This great explanation of the McCain version of GHG cap and trade (the permits would be traded) just came up on Grist.  It's a stark warning, thanks for that DR.

Let us imagine, how would a hedge fund set up a scam to incorporate the McCain plan?  Following the past models of hedge fund bubble inflation market manipulation.  Mainly the most recent bubble, that caused the global credit crisis and our present economic problems here in the US.

I think contractors would be set up to contract, sub-contract, sub-sub-contract...all the way down to the farmer burning jungle and planting trees, for instance as in other offset scams.  

Contracting companies set up in  in multiple levels by corporate cronies (as in iraq contracting and sub-contracting), then "profits" would be accrued at each stage.  These companies would be easily manipulated in terms of "earnings expectations", depending on contracts with each other.   One company would get a big boost for "offset management fees", to coin a likely scam phrase.

Inside information on these chains of companies could be used to manipulate trading.  A bubble, ultimately feeeding on consumer electricity prices, for instance, could reap huge windfall profits for the scammers.  As it did in the subprime mortgage scam.

Would any trees be planted or jungle burned?  As a worse than fake "offset"?  Probably a few demonstration projects for politicians to junket ..in some tropical paradise?  Yep.

The jet fuel they would use to junket producing 100 times the GHG that the jungle burning/tree planting does.

I would rather see any money charged for GHG emission spent paying people to produce power from their home solar panels.  At the rate of 10 cents per kwh.  No scams, no trades.  Just the cash for the GHG free grid power.

Take the cash from industry subsidies, write a check to a homeowner, to help pay for their solar panels.  Or farmers to pay for biogas power plants to back up the grid.  Or wind farms on their farm.   Or consumers to charge up their plugin hybrid, saving oil.

OPEC meet farmer Brown, he is going to be eating your lunch from now on, hehey.

Maybe oil prices would be negotiable then?  It might help.