Archive for December, 2012

Audit Says Kabul Bank Began as ‘Ponzi Scheme’

Friday, December 28th, 2012

– This is how well the ‘nation building’ in Afghanistan is going.   Oh, American tax money well spent!   

– dennis

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KABUL, Afghanistan — Kabul Bank became Afghanistan’s largest financial institution by offering the promise of modern banking to people who had never had a saving or checking account. What it really dealt in was modern theft: “From its very beginning,” according to a confidential forensic audit of Kabul Bank, “the bank was a well-concealed Ponzi scheme.”

Afghan and American officials had for years promoted Kabul Bank as a prime example of how Western-style banking was transforming a war-ravaged economy. But the audit, prepared this year for Afghanistan’s central bank by the Kroll investigative firm, gives new details of how the bank instead was institutionalizing fraud that reached into the hundreds of millions of dollars and obliterated Afghans’ trust after regulators finally seizedthe bank in August 2010 and the theft was revealed.

Going further than previous reports, the audit asserts that Kabul Bank had little reason to exist other than to allow anarrow clique tied to President Hamid Karzai’s government to siphon riches from depositors, who were the bank’s only substantial source of revenue.

At one point, Kroll’s investigators found 114 rubber stamps for fake companies used to give forged documents a more legitimate look. And the auditing firms used by the bank never took issue with loan books that were “almost entirely fraudulent,” Kroll found, recommending that the Afghan government explore suing the last such auditor, A.F. Ferguson & Co., a private Pakistani firm with a franchise under PricewaterhouseCoopers.

When Afghan regulators, aided by American officials, first discovered the extent of the fraud at the bank in the summer of 2010, “we never imagined that the criminality was as deep as it was, that it was so widespread and that it included high-ranking officials and their relatives,” said Abdul Qadeer Fitrat, at the time the governor of the Bank of Afghanistan, the country’s central bank.

“At the beginning, I received information from the U.S. Embassy that maybe $150 million or $200 million is gone in bad loans to powerful people,” he said. The number soon climbed close to $900 million, though “we did not know who took the loans and that they were all tied to a few individuals.”

What Kroll’s audit found is that on Aug. 31, 2010, the day the Bank of Afghanistan seized Kabul Bank, more than 92 percent of the lender’s loan portfolio — $861 million, or roughly 5 percent of Afghanistan’s annual economic output at the time — had gone to 19 related people and companies, according to the audit.

– More…

 

Profiting Without Producing

Friday, December 28th, 2012

– This is a complex read but well worth it.  The author is saying that those who make profit by producing something worthwhile are being increasingly out numbered by those who make profit by betting on whether or not others are going to make profits; i.e., investing.  And one is not limited to betting on whether profits will be made by the producers; one can also bet on the other bet makers.

– And so the entire thing becomes circular, self referential and turns into a bubble.

“In 2002, writes François Morin (2006), the value of speculative transactions worldwide reached a new plateau of US$ 1,122.7 trillion. That’s right: one quadrillion, one hundred and twenty-two trillion and 700 million dollars, including 699 trillion in transactions with derivatives, 384.4 trillion exchange transactions, and 39.3 trillion in financial investments. That total is 34.76 times the US$ 32.3 trillion in goods and service transactions, i.e. the real economy.”

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17 April, 2009
Transnational Institute 

While millions face poverty and hunger, others make fortunes without producing. A sustainable alternative to financial globalisation must be based on international cooperation and solidarity – with new indicators in place to measure well-being. By Marcos Arruda.

The world today is wealthier than ever – and more unequal. Something is rotten in the kingdom of Capital. Remember first that, while investors in their millions suffer the terrors of a financial crisis, the impoverished peoples of the Earth – in their billions – endure a daily routine of chronic crisis for lack of access to goods and the means of production or to the essentials of a worthwhile human life, i.e. food, energy, pleasurable work, time to develop their potential, a decent standard of living, and social and ecological relations that are friendly, secure, gratifying and lasting. Remember also a recent biological discovery: “We human beings are love-dependent animals. This is apparent in that we become ill when deprived of love at whatever age” (H. Maturana, 1996).

In the domains of capital, the reigning mode of economic relationship among people, businesses, territories, countries and hemispheres is coloured by the alienating myths of scarcity, the predatory, aggressive and competitive nature of the human animal, competitive natural selection (Sandín, 2006:65-95) and the inevitability of Homo’s ego domination over and above eco-sociability.

Down that road, humankind is headed for self-extinction, unless it decides to make a quantum jump of consciousness from Homo Sapiens Aggressans to Homo Sapiens Amans capable of re-conceiving and re-creating our relations with one another, with social collectives and with nature, and cleansing our planet of all unnecessary violence, hunger, wars, exploitation, eco-destruction, suffering and unhappiness!

Profound Crisis in Capitalist Finance: Chronicle of a Death Foretold

Historians of any of the crises of capital can come to only one conclusion: they are writing chronicles of a death foretold. Take John Kenneth Galbraith, for example, on the great crash of 1929 (Galbraith, 1962). Galbraith traces the history of the United States’ economy and finances to show that it was weaknesses in the economy and in its corporate structure and dynamics that gave rise to the crisis – the collapse in stock and share values was just one manifestation.

He points out that the collapse of the investment trusts and the systems led by holdings, moved by an insatiable appetite for easy profit, “effectively destroyed both the ability to borrow and the willingness to lend for investment” (Galbraith, 1962:188). All this took place without any of the necessary regulations by the authorities and without the private sponsors of the speculative merry-go-round showing any sense of responsibility. And the same thing happened again 80 years later!

At the end of his study, Galbraith writes that in 1929 the economy was fundamentally insecure. He points to five weaknesses that, leading always to greater indebtedness, signalled disaster. They can be held up for comparison with the weaknesses running through the world’s financial architecture today, further aggravated by the tendency for globalisation to transmit the magnitude of any economic or financial crisis at the centre to the systemic and planetary levels.

1. Poor distribution of income: in 1929, 5% of the population controlled nearly one third of all personal income. Income concentration is even higher today in the USA where the wealthiest 1% control 20% of the country’s revenues, and the mean wage rose a meagre 0.1% from 2000 to 2007. It was low pay that led families to take out loans to pay school, housing and health costs (private health insurance rates rose 68% in the same period). Meanwhile, money that could be expanding supply of goods and service migrated to financial speculation, increasing imports and causing deficits.

