The now bankrupt merchant bankers, Lehman Brothers, invested heavily in the politics of climate change. The bank released two reports last year on the issue broadly embracing and promoting the United Nations Intergovernmental Panel on Climate Change (IPCC) Agenda including emissions trading.
The second report entitled, ‘The Business of Climate Change ll’, went as far as to suggest that it will be possible to reach an international agreement to limit greenhouse gas emissions; indeed within five years.
The following extract gives an insight into the flavour of the report:
“The introduction of the European Union Emissions Trading Scheme (EU ETS), which covers a little under half of the industrial carbon emissions in Europe, has triggered discussion and concern about the impact of such a carbon trading scheme on (European) industrial competitiveness. The concern is that, by acting unilaterally, European firms may be disadvantaged, and the economy thereby damaged relative to non-EU firms and economies.
“As considered in the chapter Emissions trading: grandfathering vs auctioning, any scheme – be it cap and trade, a carbon tax, or whatever – that limits emissions thereby raises the (relative) price of carbon, a proportion of which is in turn passed on to intermediate and final prices. Depending upon whether the emissions permits are issued free or auctioned, firms may or may not experience a decrease in profit. Either way, however, firms stand to be disadvantaged relative to competitors abroad which do not face the increased marginal cost of carbon.
“This loss of international competitiveness could be resolved by the region (Europe in this case) imposing a border tax on imported goods according to their carbon content; or by other economies raising the relative price of carbon, whether by joining the carbon trading scheme or otherwise. The risk with a border tax is of retaliation, and the potential for a trade war.
“More likely, we judge, is that some sort of global scheme to limit carbon emissions, and quite possibly a global cap-and-trade scheme, will be in place within the next five years.”
On the issue of the Stern report and the associated controversy over discount rates, Lehman Brothers again come down on the side of those promoting immediate action against global warming backing “the correct ethical position” over what many would consider prudent economics.
The Lehman Brother’s report acknowledges the assistance of Dr. James Hansen, Director of the NASA Goddard Institute for Space Studies, and advisor to Al Gore.
********
The Business of Climate Change ll: Policy is accelerating, with major implications for companies and investors. By John Llewellyn and Camille Chaix, Lehman Brothers, September 20, 2007
WJP
All socialist systems are bankrupt by definition 🙂 And finally they are starting to heed Ron Paul in the US.
Ah it's wonderful time to be in when yet again Austrian Economics is confirmed again. The tragedy is that so many people have to suffer for the hubris of the socialists or social democrats as they like to call themselves.
Loius Hissink: You ommitted one crucial word ".... before we find ourselves accidentally with a (bankrupt) socialist system."
Warnings have been sounded for years with regard to the creation of excess credit. Click on Richard Daughty of Magambo Guru fame , for starters,and peruse anything!
http://www.kitco.com/ind/index.html#d
And what did we hear on ABC Radio at 12.15 PM today? Cash flooding into safe havens, US Treasury Bonds and gold. Why you might ask? No perceived counter-party risk. Simple. Simple as climate science.
I found some more coincidence.
You remember Bear Stearns? In the wake of their collapse BusinessGreen.com laments that, "Large clean tech infrastructure projects could be particularly badly hit."
http://www.businessgreen.com/business-green/news/2212173/experts-warn-bear-stearns
You still demanding those green projects now?
"Whether they are right or wrong about emissions trading has nothing to do with their bankrupt status."
As i see it it's their faith in improperly validated models, and their (that is all banks involved) attitude to the software engineers that tried to warn them about it, that's the common link.
The ironic and relevant point is that lehmans were happy to believe in models to make predictions out 100 years, and sell products and ideas based on these models. AND yet, they were incapable of predicting what was actually happening around them.
Economic models don t work, this is proof of that if you needed it. Now why would anybody believe the climate models are any better?
AND an ETS IS COMPLETELY ILLOGICAL on the basis that it will achieve nothing unless there is a global agreement, and even then until we find alternative energy sources its potential impact is negligible. This is the truth, and yet we are being sold this concept as some sort of cure. This is really fraud. Lehmann's pushed it when they must have known it would achieve little or nothing...
Even if you believe the science, its crucial you think about the economics of the issue as well........ see http:www.news.com.au/heraldsun/story/0,21985,24326897-664,00.html note // removed
Interesting logic. The Lehman Brothers are bankrupt therefore this proves that all their past actions and statements are false. Even a stopped clock is right twice a day yet we are being asked to accept that Emissions Trading is wrong because they are bankrupt?
Whether they are right or wrong about emissions trading has nothing to do with their bankrupt status.
This is pretty hilarious stuff.
What we have is an implosion caused by the less-regulation free market ideology favoured by conservatives, yet it's the evil global warming conspiracy that has brought down Lehman Brothers.
This really is planet crazy stuff.
Jennifers involvement with the Mont Pelerin mob makes perfect sense, as long as you keep in mind that it's no longer a defender of the liberal order as it was originally conceived, but is now the home of the il-liberal, conservative, anti-regulation ideologues. Hence the irrational response to AGW, with its promise of strengthened regulation and inter-govermental co-operation.
Jennifers view can now be seen for what it really is - a political position given a very thin veneer of scienciness.
“But even with their high ability to peek into the future, they couldn’t predict their demise one year ahead though there were many people that had been warning about this present crash for years. But Lehman Bros were recommending investments 30, 50, 100 years ahead. Some days, reality imitates fiction.””
SJT- "I guess thats the difference between economics and science."
How very trusting of you SJT, your naivety shows through yet again.
Given you always come away from this blog scratching, one wonders why bother to attend?
From John Ray's Dissecting Leftism blog
Quite a few good articles on different aspects of the big crashes. An excerpt from this one: "What makes me laugh - ruefully, I assure you - is when our office seekers trot around the country promising "accountability" for Wall Street. Lehman just went bankrupt - in a market economy, things don't get more "accountable" than that. What everyone wants to know is how serious the current situation is. Step back from the ledge, and for goodness sakes ignore Senator Obama's ignorant hysterics. What we have now is a market correction. Firms that made poor decisions are being devoured by the market's unforgiving nature. Today the Dow is steady, the American economy having easily withstood the shock of the weekend's events.
Another good comment here. It starts: "Democrats have spent more time investigating Sarah Palin than they have the crooks in their own party who are responsible for the financial crisis!"
Another comment includes this excerpt: "Fannie Mae and Freddie Mac were run by Clinton cronies who received millions of dollars from the organizations. Democrats were in bed with these companies and refused to listen to George Bush when, in 2003, he "recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago"
My comment: It all started out with the Democrats pressing the banks to lend to blacks -- regardless of whether the blacks looked like good risks or not. The banks did as they were told and passed on the risks to the financial sector generally. The result was entirely predict
UK's largets mortgage provider, HBOS, seems to ready to go under as well - this game has not finished.
Leftists of course consider that Keynesian economics is correct but that other factors keep spoiling the game.
What is frightening with these developments is the incremental increasein government power of the private sector - as Hayek called it, creeping socialism.
The core issue is leftist economic ignorance - and as they are the majority, there is not much one can do about it. They control the world's government bureaucracies including the UN, so its only a matter of time before we find ourselves acccidentally with a socialist system.