Tag Archives: derivatives

Infographic: Visualising The Size Of Australia’s Carbon Derivatives Time Bomb

24 Apr

On July 1, 2012, the government’s Clean Energy Future scheme will officially begin.

You know it as the carbon “tax”. It has been called a “tax” over and over and over again, by politicians, economists, bankers, and other vested interests, for a simple reason.

There are many who want you to think that the scheme to “put a price on carbon” is safe; that the government’s implementation of a “carbon price” is careful, methodical, and prudent.  A “fixed price” on carbon dioxide for 3 years. And only after 3 years, a transition from a fixed price to a “floating price” emissions trading scheme.

But there is something very important that they are not telling you.

There is a Ticking Time Bomb Hidden In The Carbon Tax.

It is called “derivatives”.

Carefully buried in 1,000+ pages of legislation, just 2 tiny, opaque clauses (109A and 110) have been included that allow the banks to immediately begin creating and trading unlimited quantities of unmonitored, unregulated carbon “securities” (another term for “derivatives”).

What are “derivatives”?

SHORT STORY: Pick something of value, make bets on the future value of “something”, add contract & you have a derivative. Banks make massive profits on derivatives, and when the bubble bursts chances are the tax payer will end up with the bill. This [graphic below] visualizes the total coverage for derivatives (notional). Similar to insurance company’s total coverage for all cars.

LONG STORY: A derivative is a legal bet (contract) that derives its value from another asset, such as the future or current value of oil, government bonds or anything else. [Example] A derivative buys you the option (but not obligation) to buy oil in 6 months for today’s price/any agreed price, hoping that oil will cost more in future. (I’ll bet you it’ll cost more in 6 months). Derivative can also be used as insurance, betting that a loan will or won’t default before a given date. So its a big betting system, like a Casino, but instead of betting on cards and roulette, you bet on future values and performance of practically anything that holds value. The system is not regulated what-so-ever, and you can buy a derivative on an existing derivative.

Most large banks try to prevent smaller investors from gaining access to the derivative market on the basis of there being too much risk. Deriv. market has blown a galactic bubble, just like the real estate bubble or stock market bubble (that’s going on right now). Since there is literally no economist in the world that knows exactly how the derivative money flows or how the system works, while derivatives are traded in microseconds by computers, we really don’t know what will trigger the crash, or when it will happen, but considering the global financial crisis this system is in for tough times, that will be catastrophic for the world financial system…

Australia’s banks already trade in derivatives. Most of their derivatives bets are on movements in Interest Rates and Foreign Exchange Rates. And they have a total exposure to just these forms of derivatives, that is truly mind-boggling.

The numbers are so big, that no one can comprehend them.

You have to see it for yourself.

First, via the superb demonocracy.info website, here is an infographic to help you visualise what $1 Trillion looks like (click image to enlarge):

Click to enlarge | Graphic source: demonocracy.info

Got that?

$1 Trillion is a lot of money*.

The value of all Australians’ superannuation savings combined, is about $1.3 Trillion. As is the claimed annual “GDP” of the Australian economy.

Now, here is an infographic showing the Australian banks’ recent record high total “Off-Balance Sheet” derivatives exposure.  Remember, this is before the official start of a “price on carbon” allows the banks to start creating and trading carbon derivatives too (click image to enlarge):

Click to enlarge | Graphic source: demonocracy.info | Data source: RBA statistics

I want to emphasise the point made earlier.

Almost everyone incorrectly believes that no trading will happen until 2015. But the truth is, the banks can begin creating and trading in carbon derivatives from Day 1. Even though the scheme is supposed to be a “fixed price” scheme for the 3 years up to 2015.

Those 2 little clauses I mentioned earlier (109A and 110), are the reason why trading will begin from Day 1. Trading in carbon derivatives, that is.

They are opaque, easy-to-overlook clauses stating that the Clean Energy Future legislation does not prevent the creation of and trade in carbon “securities”.

The designers of the legislation (no, not the politicians), know full well that the banking industry can and does create and trade derivatives on everything.

Including the date of your death. That’s right. We have previously documented how banks are trading in Death Derivatives.

