Re:Russell Napier: The world will experience a capex boom
by shawndrost on Thursday November 03, 2022 @01:08AM
(#33447260)
Would you approve of the comparison to postwar interventionism if you saw large scale nationalizations in key areas? Like if big EU energy companies, say EDF and Uniper, were to be nationalized?
Re:Russell Napier: The world will experience a capex boom
by manholio on Thursday November 03, 2022 @02:05AM
(#33447598)
Post war interventionism included energy utilities, which in many cases were rebuilt from the ground up, but also transport, rail in particular, telecommunication, extractive and heavy industries - and it happened in economies with a much smaller tertial services sector.
I don't know what the equivalent contemporaries would be, but in any case we would need to see public spending or nationalization on a scale incomprehensible to the current neo-liberal european business climate, not just some puny guarantees & price ceilings, which are not very sustainable anyway.
Sure, a green loan guarantee spurs investment in that area but the business model must still be sound or it will be falter in the marketplace. And if government steps in and, say, also guarantees an energy price, that's just another form of taxation for the consumers that must pay the costs of a political choice in energy. This will quickly hit a wall of resistance from consumers if that particular technology is a mallinvestment.
Furthermore, the loan guarantees themselves might not be officially counted in the debt to GDP ratio, but rational investors will be aware of them and price government bonds accordingly. A state that over-guarantees bad loans will see trouble servicing their debt in the marketplace, and at least in Europe the well known structural fragility of the Eurozone will amplify those shocks and bring them into the foreground.