Cap and Trade: Yet Another Scam

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I'm a couple weeks behind this one, as all the media focus lately has been on the health care bill.  I've had several interesting discussions around cap and trade lately that inspired me to put my thoughts down into a blog post.


I consider myself a fairly environmentally conscious person, I do believe based on data and observations human activity is creating a huge and very negative impact on the global climate.  I'm extremely worried about the this planet over the next several decades.  To me the health of this planet overrides any economic impacts of decisions, but at the same time I believe doing what is right for the planet can be done in ways that is also very economically beneficial in the long run.  I'm not writing this post to debate these points...

Cap and Trade is a Wolf in Sheeps Clothing

The idea behind the bill sounds fine based on the highest level talking points, incentivize investment in alternative energy and at the same time disincentivize the polluters.  Once you look under the hood though, the best phrase I can use to describe it, is "financial scam".

What got me looking at, and thinking about the impacts of the cap and trade bill was when I noticed the biggest supporters throwing the most lobbyists and money behind it was not the alternative energy industry but the Wall Street investment banks.  Why?

It comes down to the whole "trade" part of the bill where carbon credits received can be traded/sold to carbon producers.  It's been estimated that this could create the largest derivatives market, larger than the CDS's (credit default swaps).  These credits would trade on an exchange (partially owned by Goldman Sachs) and would be a multi-billion dollar windfall for the investment banks. 

Since the number of carbon credits available is fixed, and is reduced each year this creates a made in heaven market for large traders and speculators (hedge funds, investment banks).  The carbon bubble will become the new credit bubble, as speculators suck productive money from the system.

Destructive Impacts on the Alternative Energy Industry

I've got a lot of friends involved in the alternative energy industry who believe this bill is a windfall for the industry and will spark the next big revolution in alternative industry.  Be careful what you wish for, the long term impact on the industry may in fact be very destructive.

It's analogous to what happened with the housing market and credit bubble in 02-06 with all these new fangled mortgage products, CDO's, CDS'.   Everybody touted these products as being great for the housing industry as they made housing more "affordable" and accessible to the masses.  We now realize the truly destructive nature of these products, which incidentally were created by the same Wall Street banks behind the cap and trade bill.

Particularly as the price of carbon credits in driven up by speculators, it will become extremely profitable for companies producing them.  The catch is the total number of credits is limited and there really isn't a direct tie between a technology being beneficial long-term, and producing carbon credits.  You will see hundreds of companies pop up, simply built to capture huge profits from carbon credits, with technologies that otherwise would not make any sense. 

In much the same way as imprudent lenders pitching alternative mortgage products forced prudent lenders out of the mortgage business, viable alternative energy technologies will be squeezed.  Investment will be redirected from the productive to the speculative, with very negative consequences.  Of course this bill is practically designed to create a "carbon bubble", who's popping in a few years, will sow yet another round of economic destruction laying waste to a whole industry while the pig men walk away with their sacks of money.


Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Lenn Harley 07/28/2009 03:15 PM
  2. Donald Bradbury 07/28/2009 09:00 PM
  3. Fran Gatti 07/29/2009 12:07 AM
  4. Gabe Sanders 07/29/2009 06:56 AM
  5. Larry Brewer 07/31/2009 09:31 PM

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Gary L. Waters, Broker Owner Waters Realty of Brevard, LLC
Waters Realty of Brevard, LLC - Melbourne, FL
Small Office, Big Service

I got in on this a bit late and the discussion is interesting. Global warming is more of a political and economic event than an environmental event.  Just ask any politician!

Jul 29, 2009 01:03 PM #53
Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

Thomas Jefferson was the first president to worry about global warming look it up... this is on going and it is not any worse now than it was ...cap and tax trade is BAD and it has nothing to do with saving the world... it will make Al Gore and his henchmen rich...Nancy pissoli and probably whoever funded obamas campaign... 


I live in Alaska so for the gentleman who put up the barrow map which I believe is altered... we have had RECORD BREAKING COLD up her for 2 years... we had to cut Russian ships out of the ice.... up there where they are trying to steal our oil because the government wont let us take it..... in JUNE.... there is a lot of BAD information out there ... it would be nice if we could look at the truth not a pack of Al Gore Lies 

Jul 29, 2009 01:13 PM #54
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

This bill should be called "Tax & Raid" is it is about getting money from us.  Michael Chrichton wrote an excellent but well documented fiction book call State of Fear, the appendix alone should cause believers to have doubts.  Chrichton's specialty was taking complex real issues and fictionalizing them for the mass market, but he was a brilliant man.

Jul 29, 2009 01:47 PM #55
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

Silly me - I believe that if 'green' products were made available at decent prices, many folks would choose them without government enforcement. But the politicians won't get rich that way, I guess, so forget about it.

