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mises
Joined: 05 Nov 2007
Location: retired
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 Posted: Sun Apr 11, 2010 9:40 pm Post subject: |
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Citi.
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A top Citigroup Inc. trader is pressing the financial giant to honor a 2009 pay package that could total $100 million, setting the stage for a potential showdown between Citi and the government's new pay czar.
The trader, Andrew J. Hall, heads Citigroup's energy-trading unit, Phibro LLC -- a secretive operation, run from the site of a former Connecticut dairy farm, that occasionally accounts for a disproportionate chunk of Citigroup income. |
http://online.wsj.com/article/SB124848894204180877.html
I think of that guy every time I get gas. I hope he is enjoying my money.
Yes. Let's add another layer of rent seeking bankster parasites to eat away at the carcass of the middle class. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Apr 11, 2010 10:02 pm Post subject: |
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http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine/7
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Gone are Hank Paulson and Neel Kashkari; in their place are Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites. (Gensler was the firm's cohead of finance.) And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits � a booming trillion dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade.
The new carboncredit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.
Here's how it works: If the bill passes, there will be limits for coal plants, utilities, natural-gas distributors and numerous other industries on the amount of carbon emissions (a.k.a. greenhouse gases) they can produce per year. If the companies go over their allotment, they will be able to buy "allocations" or credits from other companies that have managed to produce fewer emissions. President Obama conservatively estimates that about $646 billion worth of carbon credits will be auctioned in the first seven years; one of his top economic aides speculates that the real number might be twice or even three times that amount.
The feature of this plan that has special appeal to speculators is that the "cap" on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. Which means that this is a brand new commodities market where the main commodity to be traded is guaranteed to rise in price over time. The volume of this new market will be upwards of a trillion dollars annually; for comparison's sake, the annual combined revenues of all electricity suppliers in the U.S. total $320 billion.
Goldman wants this bill. The plan is (1) to get in on the ground floor of paradigmshifting legislation, (2) make sure that they're the profitmaking slice of that paradigm and (3) make sure the slice is a big slice. Goldman started pushing hard for capandtrade long ago, but things really ramped up last year when the firm spent $3.5 million to lobby climate issues. (One of their lobbyists at the time was none other than Patterson, now Treasury chief of staff.) Back in 2005, when Hank Paulson was chief of Goldman, he personally helped author the bank's environmental policy, a document that contains some surprising elements for a firm that in all other areas has been consistently opposed to any sort of government regulation. Paulson's report argued that "voluntary action alone cannot solve the climatechange problem." A few years later, the bank's carbon chief, Ken Newcombe, insisted that capandtrade alone won't be enough to fix the climate problem and called for further public investments in research and development. Which is convenient, considering that Goldman made early investments in wind power (it bought a subsidiary called Horizon Wind Energy), renewable diesel (it is an investor in a firm called Changing World Technologies) and solar power (it partnered with BP Solar), exactly the kind of deals that will prosper if the government forces energy producers to use cleaner energy. As Paulson said at the time, "We're not making those investments to lose money."
The bank owns a 10 percent stake in the Chicago Climate Exchange, where the carbon credits will be traded. Moreover, Goldman owns a minority stake in Blue Source LLC, a Utahbased firm that sells carbon credits of the type that will be in great demand if the bill passes. Nobel Prize winner Al Gore, who is intimately involved with the planning of cap-and-trade, started up a company called Generation Investment Management with three former bigwigs from Goldman Sachs Asset Management, David Blood, Mark Ferguson and Peter Harris. Their business? Investing in carbon offsets. There's also a $500 million Green Growth Fund set up by a Goldmanite to invest in greentech � the list goes on and on. Goldman is ahead of the headlines again, just waiting for someone to make it rain in the right spot. Will this market be bigger than the energyfutures market?
"Oh, it'll dwarf it," says a former staffer on the House energy committee.
Well, you might say, who cares? If cap-and-trade succeeds, won't we all be saved from the catastrophe of global warming? Maybe � but capandtrade, 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 taxcollection scheme. This is worse than the bailout: It allows the bank to seize taxpayer money before it's even collected.
"If it's going to be a tax, I would prefer that Washington set the tax and collect it," says Michael Masters, the hedgefund director who spoke out against oilfutures speculation. "But we're saying that Wall Street can set the tax, and Wall Street can collect the tax. That's the last thing in the world I want. It's just asinine."
