Credit in our world only has value because it can ultimately buy fossil fuels. We hope to change this of course but common credit as provided by the so called carboncredit system really only works because it does exactly that : buy fossil fuels. The ongoing credit crisis thus does not mean there’s not enough paper or numbers in bank accounts, but that there is not enough fossil fuels. To reduce consuption credit is squeezed out of your pockets. You think you lack money and don’t notice the carbon shortage.
"Short-termism in financial markets was the other major reason for the carbon bubble." Short-termism isn’t a weakness, it’s a willfull crime
Now the crisis gets it’s real name : The Carbon bubble. We may never know whether it is real, what the name refers to is the situation in which credit is created without carbon being supplied, something that should result in massive inflation as more credit hunts less carbon for sale. According to the Guardian it’s a result of climate targets. That would be beautyfull, but believe us, it’s very hard to believe not all carbon that can be extracted is not extracted eventually, at least until society gets a grip on the industry. As economist Stern puts it :
An alternative reality may be that carbon/fossil fuels are running out and the credit created in expectation of future yield has to be cut to avoid inflation. It’s really besides the point if you understood carboncredit. First the enormity of getting stuck without fossil fuels while being continuously obstructed in building alternatives by the same banks that announce the needed cuts. Second, it’s not about credit at all, that is a bank problem, not a practical one. Oil drillers never need any money. Drilling is not done with money, but with metal, diesel, oil, coal, and drillers can easily get their hands on that stuff selling their fuel. If drillers need more money to drill, it does show they use up more fossil fuels in the process.
We are spending as much to stay with fossil fuels ($674bn/£441bn) as it would take to transition to renewables!
The role of money in this process is to hand control over the distribution of the oil to the banks that extend the credit, which is crucial for the management of the carboncredit system. Of course when it comes to drilling banks are not going to deny the industry the use of it’s own product, after all, without fossil fuels no banking as we know it.
The Bank of England has also recognised that a collapse in the value of oil, gas and coal assets as nations tackle global warming is a potential systemic risk to the economy, with London being particularly at risk owing to its huge listings of coal
So yes, the money and whatever derivative paper associated with carbon reserves is at risk of not buying anything if you cut down on fossil fuels quickly. But we are already in that process, it’s called the economic crisis. This is not a risk to the economy, but the end of the ‘economy’.
The appropriate resonse is to strart war-industry like production of renewable energy sources and quickly decarbonize essential production processes
Let’s play the banks and economist game and pretend we will cut back on carbon extraction and that is the reason there is a growing carbon/fossil fuels shortage (this has not happend in the last 50 years, but anyway). Then the banks are happy to write off any assets associated with these reserves. It gives them a legitimate position in our ‘economy’ that will continue to consume the carbon that could buy our escape ticket. Our economy itself will be dying because it is completely based on carbon/fossil fuels. It will fall from the sky like a plane that ran out of fuel, and even if it lands safely it has no fuel to take off again, and no fuel to secure any fuel.
Banks should not lead the effort to deal with te carbon bubble. The bubble happens because of the banks, and we are in the worst possible shape to deal with the consequences because of economics and banking
You see, here banks lead us into the era of carbon rationing, while the public should have eliminated the banks and economists and start doing that a long time ago. Rationing carbon use towards renewables and the bare necessities. Now the banks signal the end of their own carboncredit paradigm and pretend to be in charge of even the last phase of using up fossil fuels.
To respond to the threat to our wealth we need to be able to act free from banks or economic principles, at least not as defined in the carboncredit system
This announcement is the end of banking as we know it. It should be. It should be recognized as the point where people go "WTF, no fuel for anything is on the horizon? How am I going to live without gasoline, gas, airlines, trucks, factories etc..". How am I going to build windturbines if I have no fuel to power machines, or if that fuel gets more difficult to buy as banks squeeze credit more.
There is plenty of technology to fix our situation, but the banks and their desire to remain in control of the burning of all available carbon reserves is preventing any breakthrough. It can be achieved by tenaciously manufacturing renewable energy sources, because that creates an independent economic base for resisting the carboncredit economy. But things would move much quicker if we declared investment rules that would drive replacement to power essential parts of our economy, for our food, water and heating, for instance through the diversification of credit types (The Euro, Auro and Joule).