$ Multi-trillion Stock Bubble in Carbon Reserves, Economists Warn
This is a fascinating article, and huge.
The idea is that — worldwide — stocks based on carbon reserves are essentially a multi-trillion dollar bubble, because they cannot actually ever be burned (if they are burned it’s — as James Hansen has said — “game over for Planet Earth”).
The bubble is real only if carbon reserves are “unburnable,” and the argument for why they are unburnable is essentially the argument being made by the carbon divestment (“Do The Math”) campaign led by Bill McKibben, Naomi Klein, and millions of climate activists.
It comes down to this: EITHER the carbon reserves (and thus stocks) of energy companies have full value OR civilization on Earth has a viable future. Up until reading this article, I was betting on the energy companies and not holding much hope for the Earth (which is absurd, of course).
I find this a very hopeful development (for the planet, but not for the markets).
This is a grim development for financial markets.
Hold on to your hats, a disturbance in the force may be coming soon to a planet near you.
‘Carbon bubble’ leading to another financial crisis, economists warn
By Damian Carrington, The Guardian
Thursday, April 18, 2013 20:11 EDTThe world could be heading for a major economic crisis as stock markets inflate an investment bubble in fossil fuels to the tune of trillions of dollars, according to leading economists.
“The financial crisis has shown what happens when risks accumulate unnoticed,” said Lord (Nicholas) Stern, a professor at the London School of Economics. He said the risk was “very big indeed” and that almost all investors and regulators were failing to address it.
The so-called “carbon bubble” is the result of an over-valuation of oil, coal and gas reserves held by fossil fuel companies. According to a report published on Friday, at least two-thirds of these reserves will have to remain underground if the world is to meet existing internationally agreed targets to avoid the threshold for “dangerous” climate change. If the agreements hold, these reserves will be in effect unburnable and so worthless – leading to massive market losses. But the stock markets are betting on countries’ inaction on climate change.
Read the full article here.
Additional Resources:
US Taxes Almost Lowest in OECD Countries
When the subject of revenue increases comes up, Republicans usually complain that the United States is among the most highly taxed country in the world, and that taxes must be lowered.
Here’s a graph — from a report by Citizens for Tax Justice — that proves that the US bears nearly the lowest tax “burden” among OECD countries..
The US is third from the bottom in this graph. Only Chile and Mexico have a lower rate, measured as the total of local, state and federal taxes as a percentage of GDP.
Broadturn Farm, Scarborough, Maine
Young farmers in Scarborough, Maine can’t afford to buy land, so they lease it from the Scarborough Land Trust.
Could that model work here in Nevada County, California?
California Comeback Due to Conservative Decline?
Paul Krugman has a fascinating op-ed in yesterday’s NY Times. In it, he recounts some of the litany of conservative alarms about liberalism sinking California’s economy. Krugman argues convincingly that the truth is quite the opposite: California’s worst problems over the decades have often been connected to conservative greed and obstructionism (my terms).
A dozen years ago, the state was supposedly doomed by all its environmentalists. You see, the eco-freaks were blocking power plants, and the result was crippling blackouts and soaring power prices. “The country’s showcase state,” gloated The Wall Street Journal, “has come to look like a hapless banana republic.”
But a funny thing happened on the road to collapse: it turned out that the main culprit in the electricity crisis was deregulation, which opened the door for ruthless market manipulation. When the market manipulation went away, so did the blackouts.
Krugman sees in the confluence of the state’s leftward political shift and the GOP’s rightwing meltdown (and consequent loss of influence) the glimmering of hope that California can have effective (non-gridlocked) government once again:
Reports of the state’s demise proved premature. Unemployment in California remains high, but it’s coming down — and there’s a projected budget surplus, in part because the implosion of the state’s Republican Party finally gave Democrats a big enough political advantage to push through some desperately needed tax increases. Far from presiding over a Greek-style crisis, Gov. Jerry Brown is proclaiming a comeback.
Needless to say, the usual suspects are still predicting doom — this time from the very tax hikes that are closing the budget gap, which they say will cause millionaires and businesses to flee the state. Well, maybe — but serious studies have found very little evidence either that tax hikes cause lots of wealthy people to move or that state taxes have any significant impact on growth.
Read Krugman’s complete op-ed here –> “Lessons From a Comeback“
Has Facebook “Jumped the Shark?”
Journalism Professor Lee Banville asks whether Facebook has “jumped the shark?”