All that is needed, is for there to be a “price” put on some thing, effectively making that thing a “commodity”.

Once there is an underlying price, then banks can create a derivative.

Provided there is no law specifically preventing them from doing so.

It is that simple.

And that is why the Clean Energy Future scheme has those two little clauses buried inside. As Explanatory Memorandum 3.36 confirms, they are “included for the avoidance of doubt” that the government does NOT wish to prevent the banks creating carbon derivatives.

That is also why, just 3 days after the government released its draft legislation for “putting a price on carbon”, it was reported that:

Australian banks are eyeing opportunities to cash in on the proposed carbon tax by developing new financial products and services that capitalise on a market seen to be worth billions of dollars annually, according to a report by the Australian Financial Review.

Australian financial firms that have experience in European carbon markets, such as Macquarie Group Ltd, Westpac Banking Corp Ltd and ANZ Banking Group Ltd are particularly keen to establish their presence in the Australian market….

ANZ’s head of energy trading said the value of the derivatives carbon market would dwarf the $10 billion initially raised by the government, according to the AFR.

You have now seen just how mind-bogglingly enormous is our banks’ exposure to (mostly) Interest Rate and Foreign Exchange Rate derivatives.

$17.93 Trillion is equivalent to nine (9) skyscrapers made of pallets of $100 bills, each towering more than twice the height of the Sydney Harbour Bridge.

The $10 billion that the government will raise from forcing companies to buy carbon permits – the basic mechanism for “putting a price on carbon” – is almost nothing compared to the value of derivatives that banks will create and trade.

Unmonitored.

Unregulated.

Off-Balance Sheet.

The government’s claimed $10 billion in expected revenue from the Clean Energy Future scheme, is equivalent to just one (1) of the 10 x 10 squares of pallets forming the base of one (1) of those derivatives skyscrapers pictured above.

That’s one (1) storey in two hundred (200).

I hope that you now have a better idea – a clear picture in your mind’s eye – of what the ANZ Bank’s head of energy trading meant, when he gleefully said that the value of the carbon derivatives market would dwarf the $10 billion initially raised by the government.

A government that has followed the lemming-like lead of Ireland, by explicitly and implicitly putting taxpayers on the hook for the deeds (and misdeeds) of the banks, by placing the nation as guarantor for the solvency of the Australian banking system.

Meaning, just like the rest of the West, our banks are Too Big To Fail.

And from July 1, thanks to the Clean Energy Future scheme and those two little clauses, the government has handed the banks a licence to print.

It is really a licence to kill.

Tick.

Tick.

Tick.

Tick.

* If you wonder how it is possible that banks can have so much money just in derivatives bets, you might like to learn the truth. The “money” does not really exist. Almost all of the “money” in the world, is just electronic code in computers. And banks truly rule the world, by creating “money” (digits in computers) out of thin air, and lending it to you, at interest. Even the biggest central bank in the world, the Federal Reserve Bank, has admitted that this is how banking works. Learn more here.

Bankers’ Trojan Horse In Carbon Tax: Expert Confirms Breach Of Constitution

18 Apr

Your humble blogger recently sought legal advice from a prominent constitutional barrister, specifically concerning clauses 109A and 110 of the Clean Energy Act 2011.

Regular readers know that I have argued from before the release of the draft legislation in July 2011 ( Our Bankers’ Casino Royale – “Carbon Permits” Really Means “A Licence To Print” ), that the so-called “carbon tax” is in truth nothing more than a cleverly disguised, banker-designed and promoted derivatives scam ( Ticking Time Bomb Hidden In The Carbon Tax ).

Like the mortgage-backed derivatives that blew up the world financial system in the GFC, carbon-unit-backed derivatives are simply the next form of wholly unregulated, unmonitored, shadow banking artificial “money” creation that has had bankers licking their lips in anticipation from the moment the(ir) draft legislation was released:

14 July 2011, Business Spectator — Australian banks are eyeing opportunities to cash in on the proposed carbon tax by developing new financial products and services that capitalise on a market seen to be worth billions of dollars annually, according to a report by the Australian Financial Review.

Australian financial firms that have experience in European carbon markets, such as Macquarie Group Ltd, Westpac Banking Corp Ltd and ANZ Banking Group Ltd are particularly keen to establish their presence in the Australian market….

ANZ’s head of energy trading said the value of the derivatives carbon market would dwarf the $10 billion initially raised by the government, according to the AFR.

I have now been informed by the eminent barrister referred to above, that I am right.

If it is judicially accepted that the Clean Energy Act 2011 is a bill “imposing taxation”, then the two cleverly worded little clauses buried within 1,000+ pages of legislation that I have long identified as those that specifically allow the shadow banking industry to begin creating and trading (unlimited quantities of) carbon dioxide derivatives, are, in the barrister’s opinion, in breach of section 55 of the Constitution:

COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT – SECT 55

Tax Bill

Laws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect.

As we have seen previously, there are numerous other areas of the legislation whose constitutionality is highly questionable and thus contestable, under section 55 and other sections too.

Indeed, a number of constitutional experts such as Professor Greg Craven have publicly affirmed as much.

Unfortunately, I am advised that private citizens have no legal standing to mount a challenge against the legislation in the High Court.

[EDIT: For the reason that private citizens are not directly subject to the legislation. This perhaps answers the question many have asked, as to why the government still refuses to release a definitive list naming who exactly are the "biggest polluters". If those who will have standing to challenge the legislation in the High Court do not have confirmed proof of this, it would appear that they could not prove legal standing in order to file an injunction to prevent the bankster scam starting up in the first place. Doubtless this key information will not be made known until after the government has sent out billions in "compensation" bribes to households in May, and parked $10 billion in the banksters' Clean Energy Finance corporation in such a way that it cannot be retrieved.]

Those in the best position to mount a legal challenge, who do have standing before the High Court, are the State governments.

Sadly, as we have also seen, the Liberal-National Premiers of NSW and Queensland are even more vile, despicable liars than Julia Gillard.

Having campaigned heavily for our vote on the back of a solemn promise to “fight” the carbon tax if elected, Barry O’Farrell and Campbell Newman have now shown their true colours.

As two-faced standard bearers.

For the predatory, parasitic banking industry that they depend on to help finance their election campaigns, thanks to our rigged and decrepit system of governance that means political parties do not get their hands on the public cash in proportion to their share of the popular vote, until after the vote count has been determined at each election.

For a political leader to promise not to foist a predatory bankster scam on the public, and then do it, is an unforgivable crime against basic human decency and integrity, and, an unforgivable violation of public trust.

But to present yourself as a saviour, and plead for our vote with a promise to fight a predatory bankster scam, only to weasel out of actually doing anything to fight it once elected, is, in the firm opinion of this citizen blogger, a far worse crime.

Indeed, I would go so far as to say that on this issue, Julia Gillard is arguably one rung higher from the bottom of the rancid sewer that is politicians’ “integrity”, than Barry O’Farrell, Campbell Newman, and any other politician who has deceitfully gained political capital by falsely presenting themselves as an opponent of and a fighter against the banksters’ CO2 derivatives scam.

UPDATE:

Speaking of constitutional expert Greg Craven, here’s an excerpt from a column he has written for The Australian today -

“MEAN” is never a good word. There are mean dogs, mean great-aunts and mean parking inspectors. They all bite professionally, and enjoy their work.

Right now, there is a mean electorate out there. People have never liked politicians. But this is the first time that the popular mood has graduated from profound disdain to frank sadism.

Take X-rated state election results. Kristina Keneally was the bad premier of a bad government, but the last act of public vengeance rivalling her defeat was the destruction of Sodom and Gomorrah. Anna Bligh was the fairish premier of a decrepit government, but she copped worse.

Federally, in terms of a normal electoral cycle, the Gillard government should now be contemplating whether a third term will be merely tough or downright heroic. Instead, ministers stockpile cyanide pills along with press releases.

It is easy to dismiss all this as the result of poor leadership, bad policy and weak personal hygiene. But the reality is that Australian politicians everywhere are now faced with a terminally jaded electorate, less inclined to pass judgment than automatic sentence of death…

#^&%(^$! oath.

UPDATE:

By Abbott’s own words, Liberal Party premier of NSW Barry O’Farrell and Liberal party premier of QLD Campbell Newman stand condemned.

From the Brisbane Times:

When quizzed on his personal integrity, Mr Abbott said he had strived throughout his two decades in politics to be authentic, and that people should never allow things within their control to break their promises.

Challenging the CO2 derivatives scam in the High Court is well within the control of the State premiers.

Yet they have brazenly broken their pre-election promises to the electorate.

Despicable scum.

Hey Tony, If Lib State Premiers Won’t Rise Up … STFU

16 Apr

From AAP:

Abbott urges revolt against carbon tax

Opposition Leader Tony Abbott has urged workers to “rise up” against Labor in protest at the carbon tax, which will come into effect on July 1.

Visiting a Melbourne bed-making factory on Monday, Mr Abbott said the carbon tax would act like a “reverse tariff” affecting Australian manufacturing while benefiting overseas competitors.

He said Labor purported to represent workers but was attacking their jobs.

“The carbon tax will go like a wrecking ball through the Australian economy,” Mr Abbott told reporters in Deer Park.

“This is why even now I call on the workers of Australia to rise up and say ‘no carbon tax’ to a government that still claims to represent them.”

Right.

The workers of Australia have said “no carbon tax”, loudly and clearly.

Over 88% of votes at the last election, went to parties promising that there would not be one (Labor, and the LNP).

You want US to rise up?! What exactly do you mean by … “rise up”?

Here’s an idea Tony.

How about the NSW and QLD LNP State premiers make good on their loud, solemn pre-election promises?

What’s that?

Your banker mates – including Joe Hockey’s wife, and Malcolm’s Goldman Sachs buddies, et al – won’t let you?

Because they are now within mere weeks of being able to start up their long-awaited, 100% unregulated, unmonitored, CO2 derivatives Ponzi scheme disguised as a “market mechanism” for “emissions reduction”?

Quelle surprise!

Green-Labor.

Liberal-National.

All useless, spineless, self-serving, dishonest, unrepresentative swill (h/t PJ Keating)

The Fix Is In – Premiers Bow To Bankers’ Carbon Derivatives Scam

16 Apr

You know those Liberal Party state opposition leaders, who promised to fight the carbon tax if only you would elect them premier?

As predicted here on this blog, they are all talk, no action, when it comes to actually fighting the bankers’ CO2 derivatives scam, despite plenty of expert legal advice that there are solid grounds to challenge the legislation in the High Court.

From the Age (emphasis added):

NSW drops carbon tax challenge

THE passage of the carbon tax has received a boost, with legal advice to NSW Premier Barry O’Farrell suggesting that a High Court challenge to block the tax would fail.

On Friday, Mr O’Farrell said NSW would consider joining a potential bid by Queensland to block the July 1 implementation of the carbon tax in the courts.

Note well: O’Farrell’s original, loud and oft-repeated pre-election promise was not conditional on having another State premier to hold his hand.

But The Sun-Herald understands Mr O’Farrell has already abandoned any thought of leading an assault on the Gillard government. Sources confirmed advice had come back that a legal challenge would be likely to fail in proving the carbon tax was unconstitutional.

So, advice that you are “likely” to fail is sufficient reason to not fulfill your pre-election promise, hey Bazza? Sounds like a convenient excuse from a twisting and turning liar to me.

Mr O’Farrell has made political mileage out of the carbon tax since it was announced. Last week, the NSW Energy Minister, Chris Hartcher, blamed the upcoming impost for the 16 per cent electricity price rises approved by the independent pricing regulator.

The reluctance of NSW to challenge the controversial tax is likely to slow momentum for a High Court bid. Victoria, like NSW, has said it would consider joining a Queensland bid.

The West Australian Premier, Colin Barnett, has stated publicly that his advice is that a bid would fail. The Queensland Premier, Campbell Newman, said he would not act without at least one other state with him in alliance.

The fix is in.

Unsurprising. And just what this blogger predicted.

Because when all the major political parties are beholden for the loans they need to run their election campaigns, to the banksters who are behind the global drive for a new, legal, yet wholly unregulated, unmonitored CO2 derivatives casino, you know in advance what the outcome will be.

