Where I live we have a High Speed Rail Line being setup which is costing the taxpayers too much money. in the billions due to the high cost of the project of connecting the country for commuters to easily work in other parts of the country and move with ease. The service is likely to benefit the wealthy due to the cost of tickets being proposed at the cost of the taxpayers. In a world of covid-19 with majority of people working from home has proved what a malinvestment this is of funds and why it is not required.
I think Trumps reallocation of money from other departments to fund his wall when we didn’t want. There wasn’t really any allocation for it so he stripped departments for example the military which the money had already be allocated for other constructions projects. In the end money had to come from somewhere to fulfill the contracts that were signed. If he could he would have just tried to grant himself a blank check to do what he wanted.
"Chancellor on the brink of second bailout for banks"
This is the Newspaper headline included in the Bitcoin genesis block and for good reason!
Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered were part-nationalised to the tune of £50bn with an additional £200bn being lent to the sector and a further £250bn to guarantee debts, with tax payers footing the bill. This is a gross misallocation of capital, the banks should have been left to fail and those in charge should have faced criminal prosecution, instead, the can has merely been kicked down the road!
Dotcom bubble. In the late 90s too much credit was given to the online business that proved to be not sustainable. Dotcom companies got easy money to buy IT infrastructure for delivering an online service that eventually failed. IT vendors got into troubles and even gig corporations like Cisco suffered a lot (1B$ writeoff).
This is just one example of the misallocation of capital during the US government quantitative easing program. Most giant corporations get huge bailout packages that are then regularly used to buyback stock. This is market protectionism without regard for business competitiveness or the universal distribution of those resources. In this case those resources were used to protect an industry which has become largely superfluous because the administration did not protect the health of its consumers. It is also a boondoggle for dumping money into a military industrial complex darling that has not been able to fix its 737 MAX catastrophe while allowing the countries citizens to become pariah to the world due to the disease the government has not addressed.
I think the current government policy of buy corporate debts is a malinvestment because instead of letting free market decides the winners or losers. They created more zombie companies that would otherwise be bankrupt or restructured.
Tesla is an example of malinvestment… it is riding cool public opinion , yet is bigger then all the big car companies combined ,yet they produce less then 500,000 cars per year. The new Blue Gas Hydrogen Fuel revolution will drive it all into the ground quick.
After the Swiss state had already rescued the airline Swiss in 2002, a new rescue package of CHF 1.5 billion is now being allocated due to the pandemic. This time the investment is even more questionable, as Swiss is now a subsidiary of the German Lufthansa Group. Which means that the Swiss population will pay for the rescue of a German company. And this in an industry that will suffer even longer due to the pandemic and has an uncertain future. The reasoning that the attractiveness of Switzerland as a business location must be ensured by this action does not seem correct to me. The free market would solve this situation on its own, because as long as there is a need for travel, an alternative provider would step in or alternative transportation would be boosted.
What comes to mind is the multi-billion pound NHS IT project started in 2002 (abandoned by 2011) which costs the UK tax payer more than £11 billion. Although the NHS at its core it is great, it shows how fragmented its administration is the lack of communication between MP’s, project owners and health care providers. After this failure, the local NHS authorities were allowed to develop or buy computer systems to suit their needs spending even more tax payers money.
Eskom is a South African electricity power utility constantly involved in malinvestment leading to scheduled blackouts across the country. Most recently was the gross manipulation of contracts related to the construction of two new large power stations drawing forth the arrest of two former managers of the state owned firm for fraud of $51m. A misallocation of capital to a corrupt institution.
Peru 2Y bond was 1 year ago at 2.35%
Peru 2Y bond was 1 month ago at 0.44%
Peru 2Y bond today is at 0.3% and keep going down like all central banks bonds from all over the world
This to me is a malinvestment today and people still buying them
Not mentioned the 5Y,10Y,15Y,20Y and 30Y bond Peru has sold
A malinvestment would be to put your money into any bank savings account.
Well said! And unlike the zombies on the Walking Dead, these zombies aren’t going to live forever.
I think today’s biggest malinvestments are in the fossil fuel industry. We do not need to burn fossil fuels anymore. All we need is wind and solar power. I have solar panels on my roof and they produce $12 to $13 value energy per panel per month this summer. I have to add a few more panels and battery backup and I can switch my car to 100% electric. My house is already 100% electric.
We do not need nuclear power plants either unless that they will burn up all the hazardous nuclear waste from the past to make them not hazardous anymore. We should stop poisoning our environment! I will never invest in gold, because it damages the environment so much. We should invest responsibly.
I would use Uber as an example. There is a high degree of regulation and they are blocked in many localities by local regulators and local taxi monopolies. They are losing 2 billion annually.
For me, a malinvestment by the government is not investing in children’s education that will eventually be the future of the world. ( eg. By paying teachers and educators poorly).
1.) Alphadream is a malinvestment because they went bankrupt.
I pick when the irish government in 2004 decided to order 7500 Electronic voting machines.this was a malinvestment because in 2012 they scrapped the machines after never been installed for a cost to the taxpayer of €54.6 million, including €3 million for storage.
Take loans in USD when salary or incomes is not in USD.
- Volatility. If local currency is depreciated against USD, monthly payments will require more amount in local currency.
- Politic. Government can implement restrictions to buy foreign currency.
- Unexpected increase of interest rate can happen due to exposure to international events or entities.
The welfare-warfare state is the biggest malinvestment today. It does not satisfy the preferences of freely interacting individuals and would be liquidated immediately if it were not continuously propped up by taxpayer money collected under the threat of violence.
Another source of malinvestment has been the business cycle triggered by the credit expansion of the semi-public fractional reserve banking system. After the financial crisis of 2008, malinvestments were only partially liquidated. The investors that had financed the malinvestments such as overextended car producers and mortgage lenders were bailed out by governments; be it directly through capital infusions or indirectly through subsidies and public works. The bursting of the housing bubble caused losses for the banking system, but the banking system did not assume these losses in full because it was bailed out by governments worldwide. Consequently, bad debts were shifted from the private to the public sector, but they did not disappear. In time, new bad debts were created through an increase in public welfare spending such as unemployment benefits and a myriad of “stimulus” programs. Government debt exploded.