2. Poor corporate structure: United States enterprise in the 20s, says Galbraith, “had opened its hospitable arms to an exceptional number of promoters, grafters, swindlers, impostors, and frauds. […] a kind of flood tide of corporate larceny”. He points to the vast new structure of investment trusts and holdings as the main corporate weakness, because dividends from companies operating in the real economy (infrastructure, transport and recreation) went to pay off interest on the bonds of upstream holding companies.

In econo-speak, this meant a major risk of devastation by reverse leverage: any interruption in dividends left the bonds insolvent, bankrupting and bringing down the whole structure; the temptation to speculate more and more – instead of producing – was joined by deflationary pressures that limited earnings and brought corporate pyramids tumbling down! Income was earmarked to pay debts, it was impossible to borrow so as to refinance debts or make new investments… “hard to imagine a corporate system better designed to continue and accentuate a deflationary spiral” (Galbraith, 1962: 180-181).

The behaviour of today’s globalised corporations is just as badly distorted – or worse. Proof of this are the financially and ethically scandalous bankruptcies of mega-corporations like Enron, Worldcom/MCI and other Tyrannosauruses; not to mention the corporate fiascos of LTCM, Bear Stearns Bank, finance giants Lehman Brothers and Merrill Lynch, and the bailouts with public money of mega-corporations like Fannie Mae, Freddie Mac, AIG, GM, and on and on.

3. Poor bank structure: the failings here were laid bare by domino-effect bankruptcies brought on by fear and lack of confidence. In the first half of 1929 alone, 346 banks failed. In a context of depression, “as income, employment and values fell, bank failures could quickly become epidemic”, and the damping effect on spending and investment reinforced the depression still further.

Today, the lack of rigorous regulation and the excessive freedom afforded to investment banks, a range of financial institutions and stock markets themselves to issue various types of money and to speculate, added to the financial channels and destinations that facilitate capital flight, tax evasion and money laundering, combines high financial yields with very high risks for the banking system as a whole (Gurtner & Christensen, 2008). Laws are not strictly enforced, while the means to dodge them proliferate.

4. Poor state of external accounts: for over a decade following World War I the USA enjoyed a trade surplus, to the point of using that favourable balance to pay off its debts to Europe. In turn, countries with trade deficits with the United States paid the US in gold and borrowed from United States private banks to bridge the gap.

Loans to politically and economically unstable countries, President Hoover’s high protectionist tariffs, debtor countries’ payment difficulties, a number of insolvent loans and declining US exports all contributed to widespread vulnerability, especially among farmers. In the present day, the United States corrected trade deficit was around US$ 800 billion in 2007. With China alone, the USA has liabilities of over US$ 1 trillion in National Treasury bonds. Its total external debt leaped from less than US$ 2 trillion in 1980 to more than US$ 5 trillion in 2007, half of it held by the strongest Asian economies (Bulard, 2008:12). Were it not the owner of the international exchange currency, the USA would be even more vulnerable than it already is.

5. Poor economic intelligence: after the crash of September-October 1929, most advice from economists “was almost unanimously perverse”. Attempts to expand income available for consumption and to maintain capital investment by tax reductions had practically no effect whatever, except to favour the highest-income groups: investment, wages and employment were maintained only as long as that meant no financial disadvantage to companies; from that point on, policies almost entirely pushed the economy towards the brink.

Balanced-budget fundamentalism reigned: public spending could not be increased to boost purchasing power and alleviate impoverishment; nor could taxes be cut further. After 1930, this rule or formula had to yield to pressure from mass unemployment. In addition, United States gold stocks grew enormously up to 1932.

Two risks haunted the economy: abandoning the gold standard and feeding inflation. Instead, however, the country entered the most violent deflation of its history. Advisors saw an embedded risk of uncontrolled price increases. That fear reinforced calls for a balanced budget. It limited interest rate cuts, and the abundant credit and easy borrowing conditions. The refusal to use fiscal and monetary policies in those circumstances meant refusing all affirmative government economic policy.

Economic advisors were unanimous in decrying all available measures for controlling deflation and the depression: “a triumph of dogma over thought”, concludes Galbraith shrewdly. Today, influential advisors are fixated on reviving the economy by any means. They are, at least temporarily, abandoning neoliberal dogma and injecting massive amounts of public money into banks, companies and foundations.

As a sop to taxpayers, they are taking considerable portions of these economic agents’ equity into State control. On 15 November 2008, at the Washington D.C. meeting of the G-20, the presidents of the wealthiest and “emerging” countries decided to adopt a common plan of action designed just to alleviate the impacts of the current financial crisis (O Globo, 16 November 2008: 28).

The USA and Britain refused to back creation of standardised global regulations and an international agency with the power to monitor the activities of the international financial system in order to make compliance with the rules compulsory. No-one talked about attacking the factors of the crisis nor about redefining the model of development that the financial system is there to serve and which is also coming to the end of its tether. The heads of state and their advisors seem blind to the main issue, which is to get to the roots of the problem.

All in all, any similarity between the crash of 1929 and the crash of 2007-2008 is no mere coincidence! Other signals of a death foretold comes from a number of political and economic articles, among them an essay published in Brazil and Switzerland at the start of the Brazilian crisis of 1999, which reads:

“The unlimited right of governments and companies to issue these papers has led to the world’s markets being inundated with virtual money, because a large part of the papers are launched on the supposition that, sooner or later, the government or company will be able to turn them into real wealth and so redeem them for the value that they are supposed to represent.

This supposition belongs to the subjective sphere of the economy, that which operates on the basis of non-material values like confidence, foresight, hope and so on.

Now, when the government or company does not manage to repay the bearer of their moneys, it becomes insolvent, thus proving that the supposition was false and that the confidence and hopes deposited in them were mistaken, for lack of proper planning, rules and supervision to ensure that the game was played correctly and cleanly – and because their monies were only virtual […] Today we are witnessing a casino economy at the world level and, with it, an almost unavoidable risk of worldwide financial, social and economic crisis […] In practice, neoliberal capitalism is responsible for the casino-economy that has globalised in the world today.

