Activity Lesson 4

Bitcoin Monetary Revolution
#828

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).

Here in Chicago early on in the Covid-19 pandemic, the city turned McCormick Place (a convention center) into a make-shift hospital designed for 2,750 overflow patients in noncritical condition. The project cost $66 million. It turned out only 38 people were ever admitted and the entire thing was soon disassembled. The planning and expense of the project seemed like an incredible misallocation of captial.

Link to the full article : https://chicago.suntimes.com/2020/8/14/21367889/mccormick-place-coronavirus-hospital-cost-walsh-construction-mcpier-lori-lightfoot-army-corps

#829

My recent obsession, Theranos. So firstly, there was no scientific research. I mean the owner of this newly invented medical device was a child with no medical background. They weren’t really tested at all. And actual doctors and researchers wanted nothing to do with it. Secondly, this was filed as a technology stock, which in some ways it was, but it was also a medical device. Due diligence was not done.

#830

i think that The World Island in Dubai is malinvesment. after spending 14 Billion dollars, building and selling most of Island, cause recession, they stopped maintenance works, water wash sand, ruining shapes of Island, nobody is intrested to buy there. i think that making that much from sales, even if it was recession, shey should had to spend some off the profits to mainten its in shape.

#831

A specific area in which massive state-financed malinvestment is currently underway, there is e.g. the explosion in US student debt, which is a symptom of malinvestment in human capital. Since reportedly a large number of college graduates end up as burger flippers these days, one must assume that a large portion of the funding in this area is wasted.

#832

The HS2 rail link project in the UK is a good example of malinvestment. HS2 Ltd is funded by grant-in-aid from the UK government (taxpayer), and being an executive non-departmental public body (essentially a quango) operates independently of Government. Management issues have seen the budget increase from £56 billion to £106 billion. Of the revised budget, 30% could have been saved simply by using the 200mph bullet trains used in France and Japan.

#833

Alitalia, the national airline company in Italy was continually floaded with public money since day one 45 years ago. 9,2 billion and now it keeps burning 900k euros a day. An huge amount of money that could be better invested elsewhere.

1 Like
#834

I live in South Africa and a great example would be the state owned and run entities (eg Eskom). These entities are run by “Government connected people” placed in the position by government.
Money allocated to these entities is funneled away to other “government connected people” in overpriced tenders. Due to the corruption, these entitles spend less money on investment and end up repairing old and outdated technologies, rather than investing in new technologies. Eskom supplies SA with electricity, currently implements “loadshedding” due to lack of generation capacity.

#835

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
In 2010, South Africa hosted the Soccer World Cup. Huge stadiums were built, using taxpayer money, to host the matches. There are five major construction companies in South Africa, known as the ‘Big Five’. Due diligence was not done by the municipalities in their haste to have the stadiums built. As a result, the construction companies colluded with each other and charged way too much (they later received fines for this). These stadiums, although bringing in short-term prestige, turned out to be bad long-term investments as after the World Cup, they became white elephants.

1 Like
#836

Under the terms of the Foreign Investment Protection Act (FIPA), a bi-lateral treaty ratified with China by the Trudeau government in 2019.

Treachery. Terrible use of canadian capitol. compromises the independance and integrity of The Canadian Government, which overseas the canadian people. Also allows the "joe biden"of canada (a figure which no one wants representing their country), who most canadians believe was appointed the prime minister thru the same corrupt fraudulent Dominion Voting system that is used to ensure the desired figure gets elected.

https://www.ammoland.com/2021/01/forensic-report-of-voter-fraud-on-dominion-machine-results-released-by-judge/

https://therealtruthnetworkcom.wordpress.com/2020/09/02/china-owns-canada/

#837

I watched a documentary about Charles Ponzi today. He was promising people 50% returns within 45-90 days. He paid out returns with new investments coming in. This went on for months and months and he was able to personally amass millions of dollars, which would have had about 20 times the buying power it has today. He could have fled the country and possibly got away with it but he stuck around.

It seems he was not exactly the greatest conman of all time, in terms of his personality and motivations, but a dreamer and an overly-optimistic fool who was not wise with money and may have believed his own hype and that he could turn things around, he did not shy away from the art of the swindle, however. He actually had a lot of different investment schemes other than the famous one he is known for, some of them were kind of legitimate.

