At the GARP Global Risk Forum,
NY Fed executive vice president
Kevin Stiroh warned that climate
s a major threat that risk managers
can't ignore.
"The U.S. economy has experienced
more than $500 billion in direct losses
ver the last five years due to climate
and weather-related events."
I guess Stiroh believes there were
no hurricanes, tornadoes and floods
before 1975 ?
The Fed should
be concerned
with the
cost of money,
not the imagined
future climate !
The world's largest
asset price bubble,
right now,
ought to get
one hundred times
more attention
than an imagined
future climate !
Physical risk is the
potential for losses
as the climate changes.
A few tenths of a degree
global warming will make
no difference.
Transition risk
is the potential
for losses resulting from
a government forced shift
toward a lower-carbon
emissions economy.
That is a real business risk.
"Risk management tools,
models and scenarios
are not designed
to capture the long-term
nature of climate-related
risks."
The Fed vice president
did not comment on
"green QE", or having
central banks steering
bond purchase programs
toward "green bonds",
as new European
Central Bank resident
Christine Lagarde
suggested recently.
The huge cost of a
"Green New Deal"
could only be funded
by having the Fed
monetize almost
every bond
sold by the
U.S. Treasury.
They call that
Modern Monetary
Theory, but the
old term of
"printing money",
was a better
description.