Bend Over Here it Comes Again: Carbon Derivatives

[ramallamamama]

Copenhagen's Hidden Agenda: The Multibillion Trade in Carbon Derivatives

Architect of Credit Default Swaps behind the Development of "Carbon Derivatives"

From globalresearch.ca

By Washington's Blog

Global Research, December 8, 2009
Washington's Blog

As I have previously shown, 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.”

[sunflower]

My head whirls...it's really difficult to get a grip on this latest scam... er.. project.

[no caste]

Yup, derivatives. How to make money without really doing anything, like Enron's weather derivatives plan.

No clean planet, the middlemen get rich(er).

[pineal-pilot-in merkabah]

this is the next bubble it seems. the only way to keep the economic corpse appear to stay alive a little longer. total shut down of industry and instigate a program of green jobs and green enviro-nazis to police the public, all based of course on erroniouse science and faked data.

[Northern Boy]

an article from Rolling Stone Magazine posted on the forum this summer spelled out this very scenario

[no caste]

The World Bank was supposed to manage this 'Climate Fund' -

Copenhagen climate summit in disarray after 'Danish text' leak
Tuesday 8 December 2009 14.09 GMT
The so-called Danish text, a secret draft agreement worked on by a group of individuals known as "the circle of commitment" – but understood to include the UK, US and Denmark – has only been shown to a handful of countries since it was finalised this week.
http://www.guardian.co.uk/environmen...ay-danish-text

[Connecting with Sauce]

This book "Chill" by Peter Taylor may help some people shed some light on things... these positive reviews have made me order to book for the pile... I'll let you know if it is as good as the reviews say...

http://www.amazon.co.uk/product-revi...owViewpoints=1

[Kundaflower]

Hello all,

The economic crises we face now was set on fire by derivatives and most
amazing to me is that they STILL ARE WITHOUT ANY CONTROL !!!

Well, there has been talk about controlling them but talk is cheap..

How is this possible ? Anyone?

So, its not wonder that this continues in a differend area and ones who
really win in this whole climete religion is banks.

Sorry to say that but thats all folks.

Love and derivatives
kunda