|January 16, 2008|
|PR, media hype for alternative energy sets stage for next ‘bubble '|
|By Kevin McCauley|
|PR firms have established “alternative energy” groups to handle a crush of business driven by rising oil prices and widespread concern over global warming. A note of caution is in order.|
Smart PR pros will read the FebruaryHarper’s Magazine in which venture capitalist Eric Janszen warns that the alternative energy market may turn out to be the “next bubble.” The piece is an eye-opener.
Janszen argues that the U.S. economy—following the demise of the manufacturing sector-- is based on finance, insurance, and real estate (FIRE) supported by a weak regulatory environment.
That new economy is a “credit financed, asset-price inflation machine organized around one tenet: that the value of one’s assets, which used to fluctuate in response to the business cycle and the financial markets, now goes in only one direction, up,” he writes.
That rising tide is cheered on by PR people, media, investors and government officials until ridiculous or “fictitious” valuations are reached. The bubble then pops as mass selling sets off a panic.
In Janszen’s mind, the domestic economy moves from bubble to bubble. The dot.com bust begot the housing market collapse and alternative energy waits in the wings.
Concerning alternative energy, Janszen believes the hype is already in place for the bubble. NBC, for instance hosted a “Green Week” in November that featured shows with ecological messages. And Al Gore has joined legendary Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers. The firm that once helped bankrolled the rise of Amazon and Google is using Gore to oversee its “climate change solutions group.” The former VP provides a “massive dose of Nobel Prize—winning credibility that will be most useful when its first alternative-energy investments are taken public before a credulous mob.”
Janszen notes that it will cost up to $4 trillion to fund “enterprises needed to develop hydroelectric power, geothermal energy, nuclear energy, wind farms and hydrogen-powered fuel cell technology.”
Once the alternative energy bubble gets started, the FIRE crowd will boost the fictitious valuations up to $20T. That’s a valuation level FIRE needs to recover its losses from the housing market collapse.
After the bubble bursts, it will take at least a year to mop up “another devastated industry.”
The FIRE people, by then, “will already be engineering the next opportunity.” That new bubble is vital to enable the economy to avoid a deep depression.
Janszen provides a sober message for those caught up in alternative energy. PR people forewarned are forearmed.
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