Friday, May 1, 2009

Here Comes Another Bubble: Gigantic Loophole in Europe Carbon Market

If you let the people responsible for the world economic disaster be responsible for the carbon market, you deserve what is coming. We have some links below the story. Cap and 100% rebate.
From the Guardian:
* Evidence that speculators are moving EU carbon price
* No single watchdog responsible for regulation
* U.S. cap and trade plans throw new focus on speculators

By Nina Chestney
LONDON, April 29 (Reuters) - A legal loophole is allowing traders to influence the price of carbon permits in Europe's emissions trading scheme, and indirectly wholesale electricity prices too.
Market participants say that financial speculators have exploited recent volatility in European carbon permits to exaggerate price moves, and there is some evidence that individual traders are trying to move the price.
This behaviour ultimately moves electricity prices: the carbon price accounts for about one fifth of household energy bills. Power plants pass on to customers the cost of permits they have to buy to balance their emissions.
"This practice exists, it's part of the game. It should disappear with the increasing liquidity of the market," said a trader, under condition of anonymity....MORE
Yeah. Right.
From November '08:

Japan aims to limit speculation in emissions trade (or we could just tar-and-feather carbon traders)
There is no reason to believe that the same people who brought us the sub-prime mess, the asset-based commercial paper mess, $147 per barrel oil and everything else we've gone through this year, will do any better running the carbon trade as mercenary tax collectors....
From March '08:

California's cap-and-trade won't work

Here at Climateer Investing the comparison between California electricity deregulation and carbon trading seemed self-evident, based, if for no other reason, on the fact that the pals and alumni of Enron are the ones pushing the trade. Now the media is picking up on where the trade part of cap-and-trade is going. The LA Times gets it.

From "The Trouble With Cap-and-Trade" :
And this from a former Goldman Sachs trader:
The whole reason for the existence of traders is to make as much money as possible, consistent with what's legal...I lived through this: if you didn't manipulate the market and manipulation was accessible to you, that's when you were yelled at.
New York Times, May 8, 2002
I'd rather my mom's pocket wasn't picked by some Lehman or Cantor CO2e trader trying to up his bonus.

From The Richter Scales:
Here Comes Another Bubble