Will “Cap-and-Trade” be the Next Bubble?
By Linda Anselmi on July 2, 2009 at 4:01 PM in Current Affairs, Economy, Energy Policy, Environment
Okay. I’ll confess.
I’ve always considered myself something of an environmentalist. I don’t remember ever hugging a tree, but I hiked and backpacked in my youth. I’ve recycled since the early 80’s. I shunned the use of chemicals and railed against deforestation, over-packaging, and junk mail. I joined Sierra club, World Wildlife and Nature Conservancy in my twenties (and have been a member ever since). But I am far from an environmental purist. Mostly I’ve just tried to enjoy our natural environment and be a thoughtful and conservation minded consumer.
So when Al Gore came out proclaiming that global warming was upon us and would bring an end to life as we know it, I believed him. And regardless of whichever side of science and popularity is currently ahead in the Global warming debate, I still believe that the our current lifestyle of mass production, mass consumption and mass waste is unsustainable.
But a funny thing happened as environmentalism became “Green.” It some how became less real.
Suddenly green thinkers were everywhere, changing their light bulbs and carrying their eco friendly bags, while driving a Hummer and anxiously awaiting their chance to purchase the latest version of the newest best thing. Yes, they bought the marketing slogan to “Think Green”, but their actions lacked the conviction of a true convert. Their hearts and heads were more invested in the idea of a carbon footprint. Then the reality of it. But that was okay. Every little bit helps, as they say. And its true, we all have to make compromises.
Then the talk turned to “Cap and Trade”, and I just couldn’t seem to get myself on the band wagon. I just couldn’t see the logic of some people, companies, industries or states making sacrifices to conserve energy and cut pollution, so others could “buy” the energy saved and use it and/or “buy” the rights to add pollution. How does that get us ahead? And how is that fair?
If I am required by law to make sacrifices, I want every one else by law to make those sacrifices as well. And if my efforts are creating a surplus energy product or pollution “right”, then why wouldn’t that surplus and those rights mine to sell? Why wouldn’t I be the one to receive compensation for my actions? Why would the government or some other entity be making the decision as to whom could buy my energy or pollution credits? And why would they receive the payments for my efforts?
No it just didn’t make sense to me and it didn’t seem right. But I didn’t realize how wrong “Cap and Trade” really was, until I read Matt Taibbi’s latest article in Rolling Stone. And would it surprise you to learn that Goldman Sachs has found a way to make money – big money on “cap-and-trade”? From Taibbi’s The Great American Bubble Machine:
The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.
And that’s just Taibbi’s opening lines. I’ve written (here, here and here) and read about the Goldman Sachs connections to our current financial woes. But Taibbi shows that economic destruction on a massive scale is Goldman Sachs’ historical MO and even now it is actively working to set up its next round of victims and this time their funnel will be in everyones pocket. More from The Great American Bubble Machine:
…any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain – an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.
The bank’s unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere – high gas prices, rising consumer-credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you’re losing, it’s going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it’s going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth – pure profit for rich individuals.
They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They’ve been pulling this same stunt over and over since the 1920s – and now they’re preparing to do it again, creating what may be the biggest and most audacious bubble yet.
In brutal detail, Tiabbi lays bare Goldman Sachs’ role in five bubbles that have rocked the US economy from 1929 to 2009 –
#1 – The Great Depression (of 1929)
#2 – Tech Stocks
#3 – The Housing Craze
#4 – $4 a Gallon
#5 – Rigging the Bailout
And then he goes on to explain their involvement in the bubble that’s about to start:
#6 – Global Warming
…If cap-and-trade succeeds, won’t we all be saved from the catastrophe of global warming? Maybe – but cap-and-trade, 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.
If you haven’t realized it already, this is a must read of the highest order. And it should be read in its complete form to get the full effect. For me to snip and paste more would not do it justice. Warning it will leave you shocked and more than a little sick to your stomach. The complete article.. And by the way, the global warming part is at the very end, but please read through to get there.
And as a warm-up, I thought you might enjoy this clip of MSNBC’s Carlos Watson discussing Goldman Sachs with Matt Taibbi of Rolling Stone, Dillion Ratigan of Morning Meeting and Jean Chatzky of Today’s Money 911.
Visit msnbc.com for Breaking News, World News, and News about the Economy
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Major h/t to “oowawa” for the link to Taibbi’s article and to “BGD” for the link to the video!
No Quarter’s American Girl in Italy has a great post including an excellent video explanation of “cap-and-trade” by the eco geek, here.
