Carbon trading markets will yield few fortunes and break a lot of hearts
Carbon offsets to form new bubble
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I am no economist, but for an amateur I have a track record in predicting economic trends at least as good as Paul Krugman’s and I didn’t bother attending an Ivy League school to be able to do that. In predicting economic bubbles there are two things to remember. One is that most bubbles deal with intangibles, such as Michael Milliken’s junk bonds and the dot com bubble that saw insane valuations for non-performing stocks simply because they had an “E” in front of their name.
The other is that most of the investment in bubbles is borrowed and leveraged, such as the recently collapsed U.S. housing bubble, as well as the sub-prime mortgage bubble that spawned bizarre financial instruments like credit default swaps and derivatives.
Well, gang, get your checkbooks out because you’re soon going to see the emergence of a brand new bubble from which a very small number of people will benefit greatly, while a huge number of people will lose their shirts.
This bubble is essentially driven by the Democrats and the Obama White House in collusion with the UN, having made a commitment to enact Draconian eco-legislation that will feature carbon offsets at its core.
Here’s how carbon offsets work: a company that emits carbon into the atmosphere as a by-product of its business transactions will be allocated a certain number of annual “free” carbon credits by the government. That company will be audited annually and if it were discovered that the emissions exceeded the allocation, then the company would have to purchase carbon credits (currently proposed to be valued at $40.00/ton USD) to cover the excess. If the company emitted less than allocated, it could sell its unused carbon credits on the open market for the same price.
The central driver of this new bubble will be various carbon exchanges, such as the Chicago Climate Exchange (CCX), the European Climate Exchange (ECX) as well as others. Entities with carbon offsets to sell will sell them on these exchanges, which in turn will sell them to companies that have run over their allocation. The justification of this scheme is that it needs to be done in the interest of lowering so-called greenhouse gases, such as carbon, in the atmosphere. But anyone conducting even the most cursory research will quickly come to realize that trading in carbon offsets will achieve no such thing.
What it will do is to significantly contribute to the growth of intrusive government bureaucracy and raise the worldwide price of virtually everything from agricultural products to zoo tickets. It will also enable liberals, Democrats and the Eurocartel to feel better about their own carbon emissions, knowing that with every carbon emission sin that is committed an offset indulgence may be purchased. It’s particularly sweet, if like Maurice Strong, one of the most rabid proponents of climate alarmism, you happen to own shares in the Chicago Climate Exchange. Or Like Al Gore, for whom climate alarmism has substantially contributed to his $100+ million growth in net worth, since losing the Presidency to George Bush in 2000.
Global warming/climate change has always had as its endgame the redistribution of wealth. There are even politicians who make absolutely no bones about the real reason that carbon emissions should be targeted for taxation. Consider the following statement by Christine Stewart, former Canadian Environment Minister made in December of 1998: “No matter if the science is all phony, there are collateral environmental benefits…. climate change [provides] the greatest chance to bring about justice and equality in the world.” (translation: “justice and equality” = ”redistribution of wealth” in politibabble)
There is a sizable cabal of world movers and shakers who are seriously interested in imposing limits on prosperity. In all cases AFTER they have attained their own wealth. This is best summed by a statement made in 1974 by Maurice Strong, the Dark Lord of the UN’s Intergovernmental Panel on Climate Change, “Economic growth is not the cure, it is the disease.”
So remember the symbols CCX, ECX, MCeX and TCX. Theses carbon trading markets will yield few fortunes and break a lot of hearts as the next bubble begins to inflate.