#838

Most companies in stock markets globally, which are in bubble territory due to misallocated monetary stimulus by central banks! All-time high prices, despite record unemployment and economic decline. Huge amounts of zombie companies created, which are addicted to the stimulus and are being kept afloat. These companies should have died off due to natural selection, seen in free markets.

This is a huge misallocation of capital as it isn’t going to the people who really need the money. Once the stimulus stops… the bubble pops and the hangover will begin as well as full-on economic collapse… unless the failed system is transitioned to CBDC (central bank digital currencies) and the manipulation and corruption get worse!

1 Like
#839

The worst case of malinvestment that I can think of is by the American Tax Payer (all tax payers). The FED creates Fiat and the Tax Payer issues an IOU. Now they are hooked on debt to a Private Institution (THE BANKSTERS). The Fed then gives Fiat to their friends the Banksters who then lend it to their friends, BIG Corporates, who buy back shares on the backs of Tax Payers. How MAL is that!

#840

In July 2014, Amazon released the Fire Phone as a new entrant to the cellphone market. A year later, the Fire Phone had to be pulled off the market. Although the company claimed a change of hardware strategy, customers were reportedly less enthusiastic about the phone’s features.
Considering how long cellphones have been around, new entrants to the market have to be highly innovative. People have gotten used to specific brands and they are loyal to them. The existing phones largely meet customers needs, making it almost impossible to replace them. The Fire Phone probably failed because it failed to understand the market.

#841

In 2007-2009 we had the great mortgage and banking crisis where banks were lending out money to people who didn’t really qualify using sub prime lending, at the same time people were taking advantage and committed lots of fraud. This was a malinvestment bc the mortgages were so high that if the market stopped dead in its tracks no one would be able to repay the loans…

#842
  • Most State Owned Enterprises in South Africa are good examples of Malinvestment.
  • Two specific enterprises come to mind, South African Airways and Eskom (South Africa’s only electricity supplier).
  • Both these and many others suffer from gross mismanagement, mostly derived from a combination of placing very inexperienced people in power as well as corruption.
  • This in turn leads to the government paying Billions to bail out such companies.
1 Like
#843

Olympic designated installations.
Vast and Work only for the Time of the games.
They become Local municipal financial constraints.
The investment should go in to existing and renewing infrastructure all around the county.
This would stimulate financially all the county throughout the games and be easier to maintain in the future.

1 Like
#844

A good example of malinvestment will be those who invested heavily in cybercafe business in Nigeria in those days when access to internet was a big deal. However, over the years, the internet started becoming more available and more accessible. Today, everyone can easily access the internet on the go and has no need for cybercafe, hence all the big cybercafes of then had become of no use and abandoned.

#845

The F35 fighter jet project is a clear example of malinvestment as in its 20 years to date has cost the US government over $500 billion dollars without a fully working prototype to show for it. After reports in 2020 that the jet still had at minimum 13 critical flaws or problems, the total lifetime spend for the program was updated to $1.5 trillion dollars. While not having spent that money yet there is still hope that the US government can stop the program but will they see that as giving up $500 billion and admitting defeat or would they rather spend another $100 Billion now and push that problem onto the next generation.

#846

Greece. The Eurozone allowed the Greek government to borrow at German interest rates. The government promptly borrowed more money than the poor Greeks could ever hope to repay and the result was an unadmitted bankruptcy. When a government goes bankrupt, the people suffer. Not the politicians. If central banks didn’t exist, the Greek political class would have had to pay an honest, risk based interest rate on their borrowings. The free market would never have allowed them to take on that much debt and the day of reckoning would have come to the Greek people sooner and would have been more manageable and less painful to overcome.

1 Like
#847

American Federal Student Aid, not sure how “malinvestment” this is but strikes me as close enough to the definition under my frame of view:

Colleges and universities get paid by the US government no matter what courses/degrees they offer, under the agreement that the debt will be paid by the student in the future (the majority of whom are young adults/teenagers when they enter this arrangement, and who haven’t had much time to plan their life).

This goes hand in hand with the requirement of elective courses as a condition for obtaining any degree–even if the electives have nothing to do with the major of the student and are useless from an investment standpoint (i.e. Pottery 101 for a Computer Science major).

This has created a situation where millions of American students have taken on government debt for useless degrees and/or useless elective courses that have nothing to do with their chosen profession and therefore offer very little to no ROI for either the government or for the students, but have yielded massive returns from the colleges teaching them.

I believe that if the government student loan system were taken away (or modified) and returned to the free market then useless degrees and electives would likely collapse under market forces.

1 Like