Chemtrails. A phenomenon
we all see, fret about, theorize and learn about. I have written or posted
about chemtrails often enough in the past. This author, Peter Kirby, has opened
up a whole new door of possibilities as to at least one purpose served by
chemtrails that I would never have considered, simply because, naïve me, I had
not considered the financial gain to be created as a result of the weather
changes that never fail to follow a heavy layer of aerosol chemicals in the
skies.
We know Wall Street
brokers and their ilk will gamble on anything that moves if there is a buck to
be made. Heck, a penny to be made. Who would have thought that gambling on the
weather would be a billion dollar business? Read on….
In his paper ‘Why in the World Are They Spraying?‘,
journalist Michael Murphy floats the idea that chemtrails are sprayed in order
to manipulate the weather derivatives market.
He posted the story right
here on TheIntelHub.com on Oct. 11, 2011. It ran alongside my article ‘Chemtrails Exposed‘.
He may not be too far off
the mark as my humble investigation leads me to many questionable situations,
strange bedfellows and none other than those legends of corruption and waste,
Enron. The thoroughly disgraced and vilified corporation was one of the
founders of the market.
Would you put it past
Enron?
OVERVIEW:
Weather derivatives are
financial instruments (options, futures and options on futures) everyone can
buy that either pay off or don’t pay off according to recorded atmospheric
conditions such as temperature and rainfall. These instruments are mostly
traded on the Chicago Mercantile Exchange (CME). They are also traded on
smaller Over the Counter (OTC) markets.
Atmospheric conditions
are recorded and published by authorized organizations.
Although they are
available for frost, snowfall, rain, wind speed, and many others, the most
common type of weather derivative by far is based on temperature.
According to industry experts, temperature based weather derivatives account
for 75-99% of all weather derivatives sold.
This is how temperature
based weather derivatives work. Indices take a location’s daily average
temperature, and then a number is determined by how much that day’s average
temperature deviates from 65 degrees Fahrenheit (or 18 degrees Celsius outside
the U.S.).
The number deduced
determines the derivative’s value and is usually aggregated over a period of
weeks, months or seasons. Other indices simply aggregate average daily
temperatures. In short, the day’s average temperature determines the
derivative’s value.
You can bet that
temperatures will be above or below the long term daily average for a
particular date or group of dates.
The first weather
derivative transactions were conducted over the counter in 1997 between Willis
Group Holdings, Koch Industries, Pxre Reinsurance Company and Enron.
These transactions followed the deregulation of the energy market in the U.S.
The weather derivatives
market was greatly expanded in 1999 when weather derivatives began trading on
the Chicago Mercantile Exchange.
The Weather Risk
Management Association (WRMA) was founded in 1999 as well and is the leading
industry association.
The founding members
were: Aquila Power Company, Castlebridge Partners, Enron Capital and Trade
Associates, Koch Industries, Southern Company Energy Marketing, and Swiss RE
New Markets.
This year (2011), the
WRMA released the results of a survey which pegs the current global weather
derivatives market value at about $12 billion.
USA reported in its
article ‘Weather Derivatives Becoming Hot Commodities’ that
the largest broker of weather derivatives in the world is TFS Energy.
A man named Kendall
Johnson, who is described as one of the industry’s most powerful professionals,
states, “Businesses in the U.S., Japan, London and Amsterdam are the most
frequent users of weather risk management, though companies in emerging markets
like India are beginning to trade weather derivatives.”
Other big corporate
players include: British Gas, Hess Energy, ABN Amro, Merrill Lynch, AXA Re,
Swiss Re, Koch Energy, RenRe Energy, Nephila Capital, Munich Re, Speedwell
Weather Derivatives, Vyapar Capital Market Partners, Galileo Weather Risk
Management, PCE Investors / Cumulus, EDF Trading Limited, Risk Solutions International,
E.ON Energy Trading, Mitsui Sumitomo Insurance Company and Endurance
Reinsurance Corporation of America.
As you can see,
re-insurers are some of the biggest market players. Geoffrey Considine,
Ph.D. (a high profile weather derivatives industry insider) writes in his paper
‘Introduction to Weather Derivatives’,
“There are a number of
drivers behind the growth of the weather derivative market. Primary among
these is the convergence of capital markets with insurance markets.”
