UKC

I’ve wondered for a while why QE was focussed on buying back government bonds. Why couldn’t it have been used to build infrastructure? QE to 2016 has been over £400 Bn and HS2 is £50 Bn and Hinkley Point is £20 Bn. So you could decarbonized power generation and have built an extensive high speed rail network and have change. This would have put much more money into the real economy that QE, done economic good and the government would have the assets (to sell or retain as per their political preference). 

I realize that this could inflate the construction market, but projects could be phased and total-bastard project management companies could be employed and incentivized (naming no names) to keep cost in check. 

I always thought the same, but with green energy projects. Stick a couple of wind turbines in each village, give each household an x grand allowance  for solar panels etc. 

Because it wouldn't offer exclusive benefit to the wealthy, politically-inclined demographic.

Surely HS2 was financed by government borrowing (bonds) which they pay interest on so by buying bonds back is exactly what you wanted?

Hinckley point is privately owned/funded and French.

What are your thoughts on the EU/ecb buying 2.6trillion euros of bonds from banks in their last round of QE?

They are currently tempted to start again and or cut interest rates. 

Because they can’t see further then the end of their greedy little snouts.

Sheffield Forgemasters needed an 80m investment/loan in 2010 so they could tool up to forge reactor pressure vessels. This ticks every sensible economy box. 50year plan. No joy.

47000m to bail out RBS. No bother.

It's a little outdated saying one country owe X, or Y owns this and it isn't so straight forward. The same two countries can both owe money to each other at the same time. 

https://www.bbc.co.uk/news/business-15748696

But then when you factor in who the shareholders of these companies are. It's even more complex. 

It's just massive pile of ever growing debt, no matter which way you look. 

EU competition laws? Might prevent a government favouring one company. But if it's a viable idea there is nothing to stop a private investor jumping in. Didn't some pension fund from Turkey do just that recently? 

Just a political move because it was Labour's idea originally and also in Nick Clegg's constituency.

https://www.theguardian.com/environment/2010/jun/18/sheffield-forgemasters-...

The article is depressing because it was so obvious at the time. New nuclear by 2017? We will be lucky if Hinkley C is online by 2027, sending it's revenue to the French treasury for the next 70 years. I wonder if the strike price is in GBP or EUR? lol.

Directly bailing out a specific business, isn't the same as a government borrowing to commission a construction or another company to provide a service for a set price.

Why didn't forge masters securing private investment? From a group, or bank etc. 

Do you think I don't understand international finance?

Presumably because the return on investment is so heavily tied to the government's stance on nuclear. It's a very specialised industry creating a very limited number of vessels per year worldwide (maybe 5-10 units in total). If the UK doesn't build a rolling programme of nuclear plants, Forgemasters investment is destined to fail. Hinkley C vessels are now being built in Korea (i think). 

It's a similar situation to BAE Systems at Barrow-in-Furness. Private business, but totally dependant on the government decisions on Trident 2. It only works as private business because the government commit to a 20+year plan to build subs. 

So, what's the difference? Sheffield was a Labour/LibDem marginal. Barrow is Con/Lab marginal.   

In the scheme of things, the £80m to forgemasters was peanuts. The UK government spend about £100m with BAE Systems every week!

So in essence you wanted the government to bail out a company, because it might  supply parts to a power station that is yet to be built, with a design that is yet to function properly anywhere in the world? Sounds like a gamble. 

£80m shared around all the uk's tidal and wave energy research companies might be a better long term investment if the investment is really energy related. Only one design or prototype needs to become fully functional and cost effective. Unless someone removes the moon, wave energy will always be there and it's cleaner. 

Yes. I want the government to come up with a decent energy plan. I personally believe modern nuclear can be a big part of that for the next 100years. Nuclear, like big airports and railways, needs a long-term commitment from the government to make it join-up with the whole plan for the country. 

The French have done it. 80% of their electric (including the inter-connector stuff they send to us) comes from nuclear. Per person they have half the co2 emissions per person that Germany has. 

I don't want to see money wasted propping up failing, out-dated busineses, but I see no problem with strategic investment in core industries. Solar subsidy, off-shore wind subsidy, Tidal & wave research and investment - all absolutely fine with me. Nuclear done well is a incredibly dense and reliable energy source, 1 plant = 10% of the UK power = 1000 onshore wind turbines (on a windy day).

How does nuclear stack up if you count all the carbon used in the construction and dismantling etc..?

I agree a longer term view is needed. But that's the way UK politics and economy has gone. No voter wants to pay anything up front for the future, they don't really want to even invest in their own health service or kids education unless someone else pays more tax, not them. 

I suspect the countries or foreign governments that do take a more rounded and longer term view also have a population that thinks the same. They vote for policies that reflect their ideology. The UK have spent 30 plus years voting for tax decreases and false promises of everything improving. 

By buying back government bonds central banks get a triple-whammy:

1. More money injected into the economy (in theory...)

2. Reduce availability of government bonds, pushing investors to buy other assets

3. Reduces / holds down interest rates 

There is also the benefit that the impact is reasonably immediate. 

Big infrastructure projects only really address number (1) above, although granted they do add an additional benefit that you get a big thing which could be useful. But infrastructure projects are long-term. Throwing a few hundred billion pounds in one go at a construction company and telling them to spend it fast rarely ends well. 

I don't honestly know. 

If you think about it at a crude high level, a big nuclear power station like Hinkley C has about 200,000 tonnes of steel & 3 million tonnes of concrete. It needs brains and skills to build efficiently (which I'm not convinced we are very good at yet and there will be loads of waste like all major projects). 

To build the equivalent onshore wind turbine (0.1% of the output) with the same amount of materials you could use 200 tonnes of steel & 3000 tonnes of concrete per turbine. 

The nuclear plant is probably using more carbon-rich material, but maybe only by a factor of 2 or so. On the flip-side it's online almost 100% of the time at full power. 

Ha  

The internet is full of misapprehensions...

Good point. But paying tenths of a percentage % less vs paying zero?

Hinkley was just an example. New nuclear could be funded any way that was deemed appropriate. 

As said above this could be used to massively expand renewable options: better insulation, air / ground source heat pumps, etc.

Thanks. Aren’t there some doubts if / how quickly this money makes its way into the real economy?

Also your right about the timing, but 75% could go into QE and 25% into infrastructure.

Probably the the main problem is the cost inflation of construction projects which almost inevitably happens and is tricky to manage.  Perhaps do it on lump sum contracts with hard nosed management?