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Thank you for this article, Linda. The Taibbi article is very significant. The extent to which GS manipulates the NYSE is a subject very worthy of study.
http://zerohedge.blogspot.com/2009/06/nyse-halts-transparency-feels-goldman.html
http://market-ticker.denninger.net/archives/1176-Conspiracy-To-Hide-Bubble-Formation.html
Remember the original question why Bear Stearns was let to fail yet why did we bailout Goldman Sachs?
http://www.marketwatch.com/story/goldman-sachs-bailout-bonanza-lloyd
Good article, Doc. A big bunch of TARP money got to GS via AIG. This is all so complex–and that’s what they are counting on.
Administrator, please help. Almighty Spam Filter, who appears to be the Lord of GS as well as the Flies, has torched my comment.
Add to this the CCX Chicago Climate Exchange… fortuitous no? This same idea being born in Chicago of all places…who knew? The “notion” of a CCX got it’s initial funding from the Joyce Foundation…
http://www.chicagoclimatex.com/about/pdf/CCX_Overview_Brochure.pdf
which Barack was the director of for eight years.
http://pajamasmedia.com/blog/obama-and-the-attempt-to-destroy-the-second-amendment/
This is the story behind the story. This is likely “why” Barack is “the one”.
This whole cap and trade thing has little to do with pollution or the environment, and much to do with a huge pile of money to be made buying and selling and trading those “pollution rights”
It will be a commodity on the market, just like any commodity – to be squeezed for the juice, and bubbles made, and prices inflated, and sold again.
Obama’s best buddies Goldman Sachs are first in line to get those “trading rights” to this yummy new pool of money to be had and sheep to be fleeced.
Docelder, I am not surprised but none the less left nauseous.
Joyce ya say? Exelon is in there too I get the feeling.
2000
Joyce Foundation
provides grant
through Northwestern
University to conduct
feasibility study for
a voluntary carbon
trading pilot program
“The Joyce Foundation Named Barack Obama Of Davis, Miner, Barnhill & Galland A Director.” (Chicago Sun-Times, 11/28/94)
The Joyce Foundation’s Annual Reports list Barack Obama as one of the 12 members of the Board of Directors from 1998 until 2001 .
The founding members of CCX include American Electric Power (AEP), Baxter International Inc., the City of Chicago, DuPont, Equity Office Properties Trust, Ford Motor Company, International Paper, Manitoba Hydro, MeadWestvaco Corporation, Motorola, Inc., STMicroelectronics, Stora Enso North America, Temple-Inland Inc. and Waste Management,Inc.
Ford Motor company…… The unscathed US motor company on this board…..hmmmm.
Maybe we might want to rethink slapping them on the back for making it without being assimilated. They now have the monopoly on the car market as we knew it. GM is going to be building electric scooters and selling carbon credits for the savings of carbon from not producing cars. And we have Baxter International Inc. maker of the spanking new H1N1 vaccine. A little something for everybody… who knew? I think we all did know, but just couldn’t place it. There is a Pulitzer Prize in this, if somebody with a journalistic reputation has it in them to take this on.
Excellent followup, Linda, and an extraordinary important piece, regarding the financial crisis that we all need to look at, honestly, and address. I haven’t been a big fan of Taibbi, but on this article he’s got it right in my mind. He deserves kudos.
Finally, someone calls the stinker for what it is: highway robbery.
I agree with oowawa and you–Taibbi’s article is “must read.” Regardless of our political stripes, we need to consider the “fair rules” of capitalism and open our eyes to the load of crap that brought us to this moment.
It’s painful to look at and to think about, to realize how badly we’ve been duped. But nothing is going to change, unless we have the guts to call the thieves out. Wrapping this crap sandwich around environmental issues is a bitter, bitter irony. Who doesn’t want a cleaner environment–better air, better water, ensuring our natural landscape and resource riches are protected for our children.
Which makes the subtrefuge the creullest, most underhanded deception. They speak to our best intentions, while they intend to rob us blind.
Thanks for the additional speak out on this. We’ve got to start standing up and pushing back. Otherwise, everything we hold dear is up for sale.
That’s what makes it so smarmy, to me. They have co-opted the public’s environmental awareness, which is a *good* thing, and turned it to just another way for them to loot the country.
It’s disgusting.
our government is robbing us blind.
After a fashion your are correct. However, those who bankroll the candidates are the ones who are robbing the treasury blind, sums for which we must then make up. Bush and Cheney and now That One and Hair Plugs have allowed or are allowing their owners to systematically steal our treasure. In the long run, it really doesn’t matter who is doing the stealing since what is left of the middle class will end up paying for it all.
