One person I have had the pleasure to get to know over the last couple years is Jonathan Hoenig. He runs a hedge fund known as Capitalist Pig Asset Management. As his name suggests, he is an unabashed unashamed capitalist who worships at the altar of Ayn Rand and free markets everywhere.
I have had several conversations with him over drinks and over the telephone. Those conversations are off the record. I consider him a friend, and look forward to sharing drinks with him again the next time I am in his neck of the woods. I will be doing an interview with him shortly, with a heavy part of the interview focusing on oil.
Yet today the focus is on the latest attempt by elitist liberals to convince other Americans that the left are not a bunch of liars, hypocrites and screwups. The most recent liberal lie comes in the form of carbon credits.
Before getting to a brilliant article by Mr. Hoenig, a little background is necessary.
Carbon credits, also known as carbon offsets, are basically screwup credits. It is equivalent to buying indulgences to get into Heaven, rather than actually doing good deeds.
The way a carbon credit works is as follows. Many limousine liberals, or in this century, lear jet liberals, use a ton of excess energy that supposedly hurts the planet. Rather than cut back on this energy usage, these gasbags purchase carbon credits, which are promises for other people to use less energy.
Why not have Hollywood celebrities throw lavish banquets with fancy food that goes uneaten and gets thrown away while people in third world countries eat less and starve to death? Actually that already happens, but if these celebrities gave food credits, the poor nations and their people would be paid to not eat.
An even better example would be a murderer sitting in prison for the rest of his life. The prisoner then finds out somehow that some innocent human being needs a kidney transplant. The murderer donates a kidney, saving the innocent person. Newspapers love these feel good stories. Liberals hail the story of how a man could take a life, and then give one. He is now neutral.
How about being life positive? How about not being a murderer to begin with?
Why can’t these leftist greeniacs just use less energy and convince others to use less energy, and be carbon positive?
The reason is because then these people would not be liberals.
I am not against energy usage. I am against others telling me how to live, when they live in the very same way, with greater excess.
It’s the hypocrisy stupid.
Now comes the investment world getting into the act. We are living in exciting times, and virtually anything can be wrapped into a financial product of some sort.
The other day, people had a chance to purchase shares in a carbon offset financial product with the simplicity of purchasing a stock.
So how many million shares traded on the first day of trading?
100.
100 million is pretty impressive. However, I did not say 100 million. I said exactly 100 shares.
With all the money in this world, 100 shares traded.
Here are some observations by Mr. Hoenig.
“WITH A WHOPPING 100 shares traded its first day, the iPath Global Carbon ETN (GRN: 50.20, +0.58, +1.16%) got off to a quiet but historic start on Wednesday. The exchange-traded note tracks the Barclays Capital Global Carbon Index, one benchmark of the quickly growing carbon credit market. With exchange-traded notes and funds on everything from platinum to pork bellies launched in recent months, this unequivocally takes the prize as the most obscure.
What’s worrisome about the notes, and “carbon finance” in general, is that the cap on carbon emissions is totally manmade and, unlike an investment in a bond or stock, serves no economic purpose whatsoever. The value of these worthless slips of paper is only what governments, spurred on by what I consider environmental heretics, dictate they are.
Even iPath’s promotional material admits it, stating clearly on page 7 that “the regulatory environment is the main driver of both supply and demand. If regulations change, increasing (or decreasing) supply, it will subsequently affect the market price of carbon credits.”
If you think the market for crude oil is manipulated by powerful interests, then consider carbon finance to be the ultimate rigged game. Carbon credits trade, by definition, on the whim of a regulator. In reality, there is no limit to carbon-based economic activity and no economic purposes served by passing out worthless credits. “Cap-and-trade” is simply a tax dressed up to appear like a free-market solution. But with the government behind the scenes pulling the strings for both supply and demand, there’s nothing free market about it. Tree-hugging politicians, egged on by the environmental lobby, will make up the rules as they go along.”
The bottom line is that the left knows that they are wrong. They just don’t care. Government regulation is not the means to a policy. Government regulation is the end result itself. Regulation equals power. It is control.
The left simply does not believe in the concepts of supply and demand. Liberals truly believe that governments function better at setting prices than free markets.
This is why liberals try to shut down conservative talk radio with the Fairness Doctrine. They tried competing with entities such as Air America. They failed in the marketplace.
Liberals try to get the government to regulate the game because they have colossally failed at it themselves. Lose an election? So what. It only takes one left wing activist judge to overturn most elections.
I am a conservative. I support big tobacco, big oil, big guns, big alcohol, and big red meat. I do not drink alcohol or smoke, but I support the right of the companies to engage in commerce in legal products.
The problem is not with liberals that want to ban everything (Ironically they do not want to ban abortion. After all, why bring a child into the world if it will be strangled by the government anyway.). Those people are bad enough. The problem is with the liberals that want to ban everything for everybody else while partaking in those supposed sins themselves.
When a right wing politician spends his life proposing anti-gay legislation, and then is discovered to be gay, the wolves and jackals in the media exact their pound of hypocritical flesh.
Yet crickets chirp when a left wing columnist is found possessing a handgun to defend himself while writing columns about why citizens should not own handguns.
The crickets chirp even louder when environmentalists gather on college campuses to bash President Bush, Dick Cheney, and big oil, right before leaving their signs on the lawn to ruin the grass as they head to their next rally.
Crickets chirp at the sound of a sonic boom when leftists at peace rallies shout antisemitic epithets and other obscenities linking President Bush to Hitler, all in the name of peace.
Carbon Credits is not the biggest liberal lie. After all, the Clintons did not come up with the idea.
Yet it is the most current liberal lie. Luckily, once this investment idea fails, liberals will get bored, and start wearing a new color ribbon to support the newest social cause that they know nothing about, and will soon not care about.
The idea will fail because liberals don’t actually care about these things when the cameras are off. The idea will also fail because people do not want to invest in a market unless it is a truly free market.
eric