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I think today, a great many people were disappointed by the failure of the sum total of all the world’s governments to create a global Emissions Trading Scheme (ETS) in Copenhagen. Oh woe, they say, our governments have failed us. Now the sun shall burn us all to a crisp and there is nothing we can do.

Or is there? As a classical liberal, I believe in the power of the individual to achieve great things, and I have found the secret to creating our own Emissions Trading System without needing to rely on our useless politicians.

It’s actually quite simple. Failure to pass an ETS (assuming global warming is real) is an example of government failure. Government failure creates economic distortions, inefficiencies which siphon money away from workers and into a bottomless black hole. But fortunately, whenever there are economic distortions, that also creates ‘arbitrage opportunities’ – ways for intelligent investors to enact clever trading strategies to profit from this government failure.

In this case, there are some quite obvious strategies. If the government fails to pass an ETS, that means that solar power companies are undervalued. Buy shares in them, because you as a true global warming believer know that in a few years the sun will beat down upon us like a Southerner beats his wife, and everyone will turn to those selfsame solar power companies for our salvation. It also means that coal companies are grossly overvalued because if global warming does happen then a hoarde of pitch-fork wielding greenies will descend upon their local power plants and destroy them. Fortunately there is a way for you to profit off this as well – a process called short-selling. You can sell the shares of Coal Co now (when they are overpriced), then buy them in a year or so time (when their share prices are as low as their morals) and make a tidy profit off the whole process.

But think about what effect this has on the two companies. If everyone buys shares in Solar Power Co, then its share price goes up, and the share price of Coal Co goes down. It’s basically imposing a cost on Coal Co and transferring that money to the Solar Power Co. In other words, you’ve created your own ETS. But this is just one of an infinity of other strategies, some of which can be quite complex. For example, climate change will also cause extreme weather phenomenon. There will be vast, unpredictable storms destroying our agricultural land and causing famine everywhere. Normally, this is a bad thing.

But fortunately, you are an enterprising investor and know how to profit from this. There is a market for “weather derivatives”, its like buying shares in the weather. Clearly, if the weather is going psycho, the prices in this market are going to be wildly volatile. Prices will go waaaay up every time there’s a monsoon, and waaaay down because there’s a drought. Fortunately, you can use a strategy called a straddle – it lets you make money if the price of the underlying stock (in this case, a weather derivative) goes up or down. You only lose money if the price stays the same, or only moves a tiny bit.

The great advantage of a grassroots ETS is that it can tackle any kind of climate change consequence. Oh, climate change will destroy barrier reefs? I’m sure there’s an innovative investing strategy that can fix that. It takes all the best parts of the market and uses them to fix the environment by placing costs on polluters and transferring benefits to environmentally friendly companies.

Yes, I can see it now. A great grassroots uprising against politician incompetence and inability to pass climate change legislation. It’s a very civilised form of rebellion really – all you need to do is sit at your desk and call your stock broker. It’s all very British, like drinking tea. Imagine it, a hundred tea parties across the nation, capable of changing government policy and the very way we approach global problems.

<b>PS:</b> To those on the Left, if you don’t start investing you don’t believe in climate change. <i>You are a skeptic</i>! :O To those on the Right, if you don’t start investing, you don’t believe in market forces, socialist scum that you are.


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