Jul 29, 2009 01:52 PM #56
Chad Boyers
The Danberry Co.- Toledo, Perrysburg, Sylvania, & NW OH - Toledo, OH

I think that we just need to remember why Congress makes and changes laws: money and re-election...if we want to change what is happening, we need to start fresh at the top.  Remove ALL congressmen and replace them with fresh ones.  Place term limits on them.  Check out

BTW, I agree completely w/ you Katerina!


Jul 29, 2009 03:01 PM #57
John Rakoci
Eagle Realty - North Myrtle Beach, SC
North Myrtle Beach Coastal Carolinas

The ONLY truthful words to come from obama's mouth since he bagan his campaign were "electricity bills will skyrocket". Not only your home bills but on everything you buy folks. Now, India, China and others are laughing at him and greatful as this will close more companies and send more jobs offshore. obama never heard Rev Wright say anything bad about the US either.

Remember when discussed Medicare was to be voluntary and cheap when it was discussed. How many working people are not paying the 'tax'? NONE! How many over 65 are not covered? NONE. Does anyone believe obama on health care either?

All worried about 'carbon credits' can send me a check monthly and I'll plant a tree for you.

Cap & Trade plus nationalizing health care are not good things! Sad to say but I see obama as a socialist liar bent on ruining the US capitalistic society.


Jul 29, 2009 04:35 PM #58
Ryan Hodgson
Coldwell Banker 1st London - London, ON

Celeste Decker gets it.     Good to see someone else is unprogramed.

I do have faith that the popluation can awaken.

Jul 29, 2009 04:55 PM #59
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

I don't agree at all with global warming, it is a complete unscientific hoax.

The bill is cap and tax.

It is a way for the Al Gore's to make billions, it is a way to end the economic stability of our energy.

It will send jobs over seas.

It will not help the "climate".

I was so glad to see that Nashville broke their record for lowest temperture in July. I hope Al Gore had to get his sweater out.


Jul 29, 2009 07:21 PM #60
Jerri Schick - Galveston, TX

Wow, wow, wow!  You people make me proud to be a Realtor!  You have restored my faith in Americans.  Thank you.

Jul 29, 2009 09:07 PM #62
Nestor & Katerina Gasset
International Properties and Investments LLC - Wellington, FL
Realtors, Wellington Florida Homes For Sale

Celeste- You are a brave soul and all those laughing at the conspiracy theorists may not be laughing for long. It all about what THEY want you to see and know. Think about it. Read about Woodrow Wilson, Teddy Roosevelt and Franklin D Roosevelt! Then you will see what Celeste is saying is not far fetched at all.

Jessica- I totally believe that God is more powerful than man and nothing will destroy his plan. You are right, man is too arragont to actually believe they are more powerful and mighty than GOD.

Jul 29, 2009 10:21 PM #63
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

Forget the Anthropogenic Global Warming argument... it doesn't matter.  This bill is destructive towards the environment even if AGW is real...  That is the point. 

Jul 29, 2009 11:07 PM #64
Tony Barker
Premiere Home Realty - Tony Barker 832-867-0835 - Houston, TX

Matt gets it.  It is a scam.  


1. Hey if a single active volcano puts out 1000 times more CO2 than ALL of humanilty each year, and we have dozens of active volcanoes, how is eliminating (even ALL) of the COs produced by man going to help?

2. If you like Cap and Trade, how does any of the (t)billions get from Al Gore, GE, US Treasury get the air clean?

3. If we waived a magic wand and got rid of the CO2, how would the trees live to make oxygen for us pesky humans?

4. Who will buy the homes that will foreclose because they have to be GREEN to be sold, can't and get foreclosed on?  Who then will make the empty hulk green?

5.  Should we always ignore logic just to feel good... or is it about control and power.

Jul 30, 2009 08:38 AM #65
Ron Trzcinski
Century 21, The Real Estate Centre - Nottingham, MD

Regarding global temperatures, whether they be rising, falling, or staying the same, I am curious if anyone knows where I can get this data.  Certainly there are many factors which impact the earth's climate including the sun, volcanoes, and some which are man made, however I find it difficult to say what is actually happening if I do not have the data.  I can look at a particular part of the globe and see what is taking place at that location, but it would be absurd to assume that everywhere else on the globe were similar to that one location.  The fact that there is a non-value-added money making element to this issue or the fact that other weather cotributing factors are not and in some cases cannot be addressed does not mean that there is not some merit in addressing man made pollution.

Jul 30, 2009 12:20 PM #66
Seattle, WA


This is a brilliant post. A lot of people intend right, have good hearts and care about taking care of the earth, but cap and trade is not about environmental stewardship.

Cap and trade amounts to "buying" and "selling" the right to pollute. Companies pollute anyways... with cap and trade, they'll just have to "buy" the right to do so. Cap and trade merely creates a superficial market... But the same companies will still pollute, because companies don't/can't just magically restructure their entire organizations overnight (organizations that have been in existance for decades and that are based around "pollution as usual" as a part of their profitability structure don't and can't just change...). That's not realistic... What will happen instead is they'll play "lip service" in this new Cap and Trade derivatives market.

