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Monday Message Board

June 30th, 2008

It’s time once again for the Monday Message Board. Please post your thoughts on any topic. Civilised discussion and no coarse language, please.

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  1. June 30th, 2008 at 08:18 | #1

    From an article in the SMH.

    Coal mines, power stations, aluminium smelters, banks, supermarkets and airlines which emit over a certain threshold must keep carbon accounts by law.

    What’s the point of consumers of energy — banks, supermarkets, airlines and smelters — keeping track of emissions due to consuming energy products that other companies have already produced? I assume that a bank has no intrinisic CO2 equivalent emissions itself. Why can’t carbon trading occur at the most upstream level possible?

  2. Socrates
    June 30th, 2008 at 09:10 | #3

    Regarding upstream carbon trading, this was the subject of a BTRE review into carbon trading versus carbon taxes for the transport industry. BTRE did find that it was more efficient to introduce a carbon tax than trading for industries with many small emitters.

    That being said, I don’t think its just a question of efficiency – we want to provide incentives and information at both the supply and demand end of thsi market, to achieve a large reduction.

  3. Socrates
    June 30th, 2008 at 09:16 | #4

    A couple of questions for any money market economists here. There was an article in The Age that the IMF is reviewing the US financial system for the first time:
    http://business.theage.com.au/imf-finally-knocks-on-uncle-sams-door-20080629-2yui.html

    I was quite surprised to read of the President’s Working Group on Financial Markets. To me, that sounds pretty dangerous. Couldn’t insiders simply sell out of doubtful stocks at public expense? At least the Bear Sterns deal saw the guilty parties lose most of their equity. But this approach seems to let them get off scott-free. Or am I missing something?

    The second question was about the recently confirmed US first quarter GDP figures NOT showing a recession, even though that is the overwhelming perception fo people there. I wondered about two causes:
    - first, is there any risk the “official” figures are wrong, distorted by actions such as the President’s group above, and/or dubious Wall Street financial figures?
    - second, could it be a problem with GDP statistics versus GDP per capita. Lately I have been comparign GDP growth versus GDP per capita growth and it makes a big difference. With large scale immigration occurign in the US, would that explain why people feel poorer even though the economy is still said to be “growing”?

  4. observa
    June 30th, 2008 at 13:18 | #5

    Well Socrates, it’s an old theme you speak of, as old as your name itself-http://www.atimes.com/atimes/Global_Economy/JF25Dj03.html
    Perhaps the authors had some wind of that of which you speak, but I doubt it, since Austrian economists have long been warning of the folly of a Keynesian mentality that wants to apply their well meaning hanky to every sniffle of Asian meltdowns or dotcom bubbles. Welcome to their pandemic now after they wiped their hanky around copiously for so long. As the Guru has long been warning- ‘We’re all freaking doomed!’ Well, that is unless you have a sturdy bunker well stocked with food, ammunition, gold and silver to see you through it all now.

  5. Tim M
    June 30th, 2008 at 18:12 | #6

    Tom Davies, the intent of the system is to enable cross checking of reported emissions, by comparing reported scope 2 emissions (i.e. indirect emissions by banks and other consumers of electricity) with reported scope 1 emissions (direct emissions from power generators and fuel use).

  6. swio
    July 1st, 2008 at 23:01 | #7

    Socrates,

    The GDP statistics are affected by inflation as GDP has to be adjusted for inflation just like everything else.

    The way the CPI is measured was changed in the US 90′s and its now about 3% lower than it would be if was still measured the old way. In the old measure inflation is closer to 7.5%. The effect on GDP is straightforward. If GDP was measured the old way it would be 3% lower. That would clearly be a recession something like the one in the early 90′s.

    There are good arguments for changing the way inflation was measured (although I’m not sure I agree with them) but a fact you can’t get away from is that the changes to CPI measurement mean you simply cannot compare recessions and rates of GDP growth between now and the past. It would be like looking at the world record for the 100m sprint over the last 50 years when the length of the second was occasionally re-defined. I am continually surprised that “serious people” talking about the strength of our recent economic growth never bring this up. Its such an obvious thing to acknowledge that it makes me wonder about their intellectual honesty.

  7. swio
    July 1st, 2008 at 23:23 | #8

    Coal mines, power stations, aluminium smelters, banks, supermarkets and airlines which emit over a certain threshold must keep carbon accounts by law.

    Could someone please explain to me the sense in this crazy policy of everybody keeping track of their carbon? This process is ripe for rorting, surely quite inaccurate, expensive and only viable for very large organisations. I have this vision of people standing next to the exhaust pipe of their cars with carbon meters sqinting at the gage and noting down the number in a logbook, and armies of accountants at Australia’s biggest companies going slowly mad (well, madder) as they try to find the Generally Accepted Carbon Costing rule for estimating the emmissions of a marketing and sales conference.

    We know how much carbon a barrel of oil, a tonne of coal and a litre of gas will produce. It doesn’t matter how you burn it, it will always produce the same amount of CO2. Why can’t we just add the cost of CO2 emmissions right into the gas, coal and oil at the source as soon as its pulled out of the ground or imported into the country? Am I missing something here or have we all gone insane? There can’t be more than a few tens of thousands of sources of this stuff, but there are millions and millions of emmision points. Why do it the hard way around?

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