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The Fake Factory That Pumped Out Real Money

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Re: The Fake Factory That Pumped Out Real Money

#41

Post by evan_ »

jacquesm wrote: post #36
pmorici wrote: post #19

Earlier quoted context omitted.

"The interesting bit here is that is actually quite hard to figure out why what they did was illegal" I wouldn't go that far. Each RIN needs to correspond to some physical bio-fuel. They were generating RINS but not manufacturing the corresponding fuel. Seems like straight forward fraud. Now had they been actually making the fuel but then dumping it in the trash and just selling the RIN I agree it would be harder to…

You can't exactly affix a number to a specific gallon of bio-fuel. That's where the whole scheme goes off the rails, to create unique ids that only exist in spreadsheets with no 1-1 link to some quantity of product. It's a liquid, not a box of stuff.

Exactly, it's fungible, so you don't need to track specific gallons. The point isn't to track the specific molecules that represent one specific gallon, the point is to just track that a gallon was made and sold.

Nothing was made, nothing was sold, but he fraudulently tracked a creation and sale by creating the RIN.

Re: The Fake Factory That Pumped Out Real Money

#42

Post by tamana »

Alex3917 wrote: post #8
Pxtl wrote: post #3

Earlier quoted context omitted.

Yes, that's why most economists I've read seem to agree that carbon tax is better than co2 credit cap-and-trade systems - simpler and harder to game, flawed only because it includes the word "tax" which is unpalatable to the public.

A tax is actually vastly more complicated and easier to game. Remember, the goal is to cap emissions, not to raise money. When you start with a cap and work backwards towards the clearing price, you are guaranteed to be meet that cap. But when you start by setting a price, there is zero guarantee that you're going to meet your emissions target. Also, the point of cap and trade is that it lets societies meet their emi…

Cap and trade doesn't work the way you say. It isn't an auction. See the article.

Re: The Fake Factory That Pumped Out Real Money

#43

Post by tamana »

rayiner wrote: post #23
fsargent wrote: post #18

Earlier quoted context omitted.

Cap and Trade and a Carbon Tax are equivalent in outcome. Cap and trade would impose fees on everyone regardless of how much it costs them to lower emissions also. The problem with Cap and Trade is that it targets the large scale emitters rather than the item desired to be limited. Imagine that you had five major producers putting out 30% of airborne carbon, and 50,000 minor producers putting out 70%. The cost of adm…

As California's attempts to tax mileage of hybrid and electric vehicles proves, if you create an additional source of revenue for the government, tax levels will bear no relation to the harm they're designed to compensate for. It becomes just another way for the government to raise taxes without admitting to doing so.

It's not a secret that people pay car fees.

Re: The Fake Factory That Pumped Out Real Money

#44

Post by arjie »

jacquesm wrote: post #7
dkokelley wrote: post #5

Earlier quoted context omitted.

> that is actually quite hard to figure out why what they did was illegal How so? They produced fraudulent RINs and sold them, knowing they were not attached to actual biofuels. It's only a couple of steps removed from printing fake currency. Did I miss something in how Green Diesel justified their actions?

Well, given that the buyers bought just the numbers and not did not go to the authorities immediately it would seem that everybody in the deal was happy except for the EPA. If you make it so that a number is assigned to something liquid that is as fungible as can be then you really can't claim surprise if someone then decides to short-circuit the whole thing and bypass the manufacturing step. Think of it as an optimi…

The numbers were valuable only so long as the fuel existed. As soon as it didn't, they're no longer valuable. Each references fuel. If the fuel it references doesn't exist, then the RIN is fraudulent.

It's not an optimization. It's just plain fraud.

And having people buy actual fuel doesn't solve anything. The fuel could be standard diesel bought at the pump that people are claiming is biodiesel.

Re: The Fake Factory That Pumped Out Real Money

#45

Post by tamana »

tomjen3 wrote: post #34
RockyMcNuts wrote: post #22

Earlier quoted context omitted.

sorry, what? A tax is simple, like a sales tax or VAT, and there is a strong incentive to collect it at a centralized source that is pretty easy to monitor. How is that complex vs. creating a new commodity in the form of carbon credits, and checking that the emission is backed up by credits? At best, cap-and-trade is equivalent to a carbon tax plus some corporate welfare to return the tax to the polluters. In the mos…

You still have to check if everybody has paid their emission tax. Also a tax has to be high enough to offset the average cost of lowering Co2 emissions (since you force everybody to lower their emissions), whereas in a cap-and-trade system the price will the the lowest cost to lower the emissions, since anybody who would pay a higher price will be better of buying the emission permissions and anybody who can save co2…

And every time I go shopping at the department store, I get 30% off, so the more I buy, the more money I get.

