Category Archives: Banking

Topics on the fault lines of the banking system and its sociological impact on politics and governance….

Brent Carbon Price/WTI Carbon Price – A Way To Tax and Allocate Carbon

 

This is the second part of the previous article on APM and hopefully, it helps to build a foundation for creating a global framework toward a carbon capital markets regime. This financial underpinning in America’s institutions includes taxing, platform placement, suppliers, and beneficiaries. I’m very happy and optimistic about the future of the planet but especially as I see the U.S.’s role in creating this beautiful reality. Once carbon is securitized and traded in terms of a commodity instead of the fatalism of the Climate Question will become more positive. It will shift to market-based long-term planning in terms of manufacturing than a short-term emotional politically deceived debate.

I had a tough couple of weeks of wondering how to even address the problem and where the look to begin with. I went back to the source of the previous article and I began to say “Hey, the best way to start is the basis of the article. CARBON CARBON CCCAAARRBBBOOONNNN! So to begin how about the measurement should be at the atomic level. Let’s start by measuring the amount carbon in a barrel of crude oil.”

I’m not a scientist or have a deep understanding of the science so I stumbled on a great blog by Jim Bliss on Carbon measurement. His blog post helped clarify how to begin developing a globally acceptable thus traded market. He broke down what is lost on the carbon debate which I argue should be put on the CME trading market. When you begin to measure on the atomic level it really helps to craft an understanding of the issue.  You need to see how they also begin to add to your thinking that the US and the World have different standards of measuring which causes uncertainty in the markets, particularly with the C-Suite.  Read the citation on the blog post below to understand why the industry fights this but this should help answer.

CO2 EMISSIONS

Petrol:
1 litre: 2.331kg of CO2
1 US gallon: 8.824kg of CO2

Diesel:
1 litre: 2.772kg of CO2
1 US gallon: 10.493kg of CO2

Crude oil:
1 barrel: 317kg of CO2 (min.)

1 TONNE OF CO2 IS:

429 litres / 113.33 gal of petrol*
360.75 litres / 95.3 gal of diesel
3.15 barrels of crude oil

* less than 8 fills of an average-sized car with a 55 litre tank

1. Gasoline: 44.1% (70.12 litres)
2. Distillate fuel oil: 20.8% (33.07 litres)
3. Kerosene-type jet fuel: 9.3% (14.79 litres)
4. Residual fuel oil: 5.2% (8.27 litres)**

Percentage values from Riegel’s Handbook of Industrial Chemistry, 2003 edition (Page 515, Fig. 15.6). Litre values based upon conversion rate of 159 litres per barrel.

All of the other products*** of refined crude have sufficient alternative uses to make it possible (even if not entirely probable) that they will not end up as atmospheric CO2. Of the four grades of fuel listed above, however, it’s fair to say all of it is destined to be burnt. It’s worth noting, therefore, that our final result will represent a minimum CO2 per barrel.

Now, the litre values are no good to us by themselves. Each of the fuels has a different specific gravity (a different weight per litre), and it’s the weight of carbon we’re looking for, not the volume. Once we’ve multiplied the volume of each fuel by the relevant specific gravity we’ll have a rough “kilogram per barrel” number for each fuel. So:

1. Gasoline: 70.12 litres x 0.74 = 51.89kg
2. Distillate fuel oil: 33.07 litres x 0.88 = 29.10kg
3. Kerosene-type jet fuel: 14.79 litres x 0.82 = 12.13kg
4. Residual fuel oil: 8.27 litres x 0.92 = 7.61kg****

Overall, this suggests that the average barrel of crude refined in the United States in 1995 yielded a shade over 100kg of liquid fuels (that’s an uncannily round number… 100.73kg to be exact). Now, we know that a carbon-based fuel will emit 3.15 times its own weight in CO2 when burnt.

