Use access key #2 to skip to page content.

ikkyu2 (99.51)

Cap and Trade

Recs

31

June 28, 2009 – Comments (14) | RELATED TICKERS: GS , XOM

Cap and trade is the exciting new carbon-emissions legislation nearing ratification in the American Congress.

The premise is simple: carbon emissions harm the environment by contributing to global warming, and must be stopped.  They will be stopped this way: companies that use energy, i.e. companies that actually make things, will receive tokens to account for their carbon use in the USA.  The tokens initially will be free; eventually they will cost money, i.e., the companies will be taxed in order to obtain them.

The tokens, however, will be tradable.  Goldman Sachs will be tasked with making a market in them.  Goldman will get a commission on every transaction.  Other companies will have to be retained as middlemen to analyze the technical details of the market and recommend to producing companies the most efficient ways to hedge the possibilities of their future energy needs, or lack of needs.

An energy derivatives market is not a new thing.  Enron was a corporation that made billions of dollars in profit by trading energy derivatives.  And if a derivative market generates billions of dollars in profit for someone, how can it be a bad thing?

 

Let's recap:

1)  A new direct tax on production, imposed during the worst recession in history, on an economy whose production sector has shrunk to 25% and continues to shrink despite policymakers' call that the current service-oriented economy is not viable long term.

2)  A new derivatives market that promises to allow financial companies to skim billions off the top for doing - nothing?  Not much, anyway.

3)  The opportunity to build a whole new generation of profit-making energy derivative trading firms, using the shining historical example of Enron as a model.

 

What could possibly go wrong here?  How could any patriotic American oppose this BRILLIANT plan?  Write your Congressman and urge him or her to push this through immediately! 

 

 

 

 

14 Comments – Post Your Own

#1) On June 28, 2009 at 6:39 PM, rd80 (99.10) wrote:

4)  Increases pollution because even more economic activity will be pushed to countries with lax environmental standards.

But I'm sure it will be fine.  After all, congress has such a good track record of figuring out the unintended consequences of legislation. 

 

Report this comment
#2) On June 28, 2009 at 9:30 PM, LouieJunior (20.87) wrote:

Let's not forget about the debit cards the poor will get, with monthly direct-deposited funds, to offset their significant loss in purchasing power resulting from the legislation. Another great idea! Nothing could go wrong with this.

Report this comment
#3) On June 28, 2009 at 11:45 PM, NOTvuffett (< 20) wrote:

What could go wrong here? I totally believe that the scientists have an accurate model of the interactions of the biology, chemistry and physics for the entire planet and the sun that will be good for 100 years, although I don't know why they can't tell me if it will rain on Tuesday.

I am going to cash in by selling carbon offsets for planting trees in South America, then sending them to lumber and paper mills.  It would be better to have the carbon sequestered in lumber and paper than letting it decompose and releasing the carbon into the environment again, lol.  

Report this comment
#4) On June 29, 2009 at 2:28 AM, biotechmgr (58.92) wrote:

Did you read the Rolling Stone article about GS? Brilliant. Tells us the tale of the next bubble in cap and trade and why this will all go through. Yep another tax on all of us to fill their pockets.

Report this comment
#5) On June 29, 2009 at 8:15 AM, dudemonkey (58.51) wrote:

+1 Rec for a well-thought out argument that makes effective use of satire and strays from the CAPS standard of belittling those who disagree with you.

Report this comment
#6) On June 29, 2009 at 4:50 PM, Londamania (61.31) wrote:

I am no fan of the cap and trade plan as proposed - especially with GS at the center of it.  But there is only one thing worse than this plan - and that is doing nothing.  It does not matter how well the market does if we don't have a planet to live on.  And it is not reasonable to ask for 100% certain proof of this before we act - in fact it is unreasonable from a pure risk management standpoint not to act on something of catastrophic proportions if the % likelihood of it gets much above 1%.  And we are well past that.

North Africa used to be breakbasket very similar to our great plains.  Now - it's a desert.  Because of man.  Do not think that we can't royally screw this up, because we can and in fact have done so on mutliple occasions.  This time with our technology amplifying our folly it could very well destroy much of what we have built.

The only good that will come of this is that we will reduce our carbon emissions which we should have started doing in 1993 when the Kyoto accords were originally passed by the rest of the free world except us.  We are 15 years late to the party - suck it up and stop whining about a few bucks.  We should have never had energy and goods that cheap to begin with.

