FedUpUSA

Archive for the ‘Cap and Trade’ Category

That’s an understatement.

Of course, it isn’t just this scam, the primary dealers with help from the Federal Reserve and Congress have pulled the same kind of scam with regards to our financial system. Now you might understand why the two Audit the Fed Bills have languished and not come to the floor. The Federal Reserve Sunshine Act S.604 and H.R.1207 The Federal Reserve Transparency Act .  You think the criminals in Washington DC have any interest in letting you see the scam they have allowed?

Walmart, Costo, US Bank Profit From Energy Credits in US; Carbon Tax Thrown Out By French Court

Inquiring minds are noting Court throws out Sarkozy’s carbon tax.

France’s new carbon emission tax, due to have gone into effect tomorrow, has been ruled illegal by the country’s constitutional court because it exempted too many polluters.

The Conseil Constitutionnel struck down the tax on Tuesday because the exemptions breached ”the principle of [tax] equality”.

It estimated that 93 per cent of industrial emissions outside of fuel use, including those of more than 1000 of the country’s most polluting industrial sites, would be exempt from the tax of €17 ($27) a tonne of emitted carbon dioxide.

The ruling is a blow for the President, Nicolas Sarkozy, as the measure was one of his flagship initiatives to cut emissions. It also leaves the Government with a €4.1 billion hole in its 2010 budget.

Meanwhile, the President of Brazil, Luiz Inacio Lula da Silva, has signed a law requiring that Brazil cut its projected greenhouse gas emissions by 39 per cent by 2020, meeting a commitment made at the Copenhagen climate change summit.

Winners, Losers, Inequality

The Conseil Constitutionnel made the correct ruling. It’s clear to see what the policy was: handouts to 1000 favored industries at the expense of everyone else.

Walmart Wins Oregon Loses On Energy Credits

Please consider Walmart, others make money on Oregon’s energy tax credits.

When Oregon started handing out jumbo tax subsidies for renewable energy projects two years ago, one of the biggest beneficiaries was also one of the world’s richest corporations — Walmart.

No, the retail giant hasn’t branched to solar panels or wind turbines.

Instead, Walmart took advantage of a provision in Oregon’s Business Energy Tax Credit that allows third parties with no ties to the green power industry to buy the credits at a discount and reduce their state income tax bills.

State records show Walmart paid $22.6 million in cash last year for the right to claim $33.6 million in energy tax credits. The cash went to seven projects, including two eastern Oregon wind farms and SolarWorld’s manufacturing plant in Hillsboro. In return, Walmart profits $11 million on the deal because that’s the difference between what it paid for the tax credit and the amount of its tax reduction.

The loser in the transaction is Oregon’s general fund — which pays for public schools, prisons and health care programs — because the state is out the full $33.6 million in tax revenues.

Walmart isn’t alone. An analysis by The Oregonian shows Costco and U.S. Bank, which also rank among the nation’s top 200 wealthiest businesses, have made millions by buying up energy tax credits to cut their Oregon tax bills. Dozens of other companies and hundreds of individual Oregon taxpayers also have cut their tax bills by buying up the tax credits.

“It’s so convoluted,” says Eric Fruits, an adjunct economics professor at Portland State University who has studied Oregon’s energy incentives. “You’ve got all these dollars swirling around. Everyone is trying to grab them as fast as they can.”

Walmart, Costco and U.S. Bank, which top the list of energy credit buyers, shelled out a combined $67 million to avoid paying $97 million in Oregon income taxes.

Walmart and others are making money on projects that were closed, went belly up or never produced the energy or energy savings they initially claimed.

Gov. Ted Kulongoski and state energy officials say they recognize problems with the energy tax credits and are working to overhaul the program when state lawmakers convene for a short session in February. Among the targets of the overhaul is the pass-through option.

“The governor believes there’s been a public value to the program,” says Anna Richter Taylor, Kulongoski’s spokeswoman. “That said, he also is very supportive of efforts to align the rate better with other public investment portfolios.”

Insanity of Cap-And-Trade

Oregon thinks it knows how to fix the problem, but the whole idea of granting companies credits that they can trade is simply fatally flawed.

Walmart, Costoc, and US bank made millions for doing nothing and Oregon taxpayers got clobbered.

In Europe, the Cap-and-Trade Carbon Credit Extortion Scam In Full Swing.

The world’s biggest polluters wanted the carbon cap so they could trade their permits (acquired for free), to other businesses who will have to buy them to expand.

Now some of those polluters are going to move to India anyway after extorting extra permits out of the EU.

Not only is the global warming data bogus and manipulated, the whole cap-and-trade program is now easily seen as nothing more than an extortion scam, a scam that has fittingly blown up in the face of the EU and UN clowns who created it (unless of course that was their intention all along).

Unfortunately, EU workers and taxpayers are the ones who are going to suffer over this, not the clowns who created this ridiculous scheme.

Such is the insanity of Cap-And-Trade. It creates a big stream of winners and losers out of thin air, with taxpayers being the most likely loser.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

The giant banks are treating the American Citizen like we work for them, are holding the economy hostage, and are taking our deposits and using them to speculate in casino style gambling.

