CPRS and Bankers’ Bonuses
Billionaire leftist, convicted insider trader and climate change evangelist George Soros and I have something in common.
We are both suspicious of using an Emissions Trading Scheme (ETS) as a means of reducing carbon dioxide emissions.
Yes, that’s right. George Soros, the man who donates hundreds of millions of dollars to left-wing organisations around the world to fight climate change is against an ETS.
Soros and I agree that an ETS will provide the same financial traders who Kevin Rudd denounced as destroying the global economy with the opportunity to do it all again. Except this time, instead of mortgages and sub prime loans, the house of cards will be ETS permits.
Consider this for a moment.
The financial crisis was caused by big investment banks taking $1 billion of investor funds and then borrowing up to $30 billion more to trade with. This is a level of borrowing that no business (outside of investment bankers) would ever engage in. It’s exactly the sort of borrowing that sent banks to the wall earlier this year.
Now multiply those figures one hundred fold. A starting investment of $100 billion could multiply to a total investment pool of $3 trillion. It’s hard to comprehend that amount of money isn’t it?
For the record, that’s a three followed by twelve zeros. It is the entire cost of the Iraq war and three times the annual size of the Australian economy. If you collected it in $100 notes it would weigh about 30 tonnes!
Clearly, we are talking about a lot of money here. The sort of money that only the biggest governments and investment banks are able to access.
And what will they do with all that cash? Well, if you want to use it to trade carbon permits, you could effectively control the global marketplace to make extraordinary (and virtually guaranteed) profits.
You see, the carbon permits available will be limited and as industry grows, demand for permits will grow too. This means that as industry scrambles to buy permits the price of each permit is likely to rise. After all, that is the whole point of having an ETS in the first place – to put a rising price on carbon.
Now imagine that the global emissions trading market is controlled by these aggressive investment bank traders with their tonnes of money effectively rationing the supply of permits available on the open market.
As George Soros said at a London School of Economics seminar, “The system can be gamed; that’s why financial types like me like it – because there are financial opportunities.”
Soros has said that he prefers a tax on carbon emissions rather than an ETS, because trading systems can be manipulated by investors.
Just in case you think it can’t happen here, under Labor’s scheme hoarding permits is only prohibited in the first year. After that, you watch the carbon frenzy as bankers scramble to get their slice of the action by controlling Australia’s expected $20 billion annual carbon market.
Let me assure you it won’t be about saving the planet but about saving their bonuses. The problem with this is that it will further disadvantage Australian industry by pushing up their costs.
The end result can only be higher costs for every Australian consumer.
This is just another reason that Kevin Rudd’s CPRS needs to be rejected.