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
Jennifer Marohasy BSc PhD is a critical thinker with expertise in the scientific method.
sooner or later Karma catches up
Have other large financial firms also written similar documents? I suspect it is a common risk analysis conducted by all financial firms – the way you have structured this post doesn’t directly suggest that their bankruptcy is the result of their ‘promotion’ of global warming but my guess is that is what you wanted people to read into it.
For example
“Macquarie Capital (a non-banking business group of the Macquarie Group of Companies) has established a dedicated global Renewable Energy & Climate Change team to create and source investment opportunities presented by
climate change and coordinate the group’s global renewable energy and carbon activities. With qualifications in science, engineering, law, business and
accounting, the Renewable Energy & Climate Change team forms part of a global network of investment banking and
financial service professionals.”
Doesn’t mean these corporations are stable or unstable merely that they are aware and taking advantage of existing investment opportunities.
Global finance firm conducts risk analysis regarding likely developments in the energy sector.
Hold the front page!
Are you implying this is what brought them down?!?!?
here’s the thing, a merchant bank makes their profit from the present discounted against the future. In the case of global warming there is no future payoff.
I d suggest the post gives an indication of the drive for profit. Despite an ETS or carbon tax being poor economics, LEHMANN was attempting to promote the concept, because it could see a way of making money out of it. I have suggested for several years that derivatives and lending practices were bring us to a real tipping point because comkmon sense was being thrown out the window in the drive for immediate profits. Ive seen it first hand in some of the biggest dealing rooms in the world. An ETS will achieve little to nothing in reducing co2, but will line the pockets of the market makers.
At least now legislation might be introduced that limits the capacity to use derivatives to create false accounting co2 reductions and hence false profits….at least i hope so.. BEWARE AN ETS OR CARBON TAX.
http://www.lehman.com/who/intcapital/
As you can see “the business of climate change” and “TBOCC2” represents 50 % of Lehman brothers “intellectual capital.”
Let’s say you are looking for a bank to store your nest egg in. Lehman brothers promises to invest their capital, (your deposits) in carbon trading schemes. You feel comfortable putting your egg in that basket?
Lehman brothers started out as a broker for the slave labor cotton trade in the 1850’s. Sometimes there is talk that reparations should be paid to the descendants of slaves. Lehman would have been bankrupt by such an action.
They have always been morally reprehensible – bottom line.
And good riddance.
Thank you Jen for highlighting this sordid and glossed over aspect of the Lehman Bros bankrupcy kerfuffel.
grendel, nt, fdb!
No wonder, you believe in AGW, you have a very vivid and strange imagination.
There was no suggestion that this brought them down.
Jonothan – I think I said that myself – ahh yes, in fact i did. My suggestion was that the only rationale for the post was to imply that this was the case.
James – that’s ridiculous. you picked the four most recent reports and because 2 of them are about climate change you suggest that 50% of their ‘intellectual capital’ was based on climate change?
How about you look at their full page of papers under that heading – climate change was only the latest in a string of areas of interest they had.
Being seen to be environmentally conscious by corporations whether in banking or elsewhere, is standard fare these days. Call it social responsibility or opportunism depending on your world view. I don’t see any relevance to this posting unless I’m missing something obvious?
I have it first hand from the, then, CEO of an international Merchant Bank that the more competent ones have their own set of key indicators, any one of which, if exhibited by potential borrowers or business partners, will make them run a mile from doing business with them.
I won’t list them here but it can be said that Scase, Bond, Adler and Rich all scored close to 10/10, as did Enron.
Touting for business in carbon credits etc was not one of these indicators at the time but, given that boofheads like Stern are yet to properly factor in the concept of discounting for future events, there is a strong case for adding it to the list of “bad risk” indicators.
I am not privy to the full extent of ‘advise’ provided by Lehmann Brothers on carbon trading but the fact that they appear to have failed to highlight the absence of proper application of discounting concepts suggests that they always had a tenouous grasp of their professional duty of care to their client investors. By their deeds shall ye know them.
Quote from Lehman Bros report – Feb 07:-
Firms that recognise the (AGW) challenge early, and respond imaginatively and constructively, will create opportunities for themselves and thereby prosper.
