Bankrupt Lehman Brothers Promoted ‘Global Warming’
Posted by jennifer, September 17th, 2008 - under News.
Tags: Climate & Climate Change
The now bankrupt merchant bankers, Lehman Brothers, invested heavily in the politics of climate change. The bank released two reports last year on the issue broadly embracing and promoting the United Nations Intergovernmental Panel on Climate Change (IPCC) Agenda including emissions trading.
The second report entitled, ‘The Business of Climate Change ll’, went as far as to suggest that it will be possible to reach an international agreement to limit greenhouse gas emissions; indeed within five years.
The following extract gives an insight into the flavour of the report:
“The introduction of the European Union Emissions Trading Scheme (EU ETS), which covers a little under half of the industrial carbon emissions in Europe, has triggered discussion and concern about the impact of such a carbon trading scheme on (European) industrial competitiveness. The concern is that, by acting unilaterally, European firms may be disadvantaged, and the economy thereby damaged relative to non-EU firms and economies.
“As considered in the chapter Emissions trading: grandfathering vs auctioning, any scheme – be it cap and trade, a carbon tax, or whatever – that limits emissions thereby raises the (relative) price of carbon, a proportion of which is in turn passed on to intermediate and final prices. Depending upon whether the emissions permits are issued free or auctioned, firms may or may not experience a decrease in profit. Either way, however, firms stand to be disadvantaged relative to competitors abroad which do not face the increased marginal cost of carbon.
“This loss of international competitiveness could be resolved by the region (Europe in this case) imposing a border tax on imported goods according to their carbon content; or by other economies raising the relative price of carbon, whether by joining the carbon trading scheme or otherwise. The risk with a border tax is of retaliation, and the potential for a trade war.
“More likely, we judge, is that some sort of global scheme to limit carbon emissions, and quite possibly a global cap-and-trade scheme, will be in place within the next five years.”
On the issue of the Stern report and the associated controversy over discount rates, Lehman Brothers again come down on the side of those promoting immediate action against global warming backing “the correct ethical position” over what many would consider prudent economics.
The Lehman Brother’s report acknowledges the assistance of Dr. James Hansen, Director of the NASA Goddard Institute for Space Studies, and advisor to Al Gore.
********
The Business of Climate Change ll: Policy is accelerating, with major implications for companies and investors. By John Llewellyn and Camille Chaix, Lehman Brothers, September 20, 2007
UK’s largets mortgage provider, HBOS, seems to ready to go under as well – this game has not finished.
Leftists of course consider that Keynesian economics is correct but that other factors keep spoiling the game.
What is frightening with these developments is the incremental increasein government power of the private sector – as Hayek called it, creeping socialism.
The core issue is leftist economic ignorance – and as they are the majority, there is not much one can do about it. They control the world’s government bureaucracies including the UN, so its only a matter of time before we find ourselves acccidentally with a socialist system.
From John Ray’s Dissecting Leftism blog
Quite a few good articles on different aspects of the big crashes. An excerpt from this one: “What makes me laugh – ruefully, I assure you – is when our office seekers trot around the country promising “accountability” for Wall Street. Lehman just went bankrupt – in a market economy, things don’t get more “accountable” than that. What everyone wants to know is how serious the current situation is. Step back from the ledge, and for goodness sakes ignore Senator Obama’s ignorant hysterics. What we have now is a market correction. Firms that made poor decisions are being devoured by the market’s unforgiving nature. Today the Dow is steady, the American economy having easily withstood the shock of the weekend’s events.
Another good comment here. It starts: “Democrats have spent more time investigating Sarah Palin than they have the crooks in their own party who are responsible for the financial crisis!”
Another comment includes this excerpt: “Fannie Mae and Freddie Mac were run by Clinton cronies who received millions of dollars from the organizations. Democrats were in bed with these companies and refused to listen to George Bush when, in 2003, he “recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago”
My comment: It all started out with the Democrats pressing the banks to lend to blacks — regardless of whether the blacks looked like good risks or not. The banks did as they were told and passed on the risks to the financial sector generally. The result was entirely predict
“But even with their high ability to peek into the future, they couldn’t predict their demise one year ahead though there were many people that had been warning about this present crash for years. But Lehman Bros were recommending investments 30, 50, 100 years ahead. Some days, reality imitates fiction.””
SJT- “I guess thats the difference between economics and science.”
