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].