John Llewellyn
Senior Economic Policy Advisor
Lehman Brothers.
Glad that John Llewellyn wasn’t my policy advisor
So what of the other 4 companies that have gone bust?
Fannie Mae, Freddie Mac, AIG, and Merryl Lynch?
This is the stupidest post ever!
For you AGW proponents…
What Jennifer is probably implying, is that Carbon schemes are as fraught with risk as was Sub Prime Loans…. 🙂
…. and we all know what has happened to them.
Au Contraire, NT…. It is a very relevent post about the risks of investing in stupidity….
J. Hansford.
It’s a thinly veiled political attack with no actual substance. She makes no attempt to understand why the company failed and trues to pin it on their AGW stance. It’s mindblowingly stupid.
“What Jennifer is probably implying, is that Carbon schemes are as fraught with risk as was Sub Prime Loans…. ”
How on Earth would she know. She’s just making stuff up.
Companies will go bust if they make stupid decisions, happens all the time. Doesn’t matter if there is an ETS or not. If you make dumb decisions in a given climate (no pun intended 🙂 ), then you will fail.
I wish I had thought of this line, but it comes from ICECAP:
“A year ago they couldn’t predict their bankruptcy but were predicting the climate 100 years ahead.”
http://icecap.us/index.php/go/political-climate
Some more gems:
“Lehman Brothers spoke in his report about the climate in 2100 and its economic and financial projections, about climate change costs several decades away. They dared to recommend their investors what they considered a central value of the carbon ton in 50 years from now. Their sources and support references were taken from the IPCC AR4, AR3, and so on. Really impressive.
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.”
“A year ago they couldn’t predict their bankruptcy but were predicting the climate 100 years ahead.”
don’t they use the same sort of models (not properly validated) for both predictions?
LOL…. I like your climate pun anyway NT… 🙂
In what way is Jennifer making stuff up?
Lehman’s are a failed investment bank that couldn’t recognize risk, who also touted AGW financial doctrine….
I’d say Jennifer is making a valid point.
I would not entrust my hard earned savings to an investment bank that exposed itself to Sub prime lending or Carbon schemes….. I prefer real stuff. Not artificially inflated housing markets and credit schemes….
Buying debt and carbon as an investment, just seems really stupid to me….
J Hansford.
I love puns… 🙂
Four other large corporations have recently collapsed in the US, did they too espouse AGW financial doctrine?
What Carbon Schemes did they buy? Does The US now have some Carbon Scheme you can buy into?
Jennifer is making up reasons why they went bust without actually investigating. She is scoring ‘political points’.
Do other companies buy debt? Is it such strange thing to do?
As others point out this is a bit of a cheap shot. Virtually all “investment banks” have written reports on GW and carbon trading.
If they can see a buck in it – they soon write a Report!
Come on, they were one of the most outspoken on AGW and their recent report adviser was Hansen. Certainly its worth a blog post!
I do like this quote from the report:
“As with all models, the projections of climate change models are unlikely to be
completely accurate, especially given that the models are by necessity having to be used to make predictions outside the temperature range over which they were estimated.
Nevertheless, the models are unlikely to be completely misleading;”
Unlikely to be completely misleading? Haha, I think that should have been the slogan for the IPCC.
“Have other large financial firms also written similar documents? I suspect it is a common risk analysis conducted by all financial firms..”
Only the stupid ones since warming is no risk at all.
Most financial institutions are inherently unproductive and all trade under technical bankruptcy. So once it comes to a time when no new money is being created for a substantial period of time a lot of them can go to the wall.
Perhaps what the post suggests is that :
Lehman’s as a Big 5 Wall St investment bank;
punting big dollops of other people’s money and, more tellingly, their own credit lines in proprietory trading to generate the returns and fat Wall St bonus pools;
was too distracted from the main game by feel-good waffle like the price of carbon credits 50 years out; and
not focussed on the toxic so-called assets they were taking on in the CDOs linked to ‘sub-prime’ ie high-risk mortages.
to realise that they had loaded a gun, spun the cylinder and pointed it at their own heads. That is, Russian Roulette Hubris.
