Fossil fuels are sub-prime assets, Bank of England governor warned

With this heading, Damian Carrington opens his article in, Thursday 19 January 2012 at 12.22 GMT with:

"The huge reserves of coal, oil and gas held by companies listed in the City of London are "sub-prime" assets posing a systemic risk to economic stability, a high-profile coalition of investors, politicians and scientists has warned Bank of England's governor, Sir Mervyn King.

In an open letter on Thursday, they tell King that the global drive to reduce carbon emissions could mean billions of pounds of fossil fuel reserves will rapidly lose value and cause a "major problem" for institutional investors and pension funds.

At the most recent UN climate change summit in December, 194 of the world's nations agreed to enact legally binding curbs on greenhouse gas emissions within three years to limit global warming to 2C. But meeting this limit would mean just 20% of existing fossil fuel reserves could be burned, according to recent research.

"These high-carbon assets pose significant strategic challenges for the future prosperity of Britain that just can't be ignored," said investment manager James Cameron, who is a member of the prime minister's business advisory group. "Investors continue to pour cash into unsustainable assets without understanding the risks associated with these investments, such as climate change, local pollution, fossil fuel price volatility, political risk and catastrophes such as Deepwater Horizon."

This highlights an important factor generally overlooked in anticipating future trends.

To read the whole article, see



Can a man borrow himself out of debt? If not, then how can a Government do so?

In his "Short History of Debt," Robert R. Doane says:

"The total debt of the world, public and private, was 700 billions of dollars at the end of 1929.
"The world debt increased 47 per cent during the 17th century, 266 per cent. during the 18th century, and 12,000 per cent. at the end of the 19th century."

What of the 20th century? Can we carry it?

The Rev. F. It. Drinkwater has pointed out that from 1920 to 1933 Britain paid £18,300,000,000 for interest and debt repayments, and yet at the end of 1933 the debt was £300,000,000 more than it was when she started to pay it off! He went on to say:

"It is all a huge swindle. There is nothing wrong with this poor old country except that it has foolishly let go its power over its own money, and is now completely in the hands of the moneylenders."

– from Money – The Question of the Age, by Stanley F Allen, F.C.A. (Aust.), Chartered Accountant
Self-published. 8th edition, September 1943. First published August 1938


If the National Debt is part of the money supply, and if the banks have created that supply, why can't the government pay it off by creating the money itself? – Why should taxpayers have to pay the banks' interest on it?
With virtually all our money created as interest-bearing debt, it is impossible for all the debts to be repaid from the existing stock of money in circulation.

New debts must be taken on totalling the capital plus interest on the debts being paid-off, if the money supply is to be maintained. (The interest is paid from other outstanding debts.)

This means that debts must grow continuously – as they have been doing, at a growing rate – relieved only by bankruptcies. It also means that the money supply must grow continuously. This means inflation or economic growth, or both, punctuated by periods of recession. We can see the results all around us – it is time to change the system!

Joseph Huber and James Robertson Creating New Money - A monetary reform for the new age, New Economics Foundation, June 2000 ISBN 1 899407 29 4