How very trusting of you SJT, your naivety shows through yet again.
Given you always come away from this blog scratching, one wonders why bother to attend?
This is pretty hilarious stuff.
What we have is an implosion caused by the less-regulation free market ideology favoured by conservatives, yet it’s the evil global warming conspiracy that has brought down Lehman Brothers.
This really is planet crazy stuff.
Jennifers involvement with the Mont Pelerin mob makes perfect sense, as long as you keep in mind that it’s no longer a defender of the liberal order as it was originally conceived, but is now the home of the il-liberal, conservative, anti-regulation ideologues. Hence the irrational response to AGW, with its promise of strengthened regulation and inter-govermental co-operation.
Jennifers view can now be seen for what it really is – a political position given a very thin veneer of scienciness.
Interesting logic. The Lehman Brothers are bankrupt therefore this proves that all their past actions and statements are false. Even a stopped clock is right twice a day yet we are being asked to accept that Emissions Trading is wrong because they are bankrupt?
Whether they are right or wrong about emissions trading has nothing to do with their bankrupt status.
The ironic and relevant point is that lehmans were happy to believe in models to make predictions out 100 years, and sell products and ideas based on these models. AND yet, they were incapable of predicting what was actually happening around them.
Economic models don t work, this is proof of that if you needed it. Now why would anybody believe the climate models are any better?
AND an ETS IS COMPLETELY ILLOGICAL on the basis that it will achieve nothing unless there is a global agreement, and even then until we find alternative energy sources its potential impact is negligible. This is the truth, and yet we are being sold this concept as some sort of cure. This is really fraud. Lehmann’s pushed it when they must have known it would achieve little or nothing…
Even if you believe the science, its crucial you think about the economics of the issue as well…….. see http:www.news.com.au/heraldsun/story/0,21985,24326897-664,00.html note // removed
“Whether they are right or wrong about emissions trading has nothing to do with their bankrupt status.”
As i see it it’s their faith in improperly validated models, and their (that is all banks involved) attitude to the software engineers that tried to warn them about it, that’s the common link.
I found some more coincidence.
You remember Bear Stearns? In the wake of their collapse BusinessGreen.com laments that, “Large clean tech infrastructure projects could be particularly badly hit.”
http://www.businessgreen.com/business-green/news/2212173/experts-warn-bear-stearns
You still demanding those green projects now?
Loius Hissink: You ommitted one crucial word “…. before we find ourselves accidentally with a (bankrupt) socialist system.”
Warnings have been sounded for years with regard to the creation of excess credit. Click on Richard Daughty of Magambo Guru fame , for starters,and peruse anything!
http://www.kitco.com/ind/index.html#d
And what did we hear on ABC Radio at 12.15 PM today? Cash flooding into safe havens, US Treasury Bonds and gold. Why you might ask? No perceived counter-party risk. Simple. Simple as climate science.
WJP
All socialist systems are bankrupt by definition :-) And finally they are starting to heed Ron Paul in the US.
Ah it’s wonderful time to be in when yet again Austrian Economics is confirmed again. The tragedy is that so many people have to suffer for the hubris of the socialists or social democrats as they like to call themselves.
Its too bad that some greedy bankers screwed up the lives of so many people, and if it that was not enough, destroying the planet.
They say that these outfits are being nationalised. But this is to misunderstand the situation. Since financial institutions, for the most part, now exist as a cartelised partnership and counterfeiting ring in conjunction with government.
Fanny and Freedie were creations of government and had become a racket of Congress. But all banks exist under license which restricts them in many ways in order to make it plausible that they be allowed to practice fractional reserve. Or the ponzi-scheme of pyramiding notional money on top of actual cash.
Since this can never work a motherload of regulation is required and these regulations are all in the form of cartelization requirements. As a poor substitute for no-pyramiding… aka 100% backing, banks are required to hold to certain capital requirements. A capital requirement is something which says “Are you already rich? Good. You can participate in our money-creation scheme in proportion to how rich you already are.”
This is so anti-competitive its ridiculous. And its against all principles of capitalism an freedom, since an important principle of any just society is that all are equal before the law. But if I started taking deposits with only 3% cash on hand backing I’d be hauled before the courts on all sorts of fraud charges.
In fact lending out half of your on-call-cash might be alright, if everyone knew you were doing it and if all other people in the same line of work agreed that you were the only one allowed to do it. But once you get two parties doing that you have pyramiding and therefore a ponzi-scheme and therefore something which is inherently fraudulent in accordance with natural law.