One common denominator between this and the past Administration is an uncanny ability to rob us in broad daylight and get away with it.
Goldman Sachs is closely associated with the Carlyle Group. Very closely associated. Google the two companies to see the connections.
One of the next big Bubbles will exploration of Geothermal for electrical power. There is a list of 39 countries which could generate ALL their electrical power needs and in many cases have power to export.
So what?? That is so boring — THINK AGAIN!
Those 39 countries could earn extra $$$ by trading Carbon credits — they are using carbon neutral power and the countries that are polluting can give the 39 countries money so they can continue polluting.
What is needed is for some smart forward thinking entrepreneurs to go into one or more of the 39 countries and get contracts to provide Geothermal power for all the rights involved — this includes full control of selling excess power to other countries AND mineral rights to the Geothermal brine. This is sort of like going into Saudi Arabia and countries with vast oil producing potential and getting all the rights to pump and export and then paying the country 4-5% of the “profits”.
What is smart for the Carlyle Group + Goldman Sachs to do is INVEST in companies that specialize in drilling Geothermal wells and that TEST the water from these geothermal well sites.
AND THIS IS EXACTLY WHAT IS HAPPENING.
The Carlyle Group has invested in at least one major Geothermal drilling company — and doors are opening for this company. Thanks in part to some of the board of directors who just happen to be former Prime ministers & Presidents of countries with close ties to the 39 countries. There is also a list of other countries who could getting 50% of their electricity from Geothermal power.
Cap and Trade — and pay these countries — I’m expecting most of this money to go into the deep vaults of Goldman Sachs and the Carlyle Group. Probably these two companies are also tying up minerals rights from Geothermal brine — think Silica (many uses — like computer chips), and precious metal (Gold, Silver etc.)
Gold is suspended in trace amounts in sea water — but the cost of recovering that gold directly from sea water would cost more than the gold. However, energy from the earth has already been converting sea water to gold. In New Zealand it turns out that the gold strikes are associated with old Geothermal deposits. Drilling for deep pockets of super HOT water (sea water) is sort of like prospecting for gold.
The Carlyle Group + Goldman Sachs have figured this out and are already in place for the next great gold rush.
http://www.reuters.com/article/businessNews/idUSTRE5517CQ20090602?feedType=RSS&feedName=businessNews
Thanks Linda, I just finished the Taibbi article and I have only one thing to say:
You bring the pitchforks, I’ll bring the torches…
O boy. I’ll bring the marshmallows.
It’s interesting to me that Matt Taibbi’s article appeared in the pro-Obama Rolling Stone. And, although the article does not expressly condemn O, it makes it clear that his administration is still as riddled with powerful Goldmanites as previous administrations. As the influence of the big bankers on the O administration, most notably Goldman Sachs, becomes increasingly evident, disillusionment is bound to increase among the left. Anyway, Taibbi has a blog, and in this article he addresses a Goldman Sachs response to his article:
http://trueslant.com/matttaibbi/2009/06/30/on-giving-goldman-a-chance/
How to end an argument with a Global Warming Zealot.
While I am not on the we’ve-got-to-do-something-now-about-GW bandwagon, the content of that particular link is pitiful in its misunderstanding of basic science. That blogger should avail himself not of all the things that science has brought him if he doesn’t like the method inherent to the profession.
Al Gore should have been president. The country would be in much better shape today if Al Gore had become president.
BUT…..Al Gore has no credibility with me on global warming because he has a gigantic carbon footprint at his own house, and flies around the world in a private jet to tell people that THEY must save the planet.
I’ll take global warming more seriously when Mr. Gore does.
I try to do my part to control global warming. I am excellent at recycling so my family of five only has two bags of garbage in our trash can each week.
But, I think we’ve all been “had” by the energy efficient light bulbs. When I moved into my current home 4 years ago I bought two cases of energy efficient light bulbs (one each of traditional and recessed lighting “flood” bulbs) to replace regular bulbs as they burned out. Guess what? In the four years I’ve been here the only bulbs that have burned out are the energy efficient ones that I spent several times as much to buy. And they seem to burn out yearly instead of the five year estimate on the package. And I don’t notice my electric bill being lower than when the house was full of regular bulbs.
