I'm going to kick 2008 off with a topic that is going to be a constant of mine this year, and in the years to come, because as far as economics, the impact on economies and business, it is going to be one of the biggest negatives we have ever faced.
The scourge of the global warming Nazis and their thirst for control, of individuals and nations, through new and increased taxes, in the name of decreasing your "carbon footprint", is going to have far reaching impacts into every aspect of everyday life.
The relevance of this to investing and my interest comes in the form of "carbon trading".
The introduction of a so-called "Carbon Trading" platform by New Zealand's NZX is likely to be the beginning of the end for this country's economy and global economies as we know them and there is a possibility that our sharemarket could be wiped off the face of the earth completely when the carbon trading market inevitably collapses.
Scaremongering and overstating my case to make a point?
I think not.
If we learn anything from history in regards to booms and busts and meaningless frenzies whipped up by market hysteria, we have only to look back to the most recent tech bust of 2000, where there was at least some substance and truth and real profit involved in a handful of tech companies, some of which still survive today.
We can also look back to the Dutch poppy boom around 400 years ago, where "rare" blooms were being traded for outrageous prices, well beyond any intrinsic value and of course just like the tech boom 400 years latter, much wealth was made by those that got in first but eventually things turned pear shaped, and most people lost, collectively, vast sums of money.
If we look at the carbon trading market, one can see the beginnings of a frenzy, one being whipped up by the likes of Al Gore, Hollywood and theorists who base their whole "global warming" theory on failed "science" and outright lies.
Al Gore is one of the leading proponents of carbon credit trading and has a huge financial interest in that market.
These early adopters are set to make billions on carbon trading markets and will be the only ones to profit from it.
The outfall when the latter come investors lose faith from trading "carbon credits", which they will because they are not only worth zero in dollar terms, but are a negative weight on economies and have no intrinsic value in themselves, will cause a crash in multiple markets not seen since 1929 and the 2000 tech plunge.
The trading of good stocks, property, land, businesses, minerals, commodities and the like, that have an actual value, and clearly while the prices of these assets will fluctuate in price, most provide a real income and have value. Carbon credits, which are and will be traded increasingly in the future, have no actual value if you don't believe the flawed concept on which they are actually based.
As most critical thinkers know, the concept of man made "global warming", the basis for it and the reasons it is being raised as a concept or theory, is a highly contentious one and the trading of carbon credits, in order to make money for the savvy, gives it a respectability it really doesn't deserve.
Just like the poppy rush of the 1600s, the great crash of 1929, the market meltdown in 1987 and the tech bust in 2000, the coming carbon credit trading bust shares some of the reasons why markets crashed at these times.
These four market crashes all share an over exuberance and a market frenzy to a point where the value of the assets or shares traded far exceeded their real intrinsic value and these were the main reasons why the markets eventually collapsed.
The poppy trading, tech market boom and carbon credit trading share a similar trait in themselves.
In all three cases the values placed on "goods" traded often had no or little value from the get go.
Poppies traded 400 years ago were wildly inflated in price, the majority of tech company stocks traded had never made a profit, and in the carbon credit trading example not only does the "product" traded have no real value, it is actually of negative value, in a local and global business sense because it adds cost to running a business and will eventually be applied to every product and service that consumers buy and use on a daily basis.
From a carbon tax on gas at the pump, to food you buy in the supermarket, the new carbon taxes will be applied to everything and clearly it will cost us all more, all for no good reason, for that is what taxes do, they constrain business and economies.
So clearly the carbon credit trading part of the equation means you can offset those extra taxes forced on us by the global warming Nazis but the negative value of those so called carbon credits is self evident from my explanation that they are a cost not a productive commodity that is worth anything.
They are worth less than nothing!!!
Politicians and business "leaders" who have jumped on the carbon credit bandwagon, because they can see the dollars to be made and the control of the populace that extra taxes afford, are putting the global economy under threat. Ironic then that this is being led by a failed politician, Al Gore.
The past has left us littered with evidence that getting caught up in such bandwagons only leads to disaster.
To ignore the warning signs of history is to go forward blindfolded, deaf and with ones mouth shut and is clearly moronic to the ultimate degree.
In writing this piece I am constantly reminded by the old adage "...when one ignores history one is bound to repeat the same mistakes..." but we know what has passed and it is more like, "... repeating the same thing over and over and expecting a different result".
Either way the global economy is in for a huge shock when the carbon credit market implodes.
Resist the temptation to get involved this time.
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c Share Investor 2007-2009