Bliss, Jim. “Carbon dioxide emissions per barrel of crude.” The Quiet Road, http://numero57.net/2008/03/20/carbon-dioxide-emissions-per-barrel-of-crude/

This was great and I wanted to post a previous post by him:

“I then took that 317kg (which was the primary goal of my work, as it’s a useful reference figure) and applied it to a specific real-world project. In this case, the Peterhead / Miller Field carbon capture scheme proposed by BP. According to the BP press release:

Injecting the carbon dioxide into the Miller Field reservoir more than three kilometers under the seabed could extend the life of the field by about 20 years and enable additional production of about 40 million barrels of oil that are not currently recoverable.BP | Industrial-scale decarbonized fuels project

And in the following paragraph:

The project would also permanently store 1.3 million tonnes of carbon dioxide, the equivalent of removing 300,000 cars from the roads.

Based upon these figures, provided by BP, it is clear that the 40 million barrels of oil will generate (multiply by 317kg) approximately 12.68 million tonnes of CO2. Which clearly dwarfs the 1.3 million tonnes that BP claims will be stored.”

Bliss, Jim. “Oil Companies and Climate Change Redux..” The Quiet Road, http://numero57.net/2008/03/20/oil-companies-and-climate-change-redux/

Now we got something to look at with a figure to start: 317kg of CO2. Now we could say that a “Barrel” of carbon is equivalent to the above measurement and with the push in the globe into carbon capture. With CCS (Carbon Capture and Sequestration) technology it can be a commodity like wood, titanium, steel, and of course Oil. Now industries on both sides of the Atlantic could adjust and make long-term business planning now that carbon will not be a politically no-winner causing backlash.

Now the premise of the article which could have a stabilizing effect on the market is the creation of the WTI/Brent Oil and Carbon Index.

1 barrel of crude oil is: 42 gallons/158.987 liters

1 barrel of carbon is: 317kg of CO2

Now we could get into the breakdown of the difference between the WTI vs Brent price index. The security of the US market vs the Brent which includes the Middle East, European, and African oil producers, which are usually state players. If you are watching the news right now then you’ll understand why the brent is high because of the major geopolitically headwinds in the world. WTI will always be a secure source of oil/carbon because it is in the Continental US and the Americas. Brent has a range of security issues which is always a security dilemma for the US which in turn must use its military in order to keep the free flow of the world’s energy.

If you attach the oil and carbon intertwined simultaneously it could help with first the price which a trader can buy and then the option is there for an Oil prime (Carbon included) or Oil sweet (Carbon Excluded) contract. The trader, institution, or Major Carbon emitters can buy the contracts with the tax plan that the Hamilton Institute is calling for it. Is included and used to CCS, advance technology to pull the carbon out of the atmosphere to be manufactured into products, and advance America’s economic, scientific, and military might.

This is completely different from the carbon credit regime in place where a contract is bought and later sold for profit. This proposal that is laid out is completely different than the latter. This version calls for carbon to be put into the financial markets and used in the taxation and allocation in the Western Economy.

“Let’s roll” – Todd Beamer

343 – The number of firefighters killed on 9/11.

https://www.theguardian.com/sustainable-business/2017/jul/10/100-fossil-fuel-companies-investors-responsible-71-global-emissions-cdp-study-climate-change

https://peri.umass.edu/greenhouse-100-polluters-index-current

https://ycharts.com/indicators/brent_wti_spread

https://www.investopedia.com/ask/answers/052615/what-difference-between-brent-crude-and-west-texas-intermediate.asp

https://www.thebalance.com/crude-oil-brent-versus-wti-808872#:~:text=WTI%20is%20the%20benchmark%20crude%20for%20North%20America.&text=Brent%20crude%20oil%20futures%20trade,use%20them%20in%20different%20manners.

http://www.differencebetween.net/object/difference-between-wti-and-brent/

Founding Purpose: “We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.”

