Trading CO2 or TRASH
Kill Bill Vol: 1
(Reviewing Copenhagen Accord)
Even as the lights of the Copenhagen Accord that were lit by the world leaders from the BASIC countries and the last minute entry Barack Obama flickers with no remunerations, we still have no sustainable or substantial news of where it stands and what is going to done with it now that the Kyoto Protocol ends.
Leaving it at a juncture where no signature or exact bindings were imposed what more could be expected rather than a probability that the world leaders might pay heed to what deliverables they had proposed in the summit- then and there just to keep their word.
As the dealings of the markets heat up with the Obama induced bailout money in banks and financial corporations on the either side of the Atlantic what marks is an end to the securitization of home loans but has brought in another kind of attractive financial intermediately to deal with.
The word has gone out and with the takeover of Sempra Energy by J P Morgan in multibillion dollar deal it is all but clearly stated that the world moving into the direction of a climate fiasco and the market is following it too.
The Copenhagen summit began with the small island nation in the Caribbean and the pacific region around Oceania urging to establish a binding norm of reducing global temperatures to the 1.5C levels which was however not accepted however by any of the developed or developing nations. Instead they urged their own choices of norms which they wanted to set for themselves.
The take of the developed countries which included the likes of Germany, USA and France was that they promised to generate enough credit to the nations for emission control but that would not be before 2020. Before 2020 they were hazy about how much money they would be able to generate. Except for the likes of Japan which promised to induce around 100 billion USD by 2012 the rest of the developed world was an outstanding shame.
Obama defended his keep by presenting the financial state of the developed world but left no answer to the simple question what would be the use of an economy if no world existed. But the thing to think about is that the world is heading the same way from where it came from with market planning on the cap and trade agreements.
The same should have been evenly proposed to the developing nations. Even though the accord held them responsible for nothing just their meagre wish to contribute or not to contribute but their indecision to decide on binding contract provided they had every power in their hands was their blow up.
Kill Bill Vol: 2
(Reviewing what they have in MIND)
But the biggest blow up of this economic and climatic system is yet to come up. With the growing trend of economies shifting to cap and trade policy wherein they are going to capitalise the security market on basis of suture carbon emission and the sale of carbon credit the future of derivative trading is booming with probability of another financial bubble.
Even George Soros, the billionaire hedge fund operator, says money managers would find ways to manipulate cap-and-trade markets. “The system can be gamed,” Soros, 79, remarked at a London School of Economics seminar in July. “That's why financial types like me like it -- because there are financial opportunities”
Obama speaks of financial regulations and curbing the investment activities but simultaneously passes the cap and trade bill in the senate. Passing the bill would force everyone to deal with carbon credits ( as a matter of fact it is a necessity to control global warming) but with the development of carbon trading the fund and money generation would be done by nothing other than derivatives.
The banks are preparing to do with carbon credits what they've done before: design and market derivatives contracts that will help client companies hedge their price risk over the long term. They're also ready to sell carbon-related financial products to outside investors.
Recent income of ten billion USD by Laxmi Mittal is but a taste of what all is bound to come.
According to a Bloomberg report: Blythe Masters says banks must be allowed to lead the way if a mandatory carbon-trading system is going to help save the planet at the lowest possible cost. And derivatives related to carbon must be part of the mix, she says. Derivatives are securities whose value is derived from the value of an underlying commodity -- in this case, CO2 and other greenhouse gases...
Who is Blythe Masters?? She is the JP Morgan employee who invented credit default swaps (the thing that brought the end of AIG), and is now heading JPM's carbon trading efforts.
Masters, 40, oversees the New York bank's environmental businesses as the firm's global head of commodities. As a young London banker in the early 1990s, Masters was part of JPMorgan's team developing ideas for transferring risk to third parties. She went on to manage credit risk for JPMorgan's investment bank.
And we think the United States has no clear agenda in the Copenhagen Summit. No bindings but installing the cap and trade policy was an early prediction but let us see what other things also come true!!
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