China’s central bank has taken the lead in the race to launch a national electronic currency. I think it’s definitely fraud. It’s a electronic way to ‘print’ money from air, making government steal money from common people.
I would simply say Public Retirement Fund in the republic of georgia where workers are forced to save for there pension while the money stored is not used for any investment. so the saved money will basically have no value when most of workers will reach retirement age
A malinvestment this year was a Viennese outdoor public pool (3x11 meters) at one of the busier traffic junctions in Vienna. The funny thing costed around 150.000 EUR and was only 1 month in operation and due to Corona regulations only 6 person per time were allowed to go in. In Vienna there are several public openair pools which are not very expensive and there is the Danube - so one can argue the money could have been saved and invested in the existing pools or other more important topics like the school system.
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Research an investment (could be a public company, private company, government agency, infrastructure project, etc) that you believe meets the definition of a malinvestment (past or present) and argue why you think it’s a misallocation of capital (3-5 sentences).
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I believe that the largest reservoir of malinvestment is in the tech sector. Example:
The taxi service Uber, for example, is not worth anything like its “private market” valuation of $68 billion. It has a clever piece of software, but the taxi business is cursed both with low barriers to entry and a high degree of regulation. There is also very little synergy between taxi markets in different cities. With Uber both subject to competitor attack by the likes of Lyft and blocked in many localities by local regulators controlled by local taxi monopolies, and losing $2 billion annually, it is worth very little more than Joe’s taxi service, if as much.
THE FED & HERTZ
Because of the economic impact covid-19 had on travel, rental cars weren’t in demand anywhere in the world.
So naturally global companies like Hertz were going to feel it the most.
Hertz went bankrupt.
But the fed money printer went brrrrr and the stock markets bounced back and began to stabilize somewhat, as if there’s no crash to worry about.
The “proof of global economic health” that Mr President refers to all the time.
A bankrupt company, a stock price that is being propped up by fed investment.
This company should be at liquidation point by now, how can they afford multi million dollar bonuses if they are insolvent?
By attempting to dump stock and obtaining Govt. loans that they have already proven they’re unable to pay back.
But it’s important that this monolithic company stays around right? Sure, why not. It wasn’t their fault that this happened to them. We still need rental cars after all, let the Fed prop them up.
They can just print all the money they want to anyway.
So offer zero or even negative interest that anyone can afford to pay off.
Until inflation is realized, the value of the dollar plummets and those lovely low interest rates are ramped up to prices these companies can’t afford to pay.
Now who owns the company? The lender.
Misinformation
Disinformation
Misery education
Monopolies
“Pharmacocracy”
Bureaucracy
Most of all these “cracies”
It is too often to much spoken, for to few real actions. They represent in my eyes generalized malinvestments.
Privately, the hugest part of the marriage business - may the few exceptions confirm the rule - could easily expose snow-balls malinvestments - after work of course, because plannification is mostly very optimistic. Courts do good money, but not so private parties.
Serving and meriting, giving and sharing, learning and teaching could produce prodigious financial sheets for a real equity. Upgrading our human finances - may be exactly with blockchains as protein of a new cryptoDNA - something like this is in my mind one of the top key investments of our race.
I believe that cash is king and PL an opinion. If we agree with this, then companies will have a period of investment to grow and will be cash-constrained. But we see a number of companies that have not produced a dollar for many years and have no plans to produce a dollar in the near future. So why does the stock price keep going up? We can argue that there could be more capital going around those places to put it, but even then I believe these companies that produce perpetual negative cash flow are malinvestment. In the last two months, Hertz was, for me, an example of a malinvestment.
2008 housing bubble in the US is a great example. Banks give out bad loans, package it up into mortgage backed securities, sell it off to investors and make huge profit in the transactions. And when the housing collapse, govt comes in and bails out the “too big to fail” banks.
California High-Speed Rail Project
Based on an article in the San Francisco Chronicle, this project started with a budget of $33 billion and has already had the budget expanded to $77 Billion. There have been cost overruns and the State Government has even floated the idea to reduce the length of the rail line because of the cost overruns. The plan was supposed to connect Sacramento with Los Angeles but the portion that looks to be completed connects Merced and Bakersfield. These are not large cities that would utilize the train. By June 2018 the estimated completion date was pushed out to 2033 which is 13 years behind schedule. This very expensive train line will not be able to support even the operating costs much less the construction. While connecting large cities in California could be beneficial to many people, the execution of the building project has been mismanaged and is not going to be able to provide the initial benefit stated.