It may not seem that way to us. Since we have grown up all our lives with cash that gets less valuable as time goes on, and with a sort of guarantee to the on-call cash we deposit with our banks. Its not really a flat out guarantee. It involves the idea that the central bank will ease pressure on the ponzi-scheme whenever things start coming unstuck. Like all corrupt arrangements it involves a lot of factors that are not really spelled out.
A recession is simply a time when the ponzi-scheme has overshot and is now unravelling. Too much pyramid-money has been made for the cash available, all sorts of economic distortion has occurred, our trade deficit blows out even during an explosion in the terms of trade in our favour, and we have become indebted to foreigners for the privelidge of running up the price of the land that we always had prior. While our capital investment falls behind.
At the same time this bubble-creation overstates book profits and capital-gains and allows bigshots to vote themselves larger salaries every year as their actual decision-making deteriorates.
So a recession is when the ponzi-money starts dissapearing and the central bank is too damn stupid to replace it with cash money and whack in a reserve-asset-ratio to stop that cash-money from leading to a new round of counterfeiting.
Neoclassical economics is hopeless flawed in this department. Since though its leading lights were smart guys somewhere along the line they appear to have pitched their monetary-economics in such a way as to make it acceptable to bankers. And preferably Swedish bankers.
Jennifer has got the cart before the horse here. It is clear to me that global warming has caused a melt down of the international financial system (as well as ice caps and glaciers).
The collapse of the financial system has caused the demise of, or at least seriously wounded, numerous companies around the world. In Australia alone I would put in this category companies such as Babcock and Brown, Centro and ABC Learning. Where do they stand on global warming?
Not that it is relevant as the thing that has brought them all undone is good old corporate greed, over extending in the good times and unable to cope in the bad times.
Letters:
Australian Financial Review 19th Sept 2008
Your editorial (September 13) rightly argues that an emissions reduction policy “has to withstand the blowtorch of hard analysis before it can be safely launched”. The problem is that despite calls for an independent inquiry into the scientific basis of the policy, the government has given no indication that it will undertake such an analysis. Instead it has simply assumed that the Intergovernmental Panel on Climate Change reports reflect scientific consensus that increasing human activity will lead to damaging increases in temperature unless emissions are reduced. The green paper even says that the government provides no warranties that the information in it is correct.
Yet it has become increasingly clear that there is no concensus. Claims that 2500 scientists who contributed to IPCC reports support its conclusions have been denied by the IPCC secretariat and a long list of scientists now reject the basis of the IPCC conclusions. This includes 31,000 American scientists as well as a number from Australia.
There’s a long list of reasons why so many scientists reject IPCC analysis. Leaving aside the cessation of temperature increases in recent years, these include analysis, acknowledged (astonishingly) even in IPCC reports themselves, showing that increasing concentrations of CO2 in the atmosphere have long ceased to have any warming effect that would justify an emissions reduction policy.
It would be grossly irresponsible for government to introduce an emissions reduction policy and it is suprising you have not called it to account. The latest Garnaut report estimates the cost of such a policy would be more than the cost of no policy reinforces the need for an independent review.
Des Moore
Institute of Private Enterprise
South Yarra Vic
Sensei K
you wrote: “Its too bad that some greedy bankers screwed up the lives of so many people, and if it that was not enough, destroying the planet.”
Well, the planet is still here but your post says it is destroyed.
What does seem destroyed is your perception of reality.
Would you like another try?
WJP
Having had many letters to the AFR published over the years, I discovered that once they worked out who I was, (a nasty, red-necked, capitalist) letters were then not published.
The AFR is part of the Fairfax Press and thus has it’s closed system editorial policy.
That the Pierpont column was never replaced with a modern equivalent points to the Fairfax malaise.
I would not waste time writing to it – I haven’t read the AFR for years and certainly don’t rely on it for financial news.
Expensive as it is, a subscription to the Wall Street Journal is a far better investment.
Louis Hissink
I thought it interesting that it even got published bearing mind some of crap they pass off as news and current affairs and environment.
But you still have to get that list of names that need to be filed on the” never to be forgiven list” from somewhere!
Can’t help myself but I do have a soft spot the SMH letters page and cartoon and column 8. And the AFR does have infinitely more local listed co. info than the SMH would ever have. So, you know……
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