Which is very sad for the genuine worker bees in Lehmans who now face a dire Christmas and a bust for the shareholders, but yet another case study for the business texts of ‘Not Getting Too Full of Your Own Self-Importance’ – all of which get ignored as each business cycle maxes out.
“So what of the other 4 companies that have gone bust?
Fannie Mae, Freddie Mac, AIG, and Merryl Lynch?
This is the stupidest post ever!” – NT
Are you sure? The competition is so stiff!
Lehamn also produced similiar reports on India and South Korea – this means that they are frauds too perahps?………..OK NT, maybe you have a point.
“But the story has some connections with Hansen being the ‘scientific’ adviser to Al Gore, who’s the Chairman of the Board of the Alliance for Climate Protection. As seen in Alliance’s website, the managing Director is none less than: Theodore Roosevelt IV. Managing Director, Lehman Brothers, Chair of the Pew Center for Global Climate Change.
Theodore Roosevelt IV is Managing Director at Lehman Brothers and a member of the Firm’s senior client coverage group, which oversees the Firms client and customer relationships. Mr. Roosevelt is an active conservationist. He is Chair of the Pew Center for Global Climate Change, Vice Chair of the Wilderness Society, and a Trustee for the American Museum of Natural History, The World Resources Institute, the Institute for Environment and Natural Resources at the University of Wyoming, and a Trustee of Trout Unlimited.”
http://icecap.us/index.php/go/political-climate
What’s that one about dogs and fleas?
The very valid and accurate “point” of the post is that the energy sector is being invaded by carbon taxing governments behind which trails carpet baggers and “advisers” all out to exploit arbitrage and any other opportunity to sell financial products that flow from any carbon taxing or trading regime.
Governments are creating a whole industry to exploit what are hysterical fears based on junk science.
Who pays? Let me guess…..
http://www.nocarbontaxes.org
Fanny has been transformed into a retired Congressional honeypot. These retired politicians picking up tens of multi-millions for their examplary understanding of high-finance.
Jamie Gorelick pulled about 23 million in bonuses I think. Clearly she was just sitting on her financial genius all these years. Some other politico pulled many tens of millions more for just a few years stint. But a lot of them have been involved in what amounts to a counterfeiting ring.
Surely making unproductive investments in unscientific scare stories is going to be bad for Lehmens bottom line. But it is the case that a financial institution can go belly up any time the new money stops being created.
I wonder where the Maurice Strong connection is – money and influence wise.
NT… there is a connection between Fanny Mae, Freddy Mac and Lehman’s. It’s the ideology. All three have the same flaws…. It is not true to capitalist doctrine. It has been corrupted by socialist thinking in an attempt to redistribute wealth.
Giving Carbon dioxide a value by artificial premise, therefor penalizing productivity and enriching bureaucracy and the third world, is just as foolish as artificially inflating land prices by giving free loans to the captive poor, then using that as collateral for further loans…. Eventually it will adjust…. To prop it up with taxpayers money is the start of a downhill slope to a ruinous conclusion.
The Sub prime debacle is because of bad policy and bad business practice… Carbon offset schemes are just as fraught. It’s an artifice… There is no reality to it.
It is a bureaucratic mechanism… Not a product.
Here’s a question on the bigger picture: Can the global economy recover from this down cycle without the ‘free carbon dividend’?
I would hazard that only if we shed the yoke of harsh energy rationing can we recover from this.
Of course, the collapse of the ‘Capitalist system’ is no great calamity for Leftists and their Green fronts. You only need to listen to Philip Adams gloating on RN to see that. But the point is this: The voodoo economics of Garnaut, Lehman Bros et al is the last thing we need in these dire times.
No Jimmock… That is the leftist economy crashing… Not capitalism.
Adams gloats because he does not understand it and is incapable of little else.
JH, I agree with your point, hence the scare quotes in my earlier comment.
I call it the Free Carbon Dividend to compare it to the so-called Peace Dividend (upon the collapse of the Soviet Union) that was a trigger for the last up cycle.
When people argue about the introduction or not of ETS, etc they somewhat miss the point: That this tax is ALREADY built into people’s view of the future. Contrary to Leftist bilge,economic markets actually do take a long term, holistic view and the view at this point is not palatable – hence the global bust. It is possible that it can only be fixed by shaking the beggaring psychology of climate alarmism.
