Tag Archives: carbon trading

TIME: Carbon Markets May Be Finished

24 Apr

White Flag: Last Lap

The banksters and their hordes of related societal parasites will fight on to the bitter end. Even so, the conclusion to this article in TIME magazine suggests the possibility of a white flag being rolled out by some of their influential media supporters:

…the hope that we may be able to reduce carbon emissions the same way we cut pollutants like sulfur dioxide and nitrous oxide—through a well-run cap-and-trade —seems to be dimming, a victim of its own complexity and a sluggish global economy. That might leave the door open for other policies, including a straight carbon tax, more support for renewables or increases R&D funding for carbon-free power. We could use all three, but carbon markets may be finished. If carbon trading can’t make it in Europe, it can’t make it anywhere.

Hey You, Bankers’ Stooge! THIS Is How To Save The Planet

10 Mar

This morning I am really angry.

And deeply sorrowful.

Why?

Because I watched this inspiring, brilliant, contrarian-thinking, must-watch TED talk, by someone I had never heard of before:

Did you weep a little watching that?

I did.

Seriously. I did.

But why the mixed emotions, you may well ask. Whence cometh your humble blogger’s anger, and sorrow? Surely this is good news, hopeful news, inspiring and joyful news?

Well…

I am angry because so many otherwise intelligent, educated, thoughtful, well-meaning people have been fooled into supporting the idea that population control – fewer human beings (notable exception: themselves) – is critical to the future of life on the planet. Hence, all manner of genocidal ideas wearing the mask of “environmentalism” gain support – such as reducing the world’s numbers of cattle, a major protein source in human food consumption in developed nations, and an aspirational one in developing nations.

I am angry because so many otherwise intelligent, educated, thoughtful, well-meaning people have been fooled into supporting the idea that allowing central bankers to create literally trillions of dollars out of thin air to bail out the private bankstering system from 2007-08 onwards, was and is “necessary” … but creating just $175 billion a year to end “extreme” poverty in the world, is not.

I am angry because so many otherwise intelligent, educated, thoughtful, well-meaning people have been fooled into supporting the idea that global CO2 trading schemes – “putting a price on carbon” – will save the planet from global warming; that the politically-legalised financialisation (by bankers) of carbon dioxide “units” – created as electronic digits in a computer, just like money – in order to make carbon dioxide a tradeable “commodity”, is mankind’s best hope for avoiding “catastrophic”, “runaway” climate change, because – so they claim – globalised trading in electronic carbon dioxide “units” (not to mention, their derivatives) will reduce global emissions.

It isn’t –

The world emits 48% more carbon dioxide from the consumption of energy now than it did in 1992 when the first Rio summit took place.

And it won’t –

…the new game in town, the next bubble, is in carbon credits … The new carbon credit market is a virtual repeat of the commodities-market casino that’s been kind to Goldman [Sachs], except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won’t even have to rig the game. It will be rigged in advance.

… Well, you might say, who cares? If cap-and-trade succeeds, won’t we all be saved from the catastrophe of global warming? Maybe — but cap-and-trade, as envisioned by Goldman, is really just a carbon tax structured so that private interests collect the revenues. Instead of simply imposing a fixed government levy on carbon pollution and forcing unclean energy producers to pay for the mess they make, cap-and-trade will allow a small tribe of greedy-as-hell Wall Street swine to turn yet another commodities market into a private tax collection scheme.

I am angry because so many otherwise intelligent, educated, thoughtful, well-meaning people think it is a good thing that powerful lobby groups are now pressuring the government to bring forward the date when our own carbon dioxide “tax” scheme transitions to a full cap-and-trade scheme…

“The Australian Industry Group today called on all sides of politics to support the immediate removal of the fixed price carbon tax and move directly to an internationally linked emissions trading scheme,” Ai Group Chief Executive, Innes Willox, said today.

…which is exactly what the bankers have wanted from the very beginning:

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.

The initial three-year fixed carbon tax period from 2012 will serve as time to prepare for the release of ETS permits by 2015, when opportunities will really open up for banks to capitalise on the carbon 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 am angry because so many otherwise intelligent, educated, thoughtful, well-meaning people have fooled themselves into believing that the recent history of unlimited, unregulated, unmonitored, off-balance sheet, “shadow” market derivatives creation and trading by the world’s bankers that led directly to the GFC will not repeat itself – think Mortgage-Backed Securities (MBS), Collateralised Debt Obligations (CDO), and Credit Default Swaps (CDS); that allowing the bankers freedom to set up a new unlimited, unregulated, unmonitored, off-balance sheet “shadow” market in CO2 derivatives creation and trading is not a recipe for an even greater global financial Armageddon; that the massive “moral hazard” caused by declaring the world’s biggest banks to be “Too Big To Fail” – and now, “Too Big To Prosecute” – is a chance worth taking, in order to “save the planet” from rising CO2 emissions.

I am deeply saddened because simple, commonsense, natural, human-life enabling and enhancing ideas – practical, cheap, non-predatory solutions to the popularly-alleged imminent planetary threat of runaway global warming – from virtually unknown people such as Allan Savory – and one of my favourites, Austrian forester/forest warden, naturalist, philosopher, inventor and Biomimicry experimenter Viktor Schauberger* – continue to be ignored or belittled. And most often by … yes, those very same otherwise intelligent, educated, thoughtful, well-meaning people who, despite their intelligence and learning (and often, because of it, and the pride that follows), on this subject, are simply too dumb to see that they are really just stooges for the bankers:

1. Stooge

Someone who is used by others to get what they want, a clown, a follower.

I_see_dumb_people_800x600

Whether you are labelled a “denialist” or an “alarmist”, matters little.

Ideas such as those of Savory and Schauberger are worth placing at the top of our priority tree.

Because, unlike the legalisation of carbon dioxide “units” for bankers to trade – or even worse, their off-balance sheet creation and “shadow market” trading of unlimited, unmonitored, unregulated derivatives on top of those carbon dioxide “units” – Savory’s and Schauberger’s ideas can make life better.

For every one of us.

And for more of us. Not less.

So if you really, truly believe that we need to “save the planet” .. and even if you don’t … THIS is how to do it.

Electronic carbon dioxide “unit” trading, as the basis for a secondary, “shadow” banking pyramid scheme of unlimited, unmonitored, unregulated derivatives trading, is not.

The bankers are the problem.

Not the solution.

It is their monstrous, worldwide, daily creation and lending-for-interest/profit of electronic digits that we call “money”, that drives all economic “activity” (ie, “growth”).

When there is less “money”, the economy slows, right?

And with less “growth”, less “activity”, there are less carbon dioxide emissions:

US emissions are up for the first time since recession hit in 2008, in a sign of how closely pollution is linked to economic success.

Instead of blaming a morally nebulous, comfortable, dehumanising label titled “population growth” – that’s real live struggling and loving and caring fellow human beings you’re talking about! – for carbon dioxide emissions driving “catastrophic” “man-made” climate change, take a closer look at the real culprits.

Or as some wisely advise, Follow The Money.

Because “money makes the world go ’round”.

It is the bankers who financed the Industrial Revolution.

It is the bankers who have driven national and social (economic) inequality.

It is the bankers who finance all wars – the most unnecessary, wasteful, inefficient, selfish, and costly “activity” of all (can you believe that economic experts unblinkingly “credit” World War 2 for ending the Great Depression? All that lovely new economic “activity”, you see).

It is the bankers who finance – for profit – all the wasteful, inefficient, selfish, unnecessary consumption of ever more and more and more material “goods” (of ever declining quality/longevity) and “services”.

It is the bankers who have, over many generations, grown immensely powerful and unimaginably wealthy by taking advantage of our foolishly granting them the exclusive power to finance – at interest – all “economic activity”, period.

Activity – so much of which is of dubious real necessity, or value – that needs fossil fuel energy to operate.

Oh yes… it is the bankers who financed – for profit – the growth and power of the fossil fuel energy corporations too.

If you actually believe that a solution to the “climate emergency” that bankers unanimously support, lobby for, and stand ready to massively profit from, is a good idea that will achieve the stated purpose – saving the planet – then you really are, beyond any possibility of dispute, a willfully ignorant fool.

A bankers’ stooge.

* P.S. I found Allan Savory’s brief mention of temperature differentials for desertified soils vs non-desertified soils (at 8:10) very interesting, in light of my reading the works of the little known genius, Viktor Schauberger. Central to his observations, insights, theories, and experiments, was the critical importance of temperature differentials within every body of water.

P.P.S. If (like me) you are interested to know more about Allan Savory’s work, then visit the Savory Institute website.

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.

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.”

When First They Practice To Deceive And Be Very, Very Stupid

14 Dec

Terry McCrann (Herald-Sun, Daily Telegraph) is the only mainstream economics commentator in Australia that I’m aware of, who has consistently called out the Great Global Warming Swindle for what it is.

Seems the pathetically transparent spin from Combet et al following Durban, has inspired Mr McCrann to new heights of excellence … in calling a spade a spade.

Following is a brief excerpt from his brilliant column in yesterday’s Herald-Sun.  Be sure to follow the link to read the whole thing.

I think Mr McCrann is a little bit McCranky about all the BS:

The great climate change gravy train rolls on

The great climate gravy train rolls on and Julia Gillard and Bob Brown’s great big carbon tax just got bigger. Much bigger.

Phew. The dedicated delegates had to sacrifice a weekend, stay up all night and pump out even more carbon dioxide, but they were able to pull victory right out of the jaws of disaster, figuratively at five minutes after midnight.

There they were facing the end of their world, their cosy world of riding the climate gravy train from one annual two-week conference in a resort city, to the next, and all the points through the year in-between.

Always, always, being prepared to make the tough choices: which resort city, and indeed, north or south?

Faced with going down in history as the free-lunchers that betrayed not just this generation of climate change main-chancers, but the next free-lunching generation and indeed the generation after that, they resolutely put their snouts – sorry, their shoulders – to the wheel and ground out a deal.

Success! Simply put, they ensured that the great climate gravy train would NOT come to a shuddering stop in Durban. It was given a new head of steam to roll on to Qatar next year and who knows where else right through to at least 2015.

They’ve done themselves and their peer group proud. It’s perhaps not well understood just how many billions of dollars and how many probably hundreds of thousands of main-chancers ride that gravy train.

It’s not just the billions of dollars that have been rescued for the ten thousand-plus people that most prominently ride the climate gravy train from one conference to the next.

But in the finest example of real trickle-down in action, all the people who feed off the climate hysteria and inanity beneath them.

From people building useless solar panels and wind turbines (sic), to feeding off the exorbitant power subsidies, to all the climate institutes (sic), to those doing research, all the NGOs, etc, etc, etc.

All their dollars were at risk if the gravy train had ground to a stop in Durban…

Combet and Gillard can’t have it both ways. Either we have signed on in Durban to a massive increase in our carbon tax and the virtual and very quick elimination of our cheap coal-fired power stations.

Or the whole thing is a disgraceful and very expensive charade. There won’t be any real deal in 2015 and we will be left with a useless but punitive tax.

What’s that saying? Oh yes. Oh what a tangled web, a prime minister and climate change minister weave, when first they practice to deceive and be very, very, stupid.

The truth need not hurt.

Sometimes, hearing the cold truth can be downright enjoyable.

Thank you Mr McCrann.

An epic column

World Banks’ $707.5 Trillion Derivatives Time Bomb

12 Dec

No, dear reader. That headline is not hyperbole.

It’s based on official Bank Of International Settlements data.

For what that’s worth.

Money Trends Research has the story (emphasis in original):

$707,568,901,000,000: How (And Why) Banks Increased Total Outstanding Derivatives By A Record $107 Trillion In 6 Months

While everyone was focused on the impending European collapse, the latest soon to be refuted rumors of a quick fix from the Welt am Sonntag notwithstanding, the Bank of International Settlements reported a number that quietly slipped through the cracks of the broader media. Which is paradoxical because it is the biggest ever reported in the financial world: the number in question is $707,568,901,000,000 and represents the latest total amount of all notional Over The Counter (read unregulated) outstanding derivatives reported by the world’s financial institutions to the BIS for its semi-annual OTC derivatives report titled “OTC derivatives market activity in the first half of 2011.” Indicatively, global GDP is about $63 trillion if one can trust any numbers released by modern governments. Said otherwise, for the six month period ended June 30, 2011, the total number of outstanding derivatives surged past the previous all time high of $673 trillion from June 2008, and is now firmly in 7-handle territory: the synthetic credit bubble has now been blown to a new all time high. Another way of looking at the data is that one of the key contributors to global growth and prosperity in the past 10 years was an increase in total derivatives from just under $100 trillion to $708 trillion in exactly one decade. And soon we have to pay the mean reversion price.

What is probably just as disturbing is that in the first 6 months of 2011, the total outstanding notional of all derivatives rose from $601 trillion at December 31, 2010 to $708 trillion at June 30, 2011. A $107 trillion increase in notional in half a year. Needless to say this is the biggest increase in history…

Which brings us to the chart showing total outstanding notional derivatives by 6 month period below. The shaded area is what that the BIS, the bank regulators, and the OCC urgently hope that the general public promptly forgets about and brushes under the carpet.

Try not to laugh. Or cry. Or gloss over, because when it comes to visualizing $708 trillion most really are incapable of doing so.

Click to enlarge

(click here for the full article)

What is the Aussie bank(ster)ing system’s share of that total?

According to the RBA, at June 30 2011 our banks held … wait for it … $16.97 Trillion in “Consolidated Off-Balance Sheet Business”.

An all-time record total. And a record increase of $2.14 Trillion in just 6 months.

Including almost $9 Trillion in OTC derivatives bets on Interest rates. And $2.2 Trillion in OTC bets on Foreign Exchange rates.

Can you say “galactic-scale casino”?

Seems our little Milky Way galaxy just isn’t big enough for our bank(st)er ‘masters of the universe’.

Because the dream of global carbon dioxide derivatives trading has always promised an intergalactic expansion of Big Bang proportions.

As your humble blogger has argued for so long, our Green-Labor government is playing their part in the banksters’ dream.  Despite being presented as a “tax” for the first three years, the truth is that derivatives trading is the real goal of a scheme purportedly designed, and certainly fronted, by Trilateralist “economist” Ross Garnaut. A new form of wholly unregulated derivatives trading that will begin from Day 1 … before the so-called “fixed price” period ends, and the “ETS” begins.

Here’s a Bloomberg news article I missed back in November, reporting on an ASX announcement that adds further proof to that already presented in previous posts.

That the Clean Energy Future scheme, is the bankers’ carbon derivatives scam from Day 1 (emphasis added):

ASX Group, operator of Australia’s main stock exchange, plans to offer secondary and futures markets for carbon allowances before the country’s emission trading system begins in 2015, the exchange said.

Key to the success of the ETS will be the introduction of second and futures markets for carbon permits and any fungible carbon-related products,” the Sydney-based company said today in a statement. “The markets will generate the short and long- term price signals and risk mitigation required to underpin investment certainty.”

UPDATE:

For any readers wondering whether the ASX’s reference to “secondary and futures” markets does mean “derivatives”, take a look at the European Energy Exchange’s website, under “Market Data” – “Emissions Rights”:

Click to enlarge

And consider the words of our own bankers:

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…

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.

For more, see my earlier article “Ticking Time Bomb Hidden In The Carbon Tax”.

More Proof That Support For Carbon Price Means Support For Killing Black People

9 Dec

Your humble blogger copped some flack via that paragon of intelligent public discourse (Twitter) for publishing a very similar headline in October.

Then, we saw how an Oxfam report shed light on the violent forced eviction and genocide of Ugandans by the UN-supported carbon credit ‘farming’ corporation, New Forests Company.