Cap-and-trade is going to happen. Or, if it doesn't, something like it will. The moral is the same as for all the other bubbles that Goldman helped create, from 1929 to 2009. In almost every case, the very same bank that behaved recklessly for years, weighing down the system with toxic loans and predatory debt, and accomplishing nothing but massive bonuses for a few bosses, has been rewarded with mountains of virtually free money and government guarantees � while the actual victims in this mess, ordinary taxpayers, are the ones paying for it.
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Fox
Joined: 04 Mar 2009
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| Posted: Sun Apr 11, 2010 11:48 pm Post subject: |
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| The Happy Warrior wrote: |
| Fox wrote: |
Cap and Trade is a scam designed to enrich a small subset of people, I think that's fairly clear. |
How is it clear?
Cap & Trade is simply the monetization of pollution. |
Cap & Trade doesn't just monetize pollution, it turns the right to pollute into a tradable commodity, which will be traded on trading floors, which will be owned by people in the financial sector, which will use it to leech more money out of the economy while not actually producing anything. Any reduction of pollution that can be achieved with "Cap & Trade" can be achieved to a greater extent with "Cap & Fine." The fact that that isn't being pursued tell us all we need to know about the motives of the people involved, I think.
| The Happy Warrior wrote: |
| Lastly, additional taxes must be levied across the population, instead of merely allocated entirely to the wealthy. |
I don't disagree. If we're going to clean up our economy, then we all have to shoulder some of the burden. But I want precisely none of that burden going to enrich the all ready bloated, parasitic financial sector. Flat capping emissions, okay, maybe we can discuss it. Stripping dirty industries of their subsidies and tax breaks and redirecting them to clean ones is also a decent possibility; businesses will do what makes sense economically, and subsidies and tax breaks play a role in that. But Cap & Trade just sounds like another way to redirect Middle Class wealth to Wall Street to me. |
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The Happy Warrior
Joined: 10 Feb 2010
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| Posted: Mon Apr 12, 2010 2:52 am Post subject: |
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I concede that this may become corporate welfare, but cap & trade will still achieve its purpose: stimulating investment in alt-energy.
Its just I hear from you all that it will be more expensive than the estimates.
Fine, better than nothing. |
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Senior
Joined: 31 Jan 2010
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| Posted: Mon Apr 12, 2010 6:16 pm Post subject: |
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| The Happy Warrior wrote: |
I concede that this may become corporate welfare, but cap & trade will still achieve its purpose: stimulating investment in alt-energy.
Its just I hear from you all that it will be more expensive than the estimates.
Fine, better than nothing. |
Why is alternative energy an end in and of itself?
Why not fund research into fuel efficiency? Maybe it's possible to get 1000 miles to the gallon or something.
How about nuclear? It looks promising.
There are a myriad of technologies that could be subsidized(but shouldn't). What makes solar, and ancient tech like wind mills, so special? |
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Fox
Joined: 04 Mar 2009
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| Posted: Mon Apr 12, 2010 6:45 pm Post subject: |
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| Senior wrote: |
| Why is alternative energy an end in and of itself? |
It's not an end in and of itself. It's a means to an end, and the end it's a means to is producing energy without kicking up millions of tons of crap into our atmosphere, and without being reliant on a finite, non-replenishable resource.
| Senior wrote: |
| Why not fund research into fuel efficiency? Maybe it's possible to get 1000 miles to the gallon or something. |
Who says we aren't? But no matter what, sooner or later we're going to run out of oil.
| Senior wrote: |
| How about nuclear? It looks promising. |
Agreed, nuclear energy is great. It's not either-or; solar supplemented with nuclear sounds fine to me.
| Senior wrote: |
| What makes solar, and ancient tech like wind mills, so special? |
Solar technology in particular is special because it allows for the creation of massive amounts of energy without relying on consumable fuel and without polluting the air. How can someone seriously be against incredibly clean, endlessly-renewable sources of energy like solar?
How about you explain why you're against solar power? |
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Senior
Joined: 31 Jan 2010
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| Posted: Mon Apr 12, 2010 6:51 pm Post subject: |
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| Fox wrote: |
How about you explain why you're against solar power? |
I've nothing against solar at all. It probably is the future of energy. The sun is the source of all energy on earth after all.
