.
yes, and here is a fun fact, most of the push for mass surveillance comes from the European Council, the thing is that literally are "just" the locally elected leaders...
not some vague far away "the EU (personalized)" thing
which also mean you can locally enact pressure on them
furthermore the EU supreme court(s) might have more often hindered mass surveillance laws in member states then the council pushing for them...
and if we speak as of "now", not just the UK, but also the US and probably many other states have far more mass surveillance then the EU has "in general".
so year the whole "EU is at fault of everything" sentiment makes little sense. I guess in some cases it's an excuse for people having given up on politics. But given how often EU decisions are severely presented out of context I guess some degree of anti-EU propaganda is in there, too.
> mass surveillance comes from the European Council, the thing is that literally are "just" the locally elected leaders...
Factually incorrect.
The European Parliament is elected. The Council is appointed, so there is no direct democratic incentive for the council to act on and no direct electorate to please.
On top of that the actually elected European Parliament can only approve (or turn down) directives authored by the Council. They have no authority to draft policies on their own.
To make matters even worse the European Council, which drafts the policies, has no public minutes to inspect. Which obviously makes it ripe for corruption. Which evidently there is a lot of!
Looking at the complete picture, the EU looks like a construct designed intentionally to superficially appear democratic while in reality being the opposite. The more you look at how it actually works, the worse it looks. Sadly.
In short, there are three core institutions, the "technocratic" European Commission, the European Parliament elected by direct popular vote, and the Council ("of the EU"/"of ministers") made up of the relevant (in terms of subject matter) ministers of the standing national govs. The law-making procedures depend on policy areas etc. but usually in the policy areas where EU is fully competent, the Commission — the democratically least accountable of the three bodies — by default makes the initiatives and negotiates/mediates them further along with the Parliament and Council, but only the last two together really have the power to finally approve actual legislation, usually either Regulations (directly applicable in member states as such — so an increasingly preferred instrument of near-full harmonisation), or Directives (requiring separate national transposition / implementation and usually leaving more room for national-level discretion otherwise as well).
While not fully comparable to nation-state parliaments, the powers of the EU Parliament have been strengthened vis-à-vis both the Commission and the Council, and it's certainly long been a misrepresentation to say that they, e.g., only have the power to "approve or turn down" proposals of the Commission and/or the Council.
There's societal memory of monarchies and kings that held a lot of power that still impacts things to this day, sometimes unconsciously and sometimes consciously.
The NSA is an American body, and Trump is the subject of a personality cult far in excess of any European monarch. Authoritarianism is a personality trait independent of political structures.
Nowadays, for very energy intenive things like heating or driving a car, fossil fuels still are more prevalent than electric alternatives. Once demand shifts in favor of the electrified alternatives, electricity demand is continuing to raise (although not as steep as the drop in demand for the fossil fuels will be). Particularly in heating, where peak demand is in times with very little solar generation, it seems like this will be challenging.
While the prices of energy storage have come down significantly and are projected to continue to drop, there is still a noteable lack of cost effective long term storage solutions.
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