Postcards: No Action Plan... Ever...

The Banana Republic has no rudder. There are plenty of people who have BIG ideas... but there are very few who have plans to implement them. Maybe we need more ditch diggers.                                                                                                                                                                                                                                                                                                                                                                                                                 Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: No Action Plan... Ever...]( The Banana Republic has no rudder. There are plenty of people who have BIG ideas... but there are very few who have plans to implement them. Maybe we need more ditch diggers. [Garrett {NAME}]( Feb 9   [READ IN APP](   Dear Fellow Expat: America has lost her ability to get things done. Today, we have a complete top-down driven economy. People in Congress have no understanding of how things work. Yet they mandate industries based on how they “think the world should work” instead of how it does work.  The same goes for the administration. It consists of "Yale Lawyers" who think the U.S. is the problem with everything. So, they try to reimagine America in their image.  How’s that working out? Don’t answer that…  Disconnected technocrats are attempting to run industries by fiat. We call this phenomenon “dirigisme,” and it will be one of the decade's most important trends. By definition, it is economic fascism - the opposite of a free market. With grand ideas, politicians give our money to think tanks and NGOs. There, PhDs reimagine “green energy justice" or "equity in semiconductor manufacturing.” But what does that even mean? The think tank gets paid $1 million for a report. Any new studies reconfirm the progressive bias. And those cited studies become media talking points to "change" business and public opinion. But what is the actual plan?! There are no action plans for anything. No manual. No guide. No instructions. I would take an Action Plan to Unleashing American Business, even if it were written in Dutch. For instance, what’s the plan to address the issues with student loan debt? There isn’t one. Instead of getting to the root of the problem, they’re buying votes and forgiving debt. The government is the only game in town for loans and subsidizes a failing education system.  That's the problem. There is no plan to fix it. The U.S. debt will hit $50 trillion by 2032. There are no plans to cut spending. No new realistic tax or revenue ideas. No national export plan to boost GDP. No plans to curtail risk. The list goes on for miles. And if you want to see real inaction… look no further than in your house. Those lights over your head. They might be going out soon. America's energy grid is a pathetic exercise in government malfeasance. It's one of the worst in history. And it’s only getting worse. [Upgrade to paid]( “Three Ps”: Patchwork, Piecemeal, and Pathetic I've listened to politicians, think tanks, and Yale lawyers. They tell us that the United States' energy grid will run on clean, "affordable" energy in the next decade.  That we will be Carbon Neutral in 25 years… and that my gas-powered Honda is killing the planet. I studied energy and environmental security. I watched similar grand plans fail when we visited Germany as a cohort a decade ago. German officials tried to move too quickly on a transition. Now, they're turning back to coal to keep the lights on. American leaders saw Germany’s failures and said - “We will do what they couldn’t.” But this transition - as it stands - is mathematically and structurally impossible. And I only need two reasons to explain why. For starters, we need many materials we don't have. We need four times more copper, ten times more lithium, ten times more cobalt, and sixteen times more graphite than we currently produce. The world has never doubled the production of one industrial metal in a decade… ever. We'd need to increase the production of 16 different metals - by a minimum factor of four. Plus, we’ll need a lot of nickel, aluminum, and other metals from Russia and tons of rare earth metals from China. How is our political relationship with those regions? What’s the plan there?  You know the answer... Now that’s the supply issue. Let’s focus on the structural issue. The energy system itself. The U.S. energy grid is a mess at both the macro and micro levels. It’s highly fragmented, mainly built by adding capacity in all directions as the population expands. Think of a game of dominoes and how the bones stretch in various tangents as the game goes on with time. That's your local grid. And that's been happening in every state and county for decades. We divide the national grid into three sections - Western, Eastern, and ERCOT (Texas). - They are isolated from each other. The nation's 12 transmission planning regions have different levels of responsibility. They don't talk much. Then, when you get to the regional level, it's even worse. The local energy system comprises utility companies, independent power producers, renewable energy developers, regulators, and other entities like construction and water utilities. Oh… and don’t forget the lawyers… for every party and the environmentalists who are there to check every single box. Now there needs to be seamless communication between the stakeholders. There isn't. Grid operators, utilities, and energy market participants own proprietary systems and manage different protocols, reducing their incentives to share data and collaborate. Each state has different regulations, making cross-border transmission complex. These are serious challenges heading forward. The