–No one can silo off the climate
Opinion by Mathew Carr
The US Federal Bank chairman Jay Powell seems to think saving the climate is outside of “ensuring the safety of the country’s banking system”.
It’s dismissive and myopic, at best. Perhaps idiotic and dangerous
He said he won’t become a climate policymaker. Well, well, well. Let’s chew this fake-news fat.
Quite soon, without a more concerted and coordinated global climate policy response to clinch a managed transition, investors probably will anyway realise the fossil fuel game, as it’s stood until now, is up, finished, history — because there will be an ever-expanding productive capacity in that industry fighting to supply an ever-shrinking demand.
At that stage, investors will probably all try selling fossil fuel shares at once because their mere EXPECTATION has changed, causing market prices to drop precipitously.
This, the crash caused by market expectations, will cause disruptive market ructions around the world that will make previous energy and climate crises seem like child’s play.
Then, there’s the actual crash based on physical climate events.
It will be even worse.
If and when the physical climate collapses at an even faster pace than it is right now — and it’s actually quite certain to happen — the global economy will crumble into something terrifying, as policy makers scramble to deal with the simultaneous storms, floods, droughts, destruction, a multilateral / global migrant crisis, etc and these same men and women will struggle to impose new laws to mitigate further damage and social unrest.
The price of carbon will likely become compelling and necessary to incentivize deep emission cuts.
Actual and implied co2 prices will rise quickly.
Sections of whole industries will be made / will become unprofitable, and even unlawful as the transition becomes forced rather than close to voluntary (as it largely is right now).
Insurers will stop insuring certain risks, such as flood, drought, even directors and officers liability insurance in certain industries. Companies will become rudderless.
The falling demand for coal, oil and natural gas and resulting ACTUAL sales drop and further share-price plunge will trigger rules that require these companies to notify their banks they need to default on debt.
Bad debt levels will surge.
Soon afterwards, the banks, as they did 15 years ago or so during the financial crisis, will go cap in hand and ask for a taxpayer bail out. It should be made clear right now this bailout will not happen. Shareholders be warned.
Everyone is a climate regulator.
If Powell is trying to protect current markets (which rose after his speech), he’ll merely make the future crash all the more brutal.
Don’t take my word for it. Read this from Aviva, the funds manager, and see the chart and report, below.
“In a world without insurance to manage risk and offset losses, the rest of finance as we
know it would become unworkable.
Companies and projects would be unable to function.
Insurance would become unavailable as a condition of loans or granting of security,
meaning terms would become unaffordable or unavailable whether for domestic
mortgages, commercial property, project finance or infrastructure.
Capital and debt would be unable to be raised due to unmanaged or unmanageable risks.
Banking would cease to function, and investment would not be far behind.“
‘…Finance Collapses Like
Warning – this document from October was created for professional investors and is designed to spur a new system:
–Fed will not become a ‘climate policymaker’, says Jay Powell US central bank
–Chair underscores importance of maintaining focus on inflation and labour market
–Says it is important that the Fed resists the ‘temptation to broaden our scope to address other important social issues of the day’
Jay Powell has said the Federal Reserve will not become a “climate policymaker”, as he mounted a full-throated defence of the US central bank’s independence from political influence.
In a speech delivered on Tuesday, the Fed chair said the central bank must steer clear of issues outside its congressionally mandated purview and instead maintain a narrow focus on keeping consumer prices stable, fostering a healthy labour market and ensuring the safety of the country’s banking system.
“It is essential that we stick to our statutory goals and authorities, and that we resist the temptation to broaden our scope to address other important social issues of the day,” he said at a conference hosted by Sweden’s central bank.
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