Green Math

by Daniel Foty

This is too good to let it pass without deserved mocking:

My Emissions Exchange has brokered what they are calling the first-ever sale of a personal carbon credit. The sellers, Tami and Randy Wilson of Harrisburg, Pa., expect a $17.20 PayPal payment soon. The broker will pocket a 20% commission, it's [sic - ed.] first profit [sic, see below - ed.]. "We don't make money until credits are created and sold," said Paul Herrgesell, project manager of My Emissions Exchange.

Of course, that 20% commission isn't "profit" - it's revenue.  But then again, for this lot neither science nor math nor economics nor business have ever been strong points.

So what did the Wilsons have to do to reap this marvelous harvest of $17.20?

Find out below the fold.

It was all rather simple:

All the Wilsons had to do, in order to earn that $17.20, was invest $58,000 in a new solar power system for their home. "

Yep, piece of cake.

Readers can feel free to do the math on what it will take to recoup that "investment."

Actually, if you follow the link, you'll see that you (yes, you, dear reader) are actually part of this.  Most of the cost ($36,000) is being covered by state and federal subsidies.

And how will the Wilsons use that hefty $17.20?

"We are going to put it toward the loan that we took out for the solar panels."

So they financed the $22,000 out-of-pocket cost?!  Well, let's see if the revenue (ahem) from their new roof manages to even make a dent in their interest payments, let alone the principal.

As Michael Boskin put it nicely in today's Wall Street Journal, "Rabid environmentalists have descended into a separate reality where only green counts."  Sounds about right....

Comments

[Vermont Woodchuck]

I wonder if a certain Tom Tusser might have sold them those "green" credits.

He had a knack for saying witty things like: Who quick be to borrow and slow be to pay, their credit is naught, go they ever so gay or a fool and his money are soon parted. Both seem apt for the eco-nuts.

BTW there is a new crisis upon us; Anthropogenic Tectonic Plate Shift (ATPS) and it causes all sorts of troubles in this world. I posted about it yesterday.

[James Rude]

At least, in what I am sure is an unintended expression of support by the Wilson's, is the belief that the sun is actually responsible for playing a role in warming the planet.

[Chris Campion]

What the "green" economy participants seem to forget is one of the first of many annoying acronyms to be learned in Econ 101 - TANSTAAFL. Everything has a cost. That transactions occur in carbon-trading schemes is not evidence of anything, other than that some people believe that this makes a difference, and that some people (in this instance, those people hosting the exchange) will always make money.

I'm waiting for the creation of a Greenie Mac that will underwrite the risks in this market so they can be most evenly distributed out to the taxpayers who probably want zero to do with these transactions, but their elected leadership thinks it's best for them, so it must be so.

[Vermont Woodchuck]

In the Progressive Socialist Paradise, nobody has to pull the wagon. Well, everyone gets to ride on the wagon only when the wagon is going down hill.

Better you break the axles and let everyone wear out their own shoes.

[Bill]

"My Emissions Exchange?" Sounds raunchy. Where fools with more money than sense do business.

[Daniel Foty]

Bill,

Note that "My Emissions Exchange" also spells out "My Emission Sex Change."

Probably all we need to know about them....

[Matthew Lyons]

AMAZING!! So an American family does the most American thing possible, a capitalistic venture, and because it is "green" this free market blog refuses to acknowledge it for what it is. Please explain? I mean if these were widgets produced in China you would be heaping praise on them but because it somehow violates your lack of value re: our environment it is evil.

They have figured out a way to make money and they certainly are not to blame because a "fool and his money are quickly parted".

[Daniel Foty]

Sigh. Around here, having to explain business/economic basics is like the agony of having to explain the punch line of an obvious joke to the extravagantly obtuse....

The entire reason that this story is hilarious is because it's the exact opposite of "free markets" and "capitalism." It's an ideologically-driven insistence on innumeracy and non-reality.

First, a $58,000 investment to get at $17.20 return? Swampland in Florida is a better deal than that. They'll have to sell A LOT of "carbon credits" to make that a worthwhile investment - and of course the problem is compounded by the "return" being based on what is in reality a phony, non-existent item.

Second, their "investment" (sic) was force-subsidized by unwilling participants (that would be taxpayers like the rest of us, who had our pockets picked to fund this nonsense). If this is a good investment, let THEM pay the whole cost. Forcing this redirection of scarce resources is a big waste.

The last thing is that despite all the subsidies, the participants didn't even put up the balance in cash, but financed it with debt. So they are going to have to fund the cash stream of paying that debt over time. One doubts that the revenue will even cover the financing costs, let alone create any profit at all - and of course those abilities are entirely dependent on vaporous, artificial constructs of no intrinsic value (the "value" (sic) being only temporarily edicted by government).

There are reasonable (real) investments that pay in the 5 - 6% range; if this "investment" (and that applies to both the participants' debt financing AND the subsidy funds that could have been left more profitably elsewhere) can't return that sort of performance, it's a loser.

To reprise the Michael Boskin quote that ended the original piece, "Rabid environmentalists have descended into a separate reality where only green counts." This "investment" only makes "sense" (sic) over in that separate non-reality reality....

[G. Cross]

Chuckie, don't try riding in a wagon with no shafts, no whippletree and no horse or ox. The rope attached to the axle does not always work well. Tried that back in '49 and ended up with a badly broken collar bone. The hill was a little faster than we all thought. Gosh, maybe the head was also injured, but the docs have missed it all these years.

[Vermont Woodchuck]

Yeah George, hill are faster. So are trees, diving boards and roofs higher from up there than the ground, but fools still climb up and others have to risk their necks to get them down.

Maybe it's time to let them figure out how to get down by themselves.
http://www.wptz.com/money/22176776/detail.html
Socialism has not worked anywhere it's been tried. All that is offered is the others did it wrong, we'll do it right. Then they look for OPM to get them out of the tree.

No mas, get down on your own! Find your own $150 gazillion clam shells.