You are here

G20 Stimulus, A Plan for Carbon Dioxide and Mark-to-Market Reforms

Daily Update

Title

G20 Stimulus, A Plan for Carbon Dioxide and Mark-to-Market Reforms

World leaders pledge to spend an additional $1 trillion to stimulate the global economy.

Global warming activists call for policies to lower the concentration of carbon dioxide in the atmosphere to their recommended level of 350 parts per million.

Regulators reform federal accounting rules in an effort to revive banks and other financial institutions.

For more news, listen to the LibertyWeek podcast here.

1. ECONOMY 

World leaders pledge to spend an additional $1 trillion to stimulate the global economy.

CEI Expert Available to Comment: Senior Fellow Iain Murray on the message the assembled leaders are sending

“The communiqué holds that, ‘We start from the belief that prosperity is indivisible; that growth, to be sustained, has to be shared” and to “do whatever is necessary.’ In clause after clause, this pro-government rather than pro-prosperity declaration embraces new burdens on a limping financial sector in the form of expanded global regulation, and effectively requires that all look toward government before acting in the future.  At no point does the communiqué recognize that government action can and does distort market action to the point of significant harm.” 

 

2. ENVIRONMENT

Global warming activists call for policies to lower the concentration of carbon dioxide in the atmosphere to their recommended level of 350 parts per million.

CEI Expert Available to Comment: Senior Fellow Marlo Lewis on what such a reduction would entail

“What would it take to lower CO2 concentrations to 350 ppm? According to [Newsweek reporter Sharon] Begley’s source, Cal Tech chemist Nathan Lewis, global CO2 emissions would have to drop to zero by 2050. Absent revolutionary changes in energy production, distribution, conversion, and storage – Nobel-caliber breakthroughs that nobody can plan or predict – lowering CO2 emissions to 350 ppm is impossible without draconian cutbacks in population, economic output, or both. Whether they realize it or not, the Climate 350 Club is asking us to go back to the caves.” 

 

3. BUSINESS

Regulators reform federal accounting rules in an effort to revive banks and other financial institutions.

CEI Expert Available to Comment: Director of the Center for Investors and Entrepreneurs John Berlau on how this reform will help struggling markets

“By itself, this change will not make the price of mortgage assets higher or lower  Rather, it will allow price discovery to occur. Mark-to-market distorted the market by forcing banks to take losses on mortgage assets even if the underlying loans were still performing, based on the last fire sale price of similar assets. Respected banking analyst Richard Bove pointed out that because of mark-to-market, Bank of New York Mellon had to value its portfolio of commercial mortgage-backed securities with a 1 percent default rate as if it had a 25 percent default rate. This resulted in a $70 billion loss of liquidity to the financial system from this bank alone.” 

 

Listen to LibertyWeek, the CEI podcast, here.