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Because what you're offering to trade is not units of energy, but units of energy production capacity. It's like saying that you can go buy bread with units in wheat fields: not gonna happen.

It's been around - imperfectly - for years in the form of futures contracts.

In 1989 there was an interesting experiment - DeliDollars - where a Deli owner raised $5,000 by selling units of future production forward to his customers.

I'm proposing a straightforward, albeit un-geared, and un-dated, alternative to futures contracts, and the reason it has not been done to date is simply that the legal forms did not exist to allow it.

Selling production forward in this way will happen IMHO, and it will be big. And it will require exactly similar risk management to that which you already practise.

You keep on saying "equitably" but you never once say what is equitable.

The existing model is equitable: <snip>

Equitable means "fair": but fairness is in the eye of the beholder.

IMHO conventional Equity is not "equitable" in terms of sharing risk and reward, and neither is a Debt contract. If you combine the two by using debt secured over assets owned by a company then you get two conflicting claims over the same asset

Sure it's possible to tie these financial claims together using "binding" contracts, the same way that you can tie together two N/S magnets. But they will always tend to fly apart.

I advocate proportional sharing of risk and reward as between financier and user of finance.

I do so firstly because I believe that it is "fair", and secondly because I believe it actually "works" which is why people are increasingly doing it.

Leasing, for me, simply means that you don't own the asset, and you pay some form of rental to use it.

"Use" is fine. I advocate a form of "co-ownership" - I've heard it called an "evergreen lease" - where the rights of use are set out in an LLP or LLC agreement.

but you sprinkle your comments with casual insults that are all the more annoying that you don't even bother to define what you claim I know nothing about.

If you consider any of my comments as insults then that is regrettable: and nowhere on this site will you find anything written by me that questions your knowledge of your subject.

I only request the same consideration from you, because if there is one thing I do understand it is how market mechanisms, and the legal protocols of which they and the contracts traded on them, actually consist and work.

it is very much possible to have banking systems that do not drive all economic activity, because they are regulated differently

I give you that it is possible to have non-toxic forms of banking. But only in the absence of the exponential growth of money supply which is a direct consequence of Money as Debt.

There is no way around this inconvenient truth, I'm afraid, however well Banks analyse risk, and no matter how well Banks are regulated.

Fortunately, the disintermediating effect of the Internet is about to render our disagreement on this subject irrelevant.

Meh. It's bank lending that has allowed nobody hippies, local farmers or cooperatives to build their windfarms using "toxic" credit instruments. Color me skeptical of your grand claims.

You mistake tools for how they are used. The utopian tools you have in mind will get misused just as easily as current banking tools are.

Hmmm...do I detect a "casual insult" here? Surely not.

The "utopian" tools I observe emerging - the entire Canadian capital market comes to mind - are doing so simply because they work. Pension funds actually like getting their hands on Company revenues before the management does. The fact that this "pre-distributive" arrangement shares risk and reward more "equitably" IMHO is an added bonus.

Banks as credit intermediaries are no longer necessary: it's that simple.

Anyway, I've enjoyed the cut and thrust: I can't speak for you. If we agreed all the time we wouldn't get anywhere, and there is a lot (indeed most) of what you say that I agree with wholeheartedly.

ET'ers will make up their own minds as to the rights and wrongs of the discussion.

Keep on energising, and may the best paradigm win!

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Jan 19th, 2008 at 11:55:02 AM EST
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