Moody’s, the security rating agency whose one job was to signal the diseased state of asset backed securities leading up to 2008 and completely failed since the subjects of their analysis are also their clients.
I agree, but Moody's does have a reasonable defense against being called a failure.
We can't really expect them to ascertain the true state of things, because that is impossible and nobody can do that. And if they could do that, they'd put their knowledge to use as a trading firm rather than telling people what is going on.
Their job is to compile what 'everyone' knows and report it because that is all they can reliably do. That is something that can be achieved consistently, and that their customers probably do want to know.
Are you holding any investment grade bonds in your portfolio? If so you are directly rely on their (and other rating agencies) data. The fact that rating agencies fucked up mortgage in 2008 doesn't mean they can't see other real problems.
Also, if you're holding any high grade/investment bond ETFs you're very likely to own some mortgage backed securities in there.
This is the start of what I’ve been waiting for. But I don’t think we’ll see real action until the risk starts getting priced into coastal real estate, both directly and indirectly (i.e. insurance and reinsurance).
I would have started with the assumption that the risks are already being priced into coastal real estate (because real-estate investors are not ignorant of climate change). What is your evidence that they are not?
It is priced correctly by non taxpayer funded entities. However, to buy the votes of residents in FL and TX and other at risk regions, the National Flood Insurance Program was created for taxpayers to pay for flood damage.
Things brings to mind an issue that I haven't seen addressed. Profiting directly from climate change will be an increasing threat. If investors start snapping up real estate in northern Canada, for example, it creates perverse incentives--not just to ignore climate change, as oil companies have, but to encourage it.
Don't think that people won't devise ways to make a fortune from this disaster.
I've been frequenting r/collapse and one of the perspectives there is that increasing heat in the north will create desertification and thus not a very hospitable place to live. Which leaves me wondering, where at all would be? Maybe no where... I live near the equator at low elevation and I can't imagine it will be better here either.
Investors are already snapping up real estate in southern Canada creating a housing crisis.
We're actively trying to address this problem, it's not new.
It's possible that the boreal forest will just die from lack of water and deseases coming from the south(like the Asian beetle that is destroying trees in Ontario and Quebec) . Just the other day I was reading an article that the forests in South France are dying of dehydration .
Hmmmm. I'm not so sure I want big corporations becoming entangled with climate change data. Sometimes those profit motives cause some less than optimal usage of resources.
Weirdly enough this actually gives me a lot of hope for humanity and is the beginning of a realistic and scalable solution to climate change.
The main problem with the free market has been lack of accountability and dollar damage projections on environmental damage.
Most fossil-fuel energy companies have lobbied against it because it would make their product a lot more expensive to produce if their customers had to pay a market-rate fee for it's burning/disposal. The ammount of carbon that can be dumped out is finite, yet the cost is artificially set to zero/free which makes no sense unless you live in a communist system.
By accounting this into credit risk, it makes it more expensive for governments to ignore the environment. It means they have to pay a lot more interest on their debt which puts maximum political pressure on them to address the money problem regardless of their ideology beliefs.
This also makes clean energy companies actually competitive at market rate since they have very little carbon dumping to pay for.
It also puts a lot more pressure to improve the measurement accuracy of carbon emission if it is actively being traded. It also greatly increases insurance costs for new fossil fuel development because now they can face liability when people's homes are flooded for the first time.
On the positive side, It also makes local farming produce more competitive and economically stable too because it needs to burn a lot less gas, thus pay for less carbon waste for delivery compared to a similar product that's shipped from extremely greater distances.
Because shipping does not pay a market rate for carbon waste, it creates some absurd situations.
For example a lot of pepper farmers here in Ontario actually ship their produce all the way to China for packaging and then ship it back here to sell because it saves them a small margin this way in the current cost.
By enabling the market to factor in environmental costs, you're basically letting a distributed graph-based computer, a giant hive mind, the market, address the problem a lot more efficiently and with massively more processing power than you would have with central planning.
That graph keeps growing every year (save for major recession years). Consider how much effort it would take just to reduce the growth to 0, where we would still be very much screwed.
Forgive my bluntness, but I thought we had buried the 'efficient market' fallacy over a decade ago. Besides, the only thing your market would optimize for is how to maximize rentseeker profits, the 'climate' situation be damned.
Northern passage is opening up, trade with Chinese goods will be much cheaper. There is a lot of profit to be made on top of dead bodies of millions of future victims of the climate catastrophe.
very poetic. I like it because it made me look at the positive side first (woah.... never thought of that)... and then made me decide I don't want that.