J. J. : I agree, Al Gore should have been sworn in after he won the 2000 election.
Al Gore is part of this fiasco. He has his fingers in the wall street collection plate. Didn’t he just open a brokerage on wall street for barky? He’s in on this
gamebill that Nancy Pelousy wrote toscrewtake more money from middle-class America.As for this thread. This is deep. The web of Goldman’s control and greed is endless.
Who let the dogs out?
Thank you for a first rate piece on this very troubling problem. If only the American public understood what you state so plainly.
I read the Taibbi article. This is all just depressing as hell. I’ve suspected cap and trade was a big scam, but I just had no idea.
Goldman Sachs recently reported record 1st quarter earnings and a plan to pay record bonuses to executives. Remember the AIG situation? Where was the outrage by the media about Goldman Sachs? Where was ACORN with their signs, protesting outside the homes of Goldman Sachs executives? Oh yeah, I forgot. The Goldman Sachs thugs are nicely tucked into bed with Obama and his thugs.
Linda: good article. The green thinkers driving their Hummers and waiting to buy the next newest thing. Exactly. I always get a chuckle when I’m at Whole Foods and see all the Hummers, Jags, Mercedes, etc.
I think cap and trade is just another one of Obama’s compromising on real democratic values so he can please the big money people who put him in office.
Bush 41 and 43—big links to the Carlyle Group. I think Cheney is also significantly involved. I think it is really major to see this pathway connecting Obama to the cap and trade history, to learn about GS involvement—it is also very depressing. I thought the Bush years would never end and now I find they have not ended but worsened.
Thanks for calling our attention to this article Linda. While I have a jaded opinion of Taibbi, I have to admit that my hair stood up when I read his article. It may be that he’s put a particularly sinister spin on Goldman Sachs MO, but I have to admit that ever since last fall when Hank Paulsen (former head of GS) proposed the huge bailout, I’ve awakened to the key participation of former GSers in government, now and in the past. It makes one wonder if there’s really much true partisanship in the highest levels of governance.
What if partisanship as propagated by the 24/7 media exists primarily as a contrived method to divide and control?
Interesting point Docelder, but I’m more inclined to think the media highlight partisanship to create the phony sense there’s a sporting difference that doesn’t truly exist, in order to boost viewership and ratings.
Partisanship exists with or without the media. Extremists who care more for their own self-interest than the good of the country have been around far longer than the MSM. Indeed, the MSM is playing the extremists and vice versa much like the extremists have been playing the rest of us.
Interesting point Docelder, but I’m more inclined to think the media highlight partisanship to create the phony sense there’s a sporting difference that doesn’t truly exist, in order to boost viewership and ratings.
OH! You’re my new favorite blogger fyi
I am humbled.
Docelder, while I certainly appreciate and enjoy your comments, I didn’t write “you’re my new favorite blogger”! I have no idea why or how that remark got attached to my post!
Best regards!
Another comment lost to the Almighty Spam-Smiter.
Can I have my comment extricated from its talons, please?
Linda,
you need to educate yourself more on the subject.
the logic of some people, companies, industries or states making sacrifices to cut pollution, so others could “buy” the rights to add pollution is very simple. Unlike acid rain which is a local phenomenon, greenhouse gases travel around the globe and it doesn’t matter if emissions are cut in Florida or New York. Each emitter receives certain number of allowances to pollute. That’s the cap. The cap decreases every few years to force the pollutters to reduce emissions. It gets to the point where it is very expensive or technology is not available. But in other places, like Iowa, a farmer cuts methane emissions from his cow manure, uses this biogas to generate electricity for his farm. For this he gets:
1. lower electricity bill
2. his local power plant burns less fosil fuel i.e. less CO2 emissions
3. the farmer gets carbon credit which he can sell
to a power company company in Florida which used all the available technology to cut their emissions.
the offsets is equal to an allowance. That’s the trade.
It’s a win win situation. Offsets are a cost containment of the system. without them the cost of electricity would really increase a lot.
Will GS make money in the system? Probably. Someone has to finance the anaerobic digester in Iowa. Someone has to provide liquidity to the market whether it’s Chicago Climate Exchange or some other exchange. Because when the farmer in Iowa is ready to sell his carbon credits, the power company in Florida might not be ready to buy.
Cap and trade means that the fittest, more inovative emitters survive. Those who know how cut pollutions sell to those who don’t. Soon, the big polluters have to shut down because they cannot buy those allowances for ever.
Rollings Stones doesn’t like it? Strange, because they buy voluntary offsets to appear carbon neutral.
Somehow you don’t hear that they print on recycled paper to save the trees. And that’s called hypocracy.