Richard Murphy, the would be architect of the Green New Deal, tells us that the whole thing could and should be financed by Green Bonds which will pay 3% interest. Because that’s just not available anywhere else.[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]But suppose the Green New Deal was funded by Green ISAs, backed by a Green Investment Bank and paying 3% a year – which is almost impossible to get anywhere, but which has almost no net cost to the government as a means of funding right now.[/perfectpullquote]
Almost impossible to get anywhere?
Hmm.[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Moody’s Seasoned Aaa Corporate Bond Yield is at 3.45%[/perfectpullquote]
So we can get better than that in either equities or bonds. So much for it being a great deal for the investor.
But wait, you say. Green bonds will be guaranteed by the government! There’s no possibility of capital loss![perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]UK Govt Bonds 30 Year Note Generic Bid Yield
But if government is guaranteeing then that’s government doing the borrowing. And why would government – for which read you and me – want to borrow at 3% when we can borrow at 1.45%?
That is, Richard Murphy’s scheme for financing the Green New Deal either ends up with investors being offered a really shitty deal or, at the same time, government paying twice what it needs to to borrow money. Which is really pretty good, the Senior Lecturer has devised a deal which is worse for everyone.
Well done there, well done.