Tag Archives: flash crash

Barnaby Bags “Bob Brown’s ‘Big Bank Bonus'”

12 Oct

Senator Joyce gets nearer to the heart of the matter:

UPDATE (thanks to wakeuptothelies)

LYNDAL CURTIS: Barnaby Joyce welcome to ABC News 24.

BARNABY JOYCE: Thanks Lyndal. Thanks for having me on.

LYNDAL CURTIS: The carbon price legislation is in the Senate, do you accept there is no way you can stop it from becoming law?

BARNABY JOYCE: I accept that it is now obviously very difficult but that does not mean it is the end of the battle that just means it is the start. I am not going to relent and neither is any body else. When this comes in we will continue to fight on because this is a ridiculous proposition, with the economic climate the way it is, we are going forward with a new tax and the bottom line is this, it does nothing to change the temperature of the globe. It is completely and utterly climate irrelevant, it is merely a tax, it is a gesture. It will certainly make you poorer, it is not the wish of the Australian people, they were never told they were going to get it but here it comes.

And if we just think of a bus analogy. If at the last election you bought a bus ticket which said you were going from Brisbane to the Gold Coast, they ended up at Birdsville and the bus driver says sorry you have got the Birdsville carbon tax.

LYNDAL CURTIS: But Julia Gillard never promised not to introduce a carbon price, in fact she spoke of introducing a carbon price, and gave a speech about it with the ill fated citizens assembly proposal. This government has always been committed to introducing a carbon price, and at the end of the day, and isn’t this at the end of the fixed price period an emissions trading scheme like the CPRS?

BARNABY JOYCE: This is absolutely not what they said at the last election they were going to do. They said quite conclusively. We have seen it ad nauseum, the shot of her on the Brisbane River, saying “there will be no carbon tax under a government I lead.

LYNDAL CURTIS: But she did not say no carbon price?

BARNABY JOYCE: This is semantics, absolute semantics. We can’t play this sort of game with the Australian people that’s how they lose respect for you. That’s why they end up in the chamber booing and hissing because people lose respect for the office. When you are the Prime Minister you have got to be fair dinkum. If you are going to play this little game of semantics with the Australian people and then bang a carbon tax on them, delivered to them from the powerpoint of every corner of their room, making the price of everything they do dearer, that will have no effect on the climate and then try some weasel words to get out of it. You really will stir them up.

And she stirred them up today, to the point where she took the Labor party down to 26 per cent. I tell you they will stay there and live there if they carry on like this.

LYNDAL CURTIS: Just to go to the Senate debate. Will you be trying to talk this debate out, will you do everything you can to try and talk as long as you can delay a vote in the Senate?

BARNABY JOYCE: Will I work as hard as I can to protect the Australian people from a ridiculous tax? Yes I will. Right at the start, I never agreed with the ETS.

The other part of this of course is the huge boon to the banks. I hope the Australian people realise this. Big banks get their biggest bonus ever courtesy of Bob Brown, it’s Bob Brown’s “Big Bank Bonus”. They are going to get billions of dollars in commission to trade a permit around the marketplace, ultimately with your Emissions Trading Scheme, because of a colourless, odourless gas, which some housewife, man on the land has to pay. Money does not grow on trees, they are definitely going to pay.

Then we give, what, $56.9 billion a year, by 2050, to send overseas to buy permits, these bizarre markets where they go to Russia, or to south-east Asia or the west coast of Africa and buy these incredible permits from these incredible permit markets.

LYNDAL CURTIS: You’ve constantly derided carbon as a colourless, odourless gas …

BARNABY JOYCE: … it is ….

LYNDAL CURTIS: … why then is the Coalition committed to spending some billions of dollars to try and bring emissions down.

BARNABY JOYCE: It is $3.2 billion and it is budgeted, it fits in because increasing the productivity of soil is good, whether you believe in global warming, it is a real outcome. If you develop a more efficient engine, that is going to be a good outcome regardless.

LYNDAL CURTIS: Isn’t the government doing some of that through its carbon farming initiative?

BARNABY JOYCE: No, what they are doing is bringing in a tax. They are bringing in a tax and if taxes cooled the planet, the place would be an icebox. It is absurd. Using the same logic, every time you increase income tax the place would get colder, every time you reduce income tax it would warm up a little bit.

I mean it is just this absurd analysis. Where they always, and the way they go about it, where they create fear and loathing and moral outrage. You will instantaneously combust if you don’t drown, and people say oh that sounds bad. People will die all round the world, there will be droughts, droughts, fire, flood and famine.

And then people say I feel bad about this, I must do something about this. But then when people ask the logical question, hang on, how does a tax have anything to do with those things you just said then …

LYNDAL CURTIS: Don’t taxes change behaviour?

BARNABY JOYCE: Yes, they do. They make you poorer. They make it so you can’t afford things. That is precisely what this is. Yet they’re now saying, well it doesn’t have that much of an effect. Well, if it doesn’t have that much of an effect, why are you doing it?

But, of course, it does have an effect and you’re dead right. It does make you poorer, it is a pricing mechanism to make you poorer so you can not afford things, you can not buy them and the nasty little pill about this is that the thing that people can’t afford will be their power. And there are people right now Lyndal who can’t afford their power. They don’t need any more motivation to be poor, the government has got them to a poor position quite alright right now.

LYNDAL CURTIS: You say the tax will make people poorer but the government’s also going to be giving some compensation, some tax cuts and pension rises to people. Are you happy going to the next election saying to people we will take those tax cuts and pension rises away?

BARNABY JOYCE: This is an absurdity. They must think we are all fools. They’re saying they are going to take all this money of you and then I am going to give you a little bit of your own money back and you will say thank you to me.

How about we just leave all the money in their pocket, that’s a much better idea. But this idea we can take the money off you, spinning it around a department, for which I hear there are 1,000 people at the moment in the Climate Change Department, I don’t know how they’re going, it was a bit cold this morning, they should have warmed it up this morning. But then the 1,000 people get paid an average of $140,000 per year. Tell that to the lady on the checkout.

The heart of the carbon “tax” matter is this.

It is not, and has never, ever been, about the climate.

It is all … and only … about legalising a new artificial “commodity” (carbon ‘units’), upon which the banking industry can create a new, highly leveraged, entirely unregulated derivatives casino.

Remember the GFC?  With those “financial weapons of mass destruction” called “mortgage-backed securities” (ie, derivatives) at its heart?

Imagine a brave new world, in which banks are now empowered to create unlimited quantities of new derivatives, to trade using their HFT platforms, that have the power to “flash crash” and wipe out 98% of RIO Tinto’s share price in less than four minutes.

Think carbon pricing, think GFC1 … to the power of ten.

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.


“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.


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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