I'm against special interest lobbying for other peoples cash, in order that they can fund their pet project. The answer to this issue will not come from govt largess. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Mon Apr 12, 2010 8:03 pm Post subject: |
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| The Happy Warrior wrote: |
I concede that this may become corporate welfare, but cap & trade will still achieve its purpose: stimulating investment in alt-energy.
Its just I hear from you all that it will be more expensive than the estimates.
Fine, better than nothing. |
It will enrich the oligopoly at the expense of the middle class without any meaningful benefit to anybody (except the oligopoly).
In 15 years when Americans are unable to pay their heating/cooling bills and are also unable to buy gas to drive to Burger King to work/eat will you then be advocating for the Next Big Idea on how to solve the energy affordability crisis? |
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The Happy Warrior
Joined: 10 Feb 2010
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| Posted: Mon Apr 12, 2010 8:55 pm Post subject: |
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| mises wrote: |
| The Happy Warrior wrote: |
I concede that this may become corporate welfare, but cap & trade will still achieve its purpose: stimulating investment in alt-energy.
Its just I hear from you all that it will be more expensive than the estimates.
Fine, better than nothing. |
It will enrich the oligopoly at the expense of the middle class without any meaningful benefit to anybody (except the oligopoly).
In 15 years when Americans are unable to pay their heating/cooling bills and are also unable to buy gas to drive to Burger King to work/eat will you then be advocating for the Next Big Idea on how to solve the energy affordability crisis? |
Its easy to shoot down ideas, Mises. Much harder to actually try and fix problems.
Cap & Trade is the current solution that the House has passed. Its most likely to pass the Senate. It will end up benefitting some people we don't care about in Wall Street. It will also end up addressing climate change. The latter effect justifies the former in my view. |
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Senior
Joined: 31 Jan 2010
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| Posted: Mon Apr 12, 2010 9:05 pm Post subject: |
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| The Happy Warrior wrote: |
| mises wrote: |
| The Happy Warrior wrote: |
I concede that this may become corporate welfare, but cap & trade will still achieve its purpose: stimulating investment in alt-energy.
Its just I hear from you all that it will be more expensive than the estimates.
Fine, better than nothing. |
It will enrich the oligopoly at the expense of the middle class without any meaningful benefit to anybody (except the oligopoly).
In 15 years when Americans are unable to pay their heating/cooling bills and are also unable to buy gas to drive to Burger King to work/eat will you then be advocating for the Next Big Idea on how to solve the energy affordability crisis? |
Its easy to shoot down ideas, Mises. Much harder to actually try and fix problems.
Cap & Trade is the current solution that the House has passed. Its most likely to pass the Senate. It will end up benefitting some people we don't care about in Wall Street. It will also end up addressing climate change. The latter effect justifies the former in my view. |
If you believe that, I feel really sorry for you.
The chances of it having any effect on "climate change" (pretending for the moment that it is something to worry about), are low and the cost is high.
We could take action to lower the climate by the end of the year if we wanted to. There are geo-engineering techniques that would have a marked affect and only cost 100s of millions, and would be have an almost immediate affect. Why not try them first?
How much of an affect will emissions trading have? And when will it start working? No one really knows. It just seems like a gamble when there are other alternatives. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Mon Apr 12, 2010 9:17 pm Post subject: |
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| The Happy Warrior wrote: |
Its easy to shoot down ideas, Mises. Much harder to actually try and fix problems. |
There is no problem. That's the first thing. I know, Al says the Oceans will rise 234 meters yesterday and the mathematical models prove it happened the day before. But there is no problem.
Oil is 85 bucks a barrel right now. The price is prone to wild swings (get use to that with carbon emissions) but has certainly settled in a very high range. That will diminish use on its own. If you're real impatient and need more done now then simple tax policy will suffice. This year the carbon tax is 'x' cents (start real, real low). Next year is x + y. And so on. The value of the tax in a decade would be available and the proper planning can take place.
I fixed a nonexistent problem.
But you're right. It probably will pass. Just another giant knife in the economy. They'll let the Bush tax cuts expire. Medical costs will skyrocket. A VAT is on the way. Energy will be more expensive. Money printing gone mad. Why would anybody open a manufacturing or other industrial firm in the United States now?
http://www.zerohedge.com/article/guest-post-its-impossible-get-us
Dead in the water. And probably not coming back. A 150$ rise in the price of anything is just another blow to the statistical middle class. |
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mises
Joined: 05 Nov 2007
Location: retired
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