Carbon Capitalists Profit off Green Laws 

BY CHRIS PETHERICK

The world’s elite converged on Copenhagen, Denmark, in early December for two weeks of talks on environmental issues and on what role governments should play in trying to combat them. At the same time, 3,000 miles away, the slash-and-burn speculators on Wall Street behind those high-risk financial vehicles responsible for toppling economies around the world were hard at work figuring out new ways to profit off the regulations that will surely come as a result of the summit gathering. 

On Monday, Dec. 7, thousands of top officials from Europe, North America and sia arrived in Copenhagen to kick off the two-week eco-event sponsored by the United Nations. Mainstream reports wryly noted that 1,200 gas-guzzling limousines had been hired, some from as far away as Germany and Sweden, to ferry delegates to the site of the convention from the city’s airport, where 140 private jets burning hundreds of gallons of fuel an hour were scheduled to land. Throughout the week, these “eco-conscious” officials would be celebrating the festivities with expensive caviar, goose liver paté and French champagne before retiring to their thousand-dollar-a-night hotel rooms.

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“Meanwhile, in New York City, the brains behind those infamous financial derivatives known as credit default swaps were formulating new ways to profit off the proposals being discussed at the meetings. Derivatives refer to spinoff financial instruments that literally derive their value from the price of related commodities. 

In this case, carbon dioxide and other greenhouse gases will form the basis of these new derivatives as Wall Street speculators create new ways to gamble on not only the value of commodities but also on how proposed laws will affect corporate stock. New-York-based Bloomberg News reported in-depth on these carbon capitalists’ new scheme, writing that Wall Street investment firms 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.” 

According to Bloomberg, the world’s largest financial institutions—many of which received multi-billion-dollar bailouts from American taxpayers—intend to become “the intermediaries in this fledgling market.” Wall Street has already gotten in on the ground floor, cutting deals with corporations to create the framework for trading under newly proposed environmental guidelines like cap and trade. In addition, they have sent their army of lobbyists to Capitol Hill to fight pending legislation that could curtail their plans. 

International bankers are already slavering over the Democrats’ proposed cap-and-trade program, which refers to federally defined limits on greenhouse-gasproducing emissions like carbon dioxide. How it would work in the United States is that factories would be issued individual standards by the federal government, which dictate the amount of gases each one can produce in a year. The corporation would then have to enact programs to monitor their output. Those that move quickly to reduce certain types of gases and come in under their mandated limit would be able to sell or trade the remaining levels of gases with those industries that cannot. 

Bloomberg cited a recent speech by billionaire George Soros to show how bankers want to create a market for cap and trade. 

In July 2009, Soros told a group of students at a London School of Economics seminar: “The system [of cap and trade] can be gamed. . . . That’s why financial types like me like it—because there are financial opportunities.” 

Congress is apparently aware of Wall Street’s plan to profit off cap and trade, and some legislators have already gone on record as being opposed to these types of derivatives. Bills are circulating that would either ban them outright or impose stiff regulations on those who deal in them. 

“People are going to be cutting up carbon futures, and we’ll be in trouble,” Sen. Maria Cantwell (D-Wash.) said. “You can’t stay ahead of the next tool they’re going to create.” Still, Wall Street is intent on killing those bills before they even make it out of committee. 

Hedge fund manager Michael Masters summed up the growing concern, saying: “Wall Street is going to sell it as an investment product to people that have nothing to do with carbon.” 

The problem with that, says Masters, is that “suddenly investment managers are dominating the asset class, and nothing is related to actual supply and demand. We have seen this movie before.” 

And no one wants to see that rerun again with gas going for nearly five dollars a gallon and corn for as much as eight dollars a bushel.

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