For the last 20 years, the US government has propped up the green economy with subsidies, tax breaks, loans, and other forms of taxpayer-funded cash. The sector also obtained a significant advantage during the coronavirus pandemic when the Federal Reserve's ultra-loose monetary policies flooded the United States. The cherry on top was President Joe Biden's Inflation Reduction Act that threw hundreds of billions of dollars on renewables. But now that the easy money era is over, will the green-obsessed marketplace stop seeing green?
No Easy Money, No Green Economy
Lucid, a one-hit-wonder electric vehicle maker darling on Wall Street during the Everything Bubble, plans to slash 18% of its workforce, representing approximately 1,300 employees, according to a Securities and Exchange Commission (SEC) regulatory filing. This is part of the struggling company's broader restructuring to slash costs and ramp up output for its luxury electric sedan.
CEO Peter Rawlinson noted in a letter to employees that the job cuts would hit "nearly every organization and level, including executives." During this process, the company plans to depend on the $4.4 billion in cash it possesses, which will be enough until early next year.
There had been tremendous buzz surrounding the business for the last few years, even before it released its first automobile. However, since going public in the fall of 2020, the company peaked at the height of the crisis-era bubble in November 2021, topping $50 and cratering to as low as $6.36 a share. As of March 30, the stock is trading below $8.
But while this might seem like an indictment on Lucid, the latest developments are part of a broader picture of how the green economy rose to prominence thanks to the astronomical amount of dumb money that has floated around since it was announced that it would take two weeks to stop the spread. Be it the E, the S, or the G, brands that have made sustainability in their business models have struggled since the US central bank turned off the easy money spigot and allowed the marketplace to float or sink.
Silicon Valley Bank, a financial institution that invested in a diversity, equity, and inclusion (DEI) officer but not a risk management officer, had benefited from the Fed’s artificially low interest rates as it catered to the Silicon Valley elite. In other words, the Eccles Building’s trillions in free money allowed wokeology to survive and thrive in the middle of a public health crisis. The result once the liquidity stopped flooding the economic landscape? SVB became the second-largest bank failure in US history.
Is Woke Killing Everything?
ESG, which is an environmental, social, and governance mechanism of applying woke points on Corporate America, could be meeting its maker. As Liberty Nation recently reported, Sustainable investing funds have experienced substantial outflows in the last few weeks. Overall, the numbers suggest that ESG reached its peak in 2020 or 2021 and is now on the brink of becoming obsolete. That is unless the US government bails out the sector, much like what President Joe Biden did when he signed an executive order extending a lifeline to the movement.
(Photo by Drew Angerer/Getty Images)
It might be deduced that the woke mind virus eviscerates everything it touches. However, this might not necessarily be the case. The infection might only annihilate new hosts rather than existing juggernauts that have the immunity to wokeness.
Apple is going green, maintains a decent social score, and enjoys a strong governance ranking. And yet, the iPhone maker's shares are up about 30% year-to-date. That is not too bad for a company embracing its love of Mother Nature, although studies have found that it is not as environmentally friendly as it proclaims. Ultimately, Apple is a well-run and superbly managed corporation that was successful even before everyone hoisted a pride flag at the top of their headquarters, donated millions to Black Lives Matter, and professed their love for drag queens.
ESG Kills Everything?
Without the political and social component props, companies with poor products, terrible management, and an abysmal business model cannot function on their own merits without tax dollars or freshly created money from the Federal Reserve printing press. Over the last decade, the US green economy has witnessed plenty of boondoggles, blunders, and botches. From the government-backed Solyndra (remember that?) to the easy money-supported Lucid, ESG newborns are suffocating in the ashes of despair. But once the Fed restarts quantitative easing, they will rise from the dead and roam Wall Street to feast on low interest rates.
