Sunday, July 19, 2009
Is global warming a problem? Probably. Has it been overblown? Probably. One thing is for sure, though, it has now become very big business -- a new expense for some businesses and a huge money-making opportunity for others -- and once something becomes big business, there simply becomes too much temptation to manipulate the facts.
Members of the global warming industrial complex (e.g., Goldman Sachs, GE, alternative energy producers) have been lobbying hard for cap-and-trade, and it has been easy for our politicians to fall in line in support of it. After all, the public has been worked into a panic about it, and what politician wants to appear to be politically incorrect, especially when climate change is so popular with the hip and influential?
I'm not saying that we shouldn't do anything about climate change. Rather, I'm asking, are we sure we've really done enough homework to ensure that an elaborate scheme of trading carbon credits -- in which polluters get to keep polluting as long as they have enough money to do so -- is the real answer to the problem? Besides, if the answer is a system in which Goldman Sachs is allowed to shave a profit off of every transaction, I'm going to be suspicious from the get-go anyway. It just smells fishy.
In recent times, we've seen one poorly structured scheme after another that has backfired on the public, whether it was Enron being allowed to dominate the energy markets, or the attempts to create an "ownership society" by lowering standards at Fannie Mae and flooding them with too much money, or the lack of regulation over securitized home mortgages and derivatives, or poor regulation of the IPO-ing of internet companies, or no regulation of hedge funds (that manipulate the markets), etc., etc. The simple truth is that our government doesn't have the discipline and objectivity to think scenarios all the way through; i.e., to contemplate possible negative outcomes as well as positive ones. They don't model the unintended consequences, which is an essential skill that any good businessperson tries to learn. Furthermore, they don't have the integrity to say, "Let's stop and rethink this" when they discover that they're wrong. Instead, they simply work the numbers so they can justify the case they're trying to make, and then they ram their legislation into place as quickly as possible. (...and we've come to learn that few bills are even read before voted on!) They can get away with making expensive mistakes because they have the taxpayer and deficit spending to fall back on. If a businessperson makes the same mistake, he's bankrupt (unless, of course, his business is too big to fail). The bottom line: I fear that we are rushing head-long into another poorly structured scheme that will not address the problem, that will burden the public with yet more expense that it cannot afford, and that will line the pockets of the well-connected and corrupt.
The military industrial complex panicked us into an over-blown fear of the communist threat in the '50s and '60s. The result was massive, wasteful defense spending and a war in Vietnam that cost over 50,000 U.S. lives, and well over a million lives of our supposed enemy. Now, the global warming industrial complex, with the full buy-in of our eager-to-be-loved president, is pushing us towards a "solution" that will line their pockets, add an enormous expense to every family in the country, do nothing regarding other countries' responsibilities re climate change standards, and supposedly reduce temperatures by only .2 degrees by the year 2100. I've spent my entire career being a problem solver, and it just seems to me, based on the outcomes in this deal, that people haven't spent enough time working on the potential solutions. Ditto for healthcare reform, but that's another story.
Simply put, we need to demand more rigorous work and a higher level of professional integrity from our politicians. Furthermore, we need to maintain a healthy skepticism about everything our government proposes. Don't we have enough evidence that we need to?
Saturday, July 18, 2009
1) Goldman Sachs conspires with our government officials to create a panic over a real or imagined problem.
2) Current or former senior officers of Goldman are put in charge of the problem.
3) It is determined that only Goldman Sachs is qualified to handle whatever the fix is for the problem, and it is given a preferential role in all related money-making opportunities.
Sens. Dianne Feinstein (D-CA) and Olympia Snow (RINO-ME) have introduced a bill to make the Commodity Futures Trading Commission the sole regulator of the carbon market created by cap-and-trade legislation.
So does this mean that freebooting Goldman Sachs could be the de facto regulator of the carbon market?
- The current chairman of the CFTC is Gary Gensler, formerly of Goldman Sachs.
- Goldman Sachs is a part owner of the exchanges where carbon allowances would be traded.
- Goldman Sachs has spent millions of dollars lobbying for cap-and-trade legislation in anticipation of making billions of dollars at the expense taxpayers and consumers.
- Goldman has a special exemption from the CFTC to exceed the trading limits normally placed on commodity speculators. Not only was this exemption secret for 17 years, the CFTC recently had to ask Goldman for permission to release the letter to Congress!
- Goldman Sachs employees are heavy contributors to the Democratic Party giving it over $4.4. million in the last election. Barack Obama received more than $997,000, Feinstein received $24,250, and Snowe received $17,000 from Goldman. All-in-all, this could result in a pretty decent return-on-investment for Goldman.
As the global warming bubble inflates and then bursts, will Goldman Sachs self-regulate all the way to the bank… making record profits at the expense and misery of taxpayers and consumers?
Can you tell the difference between the CFTC and Goldman Sachs?