European Union - which can’t agree on anything - has a continental plan for energy. China has a plan. The United States is the only nation with a significant grid without a real plan. I'm not talking about some hypothetical "reimagining" report written by someone who's not an engineer. Things will get very rocky as this “green transition” continues. It’s not only an issue with the materials we need. It’s also about implementing a plan that largely doesn’t exist on a grid that is structurally chaotic. Going from Green to Brownout Each state will implement its green energy policies. That much is clear. This will bring things down to the very complicated local political levels. There needs to be more communication and coordination between everyone involved. How do you optimize your local grid when no one talks to one another - or you can't get them on the phone? Better collaboration is needed to ensure a reliable, stable, and efficient grid. And if you can't do it locally, how can you accomplish this nationally? Last week, I had a phone call with a real estate developer and an energy transmission consultant. We discussed one state’s recent mandate to deploy ample industrial battery storage to its grid in the next decade. Our proposed battery project would improve the state's ability to rebuild industrial zones. It would also backstop the grid at critical chokepoints around the state. Not just the big cities need these batteries to meet these hefty mandates. Energy providers must also install a lot of battery storage in rural areas to meet state mandates on solar power generation. Yet, very few people at the state level understand local grid operations. They also don't understand the technical challenges in meeting those mandates. Someone at the State Level waved a wand and said: “Let’s become carbon neutral in 10 years.” Then they cut a ribbon and had a party. But that doesn’t solve the problem. First - local energy systems are already overburdened by regulatory oversight. Second, there’s less land for battery storage than people think. Third, lawyers are ready to sue to stop development on every inch of property within 50 miles of a waterway. Meanwhile, power companies don’t want more assets to manage. They deal with enough from the transmission planners on a daily basis. Do they want to manage batteries now? Utility players want less liability and greater stability, so they’ll postpone this until they have to. It’s a complex industry, and I’ve yet to meet someone happy in the business. This specific state’s mandate effectively says, “Get it done.” Yet many environmental laws prevent the placement of certain storage systems due to unfounded concerns about toxic chemicals. (The batteries are safe; we should worry about hydrogen.) There’s the aesthetics of battery storage as well. There’s a “Not in My Backyard” (NIMBY) element to it when Millennials are buying condos on the waterfront. They don't want to see batteries from their balconies, even if they don’t understand how their lights stay on. There's also the logistics. You don’t put batteries in an isolated area and flick a switch. You can't supply electricity from your city's power stations to batteries hundreds of miles away and then run it back when needed. The batteries need to be near the original power source - or substation. This reduces transmission loss, ensures excellent grid stability, and enables quicker emergency deployment. If land is unavailable, there becomes a problem with zoning. And to get zoning changed, you have to meet the politicians. And those politicians must be on good terms with other politicians at higher levels. And so on... Everyone is busy campaigning right now. That’s the way it always is in America. It's a perpetual campaign with little plan on how to fix anything. Educating people about the batteries they want to install will take months or years. The grid is fragmented. So getting the major players into the same room to agree could take longer. We know that our approach is the only way to achieve the state’s goal and please the politicians. My colleagues have a proven solution, and we’re eager to deploy it. We legitimately want to solve the problem. But the sheer scope of the challenge ahead - from a cost, time, and regulatory perspective - makes me shake my head. A blunt, honest consultant explained the upward challenge. He compared it to us being at a base camp of a rugged mountain to climb.  He told us to temper our expectations. Even though it makes the most sense, it will be a tough uphill battle. I halfway think: “To hell with it." But we're going to try. We could just keep building in Europe and avoid the political mess we’re sailing into this year. It’s easier to do nothing and turn our attention to Estonia or Finland again. In those countries, a deal doesn’t need dozens of meetings and years of feasibility analysis. A deal here… it’s a political campaign. This is why things don’t get done. The people with the solutions get frustrated by the process. They leave and find more favorable environments to make money. A simple solution shouldn’t be that complicated. Fingers crossed. Good News There is some good news to all of this. First, this dirigisme makes everything so complex. It creates excellent investment opportunities in companies with regulatory capture. We’ll explain what this means next week. Additionally, we’re finishing up the official Risk Guide for the Florida Republic. In the coming weeks, we’ll give it to our members of the Republic Risk Letter.  Look for your copy, which will teach you how we trade and manage risk here in the Republic. [Upgrade to paid]( It's great to see new readers joining the Florida Republic. It’s going to be a great year. Stay positive, Garrett {NAME} Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()