“The disease manifest in the hypertrophy of money and over-indebtedness can only be surmounted by a national and planetary system of planning and regulation, capable of liquidating these ailments at their root. Capitalism itself is unlikely to set up such a system, since the capitalists do not want to see that this is a disease – and one that could be fatal to the system itself. When they do realize, they are unwilling to take radical curative measures, because these measures too could be fatal to the system! In fact, capitalism is increasingly squeezed between these two pressures: on the one hand, pressure for the various forms of money issues and indebtedness to be planned and for capital flows to be regulated; and, on the other, the risk of bankruptcy throughout the capitalist system if it fails to adopt these measures” (Arruda, 1999).

This curious paradox compounds the lack of any long-term pragmatic vision on the part of the “pragmatic” governments and businessmen who worship the market and money as gods.

Intensifying Trend towards Monopoly

The news of Brazilian Itaú’s buyout of Unibanco – to form the largest banking conglomerate in the southern hemisphere, with assets valued at R$ 575 billion – comes as no surprise. This is the natural movement of capitalism towards increasingly oligopolistic markets. It generally intensifies during cyclic crises of over-production or over-speculation, like the one facing the world at present.

This movement is suicidal, because the scope of what can be termed “market” is narrowing. Where there is no free interaction between supply and demand – runs the capitalist doctrine – there is no genuine market, but rather a kind of monopolistic dictatorship. The monopoly power to manipulate prices, needs and desires to satisfy its own insatiable thirst for profits prevails over all other criteria or ethics.

In the context of the world financial crisis which began to release toxic gases in 2007 and erupted for the first time in September 2008, this movement forms part of the intensifying trend towards monopoly capitalism, as amply examined by writers ranging from Marx to Paul Sweezy, Paul Baran and Harry Magdoff.

Monopoly,(1) oligopoly or cartel are a compound problem: they confine the activities of less-wealthy or less-powerful actors; they manipulate prices at their whim, seeking maximum profit and imposing a levy of exploitation on buyers and consumers; they externalize costs at will, burdening consumers, taxpayers and the environment; they gain ever greater power to influence centres of power, funding electoral campaigns and sowing corruption among public servants and government authorities in order to obtain ever greater benefits and enjoy virtually absolute impunity; and so on.

More serious still, however, is that the bigger the corporation, the smaller its ability to adapt to changing social and environmental conditions. That is why I do not hesitate to use the Tyrannosaurus allegory to describe them, comparing them with the giant dinosaurs that vanished in the Late Cretaceous, when there was rapid, planet-wide climate change. Nor do I hesitate to call the political system that prevails today in capitalist countries, including Brazil, a “corporatocracy” – a term used by John Perkins in his striking book on the strategies of the United States empire (Perkins, 2004).

Those who praise the Itaú buyout of Unibanco, and all the other mergers and buyouts that are taking place around the world, seem to ignore some important facts. The first is that this new conglomerate holds assets equal to about 25% of Brazil’s 2007 GDP! Even though the total worth of these assets is small compared with major banks in the North, it is highly significant in relation to Brazil’s national income.

Note that, in the years preceding the crisis, these two banks enjoyed extraordinary profit margins, a significant portion of them from their speculative activities and by virtue of their holding internal public debt bonds, which yield the highest rates of interest anywhere in the world.(2) Note also that Itaú and Unibanco together surpass Bradesco (assets of R$ 422.7 billion) and Santander-ABN Amro (R$ 328.1 billion). On 21 November 2008, Banco do Brasil announced it was purchasing a 71.25% stake in Nossa Caixa, raising it to second place in the saurian stakes, with assets of R$ 512.4 billion. This trend towards concentration is also advancing in the USA. Here are two examples:

The three largest banks – Bank of America Corp., J. P. Morgan Chase & Co. and Citigroup Inc. – held 21.4% of all deposits in the United States at the end of 2007; with the government-backed sales of bank assets – of Washington Mutual Inc. to J.P.Morgan and of Wachovia Corp. to Citigroup – the big three came instantly to hold 31.3% of all deposits.(3) Other smaller banks are being snapped up by the bigger banks, aggravating bank concentration in the USA.

Freddie Mac and Fannie Mae – the two government-sponsored insurance companies that were thrown a US$ 85-billion lifeline by the US Treasury – held US$ 740 billion in credit between them in 1990; US$ 1.25 trillion in 1995; US$ 2 trillion in 1999; US$ 4 trillion in 2005. In September 2007, just before they were bailed out, their assets totalled US$ 5.4 trillion, 45% of all mortgage finance in the USA or roughly half the United States GDP!!!

The guarantees of these two colossal financial dinosaurs underwrote 97% of all mortgage lending. They were the end of the real estate chain, they were those who sold insurance on debt papers, which had multiplied unchecked in a greedy irresponsible spiral. This acceleration in the value of their assets resulted from the real estate bubble of 2001-2006 and the speculative tidal surge brought on by flourishing financial engineering (Warde, 2008:15).

The second fact is that the new oligopolistic tyrannosaurs are emerging precisely as the moment of their extinction approaches… Certainly, because the financial crisis is surely going to worsen over the next two or three years.

And that is not hard to foresee, given that world economic policy authorities are unwilling to examine the deep-seated causes of the crisis: a Himalayas of speculative money, with no basis in the real economy, and for that very reason no chance of being salvaged out of public funds; the free hand given to central banks and financial agents to manipulate the usury rate at will; the lack of regulations to ensure that finance serve as a tool for investment in production; the tax havens, the secret jurisdictions and the thousand-and-one channels for tax and exchange evasion offering refuge all over the world; the irresponsibility of the major banks and industrial corporations seeing abundant, easy profits in financial speculation; and, permeating all this, the compulsion to grow, to consume, to grow more, to consume more, and to inundate the earth with garbage and refuse of all kinds.

Profiting without Producing

This, in a word, is the keynote of the advanced stage of world capitalism: profiting without producing. While 850 million men, women and children suffer and die of hunger in the world, others make fortunes without producing, just by speculating. From the standpoint of the majority of the earth’s inhabitants and ecosystems, such an economic system is irrational, inefficient and immoral.

Added to which, it continuously reproduces a profound division of societies and our species into social classes which transcend national territories and are globalising. The nomenclature “Global North” and “Global South” thus appropriately and accurately identifies how humankind is divided into social classes by the system of capital – and even more cruelly now that financialisation has brought all its deficiencies, inequalities, violence and insecurity to the point of paroxysm. So what does that financialisation look like in figures?

In 2002, writes François Morin (2006), the value of speculative transactions worldwide reached a new plateau of US$ 1,122.7 trillion. That’s right: one quadrillion, one hundred and twenty-two trillion and 700 million dollars, including 699 trillion in transactions with derivatives, 384.4 trillion exchange transactions, and 39.3 trillion in financial investments. That total is 34.76 times the US$ 32.3 trillion in goods and service transactions, i.e. the real economy.

Nonetheless, in the years that followed, the situation got even worse. Between 1993 and 2002 transactions in products guaranteeing derivatives rose from US$ 200 trillion to US$ 300 trillion. From 2003 to 2004 that went from US$ 300 trillion to US$ 874 trillion! Note that, in 2002, hedge fund products accounted for 50% of the day’s business in London and New York. These funds’ activities are opaque and speculative: instead of applying with a view to reducing risks, they have come to seek futures applications, which are riskier but more profitable if they secure a lower buyback price.

Hedge fund products include organised, standardised and easily tradable market products; and swap contracts. The former represent US$ 23.8 trillion, their turnover rate is high and they are purely speculative transactions. Swap contracts totalled US$ 122.5 trillion and turnover is low. World stocks of financial products stood at US$ 186.3 trillion in 2002, that is 4.62 times larger than that year’s world GDP, plus goods and service imports, all of which came to US$ 40.3 trillion. It is clear that financial transactions have nothing to do with economic activity – but the financial bubble is both real and menacing.

Speculation

If you stand between two mirrors and look into one of them, what do you see? An endless succession of images of yourself. In the other mirror, another endless stream of images of yourself. But only one you is real! “Speculate” comes from the Latin speculum, a mirror. It produces money from money and not by producing any real wealth. But why do that? Greed, a thirst for gain, for accumulating money without limit.

On that point economist Muhammad Yunus is quite right in his interview by O Globo newspaper (12 October 2008). He is mistaken, however, when he says that the capitalist system is not responsible. There certainly is a culture of maximising profits, but there is also a system of institutions and social relations that embodies that culture!

The core and ethics of capitalism is to accumulate profits, money, capital, material wealth – and the only people who matter are those who have capital. That capital is created by human work, but – to capital – working men and women are merely “factors of production”, along with capital-money, raw materials, machinery, land, energy and so on.

Therefore, it is the system of globalised capital that is responsible, in the first and last place, for the financial crisis that is shaking the world: its compulsion to grow indefinitely, its mode of “development” and “progress” (which comes down to a pattern of compulsive production, consumption and predatory exploitation of ecosystems), its universe of values (greed, selfishness and competition), and its institutions of global governance (particularly IMF, World Bank and WTO).

Crisis of Insolvency

When the United States central bank raised interest rates, many debtors failed to pay, as had already happened in the early 80s with the external debts of countries of the South (Arruda, 1988). The investment banks, insurance companies and other finance companies that had acted as croupiers in the global casino and went bankrupt were salvaged with public funds!

But there was no compassion for the over-indebted countries of the Southern hemisphere when they suffered the effects of the United States’ unilateral interest rate hikes of the late 70s. Most of those debts were in dollars, under flexible interest rate provisions.

The Citizens Audit of the debt, part of Jubilee Network Brazil, calculated that if the interest rate on dollar loans had remained at its historical mean level (of around 6%) Brazil would have paid off its external debt by 1989 and would even be entitled to US$ 161 billion from its foreign creditors in interest overpaid between 1973 and 2006.(4)

Remember that nearly half of Brazil’s external debt was taken out by illegitimate governments under the military dictatorship. While Ecuador is setting an example for the continent by conducting a thorough audit of its external debt, thus laying the technical and legal foundations for sovereign renegotiation with its creditors, the Lula government turns a deaf ear to civil society organised in the Jubilee Network Brazil (which is pressing for a thorough audit of the public debt), meanwhile insisting on maintaining the masochistic cycle of increasing public debt, high interest rates and unmanaged exchange.

Crisis of Confidence

Even banks have stopped lending to one another. Mistrust is starting to reign supreme and the State is required to channel funds into cleaning up the accounts of speculative agents and boosting consumer credit. In psychological terms, the aim is to defuse the crisis of confidence which tends to make people and companies prefer not to spend and not to lend.

With no credit and no demand, industrial companies’ stocks are building up, while they cut back on production and payrolls, and the whole system starts to fall apart. In Brazil, it was discovered that private banks and large industrial corporations had been speculating with derivatives and exchange – without their shareholders or investors suspecting the risks involved!(5)

Now they are suffering significant losses! By 18 November 2008, the government announced “anti-crisis package” measures worth R$ 373.5 billion, including massive input from the national Economic and Social Development Bank, BNDES, to facilitate lines of credit for large and medium-sized firms, tax breaks, and lines of financing for foreign automobile assembly plants. Quicker and more effective would be to apply reforms to redistribute income and wealth in Brazil, which has long been promised, but never done.

Trends

“This is the limit for capital: the limits of the Earth” – Leonardo Boff

The system centred on capital, profit and unlimited economic growth for companies and the material economy has no intrinsic ability to generate anything beyond itself. As long as the geographical area of the planet has permitted it to expand, it has advanced, multiplying and globalising goods, services, markets and the appetite for consumption.

This system that promotes ambition, greed, voracity and permanent competition among people, companies and nations has come to the beginning of the end – without managing to accomplish what it calls “development” and “progress” for all peoples and citizens, but depredating or lethally jeopardising the best part of the Earth’s natural resources and ecosystems.

We live at a point in human history when a civilisation, its cultural ideas and its mode of social, economic and political organisation, is heading for extinction. Meanwhile, budding and meshing within it are factors that herald a new civilisation and a new paradigm for being human and living on Earth.

