“Democrats want to kill your business, so please account for the hospitalization and burial costs.”
On Monday, The Wall Street Journal took aim at the Democrats Green agenda and how carbon-intensive investments would fare under a politicized Fed.
The editorial, aptly titled “Your New Climate 401k,” examined a report from the Senate Democrats’ Special Committee on the Climate Crisis, which called on the Fed and eight other regulatory agencies to penalize investments in fossil fuels and promote green energy.
“Mind you, their worry isn’t about how climate change per se would devalue investments, which financial institutions already account for. They want a warning about the costs of government climate policies,” policies, it notes, they themselves are promoting.
“Because Congress has not advanced any comprehensive climate policies in the last decade, the market has not priced in the possibility of significant federal action,” the Democrats note. Once new policies are introduced, Democrats warn, or are even proposed, the value of assets tied to the carbon-sensitive energy, electric power, and transportation sectors, among others will decline.
It’s comparable to an effort to discredit companies to drive down their stock in order to benefit from a short sale, only this time it’s the government trash-talking entire industries.
“The goal is to deny capital to companies that produce fossil fuels or hold other assets that politicians deem toxic,’” the Journal writes. “Democrats explicitly say that ‘utilities, automobiles, aviation, shipping, real estate, and heavy industry’ could also become stranded assets.” Stranded assets is simply a term for investors left holding the bag when certain investments are suddenly out of favor.
“Many hope to make money from this regulatory arbitrage, including these financial firms,” the paper concludes, noting that Michael Bloomberg wrote an op-ed on Monday urging the Biden Administration to adopt the reporting guidelines of the ‘Task Force on Climate-related Financial Disclosures,’ which he chairs.
“Mr. Bloomberg, BlackRock, and other masters of finance may do very well from climate-change mandates and regulation. Everyone else, watch out.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
