Nancy B King

What drives the Alaskan economy—the 3-legged stool. Here it is via Northrim Bank’s new econ website.

It’s going to be a while before the current housing problems work their way through the economic system. The following chart and comments are from  Chart-of-the-Day.

Housing continues to be a serious problem for the U.S. economy with a tremendous amount of unsold overhang remaining in the system.

This means that more than 7 million homes remain weighing down the market, due to bank’s having repossessed them or the loans being in delinquency.

It’s interesting to note, per this chart from Whitney Tilson’s T2 Partners, this does not include new defaults, which are around 300,000 per month.

Read more: http://www.businessinsider.com/chart-of-the-day-housing-crisis-2010-5?utm_source=Triggermail&utm_medium=email&utm_campaign=CS_COTD_051010#ixzz0nphuwHIX

My Initial Post about the Creation of the Chicago Climate Exchange

• Currently, Richard Sandor is chairman of the Chicago Climate Futures Exchange (CCFF) and Executive Chairman of the Climate Exchange plc (CLE.L) The Climate Exchange plc owns both the exchange and the futures exchange and the European Climate Exchange whose global affiliates include Tianjin Climate Exchange in China, the Montreal Climate Exchange in Canada, and the Envex in Australia. Other such exchanges are Nord Pool, PowerNext, European Energy Exchange, and the newest and privately owned, Cantor CO2e.

Sandor is also director of American Electric Power and a member of the design committee of the Dow Jones Sustainability Index.

Previously, he helped invent interest rate futures.

• The carbon futures for 2010 delivery on the Chicago Climate Futures Exchange fell 24 percent last year after the UN negotiators failed to extend the 1997 Kyoto Protocol.

• The Joyce Foundation that funded the development of the private climate exchange through the Richard Sandor/Barak Obama connection, is a very large and very wealthy foundation in the Chicago area created from a lumber dynasty. It has a lot of money to begin with, but it also reputedly receives extensive money from the very wealthy. Reputedly, it is a place where the uber rich can deposit their money to pass it to their pet projects—environmental and community—without it being tracked.

The Joyce Foundation is larger than the Tides Foundation (Soros) and gives money to the Tides Foundation (Soros). People from the Tides Foundation were the ones who drafted the Stimulus Bill. The Joyce Foundation also gives large grants for educational purposes to John Ayers, brother of William Ayers—a friend of Obama’s.

• Franklin Raines is a wheeler and dealer. He inflated Fannie Mae’s earnings so he could receive $52 million in bonuses tied to the company’s earnings. In fact, he made $90 million over his 5 years at Fannie Mae. He was taken to court over the inflated earnings. He was assessed fines, but his penalties were waived.

After his disgrace at Fannie Mae, he became a member of the Board of Trustees of Enterprise Community Partners. Affordable housing is part of their mission. They also partner with ACORN.

In December 2009, Franklin Raines founded Emerald Cities Collaboration with a grant he received from the Joyce Foundation. Its Board of Directors consist of Gerry Hudson with SEIU; Phaedra Ellis-Lamkins with Green for All (Van Jones is also there); and Jack Hayn and Art Lujan with AFL-CIO. Its leader, who was also instrumental in getting it started, is Joel Rogers, a professor at the University of Wisconsin.

Franklin Raines was also one of Obama’s chief fund raisers.

• The Intercontinental Exchange (ICE) operates regulated global futures exchanges that trade agriculture, credit, currency, emissions, and equity index contracts. In fact they say half of the world’s oil futures trade through ICE Futures Europe.

The relationship between Aether Ios Limited and the Climate Exchange and Richard Sandor is not new. They have partnered since 2003. Richard Sandor and ICE will continue to pursue opportunities together.

To better understand carbon credits and their trading, equate them with my newly created Dessert Credits.

The government concludes that many people are overweight; they are eating too much sugar and fat. Obesity and diabetes and their side effects are requiring a large portion of the healthcare expenditures and putting a strain on the system. Desserts seem to be the main culprit. Establishing dessert allotments (a Cap) will decrease high caloric dessert intake; it will make us healthier and will reduce healthcare costs. Therefore, the government undertakes to help us limit our empty calorie intake by establishing a dessert calorie allotment—the maximum number of dessert calories each adult can consume (the Cap). Each person receives the fixed number of dessert credits, which expire at the end of every month. By the beginning of the second week of the month, your obese neighbor has used all her Dessert Credits. However, she is not going to give up dessert—no, no, no. Instead, she goes to the Dessert Credit Exchange and buys additional Dessert Credits (the Trade). She buys the Dessert Credits that you sell on the Exchange. You sell your Desert Credits because you eat only fresh fruit for dessert. At this time, the Fruit Growers Association has obtained a Dessert Credit exemption for their fresh fruit. As with any free choice trade, both sides are more satisfied after the trade. Your neighbor willingly uses her money to buy Dessert Credits so she can eat additional desserts, and you have extra money in your pocket because you sold something you were not using.

See how easy it was to sell this idea—I was simply creating a need for my Dessert Credit Trading Exchange. By the way, I was in partnership with the government. After all, they created the regulation that made my Dessert Credit Exchange work. They were willing to create the regulation to receive the huge tax revenues from taxing each Dessert Credit transaction.