The risks of systemic global crisis stemming from the way the economy is currently organised and operated are compound. Elsewhere I have gone into them in some detail:

1. the risk of collapse in the global financial system;

2. the risk of social upheaval on a continental or even planetary scale;

3. the risk of major armed conflicts with strong potential for nuclear escalation and for proliferating worldwide at some unpredictable point;

4. the risk of large-scale ecological crisis, particularly under the effects of global warming, given the lack of will among the powerful to take radical measures in time to reduce and mitigate the various consequences (greenhouse gas emissions, tropical forest fires, rising atmospheric temperatures, melting of the icecaps, rising sea levels and temperatures, and scarcity of fresh water), which in turn become the causes of still more warming;

5. the risk of an energy crisis related to the quick decline of fossil fuel reserves in face of increasing global demand for oil; and

6. the risk of a food crisis due to the massive conversion of productive land from food production to the production of agro fuels. Any one of these risks could, on its own, bring on planet-wide disaster and, if they happen together, that could be catastrophic to human life on Earth.

The financial crisis has happened and, as pointed out above, it is essentially global and systemic. The financial crisis threatens the real economy with the risks of stagflation (industrial stagnation combined with mass layoffs and high prices resulting from financial costs), deflation (continuously falling prices, caused by overproduction and surplus stocks immobilised by the market collapse brought on by an abrupt loss of purchasing power among consumers and national currencies), and even depression.

That is when the financial crisis becomes a dramatic economic and social crisis – there is no investment, demand collapses, production grinds to a halt, employment and purchasing power evaporate, and staples become scarce and expensive. Impoverishment becomes endemic and the risk of social chaos is imminent. To these must be added the risks resulting from the tendency for global warming to intensify exponentially.

At this point the king has no clothes: capitalism bares its chaotic real nature and there is imminent risk of elites resorting to war. Now war has two lightning effects: it reactivates the economy by weapons production and trade, which involves complex production chains in manufacturing death; and it distracts people from the systemic crisis and from pressing for radical, far-reaching social and economic change.

Capitalism is an entropic system, which tends to reduce everything and everyone to merchandise and to make more and more extravagant use of energy with no concern for replacing it or for the resilience of the systems it commands (from economic and financial systems to ecological systems).

All agents, in their historical time and place, are made to dispute a breakneck race against all comers to grab the carrot of happiness for themselves to the exclusion of all others. The carrot, however, dangles from the tip of the stick of material wealth, which in turn is tied to each competitor’s back. The result is the inevitable tendency of the world capital system to dissipate energy and to chaos.

However, our complex matrix of likelihoods comprises yet another scenario. It falls to those who perceive these trends and who wish to prevent civilisation as a whole from crumbling into shambles, to link up their awareness and will in webs of non-hierarchical relations connected by the synapses of mutual help, affection and an openness to others as diverse and complementary beings.

The end of this stage of History can be the dawn of a new age, a time when the Noosphere transcends this money-grubbing era that has shackled it to material treasures. Such a time will harbour respect for life, for its diversity and its incessant upward movement towards greater complexity and spirituality. In such a time humankind will be attuned to the cycles of nature and the mysterious rhythms of the Universe.

Alternatives

The tsunami of unreal wealth that has inundated the planet is destined, for better or for worse, to ebb. All the public monies in the world put together cannot save it or cover the speculators’ losses. If the authorities try to do so, they will flood the world with another tsunami of unreal wealth, closing a catastrophic and irrational vicious circle. If they fail to change the rules of the financial game, hyperinflation or stagflation, more wealth concentration and deeper trenches between social classes will be unavoidable.

The authorities who met at the G-20 in São Paulo, and then in Washington D.C., in November, took decisions that barely scratched the surface of the problem. An accommodation was reached between the neoliberals and the advocates of a “new capitalism” with a greater State presence. The former can countenance a State presence only for as long as it takes to set national and global finances to rights, after which it should withdraw so that the gains can be privatised.

Meanwhile, the costs are to be socialised. After that, it will be business as usual. The latter feel the State should remain, regulating, overseeing and redistributing the surplus produced by society. But each State should act on its own initiative, with no organic arrangements among States and only discretionary compliance with whatever rules are enacted to discipline financial flows.(6)

Their promise to detail these corrective measures within the next six months is no consolation: the crisis will go on corroding the structures, and we all know that, unless the measures are radical and urgent, the world financial system will tend to spontaneous combustion in a matter of months or very few years, with terrible consequences for the real economy and particularly the working classes and the excluded.

The measures to be adopted are short-, medium- and long-term. They depend on their authors’ strategic goals. So the sponsors of solutions to the crisis fall into three types. Firstly, there are those who restrict themselves to the surface symptoms and propose ad-hoc reforms “so that things return to normal as soon as possible”.

Their assumption is that “normal” is good for everyone. They would be satisfied with temporary State interventions to transfer public money to banks and corporations at risk of failure, thus salvaging their capacity to offer credit and boost GDP in the short term. Their horizon seems limited to cushioning the impacts of the financial crisis and stimulating countries’ domestic demand by fiscal measures. Secondly, there are the social democrats of various persuasions who, echoing Keynes, advocate a State-controlled economy, at least as long as the crisis lasts.

They talk about placing finance at the service of business and the citizenry. And they plan to “re-found global capitalism” by completely reforming the financial system (Nicolas Sarkozy, in O Globo newspaper, 16 October 2008, Rio de Janeiro).

Lastly, there are those who envisage a conceptual movement towards comprehensive development for humankind – person and society – that should be endogenous, sustainable and based on solidarity. That, in turn, entails global economic planning, starting from the community and returning to it with complementary resources and investments at the national and regional level to support and leverage local development that is plural, concerted and harmonious.

For such development to occur there is an urgent need for a new financial architecture that integrates the local level with national, continental and global levels and, in that context, re-signifies the role of the United Nations as a potentially effective institution of global governance. It is on that perspective that I offer the following proposals:

At the national level:(7)

1. Restore people’s power to plan and pursue their own development, individually and collectively, from the local and community level up to the national and global level, combining social management with State management, using finance as just one means, because the end should always be to develop the material and immaterial potentials of the human person and collectives, and to achieve comprehensive well-being and happiness.

