Seven Companies Profiting From Obama's 'New' New Deal
Our next President will be faced with unprecedented challenges in health care, energy, global warming, an aging infrastructure and huge "legacy" automobile businesses that are teetering on the verge of bankruptcy.
He's also being presented with an incredible opportunity… one that, if implemented correctly, could have profoundly positive effects on the economic health of the world, just when we need it.
For years, the engine that fueled global economic growth was the spending of the American consumer. Market crashes because of the dot-coms and the housing boom have left many individuals with too much debt and not enough money. Americans are tapped out, and they're closing their wallets.
Reinvigorating our economy rests upon jumpstarting consumer spending - and ultimately improving the financial condition of millions of Americans. It's much easier said than done - and this new administration will have its work cut out for it.
If you’re curious as to how these government actions could benefit your bottom line, you should take a look at our past. You might find these newest sources of "economic fuel" and wealth creation look surprisingly familiar. The government's solution could be just the thing our portfolio needs for a healthy return in the years to come…
How Obama Can Jumpstart Our Economy
Ask most people to give you the cause of the current economic slowdown enveloping the United States and the rest of the world, and their likely answer will be the explosion of housing and the subsequent bubble in the credit markets.
But that was just the peak of the problem, not the beginning. The trouble has its roots in something that started 20 or 30 years ago.
That was when we started seeing the shift away from personal savings in America and toward the beginning of a huge consumer debt expansion.
And now, we are witnessing first-hand the effects of the increasing use of massive leverage can have on the markets, and ultimately on the American consumer. They're broke and can no longer be the fuel that powers the world's economic engine.
With consumer spending slowing, layoffs increasing and hiring all but stopped, the prospects for future economic growth aren't particularly bright. Or are they? We have almost everything we need to fire up the world's economic engine again: The ingenuity of the American people, plenty of factories, etc.
There's only one thing missing… the fuel to get it going again. So what's going to be the new "fuel?" History is a great teacher, and we need look no further than the Great Depression, and Franklin D. Roosevelt's New Deal.
The New Deal was a series of programs Roosevelt employed between 1933 and 1936 with the intent to provide work for the unemployed, reform of financial and business operations, and economic recovery. Here are a couple of examples:
The Works Progress Administration (WPA) was the largest of the New Deal agencies. It alone was responsible for providing almost eight million jobs. What did all those people do? They built public buildings, roads, bridges and other infrastructure projects. Anyone who needed a job could easily become eligible.
Another program, created by an act of Congress in 1933, was the Tennessee Valley Authority. The TVA, as it was known, was chartered to provide food, navigation and flood control, electrical generation, fertilizer manufacturing and general economic development for the people of the Tennessee Valley, a region hard hit by the Great Depression.
And it was just what the doctor ordered: The TVA's projects were catalysts that fueled unprecedented economic growth in the area that continued through the 1960s. Today, the TVA's 43 power plants make it one of the largest producers of power in the country.
Seven Companies Profiting From a "New" New Deal
While the slowdown we are experiencing is nowhere near as severe as the Great Depression, the solution will be the creation of similar New Deal programs in two specific areas: energy and infrastructure.
More specifically, developing energy savings, making alternative forms of energy our mainstream sources, and building the green infrastructure to support what will be our growing energy independence.
More insulation in a house's walls, lower thermostats, fluorescent bulbs, more fuel efficient cars and commercial building energy management systems are just a few of the ways to save energy. Public transportation is another. Expect the new government to provide tax incentives for these and other programs as short-term incentives to save. Companies that stand to benefit are Owens Corning (NYSE: OC): insulation, General Electric (NYSE: GE): lighting and Johnson Controls (NYSE: JCI): energy management systems.
Clearly wind, solar geothermal and tidal energy companies stand to benefit, too. While a comprehensive list is beyond the scope of this article, companies like First Solar (Nasdaq: FSLR): solar panels, Ormat Technologies (NYSE: ORA): geothermal and Vestas Wind Systems (PINK: VWDRY): wind turbines, will do well.
As new green sources of energy begin to come on-line in a big way, the nation's electrical grids will have to be upgraded to move the power to where it's needed. This is a huge project, and one of the biggest winners will be ABB (NYSE: ABB): power and automation technologies.
Ironically, the same government that's trying to find a solution to the energy problems we face has been the biggest roadblock to solving them. The trillion dollar coal and oil subsidies prolong the carbon industry's advantage over - and are a constant roadblock for - fledgling alternative energy companies.
The new President and his administration have an opportunity to turn the recession ship around, before it runs aground. By implementing new energy and infrastructure projects, thousands of new jobs will be provided at a time when they are desperately needed, and most importantly, these projects will provide the fuel to restart the world's economic engine.
We'll be watching.
P.S. There's no question that individual efforts to save energy and move to alternative sources will make a difference. And to find out what individuals across the United States are doing in that regard, check out Project Tandem. It's the story of two young documentary photographers, who for the next year are cycling over 11,000 miles around the United States. They're documenting individuals who are stepping up to help the environment. I've personally met these two enthusiastic young people, and I expect the culmination of their efforts will be extraordinary.
