“Carbon assets:” global banks still addicted to speculative markets
The McKinsey Quarterly trumpets that “a new regulatory environment for greenhouse gas emissions could hold good news for banks.” They bandy about figures such as “trading volume could grow to €2 trillion by 2020!” Banks such as Barclays and Merrill Lynch will be investing in carbon credits, which apparently will grow in value over time, which is why they would be worth the speculative risk.
Quick question: When did carbon become an asset? I thought it was a pollutant that was melting our ice caps and destabilizing our climate?
Ah, carbon isn’t the asset, it’s the right to emit carbon which will be decided by national governments in the U.K., Sudan, Burkina Faso, and Canada. The banks will invest in the right to emit pollution, which is…um…I guess an asset. If you squint.
Much of our recent economic trouble is that we imagined that we were creating value through a housing bubble and an unregulated credit glut. This approach was so wrong that most of our financial system has collapsed. But the way out is through investing in carbon “assets” that are entirely encased in an artificial market that will be run by the same federal governments now trying to run banks, insurance companies, car manufacturers and other industries?
Who can explain to me how carbon can be an “asset” with a value that will appreciate?
Better question: what real good or service will you be providing to people in 2009? There will be billions of people who want things, need help, require something of real value.
Will you be aiming to provide that, or will you be betting on assets created out of thin air?
Sarkozy warns bankers of their “moral pact” with the nation
It seems that other countries are seeing the risk in allowing national bailouts to be used, not for unfreezing credit markets, but for high-stakes mergers, dividends, bonuses, and other business-as-usual activities.
Yesterday, French president Nicolas Sarkozy called the nations bankers in a room and essentially started screaming warnings not to do likewise. Actually, quite amusingly clear, forceful language from a head of state.
Highlights:
“Bankers have signed a moral pact with the nation.”
“[To the media] When you see something that looks wrong…SAY SO!”
It’s interesting how much of the future of business seems to ride on our reactions to this crisis. In addition to trend analysis, we constantly recommend actor analysis, the examination of the motivation and decision making processes of major players in any industry or system.
France appears to be reacting to the meltdowns in other parts of the world economy and sticking with a slightly slower, much more disciplined interaction between the state and private industry. And their head of state is making this a moral argument, a sacred trust between individuals and institutions.
What about other countries? We’ll be watching.
The United States Government: World’s biggest financial yard sale?
Our quip of the week comes from Miss April Swain, Competitive Futures’ expert in economic development and next generation risk management:
“If the government is in the business of purchasing worthless assets, what’s next? I forecast they’ll probably take over EBay, Craigslist, and Kenton’s National Flea Market.”
About Eric Garland
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