Re: The Fake Factory That Pumped Out Real Money

#46

Post by rayiner »

RockyMcNuts wrote: post #39
rayiner wrote: post #26

Earlier quoted context omitted.

> In the most likely scenario, it's an opportunity for rent-seeking politicians to dole out the credits That's not how the credits work.

How the eff does it work? Who gets the credits to start with? Why do you think the companies prefer cap-and-trade? of course it's more complicated to end up monitoring both the pollution and who owns what credits. the whole point of cap-and-trade is to avoid the word 'tax', and to create a vast rent-seeking system and potential for gaming the system, and make it politically palatable by paying off the people who migh…

The ethanol credits are linked to ethanol production.

Re: The Fake Factory That Pumped Out Real Money

#47

Post by Shivetya »

fsargent wrote: post #18
Alex3917 wrote: post #8

Earlier quoted context omitted.

A tax is actually vastly more complicated and easier to game. Remember, the goal is to cap emissions, not to raise money. When you start with a cap and work backwards towards the clearing price, you are guaranteed to be meet that cap. But when you start by setting a price, there is zero guarantee that you're going to meet your emissions target. Also, the point of cap and trade is that it lets societies meet their emi…

Cap and Trade and a Carbon Tax are equivalent in outcome. Cap and trade would impose fees on everyone regardless of how much it costs them to lower emissions also. The problem with Cap and Trade is that it targets the large scale emitters rather than the item desired to be limited. Imagine that you had five major producers putting out 30% of airborne carbon, and 50,000 minor producers putting out 70%. The cost of adm…

cap and trade is a means by which politicians can pick favorites and get around rules that might prevent subsidizing particular businesses.

tax everyone to change behavior is the best route plus it does tend to stop the mini games that go on with trying to transfer funds to contributors and the like

Re: The Fake Factory That Pumped Out Real Money

#48

Post by tamana »

arjie wrote: post #44
jacquesm wrote: post #7

Earlier quoted context omitted.

Well, given that the buyers bought just the numbers and not did not go to the authorities immediately it would seem that everybody in the deal was happy except for the EPA. If you make it so that a number is assigned to something liquid that is as fungible as can be then you really can't claim surprise if someone then decides to short-circuit the whole thing and bypass the manufacturing step. Think of it as an optimi…

The numbers were valuable only so long as the fuel existed. As soon as it didn't, they're no longer valuable. Each references fuel. If the fuel it references doesn't exist, then the RIN is fraudulent. It's not an optimization. It's just plain fraud. And having people buy actual fuel doesn't solve anything. The fuel could be standard diesel bought at the pump that people are claiming is biodiesel.

That's Jacquesm's point. Fraud is optimizing for metrics without regard for what the metrics correlate to.

Re: The Fake Factory That Pumped Out Real Money

#49

Post by Alex3917 »

tamana wrote: post #42
Alex3917 wrote: post #8

Earlier quoted context omitted.

A tax is actually vastly more complicated and easier to game. Remember, the goal is to cap emissions, not to raise money. When you start with a cap and work backwards towards the clearing price, you are guaranteed to be meet that cap. But when you start by setting a price, there is zero guarantee that you're going to meet your emissions target. Also, the point of cap and trade is that it lets societies meet their emi…

Cap and trade doesn't work the way you say. It isn't an auction. See the article.

> Cap and trade doesn't work the way you say. It isn't an auction. See the article.

The initial credits can be allocated either through an auction, by giving them away to existing polluters, or through some combination. But after the initial allocation, credits are traded on the market. That's the 'trade' part in cap and trade.

Re: The Fake Factory That Pumped Out Real Money

#50

Post by Alex3917 »

fsargent wrote: post #18
Alex3917 wrote: post #8

Earlier quoted context omitted.

A tax is actually vastly more complicated and easier to game. Remember, the goal is to cap emissions, not to raise money. When you start with a cap and work backwards towards the clearing price, you are guaranteed to be meet that cap. But when you start by setting a price, there is zero guarantee that you're going to meet your emissions target. Also, the point of cap and trade is that it lets societies meet their emi…

Cap and Trade and a Carbon Tax are equivalent in outcome. Cap and trade would impose fees on everyone regardless of how much it costs them to lower emissions also. The problem with Cap and Trade is that it targets the large scale emitters rather than the item desired to be limited. Imagine that you had five major producers putting out 30% of airborne carbon, and 50,000 minor producers putting out 70%. The cost of adm…

> An optimal tax system taxes things and behaviors we don't want

Except for that the goal isn't to punish polluters, it's to get carbon to a level that won't result in the end of human civilization. By moralizing the issue you're just making it more likely that we won't get there.

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