Tuesday, July 8, 2008

Is There A Bright Side To The Current Economic Doom And Gloom?

Surprisingly, yes. In fact, there are lots of upside to all this doom and gloom.

The major beneficiaries of the economic downturn will be the American consumers. They just don’t realize it yet. Like a person trying to recover from a hangover, consumers are slowly realizing the high cost of their excessive lifestyle of living in a McMansion set in a former crop field miles from a major urban center.

Large ostentatious homes will be a relict of past frenzy, much like the Pet Rock craze. Consumers are also realizing that living in such a remote location is not as glamorous as it seemed at first: the long commute to work, the need to drive everywhere, trying to deal with wild creatures grazing in their yard or garbage can, etc.

The ever-increasing gas price has consumers seeking ‘green’ alternatives (or lat least more economical alternatives) to driving SUVs. Sales of bicycles and scooters are up. Electric vehicles, once derided as transportation of the ‘tree-huggers’ are now mainstream. Public transportation and car-pooling are even making a come back. Frugal is now vogue. People are driving less, downsizing their vehicles, conserving more, and seeking ways to reduce their total consumption costs.

Industries that will benefit
With consumers strongly signaling desire to reduce costs, those manufacturers that can meet the new consumer demand will benefit. And those companies are:

  • Makers of the next generation of lithium-ion batteries
  • Makers of solar energy: Electric Panels, Water Heaters, and Heat Pumps
  • Makers of Genetically Modified crops and seeds
  • Makers of Vertical hydro-farming
  • Green gas capture and trading
  • Makers of Green Construction Materials
  • The car manufacturer that comes to the market first with the economically viable 100-mpg car
I am most excited about the innovations in automotive design that should be hitting the showrooms around 2010-2011. With the advances in the next generation lithium ion batteries – no more of Li-ion batteries spontaneously combusting – we should see exciting versions of the electric cars. I can hardly wait to buy an electric hybrid car for about $20,000 that comfortably seats four, gets at least 100 miles per gallon, and still go from 0 to 60 mph in less than 5 seconds

Ed Kim
Practical Risk Manager

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