Today … in recognition of the final day of the UN IPCC’s warmageddonist conference in Durban, Africa … we look at a similar story from Honduras, as reported by Jeremy Kryt in the online In These Times.

Jeremy is a graduate of the Indiana University School of Journalism and the University of Iowa Writers’ Workshop. He has been reporting from Honduras since August 2009, and his coverage of the crisis there has appeared, or is forthcoming, in The Earth Island Journal, Huffington Post, Alternet and The Narco News Bulletin, among other publications.

Following is his report reproduced in full:

A boy stands next to a hut on a palm plantation in the Aguan Valley in August. The slogan reads "Area recovered by the MUCA," which stands for "United Peasant Movement of Aguan." (Photo by Orlando Sierra/AFP/Getty Images)

Carbon Credits in the ‘Valley of Death’

Uncovering the ugly effects of U.N.-backed ‘clean development’ in Honduras.

AGUAN VALLEY, HONDURAS–At 3,000 square miles, the Aguan River Valley in northeastern Honduras is about the same size as California’s Death Valley. But despite being green and fertile, the Aguan basin is becoming famous as a “valley of death.” Since January 2010, at least 45 displaced peasants have been killed in clashes over land rights in Aguan, and “the actual number of killings is probably much higher,” according to Annie Bird, co-director of the human rights advocacy group Rights Action (RA), who visited Honduras in September.

Bird and other critics say that the violence in Aguan is driven by competition over resources between local farmers and large-scale, biofuel production facilities. The valley is home to more than a dozen African palm plantations that supply “green” energy to Europe and Asia, as well as a pair of biogas plants that operate as part of a United Nations carbon-credit initiative.

“The agribusinesses are after all the prime farmland in Aguan,” Bird says. “That’s what’s driving the conflict here.”

African palm plantations have also been linked to land-based violence in Indonesia, Africa, and elsewhere in Latin America, as worldwide demand for biofuels has soared in recent years. But using arable land for fuels, as opposed to food production, has caused a spike in global food prices. In October 2011, the U.N. Committee on Food Security issued a report citing biofuel production as one of the leading causes of food shortages worldwide.

Ignoring its own committee’s report, the U.N. continues to endorse the two biogas plants attached to African palm plantations in the Aguan Valley as part of its controversial Clean Development Mechanism (CDM) program. A product of the Kyoto Protocol, CDMs allow governments and companies from Western countries to trade carbon credits with businesses in developing nations that utilize renewable energy and other carbon-saving techniques. Critics of the CDM program point to the food-vs-fuel dilemma, as well as the issue of “additionality”–that is, whether or not a given CDM would exist without U.N.-sanctioned investments. But Bird says there is a moral component as well.

“By approving investment in these projects, the U.N. has made itself an accomplice to a human rights crisis,” Bird says. “It’s just shameful.”

Killings and forced evictions

Both the CDMs in Aguan use the bacteria-rich wastewater left over from palm-oil extraction to produce methane for biogas. But the methane capture process is only cost-effective on a large scale–and observers say that gives local companies a direct incentive to expand operations.

David Calix, spokesman for the Campesino Movement of Aguan (MCA), says, “Within the last two years more than 1,500 peasant families have lost their homes, schools and communities due to forceful evictions,” all of which have been linked to African Palm expansion efforts in the Aguan valley.

In July, the International Federation of Human Rights (FIDH) released a report on Aguan alleging evictions and armed attacks against local communities by “plantation security guards and private militia groups” allowed to act with impunity. The FIDH paper forced a couple of powerful European investors to back out of the Aguan CDM project and caused the European Parliament to order a fact-finding mission. So far, however, these measures don’t seem to have had any impact on the escalating violence.

Over just two days in August, skirmishes between guards and peasants left 11 people dead. A few days later, two more campesino leaders were assassinated–one of them, Pedro Salgado, was shot down in his home along with his wife. An entire peasant village was burned to the ground. The international outcry became so severe that in early September, the Honduran government dispatched a force of about 1,000 special police officers and soldiers to occupy the valley.

But Bird says that instead of protecting peasants’ human rights, the occupation forces have aided in their persecution. Reports have emerged of police and soldiers cracking down on peasant communities, and even taking part in evictions. “Death squad” attacks on peasants have continued at about the same pace during the occupation, with four assassinations in the same week in early October. No arrests have been made in any of the killings, and no suspects have been named.

Hazardous occupation

“The troops say they have come to bring us security, but that is a lie,” says MCA President Rodolfo Cruz. “They are here to serve the interests of the rich land owners, the same ones who control the politicians back in [the Honduran capital of] Tegucigalpa.” Cruz is also acting mayor of a small peasant community called Rigores, which he claims has been threatened several times with eviction by both security guards and law enforcement.

Cruz also reports that citizens are being searched at random, and that there have been mass round-ups and arrests as the authorities hunt down leaders of the movement.

“They are accusing us of having weapons, of forming an insurgency,” says Cruz, whose 16-year-old son, Santos, was allegedly tortured for information while in police custody on September 19. Cruz maintains that the MCA and other organizations are pacifist movements dedicated to nonviolent resistance.

Bird, who has researched the case, believes there is no doubt that Cruz’ son was targeted by authorities because his father is a prominent spokesman for land reform. “It’s all part of their pattern of intimidation,” she says. “There is no functional justice system in Honduras.” As further evidence of legal dysfunction, Bird points out that the businessman with the most holdings in Aguan, Miguel Facusse Barjum, was recently revealed by WikiLeaks to have strong ties to Colombian cocaine traffickers. “The police are evicting peasants from the property of a known drug lord,” she says. “That just shows you how rotten the system is.”

Although in September there were hints in the Honduran press that the police have captured cell phones that prove the existence of a rebel army some 300 strong, Honduran Police Chief Julio Benitez is much more circumspect. “We really don’t know what is going on in Aguan,” Avila says. “We know there are armed groups. We know people are being shot up under mysterious circumstances. But it is very complicated.”

When asked about the charges of police brutality, Avila declined to respond, saying only, “[The Honduran police] are a professional organization. We behave in a professional manner. We are working hard to safeguard the peasants of Aguan and to protect them from violent criminals.”

Push for reform

“The situation in Honduras is, of course, of great concern to us,” CDM board Chair Martin Hession says. “We don’t want to be associated with this type of thing in any way.” Hession says that as a result of the violence in Aguan, the CDM Board has “increased surveillance” in regard to approving new projects.

But Eva Filzmoser, program director of the Brussels-based CDM Watch, believes that’s too little, too late. “We are deeply disappointed … that the [Aguan] project was registered despite the serious concerns about alleged human rights abuses,” Filzmoser wrote in an e-mail.

Filzmoser charges that Hession and the rest of the board chose to ignore early reports of violence coming out of Honduras when they approved the project in July of 2011. Part of the problem is systemic, she writes, stemming from a lack of stakeholder oversight by the CDM board itself. “The [Aguan] project would never have been registered if the proper rules were in place,” Filzmoser wrote.

Bird also sees an inherent flaw in the CDM program. “If you’re taking away land from poor people to generate biofuels, you’re effectively condemning them to death by starvation,” she says.

Hession says such things are beyond the purview of the CDM board. “We can’t be the arbiter of human rights across the world.” To which Bird responds: “That’s the single, fundamental mandate of the U.N. Human rights are what the U.N. was created to promote. And the CDM board is still part of the U.N.”

For Cruz, who is also a farmer, the issue at stake is less philosophical than practical: “All we want is a place to grow our corn, to grow our beans,” he says. “All we want is a right to work the land.”

I can think of no more apropos concluding comment, than to repeat that of my October 14th Ugandan genocide post:

This is just one [more] example of the unintended (?) consequences of the universally-ignorant support by multitudes of morally self-righteous, urban rich white people, for “pricing carbon” in the name of “saving the planet”…

As has been demonstrated countless times on this blog – including from the government’s legislation – the “carbon tax” has never had anything whatsoever to do with climate change.

It is, and always has been, all about money. Derivatives, to be precise.

“Putting a price on carbon” is all about legally enabling the predatory financial sector to rape the world all over again, with a new derivatives-based ponzi scheme, after their Western world real estate derivatives bubble exploded (GFC1).

It is a very simple scam.

Carbon “pricing” creates in law a new artificial ‘commodity’ called “carbon ‘units’, having an artificially-created (by proclamation) monetary value.

Who benefits?

On the lower level, governments. The basic carbon “price” for selling (on threat of gaol) their “permits” to “pollute”, represents a new cashcow for politicians. For handing out to their mates, favouring special interests, and bribing the ever-more welfare-dependent electorate to vote for them (ie, keep them in power).

On the higher (unseen) level, the international shadow banking sector. “Pricing carbon” means they can (a) cream off billions in fees and commissions on the trade in those permits, but far more importantly (b) instantly create unlimited quantities of wholly unregulated carbon derivatives, to gamble on unregulated international trading markets.

Exactly like the Western real estate bubble.

If you support “putting a price on carbon”, then what you are really supporting is two outcomes.

Impoverishing the West.

And genocide of black people.

All for the benefit of … not the environment … but bankers.

UPDATE:

And the push to use prime agricultural land for carbon credit “farming” includes our own backyard (h/t @HiggsBoson4):

Bio Lands Pty Ltd (Bio Lands) has compiled a substantial portfolio of grazing/biodiversity offset lands. The portfolio can provide the development industry with rapid access to strategically acquired, fully documented biodiversity offsets

Click to enlarge

And from ABC News yesterday:

Carbon farming starts today – in a limited way

Farmers can earn money from reducing carbon emissions from today.

The Federal Government’s Carbon Farming Initiative has opened for business, but there’s a catch.

Only two methods that farmers and landholders can use to cut emissions have been approved, one of which is capturing methane from piggeries.

Parliamentary Secretary for Climate Change Mark Dreyfus says more methods will be approved in coming months.

“We think it’s important to take time to make sure the methodologies have integrity, because the methodologies lead to the ability to sell carbon credits and companies that are purchasing carbon credits want to know that the credits represent real emissions reductions.”

I suggest that the “integrity” of carbon credit “farming” “methodologies” is already very evident indeed. One only need cast one’s eyes around the world, at the precedents that have been set elsewhere.

“Carbon Is All About Vanity”, Says UK Carbon Trader

8 Dec

“There will be no carbon tax under the government I lead”.

Congratulations Julia!

That epic broken promise is looking good now, isn’t it.

Just ask our trans-Tasman neighbours:

Carbon credits pricing crashes and burns

A crash in carbon credit prices means the government has no option but to ban or drastically restrict the use of imported carbon credits of dubious quality, or the emissions trading scheme (ETS) could become a national embarrassment.

The price of New Zealand units (NZUs) has crashed from $22 in May to about $11* last week, stifling interest in developing carbon offsetting initiatives here, according to carbon market participants.

The price crash has been so steep that by one calculation, if the price trend continued for another 100 days, the value of NZU credits would be zero.

The reasons for the crash appear to be the unfettered ability of New Zealand emitters to import credits of dubious quality from overseas, coupled with the recent dumping of international credits by cash-strapped European industrial and utilities companies selling down their stockpiles of carbon to realise cash as the debt crisis worsens, participants in the fledgling carbon trading market say.

Hmmmm. That last bit sounds strangely familiar:

ASX’ announcement came two days after Australia passed a law that will require almost 500 of the country’s largest emitters to pay for their pollution for the first time. The law allows firms to offset as much as half of their Australian discharge by purchasing credits awarded for projects that limit carbon releases abroad.

Lemmings. Cliff. Gravity. Bitch.

In more good news for Julia (and partners in crime Bob, Andrew, Tony and Rob):

Carbon credits may be buried in Durban; India, China to lose

The much-heralded carbon trading system may be headed for a dead end, if discussions underway over the last few days at the United Nations-organised global conference on climate change are any indication. This will have a major impact on India and China, the leaders in such trading.

The carbon markets will crash if Durban fails to send a strong signal that the next round of Kyoto Protocol negotiations are on track,” says Remi Gruet, senior regulatory affairs advisor on climate and environment with the European Wind Energy Association, an industry body.

Doubtless Remi Gruet is “talking his own book”, being a wind energy lobbyist and all.

But his underlying point remains valid.

Because it appears that China and India are not exactly proving helpful in forging a new post-Kyoto agreement:

The world’s three biggest polluters joined in opposing a European Union proposal for talks aimed at drawing up a new climate treaty, dimming the chances of extending the Kyoto Protocol limiting greenhouse gases…

India, along with the U.S. and China are united in opposing the EU’s timeline to a new deal. The 27-nation bloc that’s done the most to limit carbon dioxide fumes since Kyoto was signed in 1997, said it wouldn’t agree to more limits unless a treaty is signed by 2015 and in force by 2020.

The opposing positions may torpedo the chance of a deal on Dec. 9 when two weeks of talks in Durban finish. The EU has called its “road map” proposal a “red line” issue.

Although this report in the Financial Times suggests otherwise:

China and Brazil have warned that one of the world’s biggest carbon markets will be under threat if wealthy countries reject their demands for a new phase of the Kyoto protocol.

It is “inconceivable” that the $20bn UN-backed carbon offset market can continue unless countries agree to a second round of pledges under the Kyoto climate treaty after the first round expires in 12 months, China’s chief negotiator told the FT.

Confused by all the international politicking?

Not to worry.

Barnabyisright.com readers know better than to take much notice of all their noise.

They know that the best way to get an insight into the truth of what is really going on, in almost every life situation, is to simply remember the Golden Rule.

Follow The Money:

Investment banks are cutting traders and analysts in climate-related businesses as a slump in shares and carbon emission permits coincides with a deadlock in international climate talks.

JPMorgan Chase & Co. Managing Director for Environmental Markets Odin Knudsen left his post in New York by mutual accord after his team was shrunk, while UBS Securities LLC fired Vice Chairman Jon Anda and his Climate Policy Group co-workers, Anda and Knudsen said in interviews. Ben Lynch left his London job as an alternative-energy analyst for Commerzbank AG and it was taken over by a utilities analyst, company spokeswoman Claire Tappenden said. The departures took place since September.

The biggest banks, trying to recover from trading losses and a clampdown on investing their own money, are clipping resources from emissions-related businesses as United Nations talks have failed for years to extend Kyoto Protocol greenhouse- gas curbs beyond their expiration in 2012. The International Emissions Trading Association, the main carbon-market trade group, has seen its membership slide about 6 per cent this year.

“People are leaving the industry because they’ve been fired or because they see no prospects,” said Emmanuel Fages, head of energy research for Europe at Societe Generale SA in Paris.

And then there’s this, from eFinancialCareers UK:

At least you don’t work in carbon trading

It’s no longer possible to save the world whilst being paid in the style of a financial services professional. Not unless you’re prepared to live with a degree of job insecurity that offsets the advantage of working in an office rather than camping in Finsbury Square.

Three years ago, carbon trading was a vibrant, growing and politically correct business to work in. Today, it’s moribund and politically expedient.

“Carbon trading was very exciting a few years’ ago,” says Mike Brennan chairman of recruitment group Climate Human Capital. “People were very well paid and very well bid, but not any more.”

Last year, Climate Human Capital estimated there were 169 people working in carbon trading in the City of London, 27% of the European total. Today, Brennan says that number is, “significantly lower.”

Carbon trading refugees are emerging from banks and funds. Bloomberg says an MD for environmental markets has left JPMorgan, “by mutual accord,” that UBS has fired a climate vice chairman and his co-workers, and that Commerzbank has reallocated the responsibilities of its alternative-energy analyst to its utilities analyst. Carbon funds like Climate Change Capital, which were the new, new thing, aren’t: CCC made a loss last year, has lost its chief executive, has no current vacancies and has declared an interest in “strategic partnerships” in an effort to raise more capital.

“People are leaving the industry because they’ve been fired or because they see no prospects,” said Emmanuel Fages, head of energy research for Europe at Societe Generale in Paris, told Bloomberg. “That is the sad story.”

The sources of the sadness are manifold: the price of carbon has plummeted to €7.9 a metric tonne, down from €17 euros in May; the much hoped for US cap and trade carbon scheme has failed to materialize, and the EU carbon trading scheme has been blighted by an oversupply of credits. One trader who’s been acting as an advisor on the carbon market says things are unlikely to improve soon. Carbon is all about vanity. Corporates and governments want to be carbon neutral until they have to start laying people off or facing rioting in the streets. At that point, they don’t give a damn.”

What will happen to the carbon traders who thought they were using capitalism to save the world? “It’s a good job Starbucks are planning to hire so many people in London,” says one carbon headhunter, only semi-humorously.

However, Brennan insists there are some roles still somewhere. “We’re working with some niche brokerages focused on Central and Eastern Europe. They see opportunities there and are selectively adding carbon professionals to their team,” he promises. Unfortunately, applicants may exceed opportunities.

See Julia?

This is what happens when you have your Pinocchio nose jammed so far up Senator Brown’s realm-where-the-sun-don’t-shine.

You can’t see what is really going on out here in the real world.

What’s that old proverb again?

Pride goes before destruction, and a haughty spirit before a fall.

* And just days after that article, this:

New Zealand carbon price collapses below $10 a tonne

The price of a tonne of emitted carbon has fallen below $10 for the first time today, with Westpac quoting a buy price for a New Zealand Unit falling to $9.90 as European carbon prices collapse.

The developments coincide with New Zealand and Australian climate change ministers, meeting on the sidelines of the global climate change summit in Durban, South Africa, announcing terms of reference for efforts to align the two countries’ emissions trading schemes…

“Westpac has regular buy and sell prices, but no one knows whether they contract at those prices, we don’t know,” said one broker who declined to be named. “We’ve hit dire days in carbon pricing.”

Ticking Time Bomb Hidden In The Carbon Tax

1 Nov

 

Remember when the world’s 3rd wealthiest man, Warren Buffet, called out the exotic financial product named derivatives as “a mega-catastrophic risk”, “financial weapons of mass destruction”, and a “time bomb”?

Over the next two weeks, our minority Green-Labor government is railroading a set of 19 new laws through the Senate.

They like to call those laws our Clean Energy Future.

And to date, no one in either the political class, or the media – including our “expert” economics media – have called out the ticking time bomb called derivatives that is buried carefully in the 1,000+ pages of our Clean Energy Future.

No one, except your humble blogger.

Here, dear reader, is proof positive that the government’s “carbon pricing mechanism” is not about changing the climate.

Nor is it, as the government claims, to “give effect to Australia’s international obligations on addressing climate change under the Climate Change Convention and the Kyoto Protocol”.

Nor is it to “take action directed towards meeting Australia’s long-term target of reducing net greenhouse gas emissions to 80 per cent below 2000 levels by 2050 and take that action in a flexible and cost-effective way”.

Nor is it to “to put a price on greenhouse gas emissions in a way that encourages investment in clean energy, supports jobs and competitiveness in the economy and supports Australia’s economic growth while reducing pollution.”

How can I be so sure?

Because not one of those 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.

Did I say “trillions”?

Sure did.

As we have seen previously, according to the RBA our Aussie banking system already holds almost $17 Trillion worth of derivatives.  Most of these are bankers bets on movements in Foreign Exchange Rates and Interest Rates. And these derivatives are all held Off the Balance Sheet:

In just 3 months from December to March, our banks’ exposure to Off-Balance Sheet derivatives “Business” has blown out by a whopping $1.99 Trillion, to a new all-time record total of $16.83 Trillion.  That’s the biggest 3-month increase in our banks’ history.

By comparison, at March 2011 the banks have “only” $2.68 Trillion in On-Balance Sheet Assets. That’s an increase of “only” $19.9 Billion. In the same 3 months, their Off-Balance Sheet derivatives exposure blew out by 100 times that much ($1.99 Trillion)

Click to enlarge

[That’s right. Derivatives are a toxic, wholly artificial and unregulated financial product, created and traded en masse by the banks; they are held Off Balance Sheet so that noone really knows anything about their real activities. It was toxic derivatives over mortgages that nearly blew up the world in 2008.]

We have also seen previously, that our Aussie banking system is not “safe as houses”, as we are led to believe. Instead, it is a huge disaster waiting to happen. Our banks are only staying afloat – and generating ever-increasing salaries and bonuses for bankers – because of the government wholesale funding guarantee introduced in response to the GFC. Indeed, Moodys Ratings agency recently put our government on notice that it will slash our banks’ credit ratings if the government guarantee is withdrawn.

What happens when banks blow up?

The government (ie, the taxpayer) panics, and bails them out. Putting both current and future generations on the hook to pay for it.

What we have with the Clean Energy Future legislation, is a scheme designed by bankers (and their cheer-leading economists).  For the benefit of bankers.

That’s why a scheme that purports to be all about reducing CO2 emissions, has a ticking time bomb called “derivatives” hidden inside.

While ever the scheme lasts, banks will make a killing.

Not just on fees and commissions for their role in buying and selling “permits”.

Oh no, dear reader.

That trade is just the surface of the carbon pricing scam.

The fees and commissions on the straight trading in carbon permits … is peanuts.

The real monster action is in the unlimited, unregulated derivatives market, that sits on top of the basic carbon trading market. Just imagine an inverted pyramid, with the trade in carbon permits at the bottom, pointy end.

What the banks really want – and what this blogger predicted and forewarned of time and again leading up to the release of the draft legislation – is a mechanism that allows them to create and trade carbon derivatives.

In unlimited, unregulated quantities.

And that is exactly what the Greens, and the Labor Party, in cahoots with Tony Windsor, Rob Oakeshott, and Andrew Wilkie, have given the bankers.

In just a couple of little clauses. Carefully worded and buried in 1,000+ pages of bullsh!t legalese, so that noone will find it (or simply not understand it if they do).

If you want to do something practical to stop the bankers, then here’s my suggestion.

Call the Coalition Senators for your state.

Right now.

Tell them that you want them to go into the Senate policy committee hearings next week, and demand that the government explain the following:

(a) WHY their Clean Energy Future legislation specifically includes clauses permitting bankers to create unlimited, unregulated “financial weapons of mass destruction” on the back of the carbon pricing scheme;

(b) HOW their permitting banks to create unlimited, unregulated carbon derivatives will reduce greenhouse gas emissions;

(c) IF the government will guarantee the public that no taxpayer funds will ever be used to bail out a bank/s that gambles in the carbon derivatives casino and later gets into financial difficulty.

[Senators contact information here]

We know that the banks are already gleefully gearing up whole new departments for their new carbon derivatives trading casino.

Indeed, they were publicly bragging about it within a few days of the draft legislation being released:

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.

The initial three-year fixed carbon tax period from 2012 will serve as time to prepare for the release of ETS permits by 2015, when opportunities will really open up for banks to capitalise on the carbon 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.

What did I say about an inverted pyramid, with money/profit churn from the simple carbon permit trade being only the little pointy bit at the bottom … the thin end of the wedge?

The shadow banking casino in carbon derivatives is the huge bit at the top.

And just like every inverted pyramid, the carbon pricing scheme scam is inherently unstable.

The Green-Labor Clean Energy Future is an epic financial disaster, just waiting to happen.

When it comes to pricing carbon, all you need to remember is two words.

“Bankers”.

“Derivatives”.

Tick.

Tick.

Tick.

Tick.

Trading Carbon Permits Is “The Greatest Scam On Earth”

31 Oct

From the Sydney Morning Herald:

Debate on the government’s carbon tax has got off to a spluttering start in the Senate.

A package of 19 bills is being considered by the upper house for the first time, following its approval by the House of Representatives this month.

As debate was due to start today, Opposition senate leader Eric Abetz moved to suspend standing orders to allow debate of a motion aimed at delaying consideration of the bills until after the next election.

The Australian people were entitled to a say because the government had been “grossly misleading” by stating there would be no carbon tax before the 2010 election, he said.

Labor and the Australian Greens used their numbers to defeat the motion 35-31.

It is crystal clear then.

Labor and the Greens do not believe in heeding the will of the voters.

Understandable really.

Because both parties are party to “the greatest scam on earth”:

Nationals senate leader Barnaby Joyce predicted the carbon price would be worth nothing within 10 years.

“Because they won’t be there,” he told Parliament.

“You can bank on that with absolute certainty under a Coalition government.”

Senator Joyce also described the trading of carbon permits as “the greatest scam on earth”.

Indeed.

As we have seen in previous posts, carbon “permits” do not even exist.

They are nothing more than numbers. Electronic digits, in the government’s Australian National Registry Of Emissions Units computer:

Division 2—Issue of carbon units

94 Issue of carbon units

The Regulator may, on behalf of the Commonwealth, issue units, to be known as carbon units.

95 Identification number

A carbon unit is to be identified by a unique number, to be known as the identification number of the unit.

98 How carbon units are to be issued

(1) The Regulator is to issue a carbon unit to a person by making an entry for the unit in a Registry account kept by the person.

(2) An entry for a carbon unit in a Registry account is to consist of the identification number of the unit.

(3) The Regulator must not issue a carbon unit to a person unless the person has a Registry account.

There you have it, dear reader. From the government’s own Bill, now before the Senate.

There is no such thing as a physical carbon “permit”. No printed bits of paper.

Just electronic digits.

I wonder, will the Regulator and/or their staff manually type up the 15 million Identification numbers that constitute each of the carbon “units” to be issued each financial year?:

101 Limit on issue of carbon units

(1) The Regulator must ensure that not more than 15 million carbon units with a particular vintage year are issued as a result of auctions that were conducted by the Regulator during a financial year …

No chance.

It will all be done automatically:

296 Computerised decision‑making

(1) The Regulator may, by instrument in writing, arrange for the use, under the Regulator’s control, of computer programs for any purposes for which the Regulator may, or must, under this Act or the regulations:

(a) make a decision; or

(b) exercise any power or comply with any obligation; or

(c) do anything else related to making a decision or exercising a power or complying with an obligation.

These computer-generated numbers – 15 million of them per year – will have a “value” in dollars.

Because the government says so … in their new laws passed in the Parliament.

The Clean Energy Act 2011 demonstrates that the ALP and the Greens are playing their part in “the greatest scam on earth”.

Barnaby is right.

%d bloggers like this: