Where Green Energy Goes to Die

• A Texas-sized renewable energy foul-up
• Big Tech isn’t made of Teflon
• Follow-up file: Russian oil exports and UAW strike
• Bank failures haven’t made headlines for months, but…
• Pandering on U.S. college campuses

A Texas-Sized Renewable Energy Foul-Up

“Sweetwater has unwittingly become home to what is possibly the world’s largest collection of unwanted wind turbine blades,” says a Texas Monthly article.

The small Texas town of 11,000 residents, located 40 miles west of Abilene, is the epicenter of a renewable energy conundrum. Namely, just how recyclable is renewable-energy waste?

It’s a problem that Washington-based company Global Fiberglass Solutions promises, in part, to address, starting with decommissioned turbine blades which are “mostly made of fiberglass, carbon fiber, resin and balsa wood,” The Texas Observer says.

In 2017, Global Fiberglass Solutions started collecting discarded blades and hauling them to Sweetwater where the company planned to set up a recycling operation at an abandoned aluminum recycling plant.

“Instead of ending up in landfills, [turbine blades] would be ground up into a reusable material that could be turned into pallets, railroad ties or flooring panels,” says Texas Monthly.

We question the utility… but OK.

Six years later, however, GFS has done next to nothing — except create some 40 acres of unpermitted dumps.

Courtesy: Texas Monthly, X

Pamala Meyer, who lives in an apartment overlooking one scrapyard, says: “It’s just a hazard all the way around.”

She worries about the safety of children who might play in the unfenced maze of turbine blades — each as long as a school bus and stacked about 10 feet high. (So, yeah, really safe.)

“It’s just a big rattlesnake farm,” adds Sweetwater resident Matt Jackson.

Texas Monthly continues: “The Sweetwater piles are… at least partly the indirect result of a rule clarification the Internal Revenue Service issued in 2016.

“Before then, a wind farm could collect valuable federal tax credits for only its first 10 years of operation.

“But the IRS determined that it would restart the clock on the credits if a wind farm ‘repowered’ its turbines — replacing most of their equipment with newer parts.

“So despite the expected two-decade lifespan for turbine blades” — in many instances, up to three decades — “wind farms across Texas and other states began replacing many that remained in good shape years early.”

As we’ve said a time or two: You get more of whatever the government subsidizes. In this case? Hazardous waste. From the so-called “renewable” energy sector, no less.

To be fair, Global Fiberglass Solutions is one of a handful of companies, at least, attempting to recycle the wind turbine relics. Albeit “GFS has struggled to secure funding to purchase the requisite equipment,” says The Texas Observer.

But even in the face of critical funding issues, GFS director Don Lilly told Texas Monthly in late August: “If you come back nine months from now, you will not see the [turbine blades].”

Umm, we’re not holding our breath… On second thought, maybe we should. “Each recycling process carries an environmental toll: a harsh reality for an industry that aims to replace coal” — and, we presume, other fossil fuels — “by producing cleaner energy.

“The problem will come to a head in Texas,” concludes The Texas Observer, “which leads the nation in wind energy production.”

But don’t mistakenly think this is a Texas problem. According to estimates from the Electric Power Research Institute, about 4 million tons of wind turbine blades will wind up in U.S. landfills between 2020–2050.

Correction: This is a Texas-sized problem.

Big Tech Isn’t Made of Teflon

“We're seeing weakness and even some cracks in the armor for some of the mega-cap tech stocks,” says our income-investing ace Zach Scheidt.

In particular, Zach’s keeping tabs on three names: Apple, Nvidia and Tesla. “There’s a different story for why each of them is trading lower,” he says.

“For Apple, it has to do with China banning iPhones in certain government buildings, which could wind up being a much bigger deal for Apple… because China's an important market for them.

“Nvidia… stock has been on fire this year, but now it's starting to roll over after a very positive earnings announcement.” And if good news doesn’t move the needle for a stock, Zach wonders what will.

Then there’s Tesla, which — faced with more EV competitors — “has been cutting prices for many of its existing models, which is going to cut into profits.”

In general, these key stocks are trending lower, which is affecting the broader market. To wit, it’s important to understand how the major U.S. stock indexes are organized.

“The S&P 500, for instance, is a market cap-weighted index, which means big companies have a much larger effect on where the market is trading.

“If Apple drops by 2% and every other stock in the index goes up by 1%,” says Zach, “Apple could actually hold the entire index back because of its oversized influence.

“Now we're starting to see a little bit of a reversal — with the large-cap stocks pulling back — but there's plenty of strength under the surface in many other areas of the market.”

The way Zach sees it, investors are starting to look at a stock’s fundamentals. In that case, he says: “I'm keeping a close eye on other areas of the market that are showing strength, including some industrial stocks, health care stocks and energy stocks.

“In a stock picker’s market, you can make money on both sides,” he adds. “You can be a little bit more diversified into bullish and bearish positions, and that creates more stable opportunities for your portfolio.”

Checking on the markets today, all the major U.S. stock indexes are in the red.

The S&P 500 is down about 0.45% to 4,465; accordingly, AAPL is down almost 2%. The tech-heavy Nasdaq meanwhile has lost about 0.80% to 13,800 — with NVDA and TSLA each down 0.30% and 1% respectively. Tellingly, with less exposure to Big Tech, the Dow’s lost just 0.10% market cap to 35,625.

It’s a mixed bag for commodities. Oil is up 2.20%, just under $90 for a barrel of WTI (more on oil in a moment). But, according to Kitco, gold is down $9.60 per ounce to $1,912.20; silver, however, is up 0.20%, hanging out above $23.

Crypto is in rally mode: Bitcoin’s up about 4.5%, at the time of writing, to $26,190 and Ethereum’s up 3.75% to $1,600.

But Paradigm analyst Greg Guenthner is skeptical about the crypto space: “It’s beginning to feel like this year’s rally is turning into an echo boom — a temporary pop from a formerly hot asset that fails to kickstart a move to new highs.”

We’ll see…

Small-business sentiment has been in the dumps for 20 straight months — judging by the latest Small Business Optimism Index from the National Federation of Independent Business.

The headline number slipped in August from 91.9 to 91.3. This figure has been mired below its long-term average continuously since the start of 2022.

Finding qualified help is the biggest challenge faced by survey respondents; 24% say quality of labor is their single-most important problem. But inflation is a close second, cited by 23% — with taxes cited by 17%. Everything else is in single digits.

“With small-business owners’ views about future sales growth and business conditions discouraging, owners want to hire and make money now from strong consumer spending,” says NFIB chief economist Bill Dunkelberg.

Follow-up File: Russian Oil Exports and UAW Strike

“The G7 [entered] into a coalition with the European Union and Australia to set caps on the price of seaborne Russian oil products in February,” says an article at City A.M.

“This has capped high-value Russian exports such as diesel and gasoline at $100 per barrel while lower-value products such as fuel oil are currently capped at $45 per barrel.”

Ole Hansen, head commodity strategist at Saxo Bank, says of the price cap: “It has helped, not in the sense of forcing down exports, but in keeping the price in check. However,” he says, “given the current global tightness Russia has no problem finding willing buyers.”

Willing buyers including China and India: “China, the world’s biggest crude buyer, is now Russia’s biggest market,” City A.M. says. And as of July, India “imported an estimated five-month high” of Russian oil.

“With markets tightening from OPEC cuts, there is a chance [Russian exports] could be ramped up even further, as countries look for supplies lured in by discounted prices.”

“The Biden administration is expecting a deal between the United Auto Workers union and automakers, and has deployed top officials to help facilitate the talks, according to Deputy Treasury Secretary Wally Adeyemo,” says Bloomberg.

If no deal is reached, the UAW threatens to strike against the Big Three U.S. automakers — GM, Ford and Stellantis — starting this Thursday.

“What I know is that the UAW is in active conversations with the three auto companies,” Adeyemo insists. “Our expectation is that they are going to get to a deal.

“They have profits,” Adeyemo says of the three automakers, “the question now is how do they make sure that those profits are divided amongst the companies and labor.”

If you’re keeping count, using August data from Cornell ILR School Labor Action Tracker, over 200 strikes have occurred in the U.S. so far in 2023, affecting 320,000 workers. Double that number of strikes in 2022, but they affected fewer workers: 224,000.

Yeah, about Joe Biden being the most pro-labor president in history… Not so much.

Bank Failures Haven’t Made Headlines for Months, But…

“Complex dynamic systems don’t necessarily fail all at once. They fail in part, enter a quiet period and then re-emerge to fail on an even larger scale,” Jim Rickards warns.

If you rewind to the global financial crisis of 2007–2009, it proceeded in several distinct phases, both quiet and turbulent. Similar quiet periods showed up in the previous financial crises of the late 1990s.

Looking at the current bank crisis through this turbulence-and-quiet template, SVB and Signature Bank imploded over three days in March. A few weeks later, the FDIC took over First Republic Bank, with many of its assets taken over by JPMorgan Chase.

And the summer months have been quiet, but the bank crisis is still simmering, confirming Jim’s studied opinion that turbulence in the banking industry will boil over in October.

Last week, for instance, Dave reported on an academic white paper finding banks are doing the same boneheaded things that led to SVB’s collapse. Specifically, managers at 75% of reporting U.S. banks are not hedging risk with financial instruments called interest rate swaps

That’s no guarantee they’ll meet the same fate as SVB… but it does increase the risk.

In addition, September and October are typically the weakest months of the year for the stock market — and financial crises have a way of rearing their ugly heads at that time, as happened in 2008 and 1998. (Oh, and 1929.)

In anticipation of the next turbulent phase of the bank crisis, Jim Rickards will be hosting an emergency Zoom call with Paradigm subscribers this Thursday at 7 p.m. EST… Watch your inbox for all the details.

Pandering on U.S. College Campuses

You won’t believe the courses that U.S. colleges and universities are offering these days. (Well, you might.)

Here’s a sample:

• Texas State University: “Harry Styles and the Cult of Celebrity: Identity, the Internet, and European Pop Culture”
• NYU: “100 Years of Courting, Dating and Hooking up on College Campuses”
• Arizona State University: “Psychology of Taylor Swift — Advanced Topics of Social Psychology”
• UCLA: “Aliens, Psychics and Ghosts.”

And at Texas Christian University — perhaps the coup de grace — you can take “Whiskey School: A Survey of Whiskey.”

As a parent of college-age children, I wonder if students really need to delve deeper into any one of these subjects, to say nothing of their relative uselessness.

But I’m reserving judgment on the whiskey class. The final exam? Students can distill their own whiskey… which, WTSHTF, might actually prove useful.

Best regards,

Emily Clancy
Paradigm Pressroom’s 5 Bullets