Swiss Re is a name that
comes up repeatedly and just happens to be the insurer of the World Trade
towers at the time of the 9/11 attacks. But, I’m sure that’s just a
coincidence. Nothing to see here… move along.
ENRON:
By all accounts, Enron conceived
and initiated the weather derivatives market.
According to ‘Weather
Derivatives’ by authors from the London School of Economics, the Swiss Finance
Institute and the University of Geneva, “…electronic trading platforms have
always played an important role in the development of the market, especially
Enron’s platform in the early days.”
Enron initiated the
weather derivatives market in Europe as well. According to ‘Weather, Finance and Meteorology ~
forecasting and derivatives’ by Samuel Randalls, “In
the UK, the first weather derivative deal was sold by Enron to Scottish
Hydropower who, at that time, 1998, were taking part in a government pilot
scheme for the privatization and deregulation of energy markets.”
In regards to Enron’s
weather derivatives division known as ‘Enron Weather’, one of the co-authors of
the book ‘Enron: The Smartest Guys in the Room’,
Bethany McLean wrote me that, “A guy named John Sherriff was pretty
instrumental in starting it, but the woman who ran the business, whose name was
Lynda Clemmons, ended up leaving for a reinsurer ~ can’t remember the name of
it ~ long before Enron’s bankruptcy.”
Lynda Clemmons now works
as an advisor at Vyapar Capital Market Partners; a big weather derivatives
player. John Sherriff is now the owner of Lake Tahoe Financial.
MARKET
PARTICIPANTS:
The energy sector is the
biggest buyer of weather derivatives because energy companies’ bottom lines and
cash flows are largely affected by temperature fluctuations. This is why
temperature based weather derivatives are the most prevalent.
Energy companies produce more power and thus increase cash flows when the weather gets either hot or cold because people use more air conditioning when it is hot and more heat when it is cold.
The weather derivatives
market was created with the energy sector in mind. As we have seen, the
market was founded by big energy players, most notably Enron. According
to a Chicago Mercantile Exchange brochure, the 65 degree baseline selected for
determining daily index values was chosen by the energy industry.
The terms used to
describe index values are Heating Degree Days (HDD) and Cooling Degree Days
(CDD). Heating Degree Days refer to the number of degrees Fahrenheit
above 65 the average temperature of a Winter’s day is. Cooling Degree
Days refer to the number of degrees Fahrenheit below 65 degrees a Summer’s day is.
It is this way because 65
degrees is about the temperature where if it is warmer than that, people use
more air conditioning and if it is cooler than that, people tend to use more
heating.
Industry publications
claim substantial non-financial or non-energy sector participation in the
weather derivatives market. Of businesses outside the finance or energy
sectors, my investigation revealed very little participation.
It is unrealistic that,
especially in the tough economy we’ve been having lately, an organizer of an
outdoor event, let’s say, would first of all even be aware of weather
derivatives, much less use the time, energy, expertise and money to buy such
things.
Businesses outside of
finance and energy usually use more traditional forms of insurance or hedge
with commodities contracts. Weather derivatives are almost entirely an
energy and finance sector market. There is hardly any retail investor
activity here.
Industry publications
also often claim that weather derivatives are used by energy companies only as
hedges against unforeseen demand lapses. If a particular winter is too
warm, for example, an energy company would not make as much money selling fuel
as they would in an abnormally cold winter.
But, the reasoning goes,
if they have purchased a hedge in the form of weather derivatives, they can
make up those losses.
I assert that weather
derivatives are traded like any other Wall Street market. To make a buck,
they are traded any way possible. Enron, the founder of the market is
famous for their trading desk which specialized in arbitrage.
The Bloomberg article
‘Hedge Funds Pluck Money From Air in $19 Billion Weather Gamble’ had it
right. Nowhere in this article will you see any mention of non-financial
or energy sector participation.
In fact, industry
professionals are quoted as saying they are, “…using weather as market
intelligence.” And that their business is, “…like playing poker.”
