Friday, September 25, 2015

Friday Post - Cap and trade

That familiar sounding buzz word that everybody's talking about. To environmentalists it sounds like a slam dunk. To the conservatives backing dirty oil you'd think Armageddon was to start tomorrow. but this may be more a boon to Wall street than either groups. While it would on the face of it force companies to clean up their act by making emissions more expensive it doesn't take into account what happens when a company is forced to buy credits on not just the open market but a secondary market set up complete with derivatives. And once the hedge fund boys step in it's open season on market manipulation. And exactly how do they monitor emissions when there's not enough inspectors at present to keep up with safety inspections? OSHA only has one inspector to cover 4 states in the west just to give you an idea. The EPA has been pretty much gutted in terms of personnel and funding. And we know companies cheat whenever they can. It increases profits the environment be damned.

And another thought came to mind. What's to prevent large companies that have high emissions from buying smaller companies with little emissions, using the credits and selling off the assets as we've seen with the rest of vulture capitalism? Then there's the possibility of shell companies being set up off shore that produce no green house gasses but provide a nice benefit for the parent company. They could in theory make billions by gaming the system. We're on to their little games.  

A better solution would be a pollution tax but one that could be gained back by installing control equipment. Throw in a 10 or 20% bonus on the tax rebate and you'd see quick changes in industry overnight. The added money could be gained from those who refused to comply or were fined for breaking emission standards. Sort of an carrot and stick approach.

To its' credit China will at least begin to clean up its' act. Maybe having to shut down factories for a month to clean up the air around Beijing was a wake up call. After it's burned all that tar sands oil smoke just drifts back over the Pacific and pollutes us. But the real proof in the pudding is how the economics of this will work. If they have to rely on outside investors to keep markets going it's an open invitation for manipulation.

Part Two - Greed

It starts at the top. A CEO issues a memo to the underlings to cut costs and increase profit margins. Managers tell estimators much the same. Estimators pad their bids telling the CEO one price while informing the project manager that the bid was far less. Managers always want to look good so they cut the bid even more and pass it on to the supervisor. The supervisor tells the foreman that the project was under bid but to do what he can without upsetting the workers. He too shaves off a few hours. The foreman then cuts some hours from the bid and tells the workers it's a tough job and must be done in the time given. His time of course. The workers manage to get the job done in just under the bid which isn't the real bid as we know. The CEO stands before the company and tells them the company isn't making any money so he'll have to cut costs even more. That may be in the form of refusing to replace broken equipment or maintaining company vehicles. And when there is an accident it's always the employees' fault. Driver/ operator error they say and be sure to drug test him. When an employee dies on the job so much the better because the company had an insurance policy on him. Worth more dead than alive. Of course in a large company CEOs don't care because the guy was just a number on a spread sheet. Only concern will be cover up story and the lies and fabrications to be addressed. When media inquires just tell them the matter is being investigated. But the workers usually know exactly what happened, but they won't talk for fear of losing their job.

bank fails later
No fails this week


BBC said...

The carbon tax thing is all Greek to me.

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