Goldman Cap-And-Trade?
Goldman Sachs has engineered every major market manipulation since the Great Depression -- from tech stocks to high gas prices -- and they're set to do it again, claims Matt Taibbi in Rolling Stone. A number of financial journalists have problems with his blaming it all on Goldman Sachs (see below), but this part is interesting, and probably not wrong:
...The new game in town, the next bubble, is in carbon credits -- a booming trillion dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade....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 capandtrade, 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. This is worse than the bailout: It allows the bank to seize taxpayer money before it's even collected.
...Cap-and-trade is going to happen. Or, if it doesn't, something like it will. The moral is the same as for all the other bubbles that Goldman helped create, from 1929 to 2009. In almost every case, the very same bank that behaved recklessly for years, weighing down the system with toxic loans and predatory debt, and accomplishing nothing but massive bonuses for a few bosses, has been rewarded with mountains of virtually free money and government guarantees -- while the actual victims in this mess, ordinary taxpayers, are the ones paying for it.
The commodities-market casino that is cap-and-trade is well-explained by Taibbi at the link. But, Taibbi did a shoddy job in great-evil-izing Goldman, argues Heidi N. Moore at BigMoney.com, who says many firms are responsible for the wrongs he tags Goldman Sachs with. The Atlantic's Megan McArdle also rips Taibbi's piece:
He seems to deliberately eschew understanding his subjects, because only corrupt, pointy-headed financial journalists who have been co-opted by the system do that. And Matt Taibbi is here to save you from those pointy headed elites.Taibbi is a gifted narrative journalist, whose verbal talents I greatly admire. But financial meltdowns don't offer villains, for the simple reason that no one person or even one group is powerful enough to take down a whole system. Confronted with this, Taibbi doesn't back away from the narrative form, or apply it to smaller questions where it is more appropriate, as William Cohan did in House of Cards. Instead, he grabs whoever's nearest to hand and builds them up into a gigantic straw villian, which he proceeds to bash with a handful of recently acquired technical terms that he clearly doesn't quite understand. It's not that everything he says is wrong, but the bits that are true aren't interesting, and the bits that are interesting aren't true.
Carbon credits are a scam - and they need AGW to appear legit to help pull it off. It's the primary purpose (since I am no scientist) that I have been more than skeptical of AGW since the get go (that and GoreManBearPig was involved).
"the new game in town, the next bubble, is in carbon credits -- a booming trillion dollar market that barely even exists yet,"
And when the bubble goes bust, Al and his band of merry thieves will have stocks purchased for pennies on the dollar in the gas and electric companies they help drive into the ground with this scam.
Follow the dough, yo!
Feebie at December 14, 2009 11:30 PM
I admire you for this blog post. Saying there's no single bad guy out there hurts people's feelings, and media-reliant people hate to do that.
Crid [CridComment at gmail] at December 15, 2009 2:36 AM
Businesses hold world hostage over carbon credits
Even U.N. climate chief tied to new, 'green' extortion scam
WND research reveals the European Union's cap-and-trade exchange is vulnerable to a sophisticated form of corporate extortion in which EU bureaucrats in Brussels are manipulated into paying hundreds of millions of dollars in carbon permit bribes to keep companies from moving jobs to Third World nations.
In fact, it appears the scam is already under way.
The crux of the scheme is this: European steelmakers have threatened to leave the EU for India, eliminating the jobs of thousands of workers in the process, unless the EU grants the steelmakers free carbon credits worth hundreds of millions of dollars.
Eurofer, a European trade group, is at the center of the scheme. The web of the plot, however, weaves in not only several companies, but also the United Nations' climate change chief:
* Among its members, Eurofer represents two EU steelmakers, Corus Redcar and ArcelorMittal, each of which has ties to India as well as to Rajendra K. Pachauri, the Indian industrial engineer who has been chairman of the U.N. Intergovernmental Panel on Climate Change, or IPCC, since 2002.
* Eurofer appears to have coordinated a threat to the European Union Greenhouse Gas Emission Trading System that its steelmakers would move their operations from the EU to India unless the EU cap-and-trade exchange issued them – at no cost – carbon emissions permits worth hundreds of millions of dollars.
* Once the bureaucrats in Brussels acquiesced, Corus Redcar and ArcelorMittal maneuvered to cash in windfall profits from the EU carbon permits given them at no cost.
