The Climate Change Cult

Steve Hilton blames the climate change cult. Joseph Sternberg argues persuasively that climate change policy is causing far more damage than climate change itself. As numerous scientists have demonstrated, climate change is not a crisis. The climate change cult and its climate change policy have produced a crisis.

Those of us who do not live in California can sit back and laugh at the Golden State. As you know, the state’s woke governor has proclaimed his intention to ban all but electric cars by 2035. Our hapless and hopeless Energy Secretary, Jennifer Granholm, has happily endorsed this madness.

In the meantime, California today is running out of electricity. It has instituted voluntary rationing of electricity, the better to ensure that you will not be able to run your electric cars.

This suggests that we are suffering from terminal stupidity. Mass hysteria will do that to you.

And now, there is this from Joseph Sternberg in the Wall Street Journal. Sternberg notes that climate change hysteria and the bad policies it has spawned are destroying Europe. It sounds alarmist, but, compared to the shrieky adolescents running around warning us about the end of the world, it is probably sane.

Unfortunately, it’s not just the shrieky adolescents. Central banks and investment managers have hopped on the climate change bandwagon. They want to do their part in the war against the weather-- by making it more difficult to heat homes or to run factories. We recall that the state of Texas, not exactly a blue redoubt, lost electricity last winter when the climate friendly windmills stopped moving. People died from that bit of folly.

Anyway, it’s not just Texas and BlackRock. It’s also the world’s central bankers who are all-in with climate change. Sternberg explains:

Lest you’ve forgotten, the world’s central banks and other regulators are in the middle of a major push to introduce various forms of climate stress testing into their oversight. The Federal Reserve, Bank of England and European Central Bank, among others, want to know how global temperature variations a century hence might weigh on Citi’s or Barclays’ or Deutsche Bank’s capital and risk weightings today. The fad is for quantifying, with preposterous faux-precision, the costs of reinsuring flood risks, or fire, or the depressed corporate profits of a dystopian hotter future.

If this is not folly, the word has no meaning.

The problem lies in climate policy, the very same that made Western Europe dependent on Russian gas and that is now threatening to shut down industry, office buildings and home heating.

Sternberg explains:

Well, if you seek “climate risk” to financial stability, look around you. It has arrived, although in exactly the opposite manner to what our current crop of eco-financiers predicted. Europe’s plight tells a tale that could become all too familiar in the U.S. soon.

Take the United Kingdom, an epicenter of bad policy. We note that the new prime minister Liz Truss has just chosen to re-permit fracking-- one of the major enemies of climate change hysterics. Until that happens or until the war in Ukraine is resolved, Britain is in trouble. 

Sternberg explains:

The U.K. may be facing a wave of business bankruptcies exceeding anything witnessed during the post-2008 panic and recession. Some 100,000 firms could be forced into insolvency in coming months, bankruptcy consultancy Red Flag Alert warned this week. These are otherwise healthy firms with at least £1 million in annual revenue. Business failures on this scale would dwarf the roughly 65,000 firms of any size that went under from 2008-10.

The culprit is energy prices, which the consultancy believes could account directly for around one-quarter of the possible insolvencies. These prices are rising for British businesses in intervals of several hundred percent at a time and sometimes with steep deposit requirements from utilities that fear precisely a wave of bankruptcies.

One suspects, as Sternberg suggests, that governments will try to stem the tide of bankruptcy and economic distress by printing money.

After Britain, there is Germany. We have often noted the folly of German climate change policy, implemented by one Angela Merkel, and we have remarked on the supercilious attitude that Germans took when President Trump told them not to rely too heavily on Russian energy supplies.

Matters are probably worse in Germany, the eurozone’s largest economy. Some 73% of small and medium-sized enterprises in one survey reported feeling heavy pressure from energy prices, and 10% of those say they believe they face “existential” threats to their businesses over the next six months. And that poll, from the small-business association BMD, is the optimistic one. A separate survey published this week by the BDI, a major industry association, found 34% of respondents describing energy prices as an “existential challenge.” Business failures will ripple up and down supply chains and quickly into the banks.

The only solution will be money printing on a very large scale. 

The only politically viable solution for this winter will be subsidies on a monumental scale. Hundreds of billions of dollars for households and businesses (and utilities) across the Continent already have been announced, and desperate capitals won’t stop there. This will require substantial borrowing on top of the fisc-wrecking bond issuance during the pandemic.

Sternberg suggests that this will surely threaten financial stability:

All of this adds up to an extraordinary threat to financial stability. Banks and other financial firms inevitably will find themselves right at the edge of the water if or when a tsunami of energy-price bankruptcies washes ashore. Meanwhile, they’ll be called on to mediate extraordinary levels of new government borrowing—on top of the additional borrowing governments normally do during recessions to finance social-welfare assistance.

The outlook is not too good, and no one seems to know the impact of significantly higher energy prices:

No one has seriously bothered to “stress test” catastrophic increases in energy prices, even though the Bank of England claims to have modeled the economic impact of allowing global temperatures to rise by 3.3 degrees Celsius over the next few decades. By the way, the BOE also predicted the economic impact of the transition to a net-zero-CO2-emissions future would be modest.

You know the cause of this pending mayhem. It’s climate change policy, run by hysterical overgrown children and by people who think that they are more virtuous than thou.

But what transformed that one-off shift in the relative price for energy into a global disaster was two decades of green-energy policy beforehand. In Europe, that includes a fixation on renewables incapable of powering industrial economies absent battery technologies that don’t exist, a refusal to tap domestic fossil-fuel reserves such as shale gas, and a deep and irrational hostility to nuclear power in many parts of the Continent.