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Woman Who Invented Credit Default Swaps is One of the Key Architects of Carbon Derivatives, Which Would Be at the Very CENTER of Cap and Trade
I have written hundreds of articles documenting that unregulated, speculative derivatives (especially credit default swaps) are a primary cause of the economic crisis.
And I have pointed out that (1) the giant banks will make a killing on carbon trading, (2) while the leading scientist
crusading against global warming says it won't work, and (3) there is a
very high probability of massive fraud and insider trading in the
carbon trading markets.
Now, Bloomberg notes that the carbon trading scheme will be centered around derivatives:
The
banks are preparing to do with carbon what they’ve done before: design
and market derivatives contracts that will help client companies hedge
their price risk over the long term. They’re also ready to sell
carbon-related financial products to outside investors.
[Blythe]
Masters says banks must be allowed to lead the way if a mandatory
carbon-trading system is going to help save the planet at the lowest
possible cost. And derivatives related to carbon must be part of the
mix, she says. Derivatives are securities whose value is derived from
the value of an underlying commodity -- in this case, CO2 and other
greenhouse gases...
Who is Blythe Masters?
She is the JP Morgan employee who invented credit
default swaps, and is now heading JPM's carbon trading efforts. As
Bloomberg notes (this and all remaining quotes are from the
above-linked Bloomberg article):
Masters, 40, oversees the New York bank’s environmental businesses as the firm’s global head of commodities...
As
a young London banker in the early 1990s, Masters was part of
JPMorgan’s team developing ideas for transferring risk to third
parties. She went on to manage credit risk for JPMorgan’s investment
bank.
Among the credit derivatives that grew from the bank’s early efforts was the credit-default swap.
Some in congress are fighting against carbon derivatives:
“People
are going to be cutting up carbon futures, and we’ll be in trouble,”
says Maria Cantwell, a Democratic senator from Washington state. “You
can’t stay ahead of the next tool they’re going to create.”
Cantwell,
51, proposed in November that U.S. state governments be given the right
to ban unregulated financial products. “The derivatives market has done
so much damage to our economy and is nothing more than a
very-high-stakes casino -- except that casinos have to abide by
regulations,” she wrote in a press release...
However, Congress may cave in to industry pressure to let carbon derivatives trade over-the-counter:
The
House cap-and-trade bill bans OTC derivatives, requiring that all
carbon trading be done on exchanges...The bankers say such a ban would
be a mistake...The banks and companies may get their way on carbon
derivatives in separate legislation now being worked out in Congress...
Financial experts are also opposed to cap and trade:
Even
George Soros, the billionaire hedge fund operator, says money managers
would find ways to manipulate cap-and-trade markets. “The system can be
gamed,” Soros, 79, remarked at a London School of Economics seminar in
July. “That’s why financial types like me like it -- because there are
financial opportunities”...
Hedge fund manager Michael Masters,
founder of Masters Capital Management LLC, based in St. Croix, U.S.
Virgin Islands [and unrelated to Blythe Masters] says speculators will
end up controlling U.S. carbon prices, and their participation could
trigger the same type of boom-and-bust cycles that have buffeted other
commodities...
The hedge fund manager says that banks will
attempt to inflate the carbon market by recruiting investors from hedge
funds and pension funds.
“Wall Street is going to
sell it as an investment product to people that have nothing to do with
carbon,” he says. “Then suddenly investment managers are dominating the
asset class, and nothing is related to actual supply and demand. We
have seen this movie before.”
Indeed, as I have previously pointed out, many environmentalists are opposed to cap and trade as well. For example:
Michelle Chan, a senior policy analyst in San Francisco for Friends of the Earth, isn’t convinced.
“Should
we really create a new $2 trillion market when we haven’t yet finished
the job of revamping and testing new financial regulation?” she asks.
Chan says that, given their recent history, the banks’ ability to turn
climate change into a new commodities market should be curbed...
“What
we have just been woken up to in the credit crisis -- to a jarring and
shocking degree -- is what happens in the real world,” she says...
Friends
of the Earth’s Chan is working hard to prevent the banks from adding
carbon to their repertoire. She titled a March FOE report “Subprime
Carbon?” In testimony on Capitol Hill, she warned, “Wall Street won’t
just be brokering in plain carbon derivatives -- they’ll get creative.”
Yes,
they'll get creative, and we have seen this movie before ...an
inadequately-regulated carbon derivatives boom will destabilize the
economy and lead to another crash.
»
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Hard to surprise me nowadays but this was quite the eye opener GW. To be fair, we need to expand our synthetic economy in order to be able to funnel the necessary debt into it, because we sure can funnel the exponentially expanding debt into the real economy lest we risk inflation and non-moral hazard. Don't know if I'm making sense so I'll rephrase. We need to expand our debt in order to preserve the current system since it depends on an ever expanding money supply to account for the interest...so they are going to try to put this new money as far away from the economy and as close to them as possible, while enjoying the niceties of gambling in the process.
The carbon trading hustlers and their government whores (but I repeat myself) are painting a very, very big target on themselves. If people wake up to the fact that the core of their existence is being taxed by unaccountable elites based on the biggest lie in history, there will be blood in the streets. If not, we are facing a new dark age as the lifeblood of modern civilisation, energy, is taxed into oblivion. The parallels are ominous. The global warming scam is our generation's Final Solution, with the carbon trading cartel running the gas chambers. Pure fucking evil.
yep
the level of this post reminds me of the english tabloid The Evening Standard or one of those papers you find for free in the metro. These simplistic, trivial and completely under-researched posts are giving a bad name to this website.
Oh you've proved cds are evil evil evil by writing " hundreds of posts "? How very interesting...
GW, why don't you leave the more technical posts to people who know what they are talking about and stick instead with the geopolitical stuff ??
why don't you present additional research that you feel is missing from this post?
Such a brave,anonymous poster...
Trading hot air seems appropriate :)
http://www.guardian.co.uk/environment/2009/dec/03/copenhagen-summit-carb...
Copenhagen fallout from Der Spiegel...
'
Copenhagen's city council in conjunction with Lord Mayor Ritt Bjerregaard sent postcards out to 160 Copenhagen hotels urging COP15 guests and delegates to 'Be sustainable - don't buy sex'.
"Dear hotel owner, we would like to urge you not to arrange contacts between hotel guests and prostitutes," the approach to hotels says.
Now, Copenhagen prostitutes are up in arms, saying that the council has no business meddling in their affairs. They have now offered free sex to anyone who can produce one of the offending postcards and their COP15 identity card, according to the Web site avisen.dk. '
http://www.spiegel.de/international/zeitgeist/0,1518,665182,00.html
Probably explains why Obama isn't showing up till the last day. Michelle must have read this...heh
Senator Cantwell (D), WA decries "You cant stay ahead of the next tool their going to create". If the two party political system were not so consumed with destroying each other--and consequently the nation that they were elected to govern--they could regulate or outlaw these counter-intuitive "tools" the banksters regurgitate. The Blythe Masters of the world need to punished for the misery they inflict whilst seeking to greedily enrich themselves. Climate change is a real problem. Self serving schemers who try to "game" the solutions should'nt be.
Senator Cantwell (D), WA decries "You cant stay ahead of the next tool their going to create". If the two party political system were not so consumed with destroying each other--and consequently the nation that they were elected to govern--they could regulate or outlaw these counter-intuitive "tools" the banksters regurgitate. The Blythe Masters of the world need to punished for the misery they inflict whilst seeking to greedily enrich themselves. Climate change is a real problem. Self serving schemers who try to "game" the solutions should'nt be.
Now we're goin to trade 'stink bombs' - wow.
The time is come, the day draweth near: let not the buyer rejoice, nor the seller mourn: for wrath is upon all the multitude thereof. Ezekiel 7:12
I've been saying this over and over.. so happy to hear a rep say it.. I will donate to her even though I dont live in her state.
The derivatives market has done so much damage to our economy and is nothing more than a very-high-stakes casino -- except that casinos have to abide by regulations,” she wrote in a press release...
Looking for an easy way to explain to your friends and family is not a good idea? Check this out...
http://www.storyofstuff.com/capandtrade/
"Belvedere: Tell me. What do you do with witches?
Villager: BUUUURN!!!!! BUUUUUURRRRNN!!!!! You BURN them!!!! BURN!!
Belvedere: And what do you burn apart from witches?
Villager: More Witches!.........
Belvedere: So, *logically*...
Villager: (very slowly, with pauses between each word) If... she.. .weighs the same as a duck...... she's made of wood.
Belvedere: and therefore...
(pause)
Villager: A Witch!
All Villagers: A WITCH! BUUUUUUUURRRB HER
Got Ducks?
Is AFLAC involved ?
wow! they're almost created the global market for literally selling the air - at least CO2 part of it - the Carbon Default Swaps. =)
I admire those shameless bastards!
I find it interesting that the woman does not have a Wikipedia entry. Anyone feel like starting one?
Awhile ago there was an article in the Huffington Post that blamed the derivatives crisis on greedy men, that women would never do something like that and maybe women should be put in charge of the financial system from now on, yadayada. That's about when I stopped reading the Huffington Post.
The Cap & Trade scheme is engineered to cause a crisis. Being at the right end of a crisis poses the possibility of massive profits and massive fraud. This scheme exploits the economic principle of "perfectly inelastic" supply. With the supply absolutely fixed, increase in demand can not bring new suppliers online. That means nothing except the ability to pay constrains the price. Not only is the supply fixed, but the supply is deliberately reduced year by year until the crisis explodes. The people who designed this know this is the endgame.
Carbon credit isn't a good or service. It contains no productivity. This is just a massive black hole to steal money from the people while they pay everything for nothing.
Excellent Comment!!
Glad to see you know the end game and why this must be stopped.
How many others want to pay everything for nothing?
'Want' does not enter the equation here.
Just one of thus weird ass mumbo jumbo factoids from the thoughtosphere:
Carbon is 6 electrons, 6 neutrons and 6 protons.
666.
The number of Teh Beast.
-MobBarles
That is interesting, thanks.
If they couple this with tracking health care, finances, and carbon credits using RFID chips (already used in pets and some people) you can call BINGO. The new RFID chips use lithium and are implanted between the thumb and pointer finger where there are enough temperature changes to recharge the RFID chip. It sounds much like the Revelations prophecy stating nobody could buy or sell without it.
So my nice lawn and plentiful trees can get me a carbon credit for my 9 MPG truck
I can't believe we are still even talking about this shit. Carbon derivatives?! The global warming, at least to the degree that people like IPCC et al are talking about, is complete bullshit. No matter though; the fraud must be expanded to the banking system- we've run out of other fraudulent games to play.
How is this even a consideration at this point?
I am currently writing this while freezing my stones off; bring the REAL warming on- not the Goddamn Cap and Fraud!
And just wait until that so-called "public option" is passed, with the taxpayer now forced to underwrite the insurance companies and banksters' exchange (insurance exchange) where they will then speculate on their fairly recently developed mortality-linked securities and mortality derivatives and mortality swaps and q-Forwards......
Think it's BS do ya? Google C hicago C limate exchange and see who's involved and what they've done.
Most of the usual suspects...I see that their credit prices have dropped like a rock since July. And,'CFI®-US Futures
The first tool for directly hedging exposure under a potential mandatory U.S. greenhouse gas trading program.'
They are off to the races... Thank god JPM is supplying liquidity to this market.
I don't know why anyone should get all worked up over this. Masters and Jamie are our friends. Let them alone! They're just building a great big house of cards. If the POG goes south because of this fantastic financial innovation....well, ok then. The ultimate collapse makes a little gold bug happy.
She was the main Character in Fool's Gold...She should be deported back to UK and hung by the neck till DEAD.
Well it's nice to see that women participate in the financial alchemy as well or even better than the boyz. The world has become an equal opportunity employer for anyone who can create financial weapons of mass destruction.
Of course, no one who creates these items ever assumes they will be used in any manner other than what they created them for. To do so would require placing responsibility for your actions squarely where it belongs. That's the wonderful denial of faceless blameless destruction.
And pretty at that. All the better than ugly old men with beer bellies.
http://mycrains.crainsnewyork.com/40under40/profiles/2004/228
great .. what is she really injecting herself with these days??
She has gone through many other changes in the 10 years since her daughter was born. She moved from London to Manhattan, got a divorce and injected balance into her life
maybe mistress masters of morgan is just trying to invoke her inner kali.
if so, she's doing a damn fine job.
Shaking my head with a languid sorrow...
She looks like that pig maddow..:-)
My background is almost 25 years in market regulation and development, six of them as director of a global energy exchange.
I wrote five years ago in Energy Risk
http://www.opencapital.net/papers/Opinionemissions.pdf
about the structurally flawed EU emissions scheme, and since then I have been working - with a little support from a Norwegian government agency - to develop an alternative solution that should be comprehensible to anyone who understands Frequent Flyer Miles.
This is simply for energy producers collectively to create - within an Energy Clearing Union framework - "Energy Pools" of Units redeemable in payment for energy, and for the resulting funds to be used for direct 'Peer to Peer' investment in renewable Mega Watts, and energy saving Nega Watts.
This recent presentation in Scotland focused on electricity
http://www.slideshare.net/ChrisJCook/energy-pools-scottish-energy-instit...
and this one, was in Rotterdam at a gas trading conference
http://www.slideshare.net/ChrisJCook/gas-market-presentation-03-12-2009
The key is to 'monetise', value appropriately, and distribute Units which are intrinsically valuable, rather than Units whose value is imposed by political and administrative 'fiat'.
Is it any surprise that the people behind the monetisation of intrinsically worthless CO2 are the same people who brought us the Credit Crunch by monetising intrinsically worthless bank IOUs...?
M att Ta ibbi discussed the "who" part at the end of his bubbles article in july. It doesn't take much guessing as to who.
http://www.rollingstone.com/politics/story/28816321/inside_the_great_ame... ?
thanks for sharing this chris.
to answer your question: no surprise at all....then again, this is really not about saving our environment is it?
it's about saving the banks (and the queen's dowry).
cap & trade is the eye of the needle they're going to try to force their camels through.
I saw Obama's head of the EPA on the Daily Show and she said that they weren't going to regulate your exhaling breath...yet (to chuckles, nervous laughter). They might as well regulate water and call it a dangerous substance. This administration is losing credibility, it's dangerous to lie to the american public, just tell us the truth about peak cheap oil, mercury pollution, and our foreign war policy position to defend oil imports. Do not sacrifice any sovereignty over fake global warming and enrich oligarch bankers.
I think a reference to the Police song "Every Breath You Take" is apt for the coming Police state:
Every breath you take and every move you make
Every bond you break
Every step you take, I'll be watching you
Every single day and every word you say
Every game you play
Every night you stay, I'll be watching you
Oh can't you see you belong to me?
Your breath generates CO2, your freedom of movement generates CO2, CO2 is generated by the breaking of molecular bonds. The police state wants to track it all, they'll be watching you and they want to own you.
Best video ever on "global warming": http://www.youtube.com/watch?v=4zOXmJ4jd-8
The video is from a nobel prize winner, when they meant something.
Fresh water contracts are part of the plan. I wish I could link it for you. But that idea was offered by one of the inside people.
Good video, thanks fo posting
your post reminds me of the news item out of, I believe it was Denamrk in the last couple of weeks. GPS units to be mandated into all vehicles. Purpose - to determine where you drive and how much you drive so you can be taxed accordingly.
Do you suppose if enough of us pooled our funds together we could buy a small nation somewhere and manifest our own destinies for the common good rahter than the oligarchial good?.....though I suppose 0Bama would invade us as a terrorist threat...
"it's dangerous to lie to the american public"
Since when? Has any admistration told us the truth for the last 100 years? Find me a good man in the white house since 1913 and I'll show you Warren G Harding. And they want the carbon tax, it's the ultimate F-You. After all what tyrant has not dreamed of an air tax? "Wait now, you are breathing the kings air! Have you paid you're air taxes?"
It's dangerous because we now have the communication medium called the internet, and it spreads truth far and wide. This is why Obama now has the lowest approval rating of any president at this point of presidency and our congress is about the same. This can only go so far as the government makes itself completely irrelevant and they lose all credibility, by supporting and embracing frauds, they become frauds. Their propaganda programming machine, the TV, is breaking down as more and more people can't pay their cable bills and the public tunes out.
“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.” - Joseph Goebbels
+1, well said.
Anytime the climate-change pimps want to stop exhaling is fine by me.
If our policy is to cut carbon emissions, we should simply tax them. That is not politically palatable, but probably much more effective than cap and trade (and would generate revenue for G).
"Woman Who Invented Credit Default Swaps" What is this, the New York Post? Amazing how many times this headline has been used. The woman was a jr banker on a team. That's like writting "Hillary Clinton Forced Nixon to Resign"
not so fast bobby:
http://www.newyorker.com/arts/critics/books/2009/06/01/090601crbo_books_...
The Boca Raton meeting first bore fruit when Exxon needed to open a line of credit to cover potential damages of five billion dollars resulting from the 1989 Exxon Valdez oil spill. J. P. Morgan was reluctant to turn down Exxon, which was an old client, but the deal would tie up a lot of reserve cash to provide for the risk of the loans going bad.
In late 1994, Blythe Masters, a member of the J. P. Morgan swaps team, pitched the idea of selling the credit risk to the European Bank of Reconstruction and Development. So, if Exxon defaulted, the E.B.R.D. would be on the hook for it—and, in return for taking on the risk, would receive a fee from J. P. Morgan. Exxon would get its credit line, and J. P. Morgan would get to honor its client relationship but also to keep its credit lines intact for sexier activities. The deal was so new that it didn’t even have a name: eventually, the one settled on was “credit-default swap.”
a bit ironic that the 1st CDS was to offload the risk of a oil spill cleanup yes?Interesting. Didn't know that. Maybe we should change the title to "15-years on, Exxon Toxic Waste Still Causes Problems."
Still, 20-smth jr bankers at bulge bracket firms don't decide sht. Just sayin.
agreed...however 20-smth jr bankers who come up with ingenious ways to push risks off to some other sucker do get promoted into positions where they do decide shit...positions like Global Head of Commodities (oil, PMs, food, carbon) for JPMorganRockafella.