Tag Archives: carbon pricing

Flash Crash “Had Something To Do With Some Derivatives” Says Goldman Trader

10 Aug

Rio Tinto "flash crash" - 8 August 2011

You probably missed the following little news item, lost in all the screaming red headlines of recent days.

It has important implications for our understanding of what our so-called Clean Energy Future will really look like, under the government’s carbon pricing scheme scam.

Because as we have previously seen from the details buried in the government’s official website, their “carbon pricing mechanism” is nothing whatsoever to do with “saving the planet”.

Instead, it is all about preparing the way for international banking’s latest casino – carbon dioxide futures and derivatives trading.

A mega-casino with trading via the bankers favourite new toy, HFT (High-Frequency Trading) – advanced computerised platforms directly linked into the stock exchanges and able to execute fully-automated trades in under 10 milliseconds.

From Dow Jones Newswires via The Australian (emphasis added):

Rio Tinto trades under investigation after share crash

Some trades in the Australian listing of Rio Tinto are under investigation after the company’s stock lost nearly 98 per cent in four minutes and briefly dropped to its lowest level since the 1970s, the Australian Securities Exchange said today.

A series of trades between 11:24 and 11:26 AEST are being investigated, the ASX said.

Exchange data shows a series of equity options combinations were traded at $1.43 to $1.91 between 11:24 and 11:26 AEST against a typical price of around $71.00 per share.

A total of $489,981 in shares were shown changing hands at the subdued prices, giving an average price of $1.81 per share.

However, a trader at Goldman Sachs said the stock had not actually reached that level.

“It had something to do with some derivatives and I’m sure it will be unwound later in the day,” said the trader, who didn’t want to be named.

… automated trading programs have been known to cause rapid and short-term fluctuations in the prices of securities or so-called “flash crashes”, which have become an increasingly-noticed feature of financial markets.

Hmmmmm.

“It had something to do with some derivatives…”.

Regular readers may recall my analysis of the government’s newly-announced “carbon pricing” scheme on the day after Carbon Sunday – Our Bankers’ Casino Royale – “Carbon Permits” Really Means “A Licence To Print”.

They may also recall my follow up article only a few days later – I Was Right – Our Banks Begin Preparing Carbon Derivatives Market.

To briefly summarise, this is what we found buried in the government’s new website, regarding derivatives:

The “creation of equitable interests”, and “taking security over them”, simply means this.  The carbon permits can be used as the basis for bankers to create other, new financial “securities”.

Carbon derivatives, in other words.

Derivatives (or “securities”) are the toxic, wholly-artificial financial “products” that were at the heart of the GFC.  The same bankster-designed “widgets” that the world’s most famous investor, Warren Buffet, spoke of as “a mega-catastrophic risk”, “financial weapons of mass destruction”, and a “time bomb”.

You can stop reading this piece right now if you like.

Because from that Table 6 alone, you now have conclusive proof that this is nothing whatsoever to do with the climate.

We also identified that setting up the basis for a carbon futures market is part and parcel of the “mechanism”:

Furthermore, the “advance auctions of flexible price permits in the fixed price period” proves beyond all shadow of doubt, that I was right.

That this “carbon pricing mechanism” is the bankers’ CPRS by another name. From Day 1.

Why does it prove it?

The advance auctions of flexible price permits “in the fixed price period” means this.

From Day 1, the government is effectively allowing the setting up of a futures trading market, for Australian CO2 permits.

Futures trading of nothing. Before the nothing is even created.

Now, one could try to argue that the government’s documentation quoted above and in more detail in my analyses, does not actually use the specific word “derivatives”, or “futures”.

And so, one could try to argue that I have no concrete proof.  That I have simply inferred that “creation of equitable interests” and “taking security over them” means “derivatives”, but if the government has not used those exact words, then I might just be making it all up.

Dear reader, if there is any lingering doubt in your mind that the Green-Labor government is setting up a scheme purposefully-designed to serve as the basis for carbon derivatives and futures trading, then doubt no longer.

Here is the government’s Clean Energy Future Regulatory Impact Statement (RIS): 03-Clean-Energy-Future-RIS

And here is a snippet of what it says on page 75 (emphasis added):

10.3 Advance auctioning of future vintages

In consultations undertaken on this issue for previous proposals, most stakeholders supported the auction of future year vintages as future vintages may be an alternative to the spot market and any associated derivative markets for liable entities seeking to manage future emissions obligations.

Advance auctions of future vintages are not required for carbon futures prices to emerge. For example, derivative markets have developed in the European Union Emissions Trading Scheme without advance auctions.

Assessment

The preferred position is that there will be advanced auctions of future vintage permits.

So there you have it.

The government’s scheme is all about putting in place the necessary laws to allow banksters the legal right to create trillions of new carbon “securities” – that is, new carbon derivatives, and futures “products”.

The kind of “products” that lead to “flash crashes” which can wipe out 98% of the sharemarket value of one of the world’s biggest mining companies in less than 4 minutes.

Brilliant, isn’t it?

And do not doubt for a moment, dear reader, just how many carbon dioxide derivatives the bankers can (and will) create.