There is also 15% more green vegetation on the planet right now than a few decades ago, due to recent warming, much in formerly marginal areas. Some millions of people potentially dead from famine are likely still alive thinks to the extra food resources. (Along with quite a number of assorted non-human critters supported by it all.)
[+] [-] blueboo|6 years ago|reply
This is just branding for more clients
[+] [-] roenxi|6 years ago|reply
We can't really expect them to ascertain the true state of things, because that is impossible and nobody can do that. And if they could do that, they'd put their knowledge to use as a trading firm rather than telling people what is going on.
Their job is to compile what 'everyone' knows and report it because that is all they can reliably do. That is something that can be achieved consistently, and that their customers probably do want to know.
[+] [-] H8crilA|6 years ago|reply
Also, if you're holding any high grade/investment bond ETFs you're very likely to own some mortgage backed securities in there.
[+] [-] projectileboy|6 years ago|reply
[+] [-] hollerith|6 years ago|reply
[+] [-] lotsofpulp|6 years ago|reply
https://en.wikipedia.org/wiki/National_Flood_Insurance_Progr...
[+] [-] SantalBlush|6 years ago|reply
Don't think that people won't devise ways to make a fortune from this disaster.
[+] [-] spraak|6 years ago|reply
I've been frequenting r/collapse and one of the perspectives there is that increasing heat in the north will create desertification and thus not a very hospitable place to live. Which leaves me wondering, where at all would be? Maybe no where... I live near the equator at low elevation and I can't imagine it will be better here either.
[+] [-] nisten|6 years ago|reply
[+] [-] myth_drannon|6 years ago|reply
[+] [-] RickJWagner|6 years ago|reply
[+] [-] harry8|6 years ago|reply
[+] [-] nisten|6 years ago|reply
The main problem with the free market has been lack of accountability and dollar damage projections on environmental damage.
Most fossil-fuel energy companies have lobbied against it because it would make their product a lot more expensive to produce if their customers had to pay a market-rate fee for it's burning/disposal. The ammount of carbon that can be dumped out is finite, yet the cost is artificially set to zero/free which makes no sense unless you live in a communist system.
By accounting this into credit risk, it makes it more expensive for governments to ignore the environment. It means they have to pay a lot more interest on their debt which puts maximum political pressure on them to address the money problem regardless of their ideology beliefs.
This also makes clean energy companies actually competitive at market rate since they have very little carbon dumping to pay for.
It also puts a lot more pressure to improve the measurement accuracy of carbon emission if it is actively being traded. It also greatly increases insurance costs for new fossil fuel development because now they can face liability when people's homes are flooded for the first time.
On the positive side, It also makes local farming produce more competitive and economically stable too because it needs to burn a lot less gas, thus pay for less carbon waste for delivery compared to a similar product that's shipped from extremely greater distances.
Because shipping does not pay a market rate for carbon waste, it creates some absurd situations.
For example a lot of pepper farmers here in Ontario actually ship their produce all the way to China for packaging and then ship it back here to sell because it saves them a small margin this way in the current cost.
By enabling the market to factor in environmental costs, you're basically letting a distributed graph-based computer, a giant hive mind, the market, address the problem a lot more efficiently and with massively more processing power than you would have with central planning.
[+] [-] hn_throwaway_99|6 years ago|reply
Take a look at these graphs:
1. Annual worldwide CO2 emissions by region: https://ourworldindata.org/grapher/annual-co-emissions-by-re...
That graph keeps growing every year (save for major recession years). Consider how much effort it would take just to reduce the growth to 0, where we would still be very much screwed.
2. Global CO2 concentration: https://ourworldindata.org/grapher/global-co-concentration-p...
Again, up and to the right, consistently, for decades, with no sign of slowing down.
3. Same graph of CO2 concentration, but over a longer timescale, to really freak you out: https://ourworldindata.org/grapher/co2-concentration-long-te...
I'll start having optimism when I see even a small change in the direction of these graphs.
[+] [-] PeterStuer|6 years ago|reply
[+] [-] myth_drannon|6 years ago|reply
[+] [-] refurb|6 years ago|reply
[+] [-] yjhoney|6 years ago|reply
[+] [-] romaaeterna|6 years ago|reply
[+] [-] plouffy|6 years ago|reply
[+] [-] Proven|6 years ago|reply
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[+] [-] diogenescynic|6 years ago|reply