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Are toxic assets a reprieve for the biosphere?

CreditContraction.jpg
Last October I first saw this splendid inverted pyramid chart (this version has been smartened up) and put it next to another diagramme about programmed trading. I nicknamed the combination image a “Toxic Sludge Machine”. “Where we’re at now” (I wrote then) “is that systems designed to “streamline” the market have been spewing out financial derivatives which, insofar as anyone can count them, now amount to eight hundred times global GDP”.
But the financial crisis is not just the result of technology running amok. For months now, revelations of the wholesale greed and blatant transgressions of Wall Street, and the City in London, have reminded us that “The Best Way to Rob a Bank Is to Own One.” Bill Black, who wrote a book by that title, says the numbers, as large as they are, vastly understate the problem of fraud. (There’s a really terrific interview with Black by Bill Moyers, here. )


Virulent critics like Black (and Illargi & Stoneleigh at Automatic Earth ) don’t actually accuse the politicians of criminality. They suggest, rather, that the Obamas and Geithners, Browns and Darlings, are scared that the whole global financial edifice would collapse if the truth (that the banks are all insolvent) were to be widely known. Therefore they (the pols) participate in a cover-up of the truth to keep the system afloat.
As I said yesterday (see below), most leading politicians are lawyers and economists for whom the known world more or less begins and ends with the financial-legal one. It literally would not occur to them that letting the whole system collapse might be a positive option.
But consider the following. The inverted pyramid above describes a speculative/virtual cloud of money hundreds of times bigger than the planet itself (the small sphere at the bottom). But not all of this cloud stays virtual. The planet is groaning under the weight of cities and highways – and landfills filled with discarded products – most of which were paid for with borrowed money. That’s to say, money from the toxic sludge machine.
Last year, a new product was launched somewhere in the world every three minutes. In China, new skyscrapers were built almost as fast. The vast majority of these materialised investments involved the in-efficient use of energy, water, and natural resources. Each artefact or building thereby contributed to the 70 million tonnes of C02 that is emitted into the earth’s atmosphere, every 24 hours, as a result of human activity.
Two years ago the Stern Review stated that the global cost of averting dangerous climate change (if we acted at once) would be $440 billion a year. In 2005, the US government alone spent $480 billion on wars and preparation for wars; the total military expenses of the 15 biggest military spending counties was $840 billion.
At the G20 summit last week, even bigger numbers were bandied around as politicians promised to do “whatever it takes” to save the financial system.
Help me out here. If the climate, upon which all life depends, has been damaged by human activity. If it is true, as climate scientists say, that global emissions need to fall by 70% or 85% by 2050. Then is it not a good thing, for the biosphere, if the financial machine which drives all this damaging activity is killed by its own toxic by-products?
[So endeth my 600th sermon/post here].

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One Comment

  1. Justin
    Posted April 6, 2009 at 13:25 | Permalink

    There seems to be three different stances in the context of the current economic situation: two stances that view the economic situation as a ‘crisis’, and have opposing ideas on how to correct it – the ‘left-wing’ pro-stimulus stance and the ‘right-wing’ stance which wishes the market to be left alone to correct itself.

    The third stance questions whether or not, like your post above, the economic situation is in reality a crisis. I get worried when I read the news and see the people in power claim that things will be fixed only ‘when the economy can grow again’, and so cause more harm to the biosphere. But this raises questions:

    – If the economy’s loss is the planet’s gain, then an economic collapse would have nasty effects on people dependent on income, how can the loss of livelihoods be reconciled with this? To me, the misery caused by job losses is to be avoided, but maybe for some any benefit to the biosphere is worth it? In this context, Is the approach of the German government, by refusing to intervene to the extent the US or Britain wants it to, but still supporting those people who find themselves jobless with its social welfare system, the best approach?

    – Those people who think that failing businesses should be exposed to market forces and allowed to go insolvent, and not to be propped up, have something in common with people who think that continued growth is a bad thing for the planet: in some way, a recognition of the reality of ebb and flow; what goes up must come down. Though it may be that people who believe in market forces still believe in economic growth, just in a different way of achieving it. But if there is common ground, is it worth exploiting it?

    – Is there such a thing as good growth? This may come across as a naive question: but there seems something ‘human’ about expansion, about progressing, and not staying static. Is growth something inherent within the human spirit? In some way this is maybe why the word ‘sustainability’ is a turn-off for many people (and how it sometimes means sustaining growth – talk about twisting words…). So it may be that I just haven’t come across literature about this yet, but it seems a discussion about kinds of growth are good, if any, and which are not.

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