He quotes Eric Schmidt: “Every two days, we create as much information as we did from the dawn of civilization up until 2003.”
Here are a couple of other factoids Banville mentions to give an idea of the explosive growth of information on the Internet:
“Every minute 48 hours of video is uploaded to YouTube.”
“Every minute 2 million people search Google for something”
In the sphere of the Internet, Banville observes, there are about four titanic “gatekeepers:” Google, Amazon, Facebook and Apple (iTunes).
Most of those gatekeepers have various ways to make money.
Banville, in this short video, explains why Facebook has only one way to make money, and why, since it went public, it will be under continuing pressure to increase its profit year after year.
Viral Video (6 min): US Wealth Inequality as You’ve Never Seen It (Obscene Greed Since Reagan)
Based on a popular Mother Jones post on inequality.
More graphs from Mother Jones:
Who’s Behind the Effort to Destroy the US Postal Service, a Fundamentally Sound Business?
James Royal, writing in the Motley Fool, explains how the effort to destroy the economic viability of the U.S. Postal Service is actually aimed at privatizing the service. Privatization offers several goodies to some members of Congress (and their big-money sponsors) who have imposed unique, unprecedented and unnecessary financial burdens on the service:
- Privatization will bust the biggest union in the United States
- Privatization will make it possible to raise postal prices, thus profits to investors
- Privatization will allow the well-funded USPS retirement account to be open for raiding
Here a couple of excerpts from the article, “How the Postal Service Is Being Gutted“:
That 75-year pre-funding mandate adds substantially to the post office’s losses. This is a requirement that no other government agency, let alone a private company, must face. In short, the USPS is paying for people who aren’t even employees yet — in fact, may not even be born yet!
And the USPS has been a model for prudent squirreling. As of Feb. 2012, it had more than $326 billion in assets in its retirement fund, good for covering 91% of future pension and health-care liabilities. In fact, on its pensions, the USPS is more than 100% funded, compared to 42% at the government and 80% at the average Fortune 1000 company. In health-care pre-funding, the USPS stands at 49%, which sounds not so good until you understand that the government doesn’t pre-fund at all and that just 38% of Fortune 1000 companies do, at just a median 37% rate. The USPS does better than almost everyone.
[...]
So, if USPS is just government bloat, as some ideologues would have it, then why would efficient free market players such as UPS and FedEx resort to the government? Shouldn’t they simply compete USPS out of that express business?
This paradox reveals in stark detail the industry’s game plan. Compete effectively where possible and then use political power to grab market share from USPS, with the ultimate goal of privatizing the postal system, or at least its profitable parts. This goal is emblematized by the Cato Institute, a Washington think tank founded by Charles Koch advocating the privatization of public services such as the post office. Frederick W. Smith, founder and CEO of FedEx, was on Cato’s board, and FedEx funds Cato.
The results of this game plan are well-documented and disastrous for citizens. Want to know what will go down if the postal service is privatized? (Not postage!) Take a look at the 2008 Chicago parking meter fiasco, where the city leased its meters for 75 years to an investor group. The city gave the concession while estimating lifetime revenue at just half what investors expected. Now 2013 marks the fifth year in a row that meter prices have gone up, and Chicago boasts the highest prices in the U.S. The final middle finger: Whenever the city closes streets (as for a parade), it has to pay investors the lost meter revenue.
Expect the same for postage rates and with reduced service.
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China’s Real Estate Bubble is Extreme, a Global Threat: Ghost Mega-Cities full of Ghost Skyscrapers, Ghost Mega Malls
I’ve never seen anything like this report from CBS‘s 60 Minutes last night, on the Chinese real estate bubble.
What will be the impact on the global economy when this bubble bursts, as all bubbles must?
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Smarty Pants Dance
This is what I call great parenting (not just for the teaching, nor just for the praise, but for instinctively knowing that combining praise and teaching work powerfully in a young child).
Besides … it’s really funny and endearing.
What is “Generational Theft?”
Deficit hawks are fond of a concept called “generational theft,” the notion that government spending on today’s seniors robs tomorrow’s children. This excellent article from the LA Times exposes that concept as completely false:
It’s a fundamental piece of a decades-long campaign to distract Americans into thinking that the threat to their way of life comes from a war of old against young, rather than an intra-generational class war in which the vast majority of economic gains from improvements in worker’s productivity has flowed to the wealthy, not to the workers.
Click the following image to read the full article by Michael Hiltzik:
