STREET DOGS

From The New York Times Magazine:

An unsettling fact of Wall Street today is that some of the same people who accurately predicted the housing bubble are now describing another bubble, whose collapse will make the financial crisis of 2008 look mild. Perhaps the most famous is Jeremy Grantham, a founder of the Boston-based asset management firm GMO.

We are, he says, in the midst of a historic period of mispricing. Because the global economy depends on hydrocarbons, practically every asset in the world relates in some way to oil and gas. Grantham believes hydrocarbons will be priced, or regulated, into submission. In light of that belief, not only oil companies’ stock but practically everything else on the market looks falsely inflated.

In the last few years, Grantham has committed all but 2% of his personal fortune to funding projects energy storage, pesticides, lightweight cars that might help save us in the event of 2°C of warming. In June 2018, he gave a keynote address at an investment conference in Chicago. Grantham called his speech “The Race of Our Lives”.

“You could call this presentation the story of carbon dioxide and Homo sapiens,” he began. Then he spoke for nearly an hour about glacial runoff, food scarcity and lithium batteries. He explained how a turbine’s efficiency increased exponentially with the length of its blades. He said that offshore wind farms in the churning North Sea could soon provide the cheapest power on the planet. [But] even as he spoke lucidly about climate change, Grantham represented a tangled and confusing paradox. Perched as he was at the pinnacle of the market, he was developing an acute sense of the market’s failure to address the problem that most obsessed him. Yet he continued to help oversee a $70bn firm, which was the main source of his wealth.