Tag Archives: Financial Crisis

Go green for fiscal prudence!

Ramon Lopez, The Great Financial Crisis, Commodity Prices and Environmental Limits (WP 09-02, Revised May 31, 2009)

Professor Ramon Lopez of the Department of Agricultural and Resource Economics, University of Maryland, has written an interesting working paper that draws the links between changes in the global economy, commodity prices, and the current global financial crisis. It is an argument that calls into question the viability and wisdom of efforts to resume ‘business as usual’, suggests future global economic growth will be slow at best, and (implicitly) suggests that policies of large-scale public borrowing based on the assumption that future growth will help pay it off may be highly risky.
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Filed under Barry, capitalism, economic analysis, social justice, sustainability

Accelerating over the edge of the cliff

Climate & Capitalism have posted a  Sunday Herald story on a report due out tomorrow. The report is by the environmental advisors to the U.K governments and appears to pull no punches – a taste:

The economic system is broken, and attempts by governments to fix it by kick-starting growth and consumerism are “delusional” and “pathological”

UPDATE: The full report, a summary, and background papers are available here. The full report is quite sizeable, so you might want to start with the summary – it is good stuff. A few  quotes as a summary of  the summary follow:

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No wonder we are in trouble, or “What is Wealth?”

When the man in charge of the soundness of our money supply (Governor of the Reserve Bank, Dr Allan Bollard – PhD in Economics no less) goes to the “Jobs Summit” and comes out saying such headline grabbing rubbish (namely that the current global recession is the “biggest destruction of global wealth ever”), it is no wonder we are in trouble. Yes, he may well be correct that the nominal dollar value of the assets “destroyed” is the greatest ever.  It may even be that the nominal dollar value of assets “destroyed” is the greatest ever in relation to the size of global GDP. But really, what does that mean?

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But wait, there’s more…

As signalled a while back, in response to the ongoing global financial crisis the New Zealand Reserve Bank is joining other Central Banks in exposing taxpayers to billions in contingent liabilities, outside of normal Parliamentary budget processes.  And those processes might have raised some interesting questions.

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Shock absorbers: protecting our movements and communities in times of turmoil and crisis.

While the world’s bankers, Central Bankers, and Governments wrestle with a financial crisis so large it has threatened – if it is not contained – to become a systemic crisis of capitalism, the rest of us watch and wait, and wonder what the effects will be.

We recognise the need for action, but we note the irony of vast public funds being made available to rescue the same financial capitalists who habitually advocate the for the ‘reform’ of policy to take away safety nets for the poor and to expose ordinary people to the disciplines of “the market”.

Whether or not the latest rescue package succeeds, there will be economic aftershocks, and we should be wary. In her book The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein documents how moments of crisis have been exploited since the 1970s to push unpopular – and otherwise politically impossible – ‘free market’ policies (more accurately, policies favouring the interests of corporate – especially U.S. – capitalism) onto shocked and disoriented publics.

The rest of the world should not expect an Obama Presidency (if it comes to pass) to make much difference to this – it has been a behaviour persistent through changing U.S. Administrations over the decades.

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Filed under Aotearoa New Zealand, Barry, capitalism, green politics