Cap and trade will be just another derivatives market, just like you said Matt.... I don't think most people understand derivatives... Derivatives are a scam, if Americans understood this, our government would be overthrown (like a good friend of mine said in a recent conversation) for how it's handled the recent 10 months [and the years before that!] and for not really revealing to people what's going on. It's not just about mortgages.

Caring about the environment means investing in greener and cleaner methods of production, changing inherent approaches to business and addressing people's attitudes regarding entitlememt to pollute, and throwing out the old business model of how "profitability" is defined in order to consider future cost to the environment.

A test for how much people really care about the environment: Do we really believe cap and trade will do anything to alter inherent entitlement attitudes that companies have about pollution? Chew on this for a little: do we personally care about the environment? Does our "walk" prove our "talk"? An easy test of something we could apply right now in our personal lives--- How many people reading this [those one or two of you LOL] would willingly STOP buying processed foods and instead by fresh foods (vegetables, non-boxed, non-packaged items, items sold in bulk (not Costco-- stuff you put in bags by the pound is what I'm referring to)) just to cut down on their personal waste creation?

If individual people like you and me won't do something so easy as to change their grocery shopping habits in order to cut down their waste/garbage footprint, why should we think cap and trade gets even close to addressing the true motives of the heart behind poor environmental stewardship in those running the largest companies? [by the way, I don't buy many boxed or processed foods, not that I'm an angel or anything... ;) I do aim to walk my talk...]

I believe that in America our view is crippled by an over-altruism perception. We like to think well of ourselves but our walk doesn't align with our talk. We truly believe in the goodness of others and ourselves. This is not so in other countries. Go to post-communist countries, or any non-westernized country (or any westernized country other than the US) and you'll see that people understand that altruism is not how most people function. We presume that our government watches out for us. We don't do our homework as a result... we don't want to, because we might have to confront ourselves... Realizing the dishonesty in our government may call us to confront the dishonesty we have with ourselves...

The key to companies polluting less is not creating a new derivatives market. The key is to pollute less. This has to stem from  a philosophical  repentance by corporate board members and exectuive leadership from an attitude of entitlement to their embrace of environmental stewardship as one's duty and responsibility. Profitability (money) should not be the highest "master"...

Jul 30, 2009 12:52 PM #67
Larry Brewer
Benchmark Realty LLc - Nashville, TN
Nashville Real Estate

Wow - I am excited to read that I'm not the only realtor in this country who know what B.S. smells like.

Unfortunately, we have Nancy Pelosi in control of congress right now, and so far, anything she proposes seems to be a bad thing for all of us. How can we get her out of office?



Jul 31, 2009 09:29 PM #68
Daniel J. Hunter
REALTOR® - New Port Richey, FL

cap and trade has one gaol.  To raise the cost of conventional energy so the more expensive green alternatives are affordable.  Anybody see what happened to the cost of energy in countries that adopted Kyoto?  some in Europe pay 20% higher for their energy


this is nothing more than artificially inflating prices of one item, to make an alternative more feasible.  It is Bad Law

Aug 03, 2009 12:54 PM #69
Emily Knell
Realty One Group - Rossmoor, CA

I agree with Brian Brady, you need to take a hard look at natural (non human intervention) occurences, like VOLCANOS, DEAD VEGETATION, ANIMAL FECES, DEAD ANIMAL CARCASSES and 2/3 of the surface of the earth the OCEANS & their own emissions of Carbon Dioxide before you start crying "MAN BEAR PIG". (Southpark reference in case you didn't get that) it's a great episode, I suggest you YouTube it.

It hasn't been determined by the whole of the scientific community by a long shot that global climate change has anything to do with what humans do.

First you need to explain to me the "little ice age" and the "warming period" that occured 100's of years ago before Refinaries, gas autos, nuclear bombs, airplanes etc. 

Don't get me wrong, I do recycle & I do think L.A. would look much nicer minus the smog.

Wall Street will look for anything to make money with, any scam we humans are suckered into.

Aug 07, 2009 05:46 PM #70
Brian Brady
San Diego VA Home Loans/858-777-9751 - San Diego, CA

I can sell my credit to someone who is producing 75 million tons. Does anybody else see the point we are missing?

Cap and Trade may be an incentive to pollute and pay, Michael.  I've often said that the parking ticket's at the beach are more reasonable than the parking fees (and they just put them on your account)

Don't get me wrong, I do recycle & I do think L.A. would look much nicer minus the smog.

Exactly, Emily.  I'm a conservationist; I would never think of littering on someone else's property but I think it's reprehensible for someone to tell me what I can and can't do with mine (post facto)

Aug 08, 2009 11:21 PM #71
Jami Van Den Bogaert
RE/MAX House of Brokers - Springfield, MO

I have been aware that this was no good and have been emailing my reps for a while now. Thank you for bringing it attention on a post with so many viewers such as this.

Sep 01, 2009 11:17 AM #72
Ppl like you get all the brains. I just get to say thakns for he answer.
Oct 30, 2011 12:03 PM #73
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