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So many things come to mind this year. I have to think some of the crazy volatility in the stock market falls under this definition. I would point to Hertz in particular, going from .56 to over $5 AFTER declaring bankruptcy. If not for the easy money flooding the market at a time and the influx of new traders with government stimulus checks, such a thing should not have been possible. The company had billions in debt and a grim outlook going forward as the pandemic has contracted the sector and it will likely remain that way for years. What sane person would invest in it?
I found wework as an interesting option.
They have focused on expanding their business model with high costs which brought them more and more liability. these liabilities and costs became big and bigger along side with their income and there was only a hallucination of making money. in time the costs and liabilities becomes higher that the incomes. and that’s how they end up loosing the company.
The story about Adam Neumann sounds a very bad investment ad hoc. He creates WeWork, a strategic way of On-demand working space in many world class cities. The idea is good because a company only use what it needs so its expenses are fit. The issue I see is the 10 years lease for WeWork that are vulnerable on the global economy. If the space is unused because the economy is slow or on recession, WeWork stay with empty workspace but it have to pay the rent to landlords without charging someone else in return. WeWork was a risky investment and like many risk you gain a lot or lose your pants.
Research an investment (could be a public company, private company, government agency, infrastructure project, etc) that you believe meets the definition of a malinvestment (past or present) and argue why you think it’s a misallocation of capital (3-5 sentences).
Kwinana Freeway South extension beginning 1987 when the first extension through to Thomas road was done , instead of allowing the extra $1million it would have cost originally to build with Cross Road freeway Overpass bridges costing a grand total of $3 million the government at the time opted to construct it with traffic light 
intersections at the 4 major intersecting roads along the extension.
This decision caused major road user issues & the extension became yet another construction site only 4 years later in 1991 where another $3.5 Million was now required to complete the construction of the 4 overpass bridges the project then blew out to over $6 million once construction was complete.
An absolute debacle & a clear malinvestment as not only was it a waste of $2million in the Original construction it had now cost tax payers more than double what the entire project would have cost if it was all completed originally.
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The mortage crisis in 2007/08 was a huge malinvestment. Giving loans to people of whom you knew they will not be able to serve the interest payments and the amortisation.
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I had thought the Sac to LA idea got scrapped and it was going to connect LA to Las Vegas now. I’m going to have to check
There are several erc-20 project I have come across that seem to fit this description. I hate to call out anyone’s favorite investment though. There is this one coin ICO that claims to be expanding into geolocation data. Since its on set it has repeatedly made claims of development that never happened. Along with they they were and still are selling equipment that isnt needed if you pay a subscription which reports to equipment they sell that can be accomplished with a phone app. To further there desception they down graded coin collecting in their dapp/game to a token which they have since devalued the trade of their token for their coin. In my opinion that is nothing but shady scamming and a definite malinvestment.
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There all sorts of malinvestments made by governments all around the world, but where I live in the US two major ones stand out: energy sector and industrial-agricultural subsidies. Both have ruined the price discovery process resulting in pricing that is completely artificial and results in an inaccurate experience for the consumer. They have also in their deceptive prices, increased the incentive for us to consume in ways greatly detrimental to the common good by skewing price data and making optimal time preference decisions and assessment the long term opportunity cost a huge challenge for the average “Joe”.
I think a perfect example of a malinvestment would be Bitconnect or even USI-Tech. Each one being a faucet where your funds are deposited into an account and multiplied to an extreme amount. If you do not see exactly where your funds are going or how they are being used to gain profit there is always that risk. Any investment is somewhat of a risk but in these cases particularly funds were dumped into a pool and money was moved around. New sign ups would be funding more aged accounts. When the new sign ups start to slow down almost to a stop the payments stop and the money locked up from the initial investment plus any profits accrued end up paying whoever is running the company at the top. An example of a malinvestment on the stock market side would be a company such as Wirecard if it is not audited at a consistent rate and 100% up to par on their books. Wirecard went from $117 to $1.43 after it was audited and admitted that 2.1 billion dollars was missing from its books. They claimed it probably did not exist. They also owed 4 billion dollars to creditors.
Bad book keeping, poor management or carelessness this should raise a red flag to new investors looking into similar stocks.
I believe allocating your money in your bank saving accounts now meets the definition of a malinvestment. The FED aims to keep the inflation rate for 2% per year and APR for bank saving account is below 2%. It will continue to depreciate the purchasing power.
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Public companies in Indonesia like Electricity company, Airlines, etc are having a bad time this year with growing debts to foreign investors. Somehow each 1000 rupiah increase in change with 1 usd will severely increase the debt.