Report this comment
#7) On June 29, 2009 at 5:26 PM, davejh23 (< 20) wrote:

Londamania - How did you determine that we have much better than a 1% chance of consequences of catastrophic proportions?  We have had warmer periods of history within the last century.  Man is responsible for a relatively small portion of carbon emissions on this planet, and even if carbon emissions were the problem, who says that they won't lead to global cooling in the future?...this was a concern not too long ago.  I agree that we should limit our impact on the evironment, but not because of theories pushed by nut-jobs like Al Gore.

Report this comment
#8) On June 29, 2009 at 5:30 PM, ReadEmAnWeep (32.00) wrote:

Here is something interesting:-America will force a tax on everyone! (Cap and Trade will increase cost of production which in turn effectively tax all consumers) ... But this is all old news.-Hey heating and cooling cycles of the earth are natural! Whoa...-Even if global warming is a threat... China already has plans to build enough (non-clean burning) coal burning facilities for the next decade will more than make up for this added tax to America. In fact these being built in china alone will double the greenhouse gas emissions from what they currently are. I am sure glad we all get to pay more to reduce our levels what is it 18% by 2020? Something like that.-Also, as was mentioned this will only kill more jobs as it makes it all the more profitable to out source. It was mentioned in the blog earlier. This will also increase pollution, since the other countries won't have the same standards.

 

Report this comment
#9) On June 29, 2009 at 5:31 PM, ReadEmAnWeep (32.00) wrote:

Here is something interesting:

 

-America will force a tax on everyone! (Cap and Trade will increase cost of production which in turn effectively tax all consumers) ... But this is all old news.

 

-Hey heating and cooling cycles of the earth are natural! Whoa...

 

-Even if global warming is a threat... China already has plans to build enough (non-clean burning) coal burning facilities for the next decade will more than make up for this added tax to America. In fact these being built in china alone will double the greenhouse gas emissions from what they currently are. I am sure glad we all get to pay more to reduce our levels what is it 18% by 2020? Something like that.

 

-Also, as was mentioned this will only kill more jobs as it makes it all the more profitable to out source. It was mentioned in the blog earlier. This will also increase pollution, since the other countries won't have the same standards.

 

(  Sry, lets try it again with spaces this time :P  )

Report this comment
#10) On June 29, 2009 at 5:38 PM, davejh23 (< 20) wrote:

"...there is only one thing worse than this plan - and that is doing nothing."

 Do you work in government?  I agree that we've procrastinated long enough, and that something should be done.  However, the view that anything is better than nothing is absurd.  There are ligitimate concerns surrounding this legislation...it could put the US at a competitive disadvantage, increase domestic unemployment, and do nothing to improve the environment.  This is the wrong approach.  Unless we can create and enforce a global standard, any efforts in the US will have no improving effect on the environment.  So, we're left with no improvement in the evironment, and devastating unintended economic consequences.

There are some that are urging that we should be taking drastic measures to actively cool the planet.  Would you argue that this would be better than nothing?...when we aren't 100% certain that global warming is the issue?  The unintended consequences could literally destroy the planet.

Report this comment
#11) On June 29, 2009 at 5:44 PM, ReadEmAnWeep (32.00) wrote:

"However, the view that anything is better than nothing is absurd."

 Hear, hear!

"There are ligitimate concerns surrounding this legislation...it could put the US at a competitive disadvantage, increase domestic unemployment, and do nothing to improve the environment.  This is the wrong approach."

 I agree with that I think there are more immediate economic dangers than worrying about emissions. Especially since the rest of the world would just more than counter-act our efforts.

Report this comment
#12) On July 01, 2009 at 8:26 PM, fmahnke (95.89) wrote:

I still cannot beleive this bill was passed in the house. It is insanity.

The Administration's claim that this is really a jobs bill are right on the money.  I predict that for every temporary "Green job" created, we will lose ten jobs in manufacturing and/or traditional energy production.

Some people refer to this a part pf a progressive adgenda. I do understand the objectives and am not politically conservative,  but this is  insane  for this economy, at this time for our Country.

Report this comment
#13) On July 10, 2009 at 3:00 AM, ikkyu2 (99.51) wrote:

Wow, that's rough, fmahnke.  I think you're spot on, though.

Report this comment
#14) On July 10, 2009 at 3:50 AM, NOTvuffett (< 20) wrote:

It doesn't matter what the USA does.  Whether you believe in global warming or not, carbon dioxide will rise.  If there is a real consequence of increased carbon dioxide levels we will have to adjust to it, if there is not, we will have wasted our blood and treasure on a fool's errand.

Report this comment

Featured Broker Partners


Advertisement