The people who run the finance industry are extremely smart. Says so on the label. That's how they were able to convince the government to make good on their gambling debts, though if they were a little smarter, they might have remembered that the house always wins.
They've created speculative bubbles in recent decades (and more than one had to be bailed out) over commodities like silver, unsecured loans, real estate, dotcom firms whose business plans hinged on sock puppet sales, real estate ... well, you get the picture. On to the next big thing.
That thing might well be carbon markets. Turns out, the companies that hold most of the current derivative risk will be able to make ridiculous, unsupervised bets sell dizzyingly complex derivatives against carbon offsets, too. Though no worries, the price of failure would only be the absence of a price signal that will push atmospheric carbon levels down, hastening catastrophic global climate disruption. No big:
... Well, Waxman-Markey had some good language regulating carbon and other energy derivatives.
... However, in the 300 pages of amendments added to Waxman-Markey just after 3.a.m on the night the bill passed, a few new sentences materialized that placed a big asterisk on those safeguards. The final text now says that the sections of the bill regulating carbon derivatives will be overridden by any derivatives legislation that the House passes later in the year. ...
Rep. Collin Peterson, Agriculture Committee chair, is interested in regulating them, but he's not exactly Mr. Corporate Oversight. Does he just want his fingers in the pie so that, like Geithner, when it comes time for independent review, he can throw an expletive-laden tantrum and prevent serious reform? Or maybe he just wants to enshrine chemical no-till as a prime carbon offset early on, generate some extra revenue for farmers who end up using more herbicide than you can shake a stick at and then call it environmentalism.
Still, it probably hangs on the Senate, which is to say that it relies on the Senate passing tougher derivative regulations that would affect the carbon market than the House. Maybe Schumer will fix it. Maybe Boxer or Kerry, and their compatriots on the Environment and Public Works Committee. We'll see.
Pets.com wound up as just another of the Ozymandii of the Dotcom bubble. There were outfits who kept selling the company's trademark sock puppets after they folded, because it was the only money-making enterprise Pets.com ever came up with. Wall Street ate it up, though, until companies started folding and it all went to hell. Then the big investors and their cheerleaders eased into REITs, real estate investment trusts, because surely, nothing could really go wrong with the housing market.
Legislators should know by now, if they ever did, that common sense and restraint aren't the watchwords of Wall Street. They should get on the ball with providing those things if a carbon market is important to them. Otherwise, it'll be sock puppets all around.