Know thy real enemy.

Here Is Expert Legal Advice On Why The Carbon Tax Is Unconstitutional

13 Apr

Courtesy of the IPA, here is the Short Form of barrister Bryan Pape’s commissioned legal advice on a constitutional challenge to the Bankster-Green-Labor CO2 derivatives scam:

Click to enlarge

Click to enlarge

Will a Liberal State government challenge the legislation in the High Court, thus making good on their pre-election promises?

Will National Living Treasure Clive Palmer make good on his threat to do so?

In the case of the former, there is no excuse for failing to challenge.

NONE.

So naturally, I suspect that they won’t.

Because as we have seen previously, Australia is a kleptocracy … ruled by banksters.

And it is banksters (and their economist cheerleaders) who want a new global casino in unlimited, unregulated, unmonitored, CO2 derivatives trading.

How Powerful Is That Minority That Wants A Carbon Tax?

7 Apr

Barnaby Joyce has written an article for the Australian Conservative, posing a question that regular readers all know the answer to (my emphasis added):

David Murray, outgoing Chairman of the Future Fund has blasted the carbon tax as the worst piece of economic reform he has ever seen.

So if the unions don’t like it, big business doesn’t like it, manufacturing doesn’t like it, farmers don’t like it, the electorate pathologically hates it, well the question then is who actually wants it? And how powerful is that minority? Where is the constituency that wants this tax? In Warrego on the weekend, out of 20,000 votes, the Greens received only 325. Maybe this is an example of how toxic these types of green policies have become.

The Labor party have tried to change the name to make the tax more palatable. First it was a tax to deal with global warming, then it was a tax to deal with climate change and now it is a tax for clean energy. What’s next? The happy pet tax? The peace in our time tax? It’s all the same, it’s an insane and very economically dangerous bureaucratic rip off.

Read the whole article here.

And if you are a new reader who does not know the answer, try this – Ticking Time Bomb Hidden In The Carbon Tax.

Incompetent Government Marionetted By Greens The Death Of Cattlemen

30 Mar

Remember the knee-jerk government action on live cattle exports?

It just gets better:

High dollar, carbon tax to hit cattlemen

Australian beef producers risk becoming globally uncompetitive, if they are not already, a forum in Darwin has heard.

The Northern Territory Cattlemen’s Association (NTCA) 2012 annual general meeting and beef forum was told costs for beef producers were drifting higher and were not sustainable.

NTCA president Rohan Sullivan told about 300 cattle producers at the meeting that the cost of slaughtering cattle in southern Australia was about $340 per head, compared to just $150 per head in the United States, and $30 per head in Indonesia.

Mr Sullivan said the introduction of the carbon tax would likely add another $20 to that figure for Australian cattle farmers, and also add to export transport costs.

He said stringent food safety requirements, a skills shortage, high labour costs and the strong Australian dollar were also making beef producers less competitive than those overseas.

“We need something else, because the current situation is not sustainable,” Mr Sullivan told the meeting.

“Australia risks becoming globally uncompetitive, if it isn’t already,” he said.

Mr Sullivan said General Motors was recently promised more than $200 million over 10 years by governments to keep going in Australia, while Indonesia will be given $20 million to develop its cattle industry.

Australian cattle producers should also get assistance, he said.

“A slip lane on the Stuart Highway and supporting our infrastructure don’t seem too big an ask,” Mr Sullivan said.

He said the issue of wild dogs was also becoming a big issue for producers.

“There was a report the other day from a member of the academia to reintroduce dingoes into some areas to control foxes, cats and that are overrun with herbivores – I wonder if that includes sheep and cows?” he said.

During the past year Northern Territory cattle producers have also had to face challenges from the one-month live export ban on the sale of cattle to Indonesia, and bushfires which tore through much of Central Australia, Mr Sullivan said.

But that’s ok, right?

Who needs a healthy, thriving, locally-produced food industry?

Let’s just ban the building of dams, wipe out the cattle industry, sell off prime agricultural land for mining … and our best agri-businesses to the Americans and the Chinese.

