Anyone tired of lousy news from the markets should talk to Douglas Lloyd, a director of Venture Business Research, which tracks trends in venture capitalism. "I expect investment activity in this sector to remain buoyant," he said recently. Lloyd's bouncy mood was inspired by the money that is gushing into private security and defence companies. He added: "I also see this as a more attractive sector, as many do, than clean energy."
Got that? If you are looking for a sure bet in a new growth market, then sell solar and buy surveillance: forget wind, buy weapons. This observation - coming from an executive who is trusted by such clients as Goldman Sachs and Marsh & McLennan - deserves particular attention . . .
According to Lloyd, the really big money - despite all the government incentives - is turning away from clean-energy technologies, and is banking instead on gadgets that promise to seal wealthy countries and individuals into hi-tech fortresses. To put it simply, in the world of venture capitalism, there has been a race going on between greens on the one hand, and guns and garrisons on the other - and the guns and garrisons are winning. Source
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Why aren't the big investment banks investing more money in renewable energy?
By Matt Savinar, posted 12/15/2007
The large investment banks have concluded that renewable energy will never comprise more than a very small fraction of the world's total energy profile. They have also realized the world is plunging into an era of oil wars. Thus they are disproportionately moving their money into new weapons technologies over new energy technologies. Journalist Naomi Klein explains:
For decades, investment banks and hedge fund firm computers to uncover relationships in the markets and exploit them. Today, computer-guided trading has reached levels undreamed of a decade ago. A third of all U.S. stock trades in 2006 were driven by automatic programs, or algorithms. By 2010, that figure will reach 50 percent . . . Rex Macey, director of equity management at Wilmington Trust Corp. says computers can mine data and see relationships that humans can’t. Source
Independent journalist Michael Ruppert gives a more in-depth explanation of how these modeling programs work:
. . . [this sort of software] combines datamining and artificial intelligence . . . Datamining is a technique for detecting and extracting meaningful patterns hidden within vast quantities of apparently meaningless data. Programs based on datamining are powerful analytical tools; finding meaningful patterns in an ocean of information is very useful. But when such a tool is driven by a high-caliber artificial intelligence core, its power gets spooky. The datamining capability becomes a smart search tool of the AI program, and the system begins to learn.
In recent decades, great strides have been made by the mutually fertile disciplines of mathematics, computer science, and neuroscience. Among the results has been a new discipline called cognitive neuroscience, which constitutes a powerful new understanding of the way the human brain works. This has applications so practical that they have reshaped our world. "Neural Network" programming is modeled on the computational techniques used by the human brain - an electrochemical computer that uses neurons instead of semiconductors; the firing or non-firing of neurons instead of ones and zeros.
With neural networking, software has become much smarter than it had been. Now it can perform multiple, related operations at the same time through parallel processing; now it can learn from setbacks, and use genetic algorithms to evolve its way out of limitations. This kind of computational power supports an inference engine that can digest the mined data into results that predictive for imminent and, to some degree, even middle -term outcomes. It extrapolates from current trends in a more than quantitative way.
Conventional electronic surveillance finds patterns in the data of other instruments; [this software] can exploit the patterns it detects and extrapolate future probabilities . . . Source
A June 2007 Bloomberg article entitled "The Ultmate Money Machine" confirms that the world's most powerful investment consortiums are using the latest generation(s) of super-computers to guide their investment strategies:
According to a 2007 UK Register article, the Pentagon and the Department of Homeland Security now possess computer programs capable of modeling the decision making processes of financial institutions, media outlets, and even the entire human population (all 6.6 billion of us) right down to individuals:
. . . the US Department of Defense may already be creating a copy of you in an alternate reality to see how long you can go without food or water, or how you will respond to televised propaganda.
Called the Sentient World Simulation (SWS), the program replicates financial institutions, utilities, media outlets, and street corner shops. By applying theories of economics and human psychology, its developers believe they can predict how individuals and mobs will respond to various stressors.
Yank a country's water supply. Stage a military coup. SWS will tell you what happens next. Homeland Security is already using SWS to simulate crises on the US mainland. Source
If government bureaucracies are modeling financial institutions by using computer programs as sophisticated as SWS, it stands to reason the world's largest and most powerful private investment banks have similar, if not even more sophisticated, tools at their disposal.
The Bottom Line:
The point of all this is that the top investment banks' strategies to disproportionately invest in weapons technologies over new energy technologies has not been made "willy-nilly." Quite the contrary, these strategies have been informed by computer programs of almost unimaginable power.
The good news is that as the price of oil continues to increases, the total amount of money invested renewable energy will also likely increase. The bad news, however, is that the ratio of money invested in renewable energy as compared to weapons technology is unlikely to improve as the higher the price of oil goes, the more demand there will be for weapons to fight large scale oil-wars.
Far-Reaching Implications:
The implications of this go far beyond just Wall Street as the companies using these super-computers are the same companies that, for all intents and purposes, determine who can afford to run for office at the state and national level.
On a related note, even if solar, wind, and other green alternatives could replace oil, we still wouldn't escape the evil clutches of so called "Big Oil." The biggest maker of solar panels is British Petroleum with Shell not too far behind. Similarly, the second biggest maker of wind turbines is General Electric, who obtained their wind turbine business from that stalwart of corporate social responsibility, Enron. Source As these examples illustrate, the notion that "Big Oil is scared of the renewable energy market!" is silly. "Big Oil" already owns the renewable energy market. Source
Relevant background reading:
Sometime next year, developers will boot up the next generation of supercomputers, machines whose vast increases in processing power will accelerate the transformation of the scientific method, experts say. The first "petascale" supercomputer will be capable of 1,000 trillion calculations per second.
"The difficulty in building the machines is mind-boggling," said Mark Seager, assistant department head for computing technology at Lawrence Livermore. "But the scientific results that we can get out of them are also mind-boggling . . ."
Petascale computers are also expected to lead to more potent models for Wall Street to calculate risk and predict the fate of financial instruments . . . Source
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Life After the Oil Crash
Deal With Reality or Reality Will Deal With You
To be perfectly clear: the investment banks are investing considerable amounts in new energy technologies. It's just that they are investing 100 times as much in new weapons technologies which will be used to fight over the world's diminishing supply of fossil fuels. The ratio between investment in the two sectors is the key point here: while the global market for renewable energy measures in the tens of billions, the (combined) global markets for oil and arms measures over $3 trillion. Furthermore, as fast as the market for new energy technologies is growing, the market for new weapons technologies is growing by several orders of magnitude faster.
Can't the investment banks see that these strategies will plunge the world into massive oil wars and total economic collapse?
Most of the investment banks' strategies - including the strategy to invest more in weapons technologies than in alternative energy technologies - are guided/informed by extremely sophisticated computer programs. For all intents and purposes, these programs make the decisions for the traders. Just how powerful are the programs? According to a December 2007 article in the San Francisco Chronicle, the newest generation of super-computers being used by Wall Street investment houses will soon be "peta-scale":
Investing and finance books I recommend:
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