Because both weather
derivatives and energy futures rise and fall depending upon temperature, the
two markets are related. It is reasonable to assume that weather
derivatives are traded in conjunction with energy futures.
CONCLUSIONS:
Are weather derivatives
the reason chemtrails are sprayed?
I don’t know. It’s
very plausible.
I believe I have provided
here a great circumstantial case.
The errant, singular
chemtrail doesn’t support the ‘weather derivative market as a cause’ thesis
because a lone chemtrail would not have a significant impact on temperature or
any other atmospheric condition.
It might be done as a
psychological operation. But, when downtown Phoenix is gridded with
chemtrails on an otherwise clear day, producing a haze which is totally foreign
to that climate, temperature (which drives weather derivative and energy
markets) is probably affected significantly.
Does anybody out there
know of a study showing how much influence stratospheric aerosols have on
temperature? After a Google search, I couldn’t find one. Although,
I did see some stuff that seemed to suggest that aerosols can move temperature
2 degrees F or more.
Weather derivatives by
themselves are big money gambles. They may be valuable enough to make it
worth putting planes up in the sky spraying stuff. If you divide last
year’s total market value ($12 billion) by the number of traded contracts
(466,000), you get the average contract value which is $25,321.
A matter of a few degrees
on a given day or group of days could mean hundreds of thousands of
dollars. The current weather derivatives market may not be big enough to
support all chemtrail activity, but if you factor in the related multi-trillion
dollar energy futures markets and energy company revenues, I don’t have much
doubt that there is enough to support it.
The fact that chemtrails
are sprayed over mostly urban areas makes sense if one of the desired effects
is manipulated power usage. More people and therefore more power
consumers affected per square mile means a more efficient operation.
The weather derivatives
market and probably other opportunities were made possible by deregulation of
the energy market. Enron founded the weather derivatives market.
Was the Department of
Energy in bed with Enron?
I wouldn’t doubt it.
The fact that Enron
founded the market is very dubious. This is a company whose accounting
firm, Arthur Andersen, shredded more than a ton of their documents in one day
as Enron’s chairman Ken Lay told everybody everything was fine.
When Enron CEO Lou Pai’s
wife found out about his stripper girlfriend complete with his love child, she
divorced him. Enron’s bankruptcy resulted in at least 33 criminal charges
against employees and executives. People suffered under high power costs
inflated by Enron.
When Enron and their
cronies intentionally disrupted power service as they were known to do, people
were injured and died.
Who knows how many bodies
they left?
These guys were not
playing patty cakes.
These guys ARE the Nazi
party.
Have you ever heard of
something called ‘Operation Paperclip’?
If you like being
ripped-off, beaten and murdered, you’ll love these guys. Personally, I’m
not into that. I wouldn’t put anything past Enron.
NOTES:
’Weather Products;
Managing global weather exposures. Growing opportunities. Reducing Risks’
Chicago Mercantile Exchange brochure 2009
‘Hedge Funds Pluck Money From Air in $19 Billion Weather Gamble’ by Peter Robison, Bloomberg Aug 1, 2007
‘Weather Derivatives Instruments and Pricing Issues’ by Financial Engineering Associates 2000
‘Weather Derivatives’ by Pauline Barrieu & Olivier Scaillet, London School of Economics, Swiss Finance Institute and University of Geneva 2008
‘Want a Weather Forecast? Ask Wall Street’ by Alice Gomstyn, Rich Blake and Dalia Fahmy ABC News 2010
’Introduction to Weather Derivatives’ by Geoffrey Considine, Ph.D.‘Weather, Finance and Meteorology- forecasting and derivatives’ by Samuel Randalls School of Geography, Earth and Environmental Sciences, University of Birmingham
WEBSITES:
The weather is pretty strange these days.
ReplyDelete- Aangirfan
The overall effect of the spraying is to cool the planet. Huge profits are being made by energy suppliers with the greater demand for energy to heat homes and buildings. In the UK they only began to spray after the energy supply was privatized. The global warming scam then becomes the smokescreen for what they are now calling "geoengineering" to slow global warming. It is just normal criminal business practice. Another effect is to produce food shortages that may also be used for profit. We are just scratching the surface.
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