After all, I have no doubt it will be no problem whatsoever when we Try Asking 1.3 Billion Stomachs Armed With Nukes To Give Our Food Back.

Qlders To Cast Carbon Tax Verdict … LNP To Do F-All To Stop Carbon Tax

23 Mar

Media Release – The Nationals, 23 March 2012:

Dear Friends,

Queenslanders to cast carbon tax verdict

Today marks 100 days until Labor’s carbon tax drives up the price of everything, costs Australian jobs and makes us less competitive internationally – and all for no environmental gain.

Fittingly, Queenslanders will have their day of reckoning against a bad Labor government tomorrow, but also cast their judgment on the carbon tax and the deceitful government Julia Gillard leads.

This Queensland election, like last year’s NSW election, shapes as a referendum on the carbon tax. People power will be on display.

Last time in the Sunshine State there was a sense that Labor cheated its way into office. That is echoed federally with the Prime Minister’s broken carbon tax promise, ‘there will be no carbon tax under the government I lead’. Words that live in infamy and ring loudly in the ears of all Australians.

Without a record to stand on, Anna Bligh and Labor’s smear campaign against Campbell Newman has been unprecedented, ugly and Queenslanders don’t like it. It may have been headline-grabbing but, ultimately, I think it has backfired badly, especially in the last week or two.

When the Crime and Misconduct Commission confirmed Mr Newman had no case to answer and Anna Bligh could not produce a shred of evidence against him, she and Labor were exposed for the fraud they were peddling. That has repulsed people.

It was straight out of Labor’s old playbook. Muckraking and throwing anything and everything in the hope something would stick. It’s gutter politics and it doesn’t work. Dragging Mr Newman’s wife and family through that muck was morally wrong and a political mistake. People accept there is argy-bargy in politics, but this was obviously baseless and crude.

Campbell Newman is to be commended for not parachuting into a safe seat but really taking the fight up to Labor in its own backyard. Ashgrove was always going to be a tough ask, needing a 7.1% swing. That takes character and Queenslanders have responded to that.

As we’ve already seen in WA, Victoria, NSW and now Queensland the tide has turned, Labor is on the nose and Julia Gillard’s judgment day with the Australian people for Labor’s lies, waste and incompetence is coming.

I look forward to the day when the LNP and the federal Coalition are working together in government for the benefit of Queenslanders and all Australians.

King [sic ... dear Lord, can noone spell or copycheck anymore?!] regards,

Warren Truss
Leader of The Nationals

Fine words.

But will the Queensland LNP do anything more than just talk it up on the bankers’ CO2 derivatives scam, once they hold power from tomorrow night?

Will they act to STOP the “carbon tax”, rather than just unconvincingly promise to “repeal” it?

Will they get off their fat, lazy, well padded, shiny-suited, taxpayer-financed arses and actually challenge the Orwellian-titled Clean Energy Future legislation in the High Court, under sections 55 and (especially) 114 of the Australian Constitution, as several expert constitutional lawyers have advised that they can?

Or … will they demonstrate themselves to be no better than their tough talking, big pre-election promising, non-delivering invertebrate counterpart in NSW, Premier Barry O’Farrell?

On past and present form, I am betting on the latter.

All talk. No action.

Queenslanders … keep the bastards honest.

Vote 1 Katter’s Australian Party (“The Australian Party” on your ballot)

Carbon Price To Knock $30bn Off Economy

13 Mar

A new study commissioned by the Minerals Council doubtless has about as much credibility as Treasury modelling (ie, none).

Nevertheless, it is only logical that with EU carbon permits trading at under 10 Euro per tonne with little hope of price improvement, Australia’s “carbon price” starting at a fixed $23 per tonne and rising over 3 years, before changing to a full emissions trading scheme with a fixed floor price of $15 per tonne, is going to hurt.

From the Australian:

AUSTRALIA faces a $30 billion hit to growth by 2018 if domestic carbon prices remain higher than the European price, according to new economic modelling that will add to business pressure to bring the $23 starting price closer to Europe’s $10.