They’ve bought and paid for Congress and the White House. See this, this and this.

Will Americans exercise our power, or become serfs to a permanent banking royalty?

An economist says the healthcare bill “is just another bailout of the financial system”, and lawyers say that it is unconstitutional.

Will we defeat this giveaway to the insurance giants, or become permanent slaves to mandatory insurance requirements?

Top scientists, economists and environmentalists all say
that cap and trade is a scam which won’t significantly reduce C02
emissions, and will only help in making the financial players who
crashed the economy even more wealthy.

Will we defeat this
worthless scam, or allow the failed banks like Goldman Sachs, JP Morgan
and Citigroup – who have already taken many billions of taxpayer
dollars – to make a fortune off of this con game at our expense?

Will
Americans reclaim our nation in 2010 from the thugs and con artists, or
put our heads down and stay subservient while the little we have left
in the way of money, resources and dignity is stolen by the giant
banks, insurance companies and carbon trading players?

Paul Krugman argues that cap and trade worked to reduce sulfur dioxide and stop acid rain, and so it will work to reduce C02.

However, two EPA lawyers with more than 40 years of cumulative
experience – including the guy who has been head of California’s cap
and trade offset programs for more than 20 years – say that sulfur
dioxide was different, and that cap and trade for climate is a scam which only
benefits the financial players.

Specifically, they point out that:

• Cap and trade was tried in Europe, but ended up raising energy
  prices, creating volatility, produced few greenhouse gas reductions,
  but made billions for the financial players

• Even the guy who invented the cap and trade concept doesn’t think it will work in regards to climate change (see this and this)

• Carbon offsets – which are part of the cap and trade plan – increase pollution

• One reason that offsets lead to more pollution is that investors
  fight to keep toxic chemicals legal, so they can make more money off of
  trading the offsets

• Like subprime mortgages and other creative financial instruments
  which brought us the economic crisis, carbon offsets lack integrity and
  don’t work (see this)

Watch the video:

I have written hundreds of articles documenting that unregulated, speculative derivatives (especially credit default swaps) are a primary cause of the economic crisis.

And I have pointed out that (1) the giant banks will make a killing on carbon trading, (2) while the leading scientist
crusading against global warming says it won’t work, and (3) there is a
very high probability of massive fraud and insider trading in the
carbon trading markets.

Now, Bloomberg notes that the carbon trading scheme will be centered around derivatives:

The
banks are preparing to do with carbon 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.

 

[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, and is now heading JPM’s carbon trading efforts. As
Bloomberg notes (this and all remaining quotes are from the
above-linked Bloomberg article):

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.

Among the credit derivatives that grew from the bank’s early efforts was the credit-default swap.

Some in congress are fighting against carbon derivatives:

“People
are going to be cutting up carbon futures, and we’ll be in trouble,”
says Maria Cantwell, a Democratic senator from Washington state. “You
can’t stay ahead of the next tool they’re going to create.”

 

Cantwell,
51, proposed in November that U.S. state governments be given the right
to ban unregulated financial products. “The derivatives market has done
so much damage to our economy and is nothing more than a
very-high-stakes casino — except that casinos have to abide by
regulations,” she wrote in a press release…

However, Congress may cave in to industry pressure to let carbon derivatives trade over-the-counter:

The
House cap-and-trade bill bans OTC derivatives, requiring that all
carbon trading be done on exchanges…The bankers say such a ban would
be a mistake…The banks and companies may get their way on carbon
derivatives in separate legislation now being worked out in Congress…

Financial experts are also opposed to cap and trade:

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”…

 

Hedge fund manager Michael Masters,
founder of Masters Capital Management LLC, based in St. Croix, U.S.
Virgin Islands [and unrelated to Blythe Masters] says speculators will
end up controlling U.S. carbon prices, and their participation could
trigger the same type of boom-and-bust cycles that have buffeted other
commodities…

 

The hedge fund manager says that banks will
attempt to inflate the carbon market by recruiting investors from hedge
funds and pension funds.

 

“Wall Street is going to
sell it as an investment product to people that have nothing to do with
carbon,” he says. “Then suddenly investment managers are dominating the
asset class, and nothing is related to actual supply and demand. We
have seen this movie before.”

Indeed, as I have previously pointed out, many environmentalists are opposed to cap and trade as well. For example:

Michelle Chan, a senior policy analyst in San Francisco for Friends of the Earth, isn’t convinced.

 

“Should
we really create a new $2 trillion market when we haven’t yet finished
the job of revamping and testing new financial regulation?” she asks.
Chan says that, given their recent history, the banks’ ability to turn
climate change into a new commodities market should be curbed…

 

“What
we have just been woken up to in the credit crisis — to a jarring and
shocking degree — is what happens in the real world,” she says…

 

Friends
of the Earth’s Chan is working hard to prevent the banks from adding
carbon to their repertoire. She titled a March FOE report “Subprime
Carbon?” In testimony on Capitol Hill, she warned, “Wall Street won’t
just be brokering in plain carbon derivatives — they’ll get creative.”

Yes,
they’ll get creative, and we have seen this movie before …an
inadequately-regulated carbon derivatives boom will destabilize the
economy and lead to another crash.