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Andy Lees The Weakest Link

Andy Lees The Weakest Link

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Published by ritholtz
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?
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?

More info:

Categories:Business/Law, Finance
Published by: ritholtz on Jul 29, 2009
Copyright:Attribution Non-commercial

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02/05/2013

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7/28/09
The Right Game
The Credit Crunch – Treating the diseaserather than the symptoms.By Andrew Lees
(July 2009)
Contents
 
7/28/09Foreword. Page 3Introduction. Page 4Chapter 1. The Credit Crunch Page 6Chapter 2. Why Borrow? Page 11Chapter 3. A fair day’s pay Page 16Chapter 4. Tightening the old age purse strings Page 25Chapter 5. The Extinction of Fossil Fuels Page 31Chapter 6. Green is no Alternative Page 41Chapter 7. Hidden energy Page 51Chapter 8 The Low Hanging Fruit Page 57Chapter 9. Blackout Page 62Chapter 10. Back in the USSR Page 66Chapter 11. As the Crow Flies Page 70Chapter 12. Going Critical Page 81Chapter 13. Conclusion Page 87
 
7/28/09
Foreword
For several years I have been asked by clients to draw some of my thoughts together and publish a book. I have been reluctant – (some people might say lazy) – to do so, however with the credit crunchcausing business volumes to decline, the time was suddenly made available. It also seemed the righttime to tell this particular story. The credit crunch and the panic that it caused have offered the perfectopportunity to try and get both the public and business leaders worldwide to wake up and force politicians to take some very hard decisions and justify themselves.The exercise has been hard work. Putting my thoughts down on paper is relatively easy, but thenmaking them legible to the outside world has perhaps been more difficult. I hope I have achieved that,and would like to thank my colleague Henry Faire who has applied as much red-ink to my spelling andgrammar as my English teachers used to 30 years earlier.I work at a large investment bank on the broking side. I have been in the business since 1985 where myrole has been to develop macro sales. The way I have interpreted that role is to look at, and try and`understand and question what’s going on politically, economically and at sector level worldwide. Mostanalysts look at single companies, or look at economic data and express opinions on that. By looking atsuch a narrow set of information, they often miss the real story which I believe is the case now. Whyhas Japan for example stagnated for the last 20 years? They end up trading on noise and putting thesystem under greater and greater stress. Politicians reinforce and compound errors rather than enablingcorrect decisions to be made.My clients have both rewarded me well, and more importantly acted as a great sounding board for ideas. They have pushed me to dig deeper and look wider to understand the real issues. There arevarious people I would like to thank who constantly ask questions and inspire different ways anddifferent directions to think, but I’m not sure they would want me to mention them by name. Othershave also offered their in-depth knowledge of the energy market, giving me access to a level of understanding that publicly available research alone cannot give.I would also like to thank British Rail and its modern equivalent for making a 30 mile journey takealmost an hour, giving me ample time to read literally hundreds of books that have given meinspiration and helped me do my job. It was either that or join the competition in the buffet car, which Imust admit did have a certain draw.Finally I want to acknowledge the various web sites that I use where individuals can express their thoughts and research, which perhaps the broader media and distribution channels only treat asminority sport. In particular I would like to thank the organisers and contributors to the web sitewww.theoildrum.comandwww.energybulletin.comwhich carry a lot of well presented research and information, which most industry analysts either don’t know or simply gloss over.The reason I have decided not published this through a conventional publisher is several fold. Firstlythe time taken to come to market is prohibitive, and I think making this freely available on the web willhopefully get access to more people. Secondly I see it as more of an investment to bring in more clientsrather than a revenue generator per se.
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