Comments (14)

• Lisa Casanova

  Do you think investment in something like this might indicate what people really thing of global warming? I would guess that if people really believe it's happening and presents significant risks, the choices they make with their money will reflect that.

  Published: March 22, 2007 10:41 AM

• RPM

  Sean,

  I realize you have a low opinion of major investment banks, but can you elaborate on your comment? Are you saying you don't think JP Morgan should offer a bond index that some of its customers may want, even if the offer would be profitable?

  If the climate change stuff really is a bunch of hooey, then wouldn't a financial market be just the place to expose the fraud? I.e. the scientists can talk about peer-reviewed journals and "consensus" all they want, but if the futures prices indicate all is well, won't that be pretty damning to their alarmism?

  Published: March 22, 2007 10:54 AM

• Nick Bradley

  Good point RPM.
  

  
  There are already plenty of futures markets for natural disasters, such as hurricanes. Might as well add global warming into the mix.

  Published: March 22, 2007 11:27 AM

• Person

  RPM: I think futures markets already capture the (non-)risk of global warming disasters. It's just that the alarmists don't consider that valid evidence. (i.e., "They're wrong! They're just wrong! All of them!") This bond index won't make much of a difference; it just allows the few financially-informed alarmists to bid up certain bond prices, but won't add much more "information" to prices that isn't already there.
  
  Come of think of it, that would be a great article to write: "Do futures/securities/commodities markets reveal a belief in a global warming catastrophe?" The evidence is out there, it just needs to be brought together in a presentable form.

  Published: March 22, 2007 11:46 AM

• corrigan

  Oops! Having seen this posted, I appear to have raised the ire of the 'free' market-can't-be-wrong crowd (Clue: 'free market' and 'modern finance' are wholly immiscible concepts)

  If the bookies were looking to make a quick turn by pushing a bond index which weighted securities according to their issuer's contribution to the impairment of human liberty, to the erection of impediments to entrepreneurial activity, to the spread of violent religious intolerance, and to the promotion of the global Platonic Republic (which is what a pretend enviro-index effectively does), you might well say they had every right to do so, in a dispassionate, wertfrei, economic sense (who am I to i-m-p-o-s-e my tastes on others), but I would nonetheless be fully entitled to argue that it was both ethically dubious, as well as to point up the cynicism involved in such a bandwagon-jumping marketing ploy and to suggesting that it is hardly based upon the most rigorous criteria of genuine investment merit (we are supposed to be looking after the little man's retirement savings, remember, not robbing him of yet more fees by pandering to his force-fed new beliefs in Eco-Perdition).
  I presume the security credit raised by the ex-Veep's business partners will henceforth be accorded the highest possible rating in this index - thus enabling them to fuel his private jet and heat his multiple mansions more readily - as is only due to this selfless modern Calvin of Ultraviridian totalitarianism.

  (PS: Thanks, Mr. T, for getting me into this one!)

  Published: March 22, 2007 11:48 AM

• Person

  Also, combining this with today's article, I'd like to see a similar index of securities by "least likely to be negatively influenced by national pension crises".

  Published: March 22, 2007 11:55 AM

• Bill

  Corrigan:
  If you don't like the fund then don't buy it. That is the good thing about a financial instrument. I personally would like a fund that shorts the fund mentioned above as I believe global warming is a bunch of crap.

  Money and time will tell.

  Published: March 22, 2007 11:58 AM

• adi

  Person, this bond index seems to give an "overweight" recommendation for those companies, which will get subsidies and benefit from state regulation of CO2 emissions (at least in the future if not right now). Of course they must also give an adequate return..

  They even admitted that in the future this regulation issue might be very important (look for methodology of this index from their webpage and you will see that I'm right) for return of these "green" companies.

  Published: March 22, 2007 12:30 PM

• John Doe

  Wait a second! This fund essentially hedges against losses from potential new carbon taxes, doesn't it? So it has a reasonable use other than just catering to funds that are "socially responsible".

  Published: March 22, 2007 5:46 PM

• matth

  I just heard that Al Gore is heavily involved in (started?) a fund that invests in "green" energy companies. This during coverage of his excursion to Washington to lobby for policies that would make "green" energy companies more profitable.

  I may have misunderstood the news report, but if I didn't I would consider this unethical behavior.

  Published: March 22, 2007 9:21 PM

• corrigan

  The Veep’s “investment” fund - (Blood and Gore?!?!) ---complete with lashings of conflict of interest and hypocrisy – and, all ex-GS, naturally!

  see the link below
  
  http://www.generationim.com/media/pdf-ft-13-09-06.pdf
  

  Published: March 23, 2007 3:09 AM

• TokyoTom

  Sean, while we may have new pigs coming to the trough, would you not acknowledge that (i) there have already been some big ones there, feeding on the hundreds of millions the federal government spends on subsidizing fossil fuels every year (not including the value of uncollected royalties, cheap leases, environmental damage, the value of uncosted externalities - such as heavy metals - posed by coal emissions that are permitted under the private litigation short-circuiting of the CAA or the free ride in using the atmosphere as a CO2 dump) and (ii) assuming CO2 does play a role in climate change, that there is a problem with catallaxy that the market is unlikely to resolve itself?

  As for this bond fund, obviously the real money to be made is in the underlying equities. Even if regulatory changes do not occur, attention to carbon is already yield improved returns through enhanced energy efficiency.

  TT

  Published: March 23, 2007 4:51 AM

• Pepe

  As a practicing "credit-investor" who dailey deals with Mr. Corrigan's beloved Goldman and JP Morgan let me offer this observation:

  I believe the fund does not address whether global warming's exists, but adresses the credit risk of higher costs inflicted by legislation. The legisaltion pre-supposes global warming is caused by man and is bad. So, the market is not determining the existence but is dealing with the risks to profitability (costs and lawsuits)of global warming.

  I see nothing wrong with profiting from a governemnt interference in the market.

  JP Morgan: "enables credit investors to make return-driven investment decisions that systematically take into account risks and opportunities issuers face as they address climate change. “Until today, bond prices did not reflect an increasingly important financial risk: climate change,” said Edward Marrinan, managing director and head of investment grade credit strategy. “With climate exposures factored in, companies’ risk profiles - and their bonds - will more accurately reflect the trade-off between risk and return.”
  

  Published: March 24, 2007 11:58 AM

• Calvin Jones

  My link is to a video by the American Association for the Advancement of Science. It explains the current scientific thinking on climate change and the levels of certainty..

  Published: March 25, 2007 4:54 AM