- "Carbon will be the world's biggest commodity market, and it could
become the world's biggest market overall."
- Barclays Capital, June 2007
- Carbon credits seem to be another way that statists can create credit/dollars
out of thin air (no pun intended).
- This chart shows the high of 17.27 set in February 2011, which was the
cyclical high for most commodities.
- The major low was 3.10 set in March 2013, from which the rally made it
to 6.40 in July.
- At 5.72 now, taking out 5.38 sets the next leg of the bear market.
Wrap:
Carbon credits seem to be a figment of intellectuals seeking a way to control
people, who have always needed to be controlled. For their own sake, of course.
It is very much part of the recent cult of "global warming" and/or "climate
change", which has been uncritically accepted and promoted by most governments
around the world. The harshness by which sceptics are treated has not been
seen since the Vatican used the threat of death to defend the concept that
the Earth was the centre of the solar system.
Funded by a government arts fund, activists in Australia are now staging a
play "Kill Climate Deniers" and in the US, Robert F. Kennedy accuses scepticism
as "treasonous"
and wants to throw his political opponents in jail. In 2009 economist, Paul
Krugman, described scepticism as "treason against the planet".
However, in the last experiment in authoritarian government the bureaucracy's
insatiable demand for money offered absolution in the form of "indulgences".
That came to an end in the early 1600s and today's form of indulgences is the
concept of Carbon Emission Credits. Pay some money and your sins/footprints
are absolved.
The chart of the price of Carbon Emissions peaked with most commodities in
2011. Most commodities have been weak and a global recession will extend the
decline. Market forces will seriously weaken pricing schemes for carbon emissions.
A changing political tide will also take it down. Perhaps into the dustbin
of history.
Direction:
The climate phenomenon is part of one of the most ambitious experiments in
authoritarian government in history. This is placing the concept of constitutional
limits in perspective. The prime reason for a constitution has always been
to constrain those who would use the institutions of government to impose arbitrary
ambition. History instructs, sometimes forcefully, that the ultimate goal of
any bureaucracy has been absolute control of society and its money.
The final corruption of Rome from a republic to a police state was accomplished
in the third century. Through chronic inflation the wealth of the empire was
destroyed and the collapse was general. The promotion of the state had been
based upon the "Genius of the Emperor".
The next such experiment was inspired by the "Infallibility of the Pope",
which peaked in the early 1600s. After a hundred years of economic intrusion
and confiscation of wealth through chronic inflation, the experiment was rejected
by the public.
This time around, statists chose Keynesian economics that corrupted central
banking to fund yet another experiment in unlimited government. It has run
for more than a hundred years and has critically impaired the free-market system.
However, its excesses on the financial side have always aroused the skepticism
of market veterans who have been fully aware of the consequences deliberate
and chronic inflation.
In this regard, the next contraction seems to be starting and the public will
soon see that the attempt to create enduring prosperity by spending everyone's
money is not practical. And that is what is really needed to end the experiment.
On the climate side, authoritarians did not forecast that temperatures would
flat line. On the latest report this has run for 18 years, which confirms that
climate modeling has been an arbitrary exercise in promoting climate concerns,
a modern form of religious hysteria. Veteran earth scientists have always been
sceptical, but what is needed is the public's understanding that the ambition
to "manage" the climate is just another control tool. More taxation and regulation
will "cure" the health of the planet. Really?
On the financial side, the original intention of the Fed was to prevent severe
setbacks in the financial markets. The reason for this was to prevent the subsequent
recessions. The Fed started operations in January 1914 and, according to the
NBER, there has been 20 recessions since that date. The Federal Reserve System
has failed in its mandate. What's more the establishment has demonstrated an
inability to forecast even the biggest setbacks. At the height of the 1873
Bubble nothing could go wrong, because the US was on a fiat currency and did
not have a central bank. In 1929 the official story was that nothing could
go wrong, because the US did have a central bank. At the height of the 2007
Bubble, nothing could go wrong because there was a "Dream Team" of economists
at the central bank.
In any century there has been veteran traders or financiers that have been
sceptical of the establishment's convictions about intervention.
An unusually ambitious experiment in authoritarian government has been pushing
unsupportable policies in the financial markets and in climate research. Mother
Nature is about to undo two of the biggest promotions in history. All that
is needed is another financial contraction and another cold winter and the
public will realize that the promotions are just plain stupid.
In the early 1600s, a similar discovery about intrusive government described
it as
"Tyrannical Duncery".
Temperature and CO2
