Too Big to Fail – Redux

Almost two years ago now I wrote a piece entitled “Back to Square One.” (1)  The election was getting interesting.  Lots of charges were flying back and forth.   Liberals were calling conservatives stupid for not understanding that climate change was a huge issue and conservatives were calling liberals stupid for thinking that it was.  Fake news was a thing, but no one knew that fake news was a thing yet, and the biggest joke out there was that Donald Trump was running for president.

At the time I said that, “We tend to think that people are stupid or uneducated or both if they think in ways that we consider illogical. And we do that because it is very easy to dismiss stupid people.”

I wouldn’t put it quite the same way today.  Today I would have to say that we think people are uneducated and stupid if they simply have been led to think differently than we do.  Now it appears that just thinking differently is illogical in and of itself.  And we are getting so tired of illogical people, aren’t we?  We talk at them and talk at them and they just don’t listen.

We give them facts; we give them numbers; we give them data.  And they just don’t get it.  Stupid people.  Stupid, stupid people.

And we, of course, are not stupid people.  We are the rational people.  We look up the facts.   We believe in science.  We read books.  We subscribe to Time and The Nation.  We know cave men and dinosaurs only co-exist in BC comics.  We know the earth goes around the sun, unlike one quarter of the American population.  We know that fake news is a term we came up with to describe lies being told during the campaign, mainly on social media and they usurped it to mean anything they disagree with.  We know the difference between your and you’re, and we know that climate change is real and that humans have caused it.

We are just so damn superior, aren’t we?  Let’s have another march to show them just how much better we think we are.

Back then I made the point that these climate change deniers were not all stupid people.   I made the point that they didn’t get that rich by being stupid and illogical.  They had access to the best educations or at least could buy the advice of those with the best brains available.

But there they were, being so damned stupid.  And now they are taking over the US government, removing climate data from government web sites, prohibiting scientists from even talking about climate warming.  Now the guy who sued the EPA for years runs the EPA.

Makes you want to hit someone, doesn’t it?  Makes you so mad your eyes get bleary and your throat constricts and the hairs on the back of your neck start to tingle, right?  And you think stupid people did this to you?  You think stupid people made you so upset?  Really?  We’re really that superior and yet stupid people can throw us into a blind rage?  Maybe we need to go back to square one all over again.

Documents from Exxon show that as early as 1977 their scientists were raising the possibility of global warming as a real threat to the environment.  In a 1982 document marked “not to be distributed externally,” the company’s environmental affairs office wrote that preventing global warming would require sharp cuts in fossil fuel use.  Failure to do so, the document said, could result in “some potentially catastrophic events” that “might not be reversible.” (2) They knew four decades ago that greenhouse gas emissions were warming the atmosphere that this warming could have irreversible effects, and they not only hid that research, but went on a publicity campaign to deny it.

Why would anyone in their right minds do that?

Profit.  The pure and simple answer is that in the corporate structure, profit is the ultimate goal.  “Sharp cuts in fossil fuel use” simply would not be good for profits.

Now I know that there are those that, on reading this, begin to wail about mankind’s humanity and innate kindness and Christianity and Jesus and loaves and fishes.  People can’t be that cruel and inhuman.   It’s not true.  I’m not like that.  To you I say, “Don’t be stupid.”

The only thing corporate America worships is money.  The only teaching they value comes from the annual report.  If you continue to doubt this, reread the part above where Rex Tillerson’s former company knew as early as 1977 that global warming was a real thing and then that company went on a campaign not only to hide the research but to deny the existence of warming altogether.

Profit, however, is a complicated issue.

Plenty has been written about the housing bubble and the crash that precipitated the bail-out of Wall Street banks because they were “too big to fail.”

When the perceived value of something is much higher than its actual value, you have a bubble.  When everyone suddenly realizes that fact, the bubble bursts.  If you have been acting on the premise that you have billions of dollars’ worth of something and then one day it turns out that the actual value is $52.27, you are in what the financial world calls deep shit.

But what if you know that a bubble exists?  What if you know that you have holdings that are billions and billions of dollars overvalued?  What do you do then?

You do everything you can to keep the bubble from bursting for as long as you can and then you do everything possible to position yourself to be bailed out when it eventually does burst.

The term “carbon bubble” isn’t one that is used too much in the popular media as yet.  Back in 2011 it was coined by the Carbon Tracker Initiative in its “Unburnable Carbon Report.” (3)  In 2013 Sean McElwee and Lew Daly laid out the basics of the carbon bubble in a piece in Salon magazine.  (4)

Without trying to repeat the specifics that you can read for yourself, here’s the gist:  The generally agreed upon tipping point for rising temperature is two degrees Celsius above pre- industrial levels.  After that we get into what climate scientists call deep shit.

There is a good deal of math involved, but it is pretty straight forward.  In order to keep the temperature from rising more than 2 degrees C, most of the coal and oil reserves must stay in the ground.  This is important to understand.

