Description

Andy Lees and I head up a small macro sales team at UBS. You have occassionally included some of my notes on your web site, which I am very happy with as my view is the more, the merrier.

Anyway I have written basically a book which I think has got some fairly ground breaking ideas in - (I would say that wouldn't i). If it is of any interest to you, I would be very happy for you to publish it. The report is attached in word format and below is the accompanying note I sent it to to my clients with yesterday.

Kind regards

Andy Lees


The best book you will ever read…or at least the best book I will ever write.

It looks at the structural issues that explain the build-up in credit and the subsequent crunch. By putting things in a structural context, it suggests that a lot of the policies that governments are pursuing are adding to the imbalances and inefficiencies rather than addressing them. Governments are effectively repeating the same mistakes that got them in this position in the first place.

The world’s shortfall of energy is only going to intensify. Whilst economists dismiss energy as only accounting for 4% or 5% of the modern economy, they fail to understand that this is simply the cost of extracting the fuel. The value to the economy is many multiples bigger, and it is this energy subsidy that effectively explains most economic activity. Understanding how this energy subsidy affects the economy, and how it is collapsing, will explain how the world economy is set to change over the next few years. Even productivity growth itself is explained by the energy subsidy.

Unfortunately the EROIE (Energy Return of Energy Invested) of alternative energies is no more than 15% of the present EROIE of our existing fuel mix. To get the same net energy subsidy from this green energy would mean the energy industry and infrastructure growing from 4% or 5% of the economy to 25% and higher. Either the gross economy would have to soar or the net (non-energy) economy would have to shrink. The implications are huge and will affect every aspect of life, with implications for everything from relative prices to default and credit rates on debt.

The book looks at how this is likely to unfold. Whether we will all go down together or whether certain economies will outperform others. How can countries best protect themselves from the mess and what can investors do. Is there anywhere safe and what will central banks do?