The modelling, by the Centre for International Economics consultancy, warns that keeping the $23 fixed price regime and the floor price of $15 a tonne – key elements of the current package – will have almost twice the impact on economic growth by 2018 as allowing the Australian price to track international prices.

A higher price in Australia than in comparable international markets could also cost the mining industry a cumulative $4bn and durable manufacturers $1.5bn over six years, the CIE modelling predicts. In a blow to the Coalition’s direct action policy alternative, leading CSIRO researcher Michael Battaglia has warned that the abatement figures in Tony Abbott’s alternative policy are “ambitious”. The centrepiece of the policy – sequestering 85 million tonnes of carbon in soil by 2020 – might only achieve abatement of between 5 million and 20 million tonnes, he said yesterday.

The CIE research, commissioned by the Minerals Council of Australia, comes amid projections that slow growth in Europe will mean international carbon prices will not rise significantly above the $10 around which they are currently sitting.

When Australia’s carbon package was announced, Treasury assumed an international carbon price of between $29 and $61. But the European credit crisis caused prices to slump. The research will amplify calls by key business backers of carbon pricing, including the Australian Industry Group’s Heather Ridout and the Business Council of Australia’s Jennifer Westacott for the policy to be rewritten.

Last week, Ms Ridout said the difference between the Australian and European prices was effectively “a tax on industry”, while Ms Westacott described the disparity as a concern for the competitiveness of Australia’s industries.

Obviously.

As regular readers know, here at barnabyisright.com we have clearly demonstrated – from the government’s own documents – that the Orwellian-named Clean Energy Future legislation is little more than 1,000 pages of babbling legalese designed by bankers, for bankers, to disguise two (2) tiny little clauses that are the key to the entire scam.

A CO2 derivatives scam:

How can I be so sure?

Because not one of [the] claimed “Objects of the mechanism” requires laws that specifically permit bankers to create unlimited quantities of wholly unregulated “financial weapons of mass destruction” called derivatives (or “securities”).

They are completely unnecessary. Moreover, the ongoing GFC turmoil proves that unregulated derivatives markets represent a clear and present danger to our government-propped banking system, and thus are a sovereign risk.

And yet, this is just what our Green-Labor government is doing right now in the Senate.

Carefully buried in their Clean Energy Bill 2011 we find the ticking time bomb (underline added):

109A Registration of equitable interests in relation to a carbon unit

(1) The regulations may make provision for or in relation to the registration in the Registry of equitable interests in relation to carbon units.

(2) Subsection (1) does not apply to an equitable interest that is a security interest within the meaning of the Personal Property Securities Act 2009, and to which that Act applies.

In other words, while the regulations may make provision for registration of equitable interests in a carbon unit, they specifically (subsection 2) do not make provision for registering a “security interest” in a carbon unit.

[A "security interest in" a carbon unit is, quite simply, a derivative or "security" that is based on the underlying "value" of the carbon "unit"]

It is clear then, that the government does not want to record carbon derivatives creation and trading.

They want to permit it. Just not record or regulate it.

Indeed, they wish to ensure “avoidance of doubt” that banks are legally allowed to immediately pull the pin on creating and trading these (wholly unregulated) financial weapons of mass destruction (underline added):

110 Equitable interests in relation to a carbon unit

(1) This Act does not affect:

(a) the creation of; or

(b) any dealings with; or

(c) the enforcement of;

equitable interests in relation to a carbon unit.

(2) Subsection (1) is enacted for the avoidance of doubt.

And just in case you missed the point – and your missing the real point is, in fact, the whole point of their using such opaque language – then the truth is spelled out more clearly elsewhere.

Where?

Way down in the fine print, of course. In the Explanatory Memorandum tacked on to the end of the Bill (underline added):

3.36 The bill does not affect the creation or enforcement of, or any dealings with (including transfers of), equitable interests in carbon units. [Part 4, clause 110] This provision has been included for the avoidance of doubt. In addition, the bill does not prevent the taking of security over carbon units.

Now I ask you, dear reader.

How does the scheme’s granting permission for banks to create a secondary carbon securities trading market (ie, “security over” carbon units) help to reduce CO2 emissions?