To give you just a tiny hint of the scale, take a look at the following graph of our Aussie banks’ total Off-Balance Sheet derivatives based on Foreign Exchange and Interest Rate bets (euphemistically called “hedges”, of course), current to end March 2011:

Click to enlarge

That’s $16.83 Trillion in Off-Balance Sheet derivatives “Business” (red line), versus only $2.68 Trillion in On-Balance Sheet “Assets” (blue line) – 2/3rds of which “assets” are actually loans.

According to David Bloom, global head of HSBC Foreign Exchange, our banks are racing towards “a bigger Armageddon” in foreign exchange markets … and they are racing towards it sitting atop that monster red line mountain of derivatives bets.

Try to imagine if you will, just how many derivatives that international (and local) bankers will create on top of the underlying “value” of Australia’s $23 starting price carbon “permits”, from the moment that the Brown-Gillard economic planking platform is rammed through Parliament.

And then, think carefully about the words of that Goldman trader just a couple of days ago, when one of the world’s largest miners almost vapourised off the sharemarket in 4 minutes flat.

“It had something to do with some derivatives”.

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Green Left Weekly: “More Proof Of The Fakery Of Gillard’s Scheme”

16 Jul

Thank you, Green Left Weekly.

Again.

For confirming that I was right.

That the Green-Labor-Independent government’s carbon “X” scheme … IS … A … SCAM.

From Green Left Weekly yesterday (emphasis added):

There’s been so much political spin around the Gillard government’s carbon tax announcement. Of course, there’s the predictable hysterical hollering from the Tony Abbott, Barnaby Joyce and the climate change denier’s camp, but there is also tons of bullshit from the Gillard Labor government.

However, a couple of developments have provided a much-needed reality check.

On July 12, ABC News said: “Coal mining giant Peabody Energy has teamed with steelmaker ArcelorMittal to launch a $4.7 billion bid for Australian miner Macarthur Coal.”

This was the biggest-ever bid for a coal mining company in Australia and the bid was well above market expectations.

Peabody’s bid made nonsense of the opposition’s shrill warning’s that Gillard’s carbon tax, which will morph into a carbon pollution trading scheme by 2015, spelled the end of Australia’s massive and growing coal industry.

Gillard’s spin merchants were quick to crow about the Peabody bid. But all it really proved was that Gillard’s carbon tax is not a genuine or serious atttempt to address the climate change emergency.

The coal mining boom will continue. The government’s modelling for its “carbon tax” impact says coal production will rise by 109% to 150% by 2050. It expects gas-fired energy to rise by more than 200% by 2050.

There will be no serious investment — public or private — into the needed radical transition to a 100% renewable energy-based economy.

And if more proof of the fakery of Gillard Labor’s scheme, there was this other telling news report.

Peter Martin wrote in the July 14 Sydney Morning Herald: “If Australia’s economists had the vote, Julia Gillard’s carbon tax would win a landslide.

“A survey of 145 delegates attending the Australian Conference of Economists in Canberra finds 59 per cent think the tax is ‘good economic policy’.”

These economists were overwhelmingly economic rationaliststrue believers in the corporate profits-first orthodoxy that has dominated that profession since the 1970s.

What they see as “good economic policy” is good for big business profits and not for our common good or good for the environment.

Unfortunately, some very influential voices in the Australian environment movement have jumped on the Gillard Labor carbon tax bandwagon and regurgitated (or at least endorsed through lack of criticism) the deceitful spin Gillard’s salespeople have been generating.

Precisely.

As has been documented at great length on this blog for months.

Let it be clearly understood.

The Government’s scheme has nothing whatsoever to do with the environment.  Or with “mitigating” so-called “man-made global warming”.

The facts are crystal clear.

From the government’s own website detailing the scheme scam.

From the banking sector’s gleeful announcements of their “new market” and “new products”, within days of the policy detail being released.

And now, even from the hard-core “believers” in MMGW.

The Green-Labor-Independent government’s scheme is nothing more than a global-scale, profit-making, wealth-redistributing, bankster-empowering scam.

Designed by … economists (yes, the very same #JAFA’s who could not even predict the GFC).

Loudly supported bythe economists’ of banks (and other stand-to-benefit Big Business).

For the sole benefit of banks (and other stand-to-benefit Big Business).

If you have any remaining doubts that I am right, then please … take the time to read my several detailed analyses of the Government’s “carbon pricing” scheme scam.

That prove – by simply noting the details buried in the “fine print” of the Government’s own documents – that the entire “mechanism” is designed purely for the benefit of the global financial industry.

The banksters –

Our Bankers’ Casino Royale – “Carbon Permits” Really Means “A Licence To Print”

Government Lies Again – Latest NGER Report Lists Only 299 “Polluters” In Total

I Was Right – Our Banks Begin Preparing Carbon Derivatives Market

Please  … go out now, and start belting your card-carrying green cargo cult member friends, relatives, colleagues, and associates about the side of the head with this news.

From one of their own.

And while you’re at it, ask them to stop and think for a change.

Ask them to stop and think about why Bob Brown and Christine Milne’s Greens Party are really so happy about their great scheme scam.

Which even Green Left Weekly has now denounced as “fakery”.

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