Cap and trade sets of up a market for trading greenhouse gas "allowances". This means that there will be a market for futures and futures markets will also provide the opportunity for index type investments. Those investing in all these vehicles will seek to hedge their upside and/or downside risk providing for the creation of collateralized obligations and offsetting credit default swaps.
Sound familiar? This is Financial institution's dream come true- a gift from the US Gov.
My point is... get in now... establish your position...and don't be greedy. When wall street and the USGov team up, you've got to be "in the game".
If you make a ton of money you won't care that your electric bill grew by 50%, US manufacturing completely shut down, and gasoline is $8.00 a gallon. In fact, you will facilitate the whole process by being one of those individual investors that is helping provide liquidity to those efforts to remake America.
The informed will make money, the poor will get tax credit offsets and those in the middle and those frozen in the headlights will foot the bill.
------------- I hate long posts but if you want to know how this all going to work:
I read the legislation, so let me bottom line it for:
- Each year the USGov decides how much "man made" greenhouse gases can be introduced into the atmosphere by citizens and companys for which the USGov has jurisdiction (call this "the allowance").
- Some of "the allowance" is allocated to citizens and companys. They will not get enough of "the allowance" to actually operate in a given year.
- The rest of "the allowance" is given to Agencies of the USGOV or Non-Governmental Organizations who do not actually emit greenhouse gases but can "sell" their portion of "the allowance" to those that have been "underallocated". They will no doubt sell 100% of their "allowance" because they don't need an allowance to begin with. Get it?
- The combination of 1, 2 and 3 above are a simple formula for taxing everyone in line #2.
- These taxes are then either (1) passed on to the consumer or (2) avoided by curtailing production in the US [loss of jobs].
- While reduction in greenhouse gas emissions can be measured, the affect on global warming cannot since there are too many other variables at play. Hence, the success at raising taxes is a certainty; the reduction in global warming is not.
- Only Western Europe and the US are pursuing these policies. China and India are not since they have several billion people to keep happy.
What are they doing about water vapor? I loved you post on http://tedbits.blogspot.com/2009/02/listen-for-lie.html
ReplyDeleteDid you know Farmers are exempt from the climate bill? Not only that they are unhappy that the bill will raise the price of their fuel, fertilizer and electricity. In the mind of the entitled American farmer, any increase in costs or reduction in revenue -- whether from natural causes, market forces or government regulation -- must be compensated for by the government.
ReplyDeleteFarmers can earn money by reducing the carbon footprint on their farms and selling these "offsets". They will be paid extra if they change the feedstock to cut down on cow burps and farts.
And they demanded to be paid not just if they do these things in the future, but also if they did them last year or the year before. They demanded the payments even if they are already getting a check from the government to do the same things as part of some other conservation program.
And here is the real kick in the teeth... The bill shifts the supervision of farm carbon output from the EPA to the Dept of Agriculture.
Nice to get regulated by your buddies... wink wink...
Also, most farms are large Corporations... nod...nod...wink...wink.
I also read the legislation and noted that individual citizens using oil, natural gas, propane or other so deemed greenhouse gas producing fossil fuel for purposes of home heating will be individually taxed. WHAT?!?!
ReplyDeleteAlso, there is a long list of light bulbs that are going to be outlawed and individual citizens either selling such items or transferring ownership of such items after the effective date may be in criminal violation of the act.
The National Police force promised by the president will be fully in place to enforce this legislation. Unemployment will be reduced by hiring Americans to spy on other Americas to see what kind of light bulbs they are using.
ReplyDeleteCopy/Paste into your browser:
http://www.youtube.com/watch?v=_fO-usAlqak
China has already said they are concerning about global warming too. They will join in but we have to lead because the US is the largest polluter on the planet. We must stop telling other people what to do and get our own house in order first.
ReplyDeleteCap and trade will enable the US to convert old car manufacturing plants into factories to produce wind turbines. Unless of course they only want to pay the workers a buck a day in which case the auto plant is shut down and a new wind turbine factory will be built in China or Indonesia or Brazil.
ReplyDeleteThanks for the responses! Obviously a hot topic.
ReplyDeleteDoes anyone remember how people responded to the NEW COKE and COKE CLASSIC debacle from years ago? I found a similar hidden opportunity in the legislation to make some money. See if you can find it too. I will give you a hint: "We bring good things to light."
The US is 1/15th of the planetary population and nearly all of the rest of the people on the planet are going to dramatically increase their per-capita CO2 output whether we like it or not.
ReplyDeleteHerein lies the problem: While we emit more CO2 per-capita than anyone else today, we won't be emitting the most CO2 for very long on an aggregate basis.
To actually stop the increase in CO2 emissions we would have to find some way to compel the Asians and Africans to not increase their CO2 emissions.
But all possible means for them to improve their standard of living inherently involve significant and even dramatic increases in CO2 emissions per-capita.
The math is simple: Within a few years China will emit more CO2 than we will. A few years after that both Africa and India will surpass the United States. None of these regions will agree to stop emitting CO2 because to do so is to agree to keep their people perpetually poor and agrarian while we enjoy the fruits of a westernized, industrialized economy.
Thanks a lot it has been a good help, now to make money on cap and trade is without a doubt easy utilizing your advice. Thank you
ReplyDelete