The mechanism for achieving this goal is Capitalism and Democracy

Neo Federal Reserve (Mega Capitalism)

I hope everyone is enjoying their new year and I wanted to jump-start this blog because of the major risk and uncertainty that is accelerating in the coming months. The incoming Trump Administration has something that 44 presidents had before them in terms of a record to come off. The President-elect soon-to-be President has no record or background in politics to reference and that has a lot of people terrified.  I see this as a major opportunity to open doors and destroy intellectually wasteful left/right debate in this country’s politics.

The first issue, I come to terms with not playing stupid gotcha left/right politics and creating opportunities for major reforms that are needed in the global economy because of the advancement of globalization, institutional changes to integrate new technological clusters into the economy, and consolidations needed to resolve conflict and risk. This central theme for the next post will be about creating fluid economic institutions to deal with a post gold standard economy.

The real stress is the economy that no one is talking about is the economy is expanding fastest than the present institutions can handle. To handle the major change and bring certainty and fluidity back to the market. Before we continue any further on this post. We have to define the two policies affecting the economy right now:

“Monetary policy involves changing the interest rate and influencing the money supply. Fiscal policy involves the government changing tax rates and levels of government spending to influence aggregate demand in the economy.”

Difference between monetary and fiscal policy | Economics Help

www.economicshelp.org/blog/1850/…/difference-between-monetary-and-fiscalpolicy/

 

We need to acknowledge that we are in a shotgun wedding when it comes to the economy, treaties, and trade pacts. There is no way out of this or around it because the only autonomous nation on the planet is North Korea(they’re leveraged with food by the Chinese). We need to understand and create dialogue to address the structural shortcomings and the measures to resolve them. What I’ll love to inject into the debate is that we do not need so much tension where political showdowns and battles translate into market uncertainty which delays investments, contracts, and implementation of business decisions from the C-Suite.

The first issue I’m going to tackle is reforms of the Central Banks or commonly known as the Bretton Woods system to adapt to the current market of emerging markets, globalization, declining and evolving technological clusters, and upgrades to the current infrastructure. Basel III is the current structure of the global economy in terms of banks and the holdings they are required to have to keep the banks running. This could be the founding of Basel IV where the new changes in the tax code are updated across the world.

I don’t have an economics, finance, or high-level maths degree to work out the equations but the three areas that will explode the economy with a capital-rich environment is these three areas: capital requirements, leverage ratio, and liquidity requirements. The updated tax plan and policies suggested in this blog will help to reverse the declining clusters around the world.

The picture shows the role of the central banks in the country:

I’m proposing a consolidation of the top 8 central banks into a new central bank system with the U.S. and the U.K. The top financial cities(New York and London) are in those countries and the growth is small compares to the rest of the world. It already has the institutions within its borders and people are used to this nation-leading:

8 Central Banks You Need to Know

Taking the top 8 Central Banks and putting them into the U.S. Federal Reserve System and the U.K.’s Bank of England can help to resolve and bring efficiency back to the markets.

  1. US Federal Reserve Bank (USD)
  2. European Central Bank (EUR)
  3. Bank of England (GBP)
  4. Bank of Japan (JPY)
  5. Swiss National Bank (CHF)
  6. Bank of Canada (CAD)
  7. Reserve Bank of Australia (AUD)
  8. Reserve Bank of New Zealand (NZD)

Take the bottom banks and put them into the U.S. Federal Reserve System:


The same is on the bottom and will create Dual Branches of the Federal Reserve system that will reduce the number of central banks policies to contend with and make business decisions easier.

Take the bottom banks and put them into the Bank of England and it will help to reduce the danger of currency fluctuations and harmonize monetary policy around the World. Moving and splitting the Bank of International Settlements into both the U.S. and U.K. will help shake up the mix. I know what everyone is thinking (What about Brexit?)

 

 

 

 

 

 

 

 

 

This first series of reforms will help to create an environment to adapt to the changing world.

https://www.federalreserve.gov/

http://www.bankofengland.co.uk/Pages/home.aspx

http://www.hoover.org/research/reform-federal-reserve

http://money.cnn.com/2016/11/16/news/economy/us-china-trade-war-donald-trump/

http://www.economist.com/news/leaders/21699121-americas-next-president-should-modernise-federal-reserve-system-right-kind-reform

Founding Purpose: “We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.”