Related Articles
|
Top Rated Comment Streams:
-
1.Hedged In661
- 2.
-
3.Smarty_Pants401
-
4.cos1000304
-
5.axelrod608297
- Free E-Newsletters
This article has 15 comments:
-
CLH
-
708 Comments
Nov 14 06:04 AM-
finmah@yahoo
-
45 Comments
Nov 14 06:34 AMHow about showing confidence in the private sector and making the corporate tax structure competitive. One should ask the question why does the government need unlimited growth in spending during a severe recession or credit freezeup?
-
Gary Lucido
-
46 Comments
My Website
Nov 14 07:11 AM-
john s. gordon
-
680 Comments
Nov 14 08:51 AMbeginning in 1939 we sold war materiel to england for gold & then under lend lease. the war production put americans back to work.
TVA was fought tooth & nail by the industrialists. they hated FDR's socialism.
> jack
-
fahrender
-
11 Comments
My Website
Nov 14 09:18 AMi suppose CLH would've been happy with the Axis powers and their rapacious ways taking over Europe and Asia.
the right wing in this country are consistent anyway: fascism, yesterday as well as today is just fine with them.
-
sumosama
-
237 Comments
Nov 14 11:25 AM-
Stockguy456
-
78 Comments
My Website
Nov 14 11:37 AM-
Road Runner
-
128 Comments
Nov 14 12:14 PMFirst, this is not going to be anything like the Great Depression. The Great Depression was caused by a contraction of the money supply, when the money supply should have been expanded (you can blame that on the lack of understanding of economic theory, and the Republican dogma of the Hoover administration, not Roosevelt). Today, the central banks of the world are pumping trillions of dollars into the world economy. The US central bank, the Federal Reserve, has injected more than 1.2 trillion into the US economy since September. That’s a massive amount of money. But, it will take about 12 months to affect the general economy. Injections by the Federal Reserve always have a delayed effect. Note that this 1.2 trillion is totally separate from the $700 billion Federal bailout package. I am looking for a recovery starting in the second half of 2009, with it kicking in strong in 2010 because of this massive money supply increase.
Second. There will be low consumer spending for years. It will take years for the consumer to feel good again (and greedy – remember that “greed is good” from the movie Wall Street). Since consumer spending is most of the US economy, someone or something needs to pick up the slack to get the economy back to full speed and full employment in the next few years.
That is where federal infrastructure spending needs to come in. The reason the federal government can go on this borrow and spend spree is because of low inflation that allows the Federal Reserve to inject large amounts of money into the economy by buying US federal debt securities (see explanation below). I think the national debt fear mongers are wrong now, though they will eventually be right.
Third, as you said, public works projects often lead to large economic booms years later. That is because they can have a huge productivity gain for the economy. There are only 2 ways to grow an economy: increase population and increase productivity. You have a great example in your article with the TVA. But, my favorite is the Hoover Damn, also built in the Depression. The Hoover damn basically launched the economic boom of the southwest US. It cost $49 million but has given back billions in economic growth. I believe that alternate energy and the electric grid are the “Hoover Dam” projects of the present age. It looks like a huge up-front cost today, but in the following decades will give a many fold return to the economy.
This is a point often missed by people that stick with the Republican, conservative dogma that the private sector is ALWAYS the best place for capital expenditures that increase productivity. On the flip side, a huge amount of the private sector investment in the last 5 years went into building luxury homes and condos, and the overhead of the financial system. Both add little to general productivity. The founder of the Vanguard investment group estimated that $600 billion a year was spent on the overhead of the financial system in the last few years. He was shocked by how wasteful that was.
Explaining the Federal Reserve. The Federal Reserve’s main concern is inflation. It raises inter-bank lending rates, thus contracting the money supply when inflation is too high. And, does the opposite when inflation is low. The Federal Reserve also buys US Government Bonds to manage the money supply. The Federal Reserve gives the interest it makes on the inter-bank loans and US bonds back to the US government. I know that sounds circular and strange, but that is the nature of the Federal Reserve. Right now there is little inflation and in some areas deflation (how about those low gas prices!). This allows the Federal Reserve to inject massive amounts of money into the economy by buying US government debt, thus allowing the US government to borrow large amounts of money for infrastructure projects, basically interest free.
-
longoil
-
180 Comments
Nov 14 12:17 PM-
frflyer
-
125 Comments
My Website
Nov 14 12:52 PMTo rewrite history, making claims that FDR was a bad president are beyond rubbish. Those claims are categorically untrue.
Maybe if you had been there when millions of citizens cheered FDR, when the nation as a whole adored him, you would have a different perspective.
It is no accident that he was elected three times. He not only instituted measures which helped milliions of workers have some self respect as well as make a living during the depression.
