BlockBuster thinking that online streaming would never catch on.
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).
GET IN BANK (Poland) - the bank is near the bankrupcy mainly because of strategy which was based on aggressive way of gaining the market that by offering high-risk products to customers not prepared to take it (misseling). Huge procentage of mortgage loans issued by that bank were non-performing loans or “damaged” loans.
Although not proven entirely yet the company Nikola stock went to complete crap this year because of fud with what owner has done. Anyway not sure if the company is actually a malinvestment but I did lose quit a bit of money investing into their stock
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).
Investing in alt coins with zero fundamentals during the last bitcoin bull market. There was no logical reason why many of them could justify their price or potential for appreciation
I would say the financial crisis of 2008 was an example of a malinvestment. There were many banks that were financing more than the value of the houses they were lending money for. They were also doing balloon mortgages where the clients were eventually unable to pay their mortgages. I believe this was a malinvestment because it was systemically part of the reason for the needed bailout. It was also a malinvestment because it created a greater problem with FIAT currency in the US.
The end of the 1990s was a watershed moment that illustrated that good things do not last forever. Now that was a decade of oppulence in some parts of the United States that saw good things happening and some very heart wrenching things happen. When the president came into office it seemed as if the recession of the 80’s would soon be over. It was, and everything was now on ‘sale’ as it were. At the end of the decade and into a new century two avenues came into play. The presidential race was decided by the supreme court and shortly there after the twin towers came down. We entered a ‘forever’ war that lasted twenty years and cost many lives and fractured the U.S. It was not bad government policy that we went to war as a country. It is just bad to live on high hopes in dream land.
In May, 2010, Detroit started to tear down vacant and abandoned structures, planning to knock down 10.000 to “reconfigure the city to reflect its shrinking population.” The city of Dayton, Ohio, plans to demolish 500 of the 1,732 properties on the city’s nuisance list in 2011. The process to demolish a property can take a year or more and costs an average of $13,800. The city doesn’t have the capital to demolish these structures and has to rely on federal funding.
The federal Neighborhood Stabilization Program funds the demolition of houses in neighborhoods hit hardest by foreclosure. City leaders say the $28 million Dayton has received will only make a small dent in the growing list of vacant and deteriorating properties, estimated to be as high as 10,000. The program money amounts to the demolition of only about 1,500 structures. Housing officials estimate they will need an additional $20 million to $30 million in funds — money the city does not have — to deal with the remaining vacant housing stock. As of July, 2011, the Bank of America and other mortgage holders were donating foreclosed and abandoned houses they couldn’t sell for demolition. Ironically this is occurring in the midst of a crisis of homelessness in America, indicating the extent of the bizarre malinvestment and economic dislocation.
Meanwhile, the rash of foreclosures and mothballed construction projects has launched a boom in the business of shrink-wrapping. Plastic-covered foreclosed homes, half-finished hotels, a canceled casino project in Las Vegas, new terminal expansion projects at the San Jose or Sacramento airports and even a church stand as silent indicators of a global recession.
China may be the biggest malinvestment case of all time. The Chinese authoritarian government manipulation of an economy absent of free market dynamism led to over-investment and over-development of real-estate and infrastructure projects. The result are hundreds of cases of housing, buildings, and malls unused, unattended, and abandoned.
A malinvestment that comes through my mind is buying a completely new car. The depreciation for new cars are unbelivable after just one year and it would be a better option to buy a used instead as depreciation slows as the car get older.
Bassically all infrastructure projects in Australia. A good example is the cost of the Victorian Government’s signature rail project has blown out by $2.74 billion, with half the cost to be borne by taxpayers, after a year of protracted negotiations between the Government and builders. It was initially budgeted for for $11 billion and is looking to be completed by 2025. Victorias infrastructure budgets are so bad that the state has signed a deal with the Chinese Communist Parties “Belt and Road Initiative” for extra funding which in turn will be unhealthy for the future of the States economic stability.
P G & E would be a malinvestment. Too many destructive mishaps are clearly their fault due to lack of reinvestment in Maintenence of the infrastructure. The company has a bad public image.
For me, a malinvestment would be buying a home for yourself (and not as a rental property). Many people think a home would be an investement, but it will always generate costs as long as you live in it and you won’t have any returns…
I personally think that the US education system could be considered a malinvestment, as numerous individuals graduate from US colleges and universities each year with degrees in fields that are practically useless to them as there are not enough jobs in the field that they got their degree in. I think that US colleges and universities (and the entire education system) in many cases have misused the capital that they have to benefit themselves and their own interests, rather than the interests of their students or the economy. Instead of only accepting students into areas of study when they know that they will be able to place them in a position upon graduation, they accept students for the sake of benefitting their own bottom line.
One of the top of my head would be " Green-energy failure".Where you have $15 billion of “green” taxpayers money were given to private companies. 23 went bankrupt( Most notably Sylyndra) and 27 are in trouble. This as a case of misallocation of Tax money, while picking winners and setting policies that are not with beneficial to tax payers. I
In the Netherlands they are subsidising buying new (and older) Electrical Vehicles with government money (i.e. your taxpayers money), because they believe it is helping the world to become a greener place = climate neutral. But in reality the production proces of the e-cars and especially the production proces of the batteries is not so environmentally friendly at all. They have calculated for example that you have to drive the new Audi E-tron with the largest battery capacity about 150.000 km before it starts to become eco- friendly. So in my eyes this money would better be spent somewhere where it makes an immediate impact on the environment because we will all go to E-vehicles sooner or later.
Romanian gov borrowed in 2018 3 bil € from EU with a big interest rate, to pay the retired people more, so they would vote for them
malinvestments that people do: borrow money for holidays , my opinion
Q. 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).
A. A few years ago, my government spent millions and millions of dollars on wind energy projects in a remote region of the province. Although renewable energy is good, this “investment” was not driven by demand. Its goal was said to be “jobs creation” in a region with higher poverty rate. That region was pressuring the government for such “investments”. The government, seeking electoral support in that region, approved the project. The result was that the energy produced was not needed and a lot of it was wasted, along with the colossal efforts associated with the project.
I had trouble searching for something so i read everyone’s comments and decided on this one.
Thanks.
The Odebrecht scandal, possibly the case of corruption with the greatest geographic extension and economic impact, exemplifies like no other in the history of the region the damage that corruption can cause in public investment and public-private bidding processes. This translates into unfair resource allocations, overpricing, bottlenecks, a deterioration in the quality of public goods, and a halt to economic growth.
a malinvestment in my eyes is buying something you dont need like a brand new car, but it would be almost worse to save this money in a bank at low to negative interest rates. Save the money in something that hold value or invest in a rising market (like battery’s)