The mechanism for achieving this goal is Capitalism and Democracy.

Staple Corridors (Global Cities)

Mexico-Inbound-Outbound-Logistics

“The border between Mexico and the United States spans four U.S. states, six Mexican states, and has over twenty commercial crossings. The long border between the two countries means that peace and security in that region are important to the U.S.’s national security and international trade.”

-Google Search

The integration of the global economy means new methods and experiments need to be tried. The Hamilton Institute calls for the formation of global corridors in the U.S. where multiple cities are lobbed together to create a larger economic impact. I will use two examples to show the success of this way of thinking. One, I will use is the San Diego-San Ysidro-Tijuana corridor which is home to me. The other is the Detroit-Windsor corridor which is up north at the U.S-Canada Border. These combined resources will help to boost the economic outlook in the long term by strengthening the G.D.P.

San Diego-San Ysidro-Tijuana Corridor

AHLB4465

 The San Diego-Tijuana Corridor is the largest border crossing in the world.  Between 25 million vehicles and 100 million people enter the United States every year and if you want to walk across the border it could include a two-hour wait. Tijuana is the second most visited city in the western hemisphere with New York City being number one. This will help prop up and spread the experiment of the super-corridor.

Technology, biotechnology, cyber security, military contractors, maritime, and manufacturing clusters will be the engine of the combined cities. This new corridor will include multiple cities and business areas which will boost the population to 6.5 million people to create a new mega-region in North America.

Detroit–Windsor Mega Region

detroit_skyline_windsor_900x600

Detroit Windsor corridor is one of the Quebec City-Windsor mega-region and the staple to the north in terms of the economy. It has a combined population of 5.7 million people and the latter is at least 18 million people by a 2011 census. The Detroit-Windsor corridor is a technological powerhouse that is in the running for developing nanotechnology, biotechnology, information technology, and hydrogen fuel cell/cleantech. It is the home of the big three automakers in the U.S. where two auto firms (General Motors, Ford) are in the U.S, and one is located in the Windsor area(Chrysler Canada Headquarters).

This helps cooperation between the regions means just because you’re in one region does not mean you cannot work with other regions.  Silicon Valley/Detroit collaboration in the future of transportation is the engine of growth and innovation. The region is heavily talented with the R&D, Universities, and companies to make it happen. The only thing from making this region from exploding is the role and backing of the U.S. Government.

hazpic

http://www.america2050.org/megaregions.html

https://en.wikipedia.org/wiki/Quebec_City%E2%80%93Windsor_Corridor

https://en.wikipedia.org/wiki/San_Diego%E2%80%93Tijuana

https://en.wikipedia.org/wiki/San_Ysidro,_San_Diego

https://en.wikipedia.org/wiki/Detroit%E2%80%93Windsor

https://en.wikipedia.org/wiki/Mexico%E2%80%93United_States_relations

Founding Purpose: “We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.”

The mechanism for achieving this goal is Capitalism and Democracy.

The Age of Super Banking (Japanese, European and Russian banking consolidation)

00462-bank-mergers

The planet’s biggest banks are going to get bigger to help in the reduction of poverty. The rise of East Asia, urbanization of Africa, and rising incomes (middle class) in Latin America have caused the Hamilton Institute to call for Western Bank Consolidations. Some ideas that we call for based on market capitalization would be Barclays-Citigroup, Wells Fargo-HSBC, Bank of America-Deutsche Bank, JPMorgan Chase-BNP Paribas, Mizuho Financial Group-Sumitomo Mitsui Financial Group. This will help create new wealth in the capital markets to feverishly compete against massively capitalized Chinese banks, and set a course in prosperity in the financial sector.