Indeed, how does a wholly unmonitored and unregulated shadow banking market in carbon derivatives help to create a single cent in extra government revenue, for the Senator Milne-championed Clean Energy Finance Corporation to pour down the toilet of otherwise commercially unviable “green” energy projects?

Answer: It doesn’t.

The government will never see any of the profits generated by banks from their multi trillion dollar trading in wholly unregulated carbon derivatives.

But you can be certain that they (and we) will hear all about it when the banks’ multi trillion dollar derivatives betting on movements in the market price of thin air blows up too. Because that’s when - just as with the global mortgage derivatives trade that triggered GFC1 – the bankers will (again) come running to government for a bail out.

Rest assured, dear reader.

Even if this latest round of calls for changes to the legislation are acted upon by government, of one thing you can be certain.

Just as the current legislation specifically allows for unlimited, unregulated creation of CO2 derivatives by banksters for trading and profit in international ‘shadow banking’ markets – and from Day 1, not just when an ETS begins – so too any new or revised legislation will still specifically allow this ticking time bomb hidden in the carbon tax to be created.

Because that is the ONLY reason why the legislation exists.

To allow the creation of wholly unmonitored, unregulated derivatives-on-thin-air by Big Finance, in unlimited quantities.

The fuel-air mixture for the biggest shadow banking financial bomb ever devised:

A Lonely Suicide

29 Feb

A 30% over-valued, speculator-driven Aussie Dollar white-anting whole swathes of the non-mining economy, with the RBA’s blessing.

A government and opposition united in not wishing to do anything about it.

A World’s Biggest (and highest price) CO2 Derivatives Scam set to hollow out what’s left.

A minority government defying the will of the people in implementing it, and an opposition powerless to stop it.

Sounds great, right?

After all, we are going to “lead the world” in the “greatest moral challenge of our time” … despite no global warming in a decade … right?

And all the other lemmings are going to follow us off the cliff, as enthusiastic human sacrifices to the Green cargo cult … right?

Uh … no:

Japan has become the latest major world polluter to rule out introducing a carbon price or carbon tax in the near future, as it struggles with power shortages and a rising yen caused by the euro crisis.

Senior Japanese diplomatic officials in Tokyo have told The Australian there is “no chance” of the country adopting a scheme similar to Australia’s carbon tax or emissions trading scheme in the foreseeable future.

Japan, the world’s fifth-largest carbon emitter, joins the US and Canada in backtracking on the introduction of a carbon price.

Our impending national economic suicide is becoming lonelier by the day.

Europe?

They went over the cliff years ago.

Now we’re just watching the entrails gush out, and the blood spatter.

At least we can feel all noble and holy though … right?

UPDATE:

The AFR reports that electricity generators are warning of price blowouts in excess of that predicted by the Green-Labor-Wind-Shott gubbermint -

The head of Australia’s largest power generator has warned that electricity prices will rise more than the federal government predicts under an option to ration output in order to stay ­profitable under the carbon tax.

The comments by Macquarie Generation chief executive Russell Skelton highlight warnings by the power industry that distressed generators will start to manipulate the price of power in the National Electricity Market in order to stay afloat.

The price threat also casts doubt on the government’s tax cuts and ­welfare payment rises for consumers.

The compensation package is based only on the Treasury estimate of a 0.7 per cent rise in prices due directly to the carbon tax in 2012-13.

Figures released by the government yesterday show some generators will need to pay hundreds of millions of dollars to buy permits in advance to cover emissions when the scheme starts on July 1.

“We expect to go from a profitable business to an unprofitable business partly as a result of the carbon price,” Mr Skelton told The Australian Financial Review.

…

“Most of the analysis and modelling done indicates we will not be able to pass through somewhere between 20 to 40 per cent of the cost [of the carbon price],” he said. “If you have a $500 million bill you have to absorb 20 per cent, so there is $100 million right there and our projected profits this year are $100 million.”

As a result, Macquarie is considering options to stay profitable which include reducing output to increase the price of power on the National Electricity Market. “We have done it in the past to respond to varying market circumstances,” Mr Skelton said. “To the extent wholesale prices increase, you would expect it would increase the price to consumers.”

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