Thursday, April 9, 2009

Do I smell the next financial bubble?

There's a carbon allowance market. Simply put it permits the sale and trade of carbon allowances. Without much knowledge of the process I can see how this will get out of hand in the future. Large high carbon output corporations will buy up credits from smaller companies. Other investment companies will come into existance to trade in these allowances and like the mortgage paper that was composed of bits and pieces of loans and sold all over the world...I think you get the idea. You know they will try to sell this to the general public as the new great way of "green" investing. And just like the sub prime and option mortgages there'll be no way to value such paper. What's worse with this senerio is that when the carbon market collapses there'll be nothing of value to back up the paper. No collateral zip nada you'll have toilet paper after getting screwed on that deal. Remember you heard it here first.

Carbon allowances
The next weapon of mass financial distruction

9 comments:

an average patriot said...

Interesting! I have never heard of a carbon market or carbon futures or anything. Googling it, it seems America is behind the rest of the world. This might be a good thing!
"We know the country that harnesses the power of clean, renewable energy will lead the 21st century," President Obama said in his address to Congress earlier this year.

As investors seek out opportunities in the growing global carbon market, and world leaders prepare for the United Nations climate change conference in Copenhagen in December, it may seem as if the United States is a step behind in reducing carbon emissions; the administration and the Democrat-led Congress are still shaping policy to regulate carbon in the United States.

Yet given the United States' role as a global leader and its potentially substantial carbon market, the rest of the world will be watching what happens here very closely, experts from the carbon finance, climate policy, and clean-tech communities said here Wednesday.

Snave said...

Excellent post. And if what you say proves to be correct, it will be the fat cat guys in the top 1% of wealthy getting all the money while the rest of us never see any of it, of course.

Snave said...

Excellent post. And if what you say proves to be correct, it will be the fat cat guys in the top 1% of wealthy getting all the money while the rest of us never see any of it, of course.

Tom Harper said...

OK, I heard it here first. It's inevitable I guess. Large corporations always find ways to get around things, whether it means dodging regulations or pretending to follow the trends and showing that they "care" about the environment.

BBC said...

It's just politics. And it's all a bunch of bullshit. Get out and do some camping before it all goes to hell.

Later you are going to be too busy with a garden and such while trying to get by.

BBC said...

There hasn't been anything of value to back up the paper for years, it's just all made up figures and smoke screens to keep you working for the kings.

BBC said...

"Do I smell the next financial bubble?"

Hell, I see it. Looks in wallet, na, I'm still doing great. I can't make it my problem if so many are going down the tubes because they are stupid.

S.W. Anderson said...

As I understand it, a big part of the reason for this is to encourage large-volume users of carbon-based energy to reduce consumption over time. Likewise for reducing CO2 emissions. Hence, the caps and the necessity of trading.

It seems to me trading would only be useful for big companies in need of rights to exceed their cap and for smaller or at least cleaner-running companies to turn some of their rights into cash.

How and why third parties would get mixed into it, buying investment paper directly based on this carbon trading isn't clear to me.

I think investors would be looking, in part, at how well particular companies do at adapting to this new system. But those investors would be considering investments in companies, not in emissions right and the like.

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