This will help in the tax plan that the Hamilton Institute is calling for where U.S. Sectors on the Stock Market can get the resources to increase cap x expenditures and hire the employees to oversee these upgrades. This will help upgrade the U.S. Economic outlook in the short and long run.

.48434

The shirking of the global “unbanked” will help with financial inclusion in the global economy. The creation of such new customers and wealth will spur new advances and help uplift humanity. This will help counter the competition of the naysayers and the gloomier outlook they project.

The World's Unbanked Adults By Region

India, Indonesia and China's Share of Unbanked

http://realitieswatch.com/37-banks-became-4-just-2-decades-one-astonishing-chart/

http://www.investopedia.com/terms/c/capitalexpenditure.asp

http://www.vocativ.com/money/industry/nearly-40-percent-of-people-with-no-bank-account-live-in-3-countries/

https://en.wikipedia.org/wiki/List_of_largest_banks

Founding Purpose: “We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.”

The mechanism for achieving this goal is Capitalism and Democracy.

Keeping Antibiotics for the Next Generation.

There is always an opening for hope and advancement in the darkest times. The antibiotics era needs new investments to keep unneeded suffering or deaths to be prevented. The end of the antibiotics is not an “apocalypse” in the sense of the end of everything. There are cycles in economics, business, and now in medicine where you have a period of innovation and development. Just in many other fields there comes a time when the investments and R&D simply become exhausted. New fields, research, and funding need to be established to keep progress advancing.

*The picture is the good guys called Bacteriophage Virus*

Reforming the tax code of the U.S.A and creating incentives for the Pharmaceutical industry to cure, treat, and destroy “bugs” will help the economy, social net, and the republic at large. Healthcare will stop being so polarized because the Insurance industry will be able to keep getting a profit while paying for the claims of its customers. The benefits of a population that are healthy and able to develop their true potential will have incalculable events for our economy.

Check out these articles:

https://www.medicalnewstoday.com/articles/327167

http://www.pbs.org/wgbh/frontline/article/dr-arjun-srinivasan-weve-reached-the-end-of-antibiotics-period/

http://www.theguardian.com/commentisfree/2015/nov/20/the-guardian-view-on-antibiotic-resistance-a-clear-and-present-danger

http://www.theguardian.com/commentisfree/2015/nov/20/antibiotics-apocalypse-research-resistance-threat-breakthrough

https://en.wikipedia.org/wiki/Bacteriophage

Founding Purpose: “We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.”

The mechanism for achieving this goal is Capitalism and Democracy.

The U.S. Dollar, Bitcoin, and Blockchain

Source: The Economist

While many see Bitcoin as a fab, blip, or an annoying phase in finance. The “brains” are researching the technology to see the true potential of BlockChain. Many are researching a way to for “seamless transactions”(no currency fluctuation and credit card fees) that BlockChain may allow. Many are having very healthy debates about the future of technology. Banks and Credit Card companies see the benefits of having a secure but open ledger system but it is still too complicated for management or the public. I truly see the future of having a truly global currency without national governments interfering.

 

One application of Bitcoin which The Hamilton Institute agrees with the experts. Using Bitcoin, to stop the chaos that happens with crashing currencies and national disaster areas like earthquakes or civil wars. Blockchain tech can be used to dissolve and counter the Snowden effect on tech companies, governments, and civil society groups. We are becoming more aware and sophisticated where the guild lines of the past no longer apply. The Snowden effect has caused a lot of damage and trouble for American Tech Companies. This could be used to move to privacy debate to Anonymity which will match where we are in this technological period.

 

Check out these articles:

http://www.economist.com/news/special-report/21650295-or-it-next-big-thing

http://www.economist.com/news/leaders/21677198-technology-behind-bitcoin-could-transform-how-economy-works-trust-machine

https://bitcoin.org/en/

Founding Purpose: “We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.”

The mechanism for achieving this goal is Capitalism and Democracy.

Automated Vacuum Collection – Great for NYC, LA, SF, SD and Chicago.

