A recent Chartered Institute for Securities & Investment presentation led me to revisit our belief in man-made global warming and draw parallels with the sub-prime crisis.
Structural incentives obscured the toxic nature of mortgage-backed securities and derivatives. Until the 1970s, investors delegated due diligence to credit rating agencies for which they paid a fee. When rating agencies started charging bond issuers for ratings, their financial interests converged. Investigations following the crisis revealed evidence of collusion between issuing banks and rating agencies, optimising risk profiles of securities to achieve AAA ratings. Carbon credits are ascribed value because they are the mechanism by which man-made or anthropogenic global warming (AG...
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