Wednesday, October 8, 2008

More Green = Less Green?

I've long been a supporter of the so-called green movement and I'm encouraged to see it succeeding in everyday life, from people determined to buying cars with better gas mileage to shoppers using fewer disposable bags to homeowners replacing their incandescent light bulbs with compact fluorescent lights.

The increase in these types of actions, to me, is all great news. It means we're conserving our resources, helping to make our world more sustainable, and also in many cases saving money.

Which is where I'm getting increasingly curious as to whether or not the green movement is causing at least part of the readjustment in the stock markets.

Considering the fact that Americans are driving less year over year and that cars are getting more efficient, it should help to cut back on money spent on gasoline. Additionally, if people are using reusable bags to carry their groceries, that's another huge source of petroleum that is not wasted. Or having people use more energy efficient light bulbs means saving money on electric bills. All of these initiatives and others inevitably will result in less money for the oil, electric, and industrial companies. And as these initiatives increase across the country and worldwide, it will have a major impact on corporate bottom lines... read: less profit.

So perhaps part of the sell-off on Wall Street and other stock markets around the world is a result of this fundamental change in society of being more green. If less money is being wasted on oil, electricity, etc. then it means more money to spend elsewhere, but it would also mean less money for those industries and fewer jobs. The net result could end up in people saving more money, or it could result in deflation which could shake up the entire system. Perhaps it will be the starting point of taking wasted money away from companies and putting it back in consumers' pockets, which means a fundamental change in the way we spend money in the future.

I'm clearly not an economist, just a rational observer of what's going on and I would be curious to learn more about the impact of green practices on the bottom line regarding corporate greenbacks. Eventually we'll start to see long term trends, but in the meantime we will have to do our best to adjust to the changes.

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