 

pneumatic_waste_collection1-660x400

The U.S. financial sector needs to be very strong and vibrant to redevelop the nation. A new section on emerging technologies will show the reason why the banks need to have huge reserves of savings. The American worker needs a situation where the whole compensation system is reformed and makes money work for them. Automated vacuum collection would be one of the many upgrades for American cities. This new system will make taking out the trash totally different where you could collect trash, recyclables, and compost to the collection point where it is processed.

852x400-kivisto

A sensor would look to activate the system and the trash would be sucked out of the bins. The U.S. has the talent, manpower, and innovation for this but with everything you need to finance it.

Founding Purpose: We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.”

The mechanism for achieving this goal is Capitalism and Democracy.

Read the articles below to learn more about this technology.

http://www.greenerideal.com/lifestyle/0213-automated-waste-collection-sucks-but-thats-good/

http://www.waste-management-world.com/articles/print/volume-10/issue-4/features/the-future-of-waste-collection-underground-automated-waste-conveying-systems.html

Nixon and saving the U.S. Dollar

Nixon_30-0316a

I’m not a fan of some of the policy decisions of President Richard Nixon. There are two areas that I feel will make people reconsider him. His decision to pull the U.S. Dollar off the gold standard made the Dollar free float.  The Nixon Doctrine was another of his position that is seriously debated. These two policy decisions of President Nixon helped to bring the dollar back under the control of the U.S. Government and the U.S. Federal Reserve system. While many criticized his action known as the “Nixon Shock” he defended the U.S. economy. His actions caused the U.S. economy/dollar to rise on his actions. One of the most controversial decisions was the “Nixon doctrine” which states that every nation is responsible for its defense but the U.S. will be used for a nuclear umbrella. Many look at the foreign policy aspect of his doctrine but few look at the reasons why he did it. The U.S. was a major industrial exporter in the world at the time. The policy of President Nixon was to use the military/nuclear might of America against foreign meddling in trade pacts where U.S. jobs were at risk.

This aspect deserves a closer look but people are products of their time. I can’t take today’s standard and applied it to the past so yes there are things I agree with but things I disagree with.

This is a second of a two-part series on the attempted transformation of the U.S. government to better support the economy.

Founding Purpose: We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.”

The mechanism for achieving this goal is Capitalism and Democracy.

Benefits to the Economy and the Multiplier effect

tax20man

The second video in a two-part series is to explain the benefits of understanding the basics of capitalism which in turn advances democracy. The citizenry must understand to reform the fiscal (taxation and public spending) and monetary (interest rates) policies of the United States to favor the whole population than the small affluent elite. The Multiplier effect helps lift all tides by providing extra capital to lend for students loans, car loans, interest payments, and mortgages and allows the person who takes the loan to service (maintain) the loan.

Founding Purpose: We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.”

The mechanism for achieving this goal is Capitalism and Democracy.

Visit our Educational Program for more details click here

 

 

Fractionalized Banking

Creating the “More Perfect Union”2015-10-11_11-51-23

The first step to understanding Capitalism and how it works is to understand money and how money works. It is impossible to become wealthy in a capitalist system if you do not understand capitalism and think it is a dirty word. It is also important to note, that if you do not understand capitalism, it is impossible to understand democracy; because democracy is the gateway to making capitalism work for you.

If our democracy is to become effective it is important to teach capitalism to everyone, so that we as citizens would elect representatives who are dedicated to making capitalism work for each citizen. Our goal is to ensure that the common people, working together, become an exceptional civilization. We want you to join us as we attempt to educate each citizen parent in implementing the moral science goals set-forth by our Founding Fathers. EDUCATION BE PRAISED: POLITICS BE DAMNED!

Founding Purpose: We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.”

The mechanism for achieving this goal is Capitalism and Democracy.

Visit our Educational Program for more details click here

by A. J. Sturrup
Founder and CEO
The Hamilton Institute