He improved the infrastructure in a big big way. The depression didn't immediately go away as a result of his actions, because of the depth of the economic contraction, not because his policies were wrong or ineffective. That's why it took WW2 to bring it to an end. Then he donned the hat of commander in chief and famously led the country with inspiration and strength to a victory in WW2
Sure he wasn't perfect and made some mistakes. Social security, a labor movement, the SEC, the GI bill, th FDIC,
and many other programs that led to the great growth of the middle class of workers in the 50s and 60s were hallmarks of his leadership.
You extremists on the right, would be calling Dwight Eisenhower a socialist if he were alive today. Yes the Allied Commander of Europe actually had the temerity to speak up for the interests of working people. And you would be calling him unAmerican for speaking out against the dangers of the military industrial complex.
Your ideology blinds you to common sense. You are so blinded by your ideology that science is a communist plot to many of you.
You are so out of step with where the American public is that you are under the delusion that it is liberals who are too extreme. From where you are looking at things, way out there on the extreme right, everything looks red or pink. Americans are predominantly liberal despite the claims that Republican talking heads keep making that Ameicans are center right. It just isn't so.
The recent election indicates the same.
Conservatives have done a good job a branding the word liberal as a four letter word. As a result, when asked if they are liberals, most people are afraid to say yes. But if you ask them how they feel about individual issues, something like 70% answer with opinions that are decidedly liberal. They have bought into the rights fascination with labels. Everytime anyone proposes anything that isn't a giveaway to the rich, those on the right are ready can't wait to throw out those old red baiting labels. I guess it's easier than thinking.
If not for the policies of FDR, we would have absolutely no worker's rights, no unemployment, not sick pay, no vacations, no retirement, no GI bill, no federal loan programs for housing, and would still be working 12 hour days six or seven days a week for lousy pay in dangerous conditions.
But wait. the days of the robber barrons are back. We now, thanks to Reaganomics, have the worst distribution of wealth since 1929. Working wages have actually gone down while the rich have been getting fat on our labor. Labor is the source of wealth, not capital. Capital is the result of wealth. Labor is the engine of the economy. Nothing is worth anything without labor. It only makes sense that labor should get a fair share of the pie. Republican economics have killed the American dream. They have killed off organized labor and are responsible for $9 trilliion of the $10 trillion federal deficit. It is their deregulation that brought about the Savings and Loan scandal and the current credit mess.
Regressive tax schemes have never worked and never will. Top down economics is criminal.
Investing in renewable energy and conservation is the only thing that will save our economy. It will kill 4 birds with one stone, economy, environment, energy and national security. Oil is ruining our economy and our environment and making us less secure.
We won't be "gambling" on renewable energy as Gary Lucido says. I would advise him to get informed because he doesn't have a clue what he is talking about. Get informed and stop making statements about things you are completely ignorant about. You have bought into the propaganda that says renewable energy can't power the country. That is categorically not true. Here are some websites where you might learn something.
www.sciam.com/article....
www.setamericafree.org...
www.pluginpartners.org/
www.repoweramerica.org/
energysolutionswecanbe...
www.salon.com/news/fea...
Think nuclear is the answer? Think again.
www.theleaneconomyconn...
www.cleanwisconsin.org...
Nuclear power is not sustainable in any way shape or form.
You are being fooled if you believe otherwise.
-
creativforce
-
21 Comments
My Website
Nov 14 01:19 PMEverything we build to create, grow, collect or save energy from an infinite resource (the sun, the moon --wind and tides--, the atom) will enrich this nation.
The paradigm of previous centuries, that we can find energy or buy a dollar's worth for less than a dollar is an unsustanable fallacy in a finite system.
Whether or not we have reached "peak oil", "peak coal" or "peak any other finite resource," global warming should be the wake up call to the fact that we are running on our stores, and that is unsustainable.
Isn't all this discussion on energy policy like asking, "How long can a fat man go without eating?" It's a silly question, time isn't the issue ... the issue is he will die.
It's time to do the right thing and feed from the infinite.
I don't know if the end is near, but now that we most definitely know there is and end, why not be conservative and prepare for it?
-
Small Business Income Center
-
1 Comment
My Website
Nov 14 03:29 PMI also discussed "10 Stocks That Will Flourish With Obama In Office" on my site.
You can read it here: www.smallbusinessincom...
-
Road Runner
-
128 Comments
Nov 14 03:36 PM-
Marcel Williams
-
1 Comment
My Website
Nov 15 04:54 AMEnergy re-industrialization through non-carbon dioxide polluting nuclear and renewable resources will be the key. The Federal government should be willing to invest up to 45% of the investment capital for all US utilities that want to build more nuclear power plants, small hydroelectric facilities, urban biowaste power plants, wind, solar, and geothermal.
Heavy federal investment in technologies related to synfuel production (carbon neutral gasoline, methanol, diesel fuel, aviation fuel, dimethyl ether) through aero-carbon dioxide extraction devices combined with hydrogen through water electrolysis will be essential if we are to totally free ourselves from the petroleum economy.
-
Citizen X
-
1 Comment
Dec 14 09:21 AM