Endogenous, democratic, sustainable, solidarity-based development is essentially bound up with meeting human needs and fully achieving rights, particularly the rights to a decent life, to democratic sharing of productive goods and resources, to well-being and happiness. Such development cannot be evaluated and measured by present indicators of wealth. The whole concept of wealth has to be broadened to include the riches corresponding to the cultural, psychological and spiritual development of persons and collectives. It is indispensable and urgent for the oppressed classes to organise and build alliances, so as to establish concrete self-managed, solidarity-based social relations of production within and at the margin of the capital system.

Such a process will have the power to attract growing contingents of workers who are either unemployed, or in precarious or informal occupations, as well as politicians and entrepreneurs conscious of their eco-social responsibilities, to the field of a responsible, plural, solidarity economy.

2. Public funding should be channelled as a priority to creditors of the social, historical and ecological debts, so as to help them rebuild their family and community economic life, by enabling them to stay solvent and increasing their purchasing power. That is the fairest and most durable immediate measure. It would alleviate the crisis of liquidity and insolvency at the locus of the real economy and in the realm of real needs, instead of acting only at the locus of the financial institutions and the realm of supply.

Unfortunately, governments only seem willing to take palliative measures, such as continuing with the now widespread practice of transferring public funds to banks – the big winners in the global casino – and to companies that preferred to run the risk of speculating rather than investing in production. That is just to postpone the final explosion.

3. Restructure national financial architectures to serve a mode of development oriented towards the needs and aspirations of people, communities and the nation. This entails:

– eliminating the myth of the independent Central Bank(8), rather making that institution responsible for monetary and fiscal policy at the service of a national plan for endogenous, sovereign development;

– overseeing capital inflows and outflows and monetary and financial markets, framing them in terms of the country’s sovereign national development plan, rather than the expansion plans of individual corporations;

– promoting policies to control or eliminate the institutions and mechanisms that foster or favour speculation, such as derivatives, futures markets, fiscal havens and other secret jurisdictions, and so on;

– reconnecting finance and currency to the real economy by creating regulations, limits and compulsory rules on capital flows and the issuing of various forms of money by private agents;

– pursuing a policy of low interest rates with a ceiling, which meets the needs of consumers and the industrial sector, rather than being an instrument of usury;

– adopting and using exchange controls as a tool for financing endogenous, sovereign development policy;

– revoking tax waivers on foreign investments in stock markets, land ownership and waters;

– democratising public budget management, including holding a thorough audit of the federal public debt in order to lay the technical and legal foundations for sovereign renegotiation of the amount owed and its payment, considering also the historical, social and environmental debts of which the working population is creditor;

– transforming Complementary Law No. 101, of 4 May 2000 (Brazil’s “Fiscal Responsibility Law”), into a Law of Fiscal and Social Responsibility, prioritising the social aims of the public budget over payment of interest on financial debts;

– overseeing investments in technological research and development, so that innovations are created and introduced with a view to self-managed, sustainable human and social development;

– changing the system of exclusive ownership of production goods and resources: work, land, water and energy should not be considered as merchandise; and

– promoting community oversight of community finances, by way of measures to decentralise money, stimulate the proliferation of self-managed savings and loan institutions, community banks and ethical banks, the use of complementary currencies and appropriate legislation to support them.

4. Taking effective measures to redistribute income and wealth: agrarian reform, reintroducing millions of landless, income-less working families into the countryside in conditions to produce; fiscal reform, prioritising public investment in the domestic economy and in social areas and explicitly limiting spending on financial debts; progressive tax reform, including levies on large fortunes and preserving the constitutional sources of social security funding; financial, monetary and exchange reform; and a national basic “citizens’ wage” policy.(9)

5. Declaring that finances and money are, in their essence, a public service. Therefore, their priority should be to serve to generate purchasing power, equity and well-being for all. Keynes’ advice should not be forgotten: the country that wishes to have control over its own development must have control over its own finances.

Financial activity should not be an end in itself, and its prime motivation should not be profit, but rather to serve to create wealth to meet human and social needs and to support the integration and sovereign, democratic, solidarity-based development of the peoples of Latin America and the Caribbean. That should be the purpose of public banks such as Bank of the South, BNDES, Banco do Brasil, Caixa Econômica Federal and the State banks.

On the international level:

1. Creating internationally orchestrated, compulsory regulations and levies on financial stocks and flows; and bringing financial institutions partly under government and inter-government control.

2. Creating institutions at the national, continental and global levels with the power to enforce such rules and impose sanctions on agents who breach them.

3. Dismantling tax havens and secret jurisdictions, which permit laundering of illegal money and capital and exchange evasion.

4. Radically reforming international financial institutions, their principles, functions and modes of operation, so that they fulfil their respective roles as orchestrators of the equitable, sustainable development of peoples, and regulators of world financial equilibrium at the service of such development.

5. Recognising that this is not just a finance crisis. It is yet another crisis in the capitalist mode of production, in the system of power centred on capital and on the mega-corporations that hold it. It is a crisis in the neoliberal economy that has dominated the planet for the last three decades.

And it signals another, more deep-seated crisis: it is a multidimensional, systemic crisis, a crisis of our civilisation, which affects the objective and subject dimensions of human and social existence on the planet and calls the system of globalised capital into question.

The capital class’s submission of the working classes worsened and expanded when, in present times, the already retrograde “producing by exploiting the work of others” began to regress into the now prevailing “profiting without producing”. The labour surplus from all society has becomes fodder for speculative parasites. They fatten without limit, to bursting point, which the globalised capitalist world is approaching perilously and unhesitatingly.

6. Promoting sustainable globalisation in solidarity. Thoroughly solving the crisis entails recognising the need for a new model of global development that does not rest on selfish, materialist greed, nor the uniformity of one-track thinking, but rather on responsibility, plurality and solidarity among societies and cultures, with enough material abundance, with unlimited production and exchange of non-material goods, and with new indicators in place to measure human well-being and happiness.

It should rest on a pattern of aware consumption directed to sustainable economic degrowth for the elites and planned growth within the limits of natural and intergenerational sustainability for the oppressed or excluded majorities; while avoiding waste and applying to our relations with nature the principle of the four R’s: reduce, reuse, recycle, respect.

The world financial system will collapse in ruins, certainly and with disastrous consequences for the socio-economy and the environment planet-wide, unless those who wield institutional power decide to change radically the role of money and indebtedness, and the underlying meaning of development.

Gross National Happiness: Towards Another Development

“ ‘Always more’ fills the heart with cholesterol plaques instead of happiness!” – Jean-Luc Gérardx (10)

Not all the news is bad though. A new indicator of wealth is coming into use and it has the power to realign the whole axis of economic activity and development policy. It obliges governments (planning goals, public budget, public policies), banks, corporations and value added chains to redefine their operating goals in terms of a new index embodying a comprehensive, multidimensional concept of wealth!

In October and November 2008, events on the Gross National Happiness (GNH) index took place in Campinas and Porangaba in Brazil, participants meeting for a weekend at a time, over 1000 at Sesc (São Paulo), 250 at Unicamp (Campinas) and some 150 at Parque Ecológico Ecovillage (Porangaba).

Impeccably organised by the monk Susan Andrews, and her extremely efficient team, these three events – plus numerous interviews with the spoken and print media – were attended by three members of the government of Bhutan, a tiny country in the Himalayan foothills between India and China, where the GNH has been applied for the past 12 years with outstanding success; and Michael Pennock and his wife Martha, from Canada. Michael, a health specialist, spoke on the subject of Gross National Happiness as an index of overall human development, which in Bhutan has replaced the Gross National Product (GNP), which focuses on economic growth.

“The GNH is a ‘holistic’ approach to human needs, because without addressing both the material and the spiritual needs of people-and-society, the ‘good and decent’ society (…) cannot be achieved.” (Thinley, 2007: xv). At its core is thus the postulate that, in today’s world, well-being should be developed simultaneously as physical and vital (social and economic), mental and spiritual.

The purpose of the GNH index is to shape the conceptual underpinning and the motivation for an alternative development path which nurtures the process of building a fully developed human person and society. This alternative path takes the GNH as a yardstick for planning and achieving economic and technological development, and thus orienting them to the greater goal of human and social development. The challenge of the GNH is operational but, first and foremost, it is conceptual, paradigmatic and civilisational. It is also surprisingly synchronised with the crisis in the paradigm of civilisation that humankind is experiencing at this start of the new century and the new millennium.

Bhutan’s index reflects indicators covering nine aspects of family and social life:

1. Standard of living – relates to all material needs and the real economy

2. Good governance – sharing in power over decision-making and over managing the economy and development; the relationship among State, social economy and private economy

3. Education for all

4. Health for all

5. Ecological resilience – an ecosystem’s ability to return to its original state after being altered by human action

6. Cultural diversity

7. Community vitality

8. Balanced time use

9. Psychological and spiritual well-being.

One of the principles that guide application of these nine areas to public policy is that overvaluing any one of the factors causes imbalances and losses as regards the others. This means that socio-economic development has to be harmonious, omnilateral and omnidimensional. Another principle is that equitable development in each of the fields does not occur spontaneously. It means planning economic and technological development so that economic activity is oriented to achieving the conditions that generate human well-being and happiness.

Lastly, there must be a recognition that the economy centred on profit and the individual accumulation of material wealth by the cruellest competition and egocentric corporatism does not foster conditions for the integral development of human persons and collectives, as proven worldwide by the present state of the societies that practice such economies. It must give way to an economy centred on the social individual, on the human person – who is at the same time person and collectivity, female and male, everyday and historical. Socio-economic praxis compatible with GNH rests on values such as cooperation, reciprocity, responsibility, plurality and solidarity.

Eloquent evidence that the current paradigm of development and progress has failed in terms of human happiness in the USA is given by Susan Andrews: twice as many cars in the last 40 years; 21 times more plastics; 25 times more air travel; three times more products produced and consumed between 1950 and 2005.

In the USA, one quarter of the population suffers from depression; divorces doubled in the period; teenage suicides tripled; violent crime quadrupled; and the prison population increased fivefold. One of the most serious aspects of the social and human crisis in the USA is the loss of a sense of community. “Every man for himself”, the ideological basis of the capitalist system and the system of social classes it engenders, has fragmented society and turned person against person, firm against firm, ethnicity against ethnicity, nation against nation.

The aims of the happiness index are threefold: (1) to go beyond the fallacy of “the more the better”; (2) to persuade people to read the world and the economy differently, and to be more open to changing their social and environmental relations, including their consumption habits; and (3) to influence government choices towards adopting a human happiness index as a tool for planning and evaluating economic and technological development.

Marcelo Neri, an economist with Brazil’s Getúlio Vargas Foundation (Jornal do Brasil, 7 September 2008:E1) uses a study by the Gallup Institute in 132 countries to demonstrate that increased income and possession of money is not proportional to increased happiness: for every 100% increase in income, nations’ overall happiness increases by only 15%.

Brazil confirms that observation in the opposite direction: it stands 22nd in the world happiness table in contrast to its position at 52 in the income ranking of the 132 countries! That is, on the income-happiness graph, the happiness curve progresses upwards with income to a inflexion point beyond which more income just means less happiness!

In Brazil, as in other countries, a movement is taking shape to popularise an index of human and social well-being and happiness whose purpose is to influence the way people, institutions and governments measure wealth and how they behave. The GNH index is a very powerful tool for encouraging aware consumption, for supplanting the logic of profit by the logic of integral development of persons and communities, and fostering the adoption of public policies directed to increased satisfaction, well-being and happiness of the entire populations of their respective territories.

Given the threat of global crisis, the GNH movement offers a practical vision of another possible economy. It is conducive to convergence among movements such as the Solidarity Economy networks (Mance, 2002: 42-52 and Verano & Bernal, 1998), which seek to reconceptualise the economy, taking as their central value and meaning the human person as a relational being, that is, as a multidimensional being, at the same time individual and social (Arruda, 2003, 171-222); and the movement for integral, self-managed human development (Arruda, 2006: 151-218), as a process directed to realising the potentials, qualities and attributes of the human person that can generate individual and social life of quality and increasing happiness.

Marcos Arruda is economist and educator at PACS (Institute of Alternative Policies for the Southern Cone, Rio de Janeiro); member of the Jubilee South Network and ALOE – Alliance for a Responsible, Plural and Solidarity-based Economy; and fellow of the Transnational Institute (Amsterdam).

– To the original article:

Happy Holidays

Sunday, December 23rd, 2012

I’d like to wish everyone happy holidays.

Remember, give what you want to get and be a light unto yourself.   You are the only person, really, whose thoughts, intentions and behaviors you can control.   Be an artist – create something beautiful.

And remember also to do your best at every moment – and then let it go,  Because, if you do your best, then you cannot possibly be responsible for the outcome; whatever it is.   Buy yourself this freedom.

– dennis

 

Profiting from injustice

Sunday, December 16th, 2012

How law firms, arbitrators and financiers are fuelling an investment arbitration boom

A small club of international law firms, arbitrators and financial speculators are fuelling an investment arbitration boom that is costing taxpayers billions of dollars and preventing legislation in the public interest, according to a new report from the Transnational Institute and Corporate Europe Observatory.

Investment arbitration cases are brought by foreign investors against governments following alleged breaches of international investment agreements. Emblematic cases include tobacco giant Philip Morris suing Uruguay and Australia over health warnings on cigarette packets; and Swedish energy multinational Vattenfall seeking $3.7bn from Germany following that country’s decision to phase-out nuclear energy.

Profiting from Injustice uncovers a secretive but burgeoning legal industry which benefits from these disputes – at the expense of taxpayers, the environment and human rights. Law firms and arbitrators, who are making millions from investment disputes against governments, are actively promoting new cases and lobbying against reform in the public interest.

Download a PDF of the full report:

New Category added to Samadhisoft

Friday, December 7th, 2012

I’ve added a new category under which I can classify posts here in Samadhisoft.  It is:

Corporate takeover of government

I’ve been realizing for sometime that in their efforts to maximize profits for their shareholders, corporations have been working to control our governments in order to diminish the power those governments to make the laws that limit their actions and opportunities.

This is a major factor in the way human history is progressing now in the early 21st century.

We, as a species, should be deep into the realizations now that if we do not change directions, we are going to experience a calamity of truly historic proportions.  I call this the Perfect Storm.  A calamity so huge, in fact, that it will make all the other major ‘events’ of human history pale.

So, what makes us press on so heedlessly when the danger signs are growing so prolifically around us?

Some of it is our human nature.

But another very significant part is the fact that corporations have gotten so powerful that they are directly or indirectly controlling our governments for their own aims.  And, as those aims are solely about maximizing profits for their shareholders, those aims do not include considerations about the future of our species or the health of the planet.   In many cases (as you will see in the links, below), corporations are working actively to defeat the very things we should be doing for own own survival. And they do this because if we are allowed to do these things, it would interfere with their profits.

To get an idea of the size and tenacity of the problem, consider that of the 100 most powerful economies on the planet, 51 of them are corporations.

In honor of the new category  and to review for you some of the stories and perceptions that have led me to this POV, I’ve listed below a number of stories and pieces I’ve written or reported on here that bear on this subject:

 

 – The Corporate “Heist” of the United States Government Began With a Memo in 1971

– Forbidden Planet – George Monbiot

– Tobacco and the manipulation of public perception for corporate profit

 – The new face of how corporations dominate governments

– The Greedy are everywhere…

– Myth of Perpetual Growth is killing America

– Top (American) CEO pay equals 3,489 years for typical worker

– Why increasing corporate control of our world is bad

– Obama tries again to end oil subsidies

– Corporate Margins and Profits are Increasing, But Workers’ Wages Aren’t

– Plutocracy, Pure and Simple – George Monbiot

– Syngenta PR’s Weed-Killer Spin Machine: Investigating the Press and Shaping the “News” about Atrazine

– Ohio Lawmakers Introduced 33 Bills Last Year Based on ALEC Model Legislation

– Directors’ pay rose 50% in past year, says IDS report
– Financial world dominated by a few deep pockets
– As Verizon Demands Huge Cuts to Worker Benefits, Its Profits Soar and Its CEO Gets $18 Million in Compensation
– America in Decline – Noam Chomsky
 – Health Insurers Making Record Profits as Many Postpone Care
 – Lobbying Firm Advising Corporate Clients How to Take Advantage of Campaign Finance Ruling
 – We’re having the wrong conversations

– The Supreme Court and Corporations

– Corporations Are Citizens – What Are We?

Forbidden Planet

Tuesday, December 4th, 2012

– George Monbiot is brilliant,  He’s one of my favorites.   He has a way of taking things apart so clearly and laying all the pieces out.

– His theme here, that preventing global ecological and climatic disaster is in direct opposition to Capitalism, is not new.  

– Numerous others, like James Gustav Speth in The Bridge at the Edge of the World, have said precisely the same thing.

– The really scary bit is when you contrast the truth of their observations against the fact that the world’s impending ecological and climatic disasters have largely gone off the radar with the rise of the world’s financial crisis and that the main thing most folks are concerned with fixing is getting Capitalism back up on its feet, then you can see why many of us are thinking we’re doomed.

– – – – – – – – – – – – – – – – – – – – – – –

Forbidden Planet

By George Monbiot, published in the Guardian 4th December 2012

Humankind’s greatest crisis coincides with the rise of an ideology that makes it impossible to address. By the late 1980s, when it became clear that manmade climate change endangered the living planet and its people, the world was in the grip of an extreme political doctrine, whose tenets forbid the kind of intervention required to arrest it.

Neoliberalism, also known as market fundamentalism or laissez-faire economics, purports to liberate the market from political interference. The state, it asserts, should do little but defend the realm, protect private property and remove barriers to business. In practice it looks nothing like this. What neoliberal theorists call shrinking the state looks more like shrinking democracy: reducing the means by which citizens can restrain the power of the elite. What they call “the market” looks more like the interests of corporations and the ultra-rich(1). Neoliberalism appears to be little more than a justification for plutocracy.

The doctrine was first applied in Chile in 1973, as former students of the University of Chicago, schooled in Milton Friedman’s extreme prescriptions and funded by the CIA, worked alongside General Pinochet to impose a programme that would have been impossible in a democratic state. The result was an economic catastrophe, but one in which the rich – who took over Chile’s privatised industries and unprotected natural resources – prospered exceedingly(2).

– More…

 

Life expectancy at birth (from the U.S