Thus, the Dessert Credit Exchange has nothing to do with one’s health. Dessert Credits and Credit Trading do not decrease the amount of dessert calories consumed. They merely re-allocate the Dessert Credits you did not consume to someone who used them to eat more than the allotted amount. However, Dessert Calorie Credits have everything to do with creating significant tax revenues for the government and $10 trillion a year for my Dessert Credit Exchange.

How easy it would be to sell this to the American public! The people who would buy extra Dessert Credits would complain. However, they would not complain too loudly because that would advertise their poor eating habits, and they know that eating less caloric desserts would be better for their health. Also they feel guilty about eating so many rich desserts and are ashamed to admit it out loud. People who don’t eat desserts would be happy because it gives them a feeling of superiority over the obese. Besides they would make extra money from the sale of their unused Dessert Credits. The sweets industry would grumble, but they would go along with the government regulation because someone would explain to them that it really would not change the public’s behavior and consumption. In fact, some people would eat additional high caloric desserts because they want more of what they technically can’t have.

In conclusion, Dessert Credits have nothing to do with less sugar, fat, and caloric intake, but everything to do with money and tax revenues.

With the market down and my being stopped out of two stocks, what else was there to do but dig around the internet and see what was new.

I found the following: Aether Ios Limited (a wholly owned subsidiary of Intercontinental Exchange Inc–NYSe: ICE) ) acquired 53.5 percent of the Chicago Climate Exchange. Richard Sandor, Executive chairman of Climate Exchange, will receive $606M for his 17 percent ownership of the Exchange.

However, it is the-behind-the-scenes info that intrigued me. What is the Climate Exchange? Who is Richard Sandor?

The Initial Idea and the Start-Up Plan for the Chicago Climate Exchange

The story begins in 2000. Richard Sandor worked through the Joyce Foundation with the help of his good friend Barak Obama, a board member, to obtain $1.1 million in grants to develop, pilot, and launch his idea of a private exchange to trade carbon credits. Obama guided the money to make sure Richard Sandor’s idea got off the ground. The grant monies were funneled through the Kellogg Graduate School of Management at Northwestern University where Sandor was a research professor and taught a class in environmental finance.

The Climate Exchange: A Forward-Thinking Idea

Carbon and other types of emission credits were already traded in Europe. Before too long, some type of emissions cap and credit trade legislation would pass in the United States which would create the need for an exchange and the technology to trade the credits. Carbon credits are, allegedly, a way to curb industry air pollution. With “Cap and Trade” the government determines how much carbon it will allow industries to emit. Industries that emit more than the fixed amount and use all their credits may buy additional credits from industries that do not use all their credits. The buying and selling of these credits takes place on an exchange. The exchange that trades carbon credits will become a $10 trillion business when the U. S. government passes the Cap and Trade bill. The Chicago Climate Exchange was born.

The Technology Necessary to Operate the Climate Exchange

The next step in getting the Chicago Climate Exchange up and running was to acquire the necessary technology to initiate, track, and complete the trades. Carlton Bartells at CO2E.com had devised the technology for trading carbon credits. He had filed for the patent. The paper work was just sitting in the patent office. Nothing was happening. During this time, Carlton Bartells was killed on 9/11. After his death, his wife decided to sell the patent—the patent that was stuck in the patent pending department. The patent sale came to the attention of Franklin Raines, who at the time was running Fannie Mae.

Franklin Raines or rather Fannie Mae purchased the technology even before the patent had been approved. Those at Fannie Mae wondered why an entity whose business was guaranteeing housing loans and making housing affordable for all was buying technology to trade carbon credits. Fortunately, for Raines and Fannie Mae the patent was immediately approved following the 2006 Democrat win.

Big Investors to Make the Chicago Climate Exchange a Major Player

The Chicago Climate Exchange had its start-up company in place and had the needed technology to trade carbon credits. Now it needed large investors get the Exchange off the ground and into a highly competitive position. One of the first large investors was Generation Investment Management (GIM). GIM is an investment company located in Great Britain. Al Gore is its co-founder along with three Goldman Sachs men, David Blood, Mark Ferguson, and Peter Harrison. (a snarky note: Al Gore seems to be an astute businessman while protecting the earth. Nothing like a little capitalism to go with altruistic environmentalism.) After the 2006 election Goldman Sachs bought 10 percent of the Chicago Climate Exchange. Currently, the largest share holder (29 percent) is Invesco Assets Management. ICE’s Atlanta-based subsidiary is a small investor at 4.8 percent, or was before ICE acquired controlling interest in the Exchange on Friday.

Customers for The Chicago Climate Exchange

The Chicago Climate Exchange began voluntary, legally binding carbon credit trading in 2003. More than 350 companies and entities, such as Ford, DuPont, Motorola, the cities of Oakland and Chicago, the National Farmers Union, and the Iowa Farm Bureau, trade emission credits on the CCX.

To be truly successful and attain the projected profit of $10 trillion a year, trading carbon and other emission credits needs to become mandatory. Hence, they are waiting for the Cap and Trade legislature to pass.