In order to keep global warming from destroying the ability of mankind to exist on the planet without catastrophic damage, 65 to 80% of everything the oil and gas and coal industries own the rights to must stay in the ground.  That means it’s worthless.  Once we admit that global warming exists, that we have to stop relying on carbon fuels, that we have to stop burning fossil fuels NOW, those industries are kaput.

Once the bubble bursts, the oil companies, the gas companies, the coal companies, the Russian government and the Venezuelan government and anyone else who thinks they are rich because they have investments in those companies – including a whole bunch of pension funds and IRAs – are toast.

The stock market crash in ’29 will seem like a Girl Scout picnic.

We live in a world where the entire global economy is based on the carbon fuel industry.  And the carbon fuel industry is preposterously overvalued.   And they know thatThey are not stupid people.

So long as the world doesn’t recognize how overvalued they are, however, everything is fine.  So the fossil fuel industry will do anything they can to make sure you don’t believe in climate warming.  No matter how much money they spend to do that, it pales compared to what they will lose once you realize what’s happening.

They can spend billions searching for and developing new reserves if it helps assure the public that the industry is healthy and growing because they stand to lose so much more if the public thinks it may collapse any minute now.

Maybe technology will make a big breakthrough and save them all.  Maybe the scientists really are wrong and it won’t be as bad as the scientists say it will be.  Maybe Jesus will show up just in time and there will be trumpets and what-nots in the sky.  So stall. Deny.  No matter what it costs, deny.  Propose a carbon tax because it will cost nothing compared to a carbon bubble crash. That’s not stupid.  That’s a hail Mary pass.

In the meantime they will do everything they can to position themselves to survive beyond the day people catch on.  The current administration is awash with people beholden to the fossil fuel industry.  From Secretary of State Rex Tillerson to Rick Perry at the Department of Energy; from Scott Pruitt in the EPA to Ryan Zinke at the Interior, this is an administration devoted to protecting the fossil fuel industry and to bailing it out when the time comes.  If you think the banks were too big to fail in 2008, this one is going to blow your mind.

But that’s so stupid!  How can they put the future of the entire human race in danger for mere money?  Don’t they see how real the danger here is?  The sea is rising.  The storms are getting worse.  The permafrost is melting.

What do you think is going to happen when the carbon bubble bursts?  Do you imagine a few rich people getting their come-uppance and you get to read about it in Time and The Nation?  Do you think everyone just walks away from all the deep sea drilling because they can’t afford to run them any longer and they’ll all be safe?  Do you think we just turn off the pipelines and let them rust out?  What do you think will happen when seven out of ten of the world’s top revenue producing companies go belly up?  How much of your pension plan is invested in oil and gas company stocks?

There is a real question as to whether, at least in the short run, the damage done by the collapse of the carbon bubble or climate warming itself will do the most damage to civilization.  To be sure, climate warming will be the deciding factor in whether it survives.

It’s hard to know when the carbon bubble will finally burst.  It’s hard to know what it will take for the American people to realize they have been duped and now face an existential threat of a magnitude unknown before.  Maybe when Manhattan is washed out to sea?  Maybe when there is a worldwide dolphin die-off.  Maybe when a category five hurricane rumbles up the Mississippi all the way to Canada?  But when it bursts and the when the world economy goes south, that’s just when people will want government to step up and solve the climate problem, finally, because now they believe it’s real.  The government, however, will be busy bailing out its own.

The situation gets worse by the day, but getting angry at all the stupid people is …  well, stupid.  Feeling superior because we know the facts is worthless.  Trying to rub people’s faces in data may make us feel better, but it won’t save Manhattan.

If the fossil fuel industry is, in fact, too big to fail, then we cannot let it fail.  Not by subsidizing it further, but by forcing it to become something else.  If the carbon bubble bursts and the industry fails all at once, the world economy will not have the resources it needs to then address climate warming.  Like it or not, we have to work with people we really, really don’t like.

And that means getting over the anger.

If your throat constricts and the hairs on the back of your neck rise up every time you hear one of the stupid people on a talk show you are a part of the problem, not the solution.

We need to convince the fossil fuel industry to diversify faster and pour money into renewable energy in order to reduce the size of the bubble before it can burst.  There is money for them to be made there.  More jobs are being created in renewables than in oil and coal now.  Worldwide, oil prices are falling, primarily due to increased use of natural gas, but also due to the reduction in the price of making solar and wind energy.

The best way to do this is through congress.  Putting the new liberal activism to work to convince congress that climate warming is an issue Americans feel strongly about and will vote them out of office before they allow it to be ignored is a start.  Instead of protesting twenty different things, we need one voice on one issue: climate.  Congress is in a position to bring influence to bear on the administration and this administration is uniquely qualified to bring influence to bear on the carbon fuel industry.

This may seem like wishful thinking at first, but it is much more likely to produce results than posting angry memes and shouting obscenities and strangling on your own spittle every time you see Kellyanne Conway open her mouth.

Either we come together and make the effort or we end up, as this writer likes to say, in deep shit.


Your Humble Servant,

Roger A. Shipley, The Willowbrook Curmudgeon


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4 thoughts on “Too Big to Fail – Redux

  1. Pingback: Too Big to Fail – Redux | oldgymrat71

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