‘the view is not palatable’. Sorry about the mixed metaphor
“J. Hansford.
It’s a thinly veiled political attack with no actual substance. She makes no attempt to understand why the company failed and trues to pin it on their AGW stance. It’s mindblowingly stupid.
“What Jennifer is probably implying, is that Carbon schemes are as fraught with risk as was Sub Prime Loans…. ”
How on Earth would she know. She’s just making stuff up.
Companies will go bust if they make stupid decisions, happens all the time. Doesn’t matter if there is an ETS or not. If you make dumb decisions in a given climate (no pun intended 🙂 ), then you will fail.”
What more can be said. It’s a really stupid topic.
J. Hansford
“It is not true to capitalist doctrine. It has been corrupted by socialist thinking in an attempt to redistribute wealth.”
BWAH HA HA HAAAAAAAAA
I love this!! So all of them were Socialists? CLASSIC!
“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.””
I guess thats the difference between economics and science.
“I love this!! So all of them were Socialists? CLASSIC!”
Rich ones, but.
Elitism is elitism SJT…..
Capitalists can’t be elitists. Ha, you nearly had me there, you joker, you.
“What’s that one about dogs and fleas?”
I have to say, every time I finish reading this blog, I start scratching a lot.
“As you can see “the business of climate change” and “TBOCC2″ represents 50 % of Lehman brothers “intellectual capital.””
A good example of your understanding of evidence.
You know Al Gore did his banking with Lehman’s. I wonder how big a hit he took if any? He was bragging on the $300 million PR fund. Wouldn’t it be something if all of that money went “poof”.
I have heard it said that Merryl Lynch was pushing the climate change investment scheme also.
Just a rumor.
By Steven Milloy (circa 2005)
Merrill Lynch Pushes Global Warming Bubble
Last week, Merrill and the environmental activist World Resources Institute (search) issued a joint report on global warming-related “investment opportunities” entitled, “Energy Security and Climate Change: Investing in the Clean Car Revolution.”
Heralded as the “first such collaboration between a mainstream U.S. investment bank and an environmentalist non-profit,” the report purports to describe the international regulatory environment concerning global warming and automobile emissions, and makes stock recommendations.
The report’s baseline assumption is, “clearly, there is a discernable trend towards regulating emissions of carbon dioxide and other tailpipe emissions from the bu …
Here’s another report on Merrill (current events)
LONDON, April 22, 2008 — Merrill Lynch, with support from ICF International, today announced the launch of Merrill Lynch Green & Gold, an innovative full-service climate change solution with a strong focus on sustainability.
Merrill Lynch Green & Gold is intended for companies in the Americas, Asia and Europe that do not currently face a regulatory requirement to reduce carbon emissions but that wish to proactively develop a carbon strategy that identifies financial opportunities and enhances their brand in light of growing concerns about climate change. Its aim is to help companies identify potential win-win opportunities that simultaneously reduce emissions and costs. Companies seeking to attain a carbon-neutral position by offsetting any residual emissions can protect their reputation through procuring carbon credits with the highest sustainability attributes in the voluntary carbon market.
ICF International will support the implementation of Merrill Lynch Green & Gold and assume responsibility for identifying and assessing each client’s carbon footprint and total emissions and will work with these clients to identify potential opportunities to reduce emissions through measures such as improving energy efficiency.
rumors!
Here in Lehman’s own words when they hired Al Gore’s surrogate, Theodore Roosevelt IV.
In 2007, the Firm created The Lehman Brothers Council on Climate Change and appointed Theodore Roosevelt IV, who brings to the role a deep knowledge of environmental issues, as its chairman. By harnessing the Firm’s global resources, the Council is uniquely positioned to accelerate the understanding of climate change issues. In December, the Council held the first of three regional summits in New York. These summits serve to facilitate constructive dialogue on global climate change policy among our clients, government officials and academics.
Here’s a track of the Lehman stock (LEH) since 2007.
Could this be coincidence?
Its going to skew the outcome of meetings and complicate clear decision-makers to have these nutballs anywhere near the top. Its indicative of failed analytical ability. As well as an infusion of dishonesty and tendentiousness into the corporate culture.
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……