Brazil,Peru,Colombia and now South Korea have all joined the “Buy Dollar and Sell Local Currency” Club.The Brazilian Real has appreciated by 34% in the last 2 years while similar stories lie behind Peru and Colombian interventions as well.With yields at near zero,Developed World Investors are pouring money into debt,equity and commodities fueling some of the Emerging Markets to all time highs.Some of the valuations like the Indian market are already stretched with local investors shunning the bubble markets.Countries with large Export Sectors like South Korea are particularly sensitive to currency appreciation and are joining in the chaos that the currency markets have become.The $4 Trillion Currency Markets are too big for a single country to take on as the Swiss found out losing Billions of Dollars in the process.The Currency Chaos is set to persist as the Financial System has become Unstable with Huge Debts,Moral Hazard and Central Bank Meddling.Gold has touched an all time high of $1300 with Silver following closely.With such volatility in Currencies,Business has become quite difficult with faith in currencies eroding at a fast pace.
Offshore Wind Energy is starting to receive a huge amount of investment and attention both in Europe and Asia.Onshore wind installations facing the problems of visual impact,saturation of good windy geological locations and problems of low frequency noise.However Offshore Wind Farms face no such problems since they are located in high wind locations offshore far away from the general population.The largest Wind Farm got installed in the UK with Swedish Utility Vattenfal starting a 300 MW + Farm off the cost of Thanet.UK is at the vanguard of the Offshore Wind Energy Revolution with the largest amount of installations at 1340 MW.The Government has given out a number of approvals to another 30-40 GW of Wind Farms to a number of private players.This will not only substantially raise the Renewable Energy generated from UK but will also result in a huge number of Green Jobs and Investment.Already a number of Oil and Gas offshore companies are converting themselves to Green Ones to take advantage of the Offshore Wind Boom.The Wind Farms are being developed by big utilities like Dong,E.ON,EDP and RWE.
Recently Rare Earth Minerals Companies have seen sharply rising exports.Molycorp which came out with an IPO in the US markets has seen its stock price shooting up despite not producing commercial quantities.Other Australian and Canadian Companies have also seen steep increase in stock price.The Chinese Embargo should lead to further price appreciation as other countries focus on expanding supply and production of these minerals.The recent spat between Japan and China over a fishing boat incident has escalated in recent times with the top leadership in China taking issues.China’s relations with other countries have deteriorated in recent times with increasing trade friction with USA,Currency and Territorial Issues with Japan and growing Tension with India over border and land issues.
Not only Europe,even US is rapidly losing Green Jobs to Asia.Earlier Evergreen Solar had decided to shut down its US plant to set up a factory in China and Energy Conversion Devices is laying off workers to hire more in Mexico.The high costs of labor and capital have made it unfeasible for Western companies to manufacture in the Developed Nations.High Subsidies in the form of Low Interest Long Term Loans,Tax Holidays,Free Land have made the Asian countries irresistible to US companies.First Solar which is the largest manufacturer of panels in the world has most of its production in Malaysia where it enjoys a 15 year tax holiday.Chinese Company’s get massive subsidies from the government.This combined with extremely low worker and managerial salaries make western factories totally uncompetitive in a globalized world.REC which is one of the world’s biggest solar polysilicon and wafer producers has decided to shut down its module plant in Sweden.While the reason given is isolation from other factories,I suspect the costs are too high in expensive Sweden.Another European Solar Factory closes as Green Industry moves to Low Cost,Subsidy Rich Asia
US Energy Utilities have been buying up Green Companies at a rapid clip these days taking advantage of the fall in valuations of Green Companies recently.Exelon bought Deere’s Wind Assets while NRG Energy bought Green Mountain Energy.Constellation Energy already has around 10% of its 9 GW of Electricity Capacity being sourced from Green Sources.Its Smart Grid buy is synergistic to is Energy Trading Core Business.It will help in expanding its customer base and sourcing new opportunities.For CPower Investors which are mainly PE players,it would be a good exit as competition in the Demand Response is increasing .
In our Financial linked world where Capital is Globalized while Regulation is not,Hot Money Flows are fueling inflation and asset based bubbles in Developing Countries.Some of the Emerging Markets are either close to or have surpassed the 2008 all time highs.Inflation is also hitting dangerous levels in some countries like Argentina,India and others.The depreciating dollar brought upon the the US Federal Reserve Printing of money has made it necessary that the Central Banks purchase Dollars.This has been done not only by Brazil and Singapore but also by Japan.With more Dollar Printing,these Purchases will increase the Liquidity in the Developing Countries.This is a sure shot recipe for high inflation which will be difficult to control.India has already raised Interest Rates 5 times this year in order to rein in the pernicious effects of high inflation on its largely poor population.