I just visited Houston and was blown away. I saw capital being deployed everywhere. Recession? What Recession?
|Shanghai Construction Boom|
But how is this possible? I live in another large and powerful metropolitan area with lots of wealth and I have not seen a construction crane in years. How is it that two similar cities could be so different?
Moreover, why is Houston experiencing such great infrastructure boom; especially when it is the center of energy in the US and Obama, arguably the most powerful man in the world, has declared war on hydrocarbons?
|Fail or Else Campaign|
In the United States, 20-year capital spending has dropped close to zero. While there is no public denouncement against any guilty party, it is my opinion that Obama's wealth redistribution threats have successfully scared businesses out of any notion of long term investment.
borrowed money against long term earnings to distribute a unusual dividend before tax increases started. Risk-adverse money is being deployed to buy volatile stocks everyday, in this way pushing the stock market to record levels. The signs are clear. Make money as fast as you can because there is no certainty that you may be able to keep any in the future.
But Houston seems to be different. There appears to be confident outlook there. Could it be that American innovation has come to the rescue of our nation once again? After our energy resources were deemed to be in the path to extinction, we suddenly have the technology to extract oil and gas from previously unreachable places and at very competitive costs. In fact, it is now said that we are the Saudi Arabia of natural gas. We have so much gas that we do not know what to do with it... literally. In North Dakota, the excess of gas and the absence of a pipe to send it to the rest of the country means that enough energy to light up Chicago gets burned every night.
|Click to enlarge map of US at night|
Why not send it to the people who could use it around the country? Because there is no infrastructure to do it. Regardless of the jobs that such project would create, the President refuses to support the permits needed or anything else associated with hydrocarbons. So, North Dakota residents get their gas for free and the rest is used to increase the atmospheric carbon; a fantastically green solution.
By the way, next time that a hipster environmentalist accuses you of destroying the earth, ask them how exactly is it that they wash their fashionable clothing. Last I checked, environmentalists had not quite made it back to hand washing or hand drying their attire. They too have yet to go back to the old way to keep food refrigerated. So, to Mr. Obama and his environmentalist bodies who refuse to let the rest of the country get into the US energy boom, I say "stop moving your lips and get out of the way". "There is lots of work to get done!"
At least, this is exactly what Houston has replied to Obama.
|Houston's Response: "Else" then|
Since the beginning of the 80's, US energy production continuously dropped year after year. But in just three years, it is now up to levels from 1989. Considering the fact that California, a former juggernaut in energy, has continued to refuse to participate in the renaissance, it should be clear how magnificent Houston's feat has been. Even under threat from the most powerful man in the world, the city has pushed upward at a rate never again though possible in the US.
Things have moved so fast in Houston, that I had almost missed the changes. I constantly scan all sorts of economic data for signs of change but it was the cranes that made me come to my senses. If we could only replicate the effect around the US.
Capital spending means jobs. Jobs mean the end to the stagnation. The change would demonstrate once again that progress can be had without cheap labor. US inventiveness would save the day once again. But the president is lost in LA-LA-Land while the rest of his nation grows hungry.
|Moving to Houston|
Until then, I am moving to Houston.