* Additionally, Corus Redcar has now announced a decision to close operations in Great Britain nonetheless and relocate its steelmaking activities to India in order to gain additional U.N. carbon credits.
Ironically, EU and U.N. officials who might have thought requiring cap-and-trade permits would operate as "protection racket" in which EU companies need to buy carbon credits to continue operations, have now found themselves on the losing end of the reverse scheme.
In the final analysis, the winners are the European Union corporations willing to play hardball with the European Union Greenhouse Gas Emission Trading System, and the losers are the EU middle class workers that are held hostage in the scheme.
http://www.wnd.com/index.php/index.php?pageId=118953
Snoopy at December 15, 2009 5:14 AM
The best comparison I've heard yet about carbon credits are the ancient (OK, not so ancient) practice of plenary indulgences.
Vinnie Bartilucci at December 15, 2009 6:48 AM
Hard to raise taxes on stuff that doesn't really fix what it was supposed to fix, the end around is something new and scary, and somewhat undefinable, takes the tax and spend game to new heights.
jksisco at December 15, 2009 8:27 AM
This reminds me of that King of the Hill episode where Dale sells a bunch of carbon offsets and pockets the money.
Cat at December 15, 2009 8:30 AM
"there's no single bad guy out there "
Well, you gotta start somewhere!
Jay R at December 15, 2009 11:09 AM
Business responds to incentives, another way of saying that smart people respond to incentives. The government proposes crazy schemes and subsidies, uncontrolled, mismanaged, and without oversight. People take advantage of those schemes. I think that this is the intended result, benefitting some in congress. How would we know? Al Gore has become a billionaire through "perceptive" investments in green schemes.
Among many examples, the rules allow converting ordinary fuel into subsidized fuel by adding a small amount of "green" fuel:
www.stopglobalwarming.org/sgw_read.asp?id=84000412008
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The "splash and dash" scam involves shipping biodiesel from Europe to the US where a dash of fuel is added, allowing traders to claim 11p per litre of US subsidy for the entire cargo. It is then shipped back and sold below domestic prices, undercutting Europe's biofuel industry.
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When people/business don't take advantage of government subsidy, the government claims they are not cooperating! For example, the banks are now bad for paying back the emergency TARP loans offered and required by the US Treasury. And, they are "paying back" those loans by borrowing other money at less interest, offered to them by that same Treasury.
The current recession was triggered by collapsing home prices and mortgage losses, after an extended period of government providing easy money and low interest rates. (They are still doing this.) The bad housing policy was designed, encouraged, and required by government. See We Guarantee It - The Government Caused the Economic Crisis
Seen one way, the government spins schemes, then "business" uses those schemes to get rich. This would be impossible without the government paying. Congressmen and Senators coincidentally get rich through "prudent" investing. Independent analysis discovers the wasted funds, and the government doesn't react. The government merely blames "business" for doing bad things.
Or, see it the other way if you must. Crafty businessmen subvert the honest politicians to create unintended consequences. The honest politicians are too trusting to investigate and prosecute. It is the "fat cat bankers" and "Goldman Sachs devils" who are at fault. This is convenient for the politicians, yes? This argues for removing from government the power to do these things. If the innocent/honest politicians can't get it right, then the public does not benefit, anyway. Throw them out. Take away their power. Then the greedy businessmen will have to make cheaper toasters to get rich.
Andrew_M_Garland at December 15, 2009 12:00 PM
Unfortunately, a carbon tax is a non-starter. I don't know what other mechanisms there are available to incentivize the reduction of greenhouse gasses. I think it's cap and trade or nothing.
Whatever at December 15, 2009 11:17 PM
Whatever, it's not at all clear that from the available evidence that's the sort of thing that needs to be incentivized. But if it is, the #1 action to take is to clear away the Byzantine cluster-fu of regulations that prevents new nuclear power plants from being built.
Cousin Dave at December 16, 2009 6:39 AM
Yeah, because Cap and Trade has worked so well to reduce Europe's emissions. Oh wait, no it hasn't.
Of course, you're starting from the premise that it is both desirable and necessary to reduce "greenhouse gas" emissions. What if your premise is false?
Why, then you're asking us to spend probably a quadrillion dollars worldwide to solve a problem that doesn't exist. It would be kind of like mandating that all houses be Velociraptor-proof.
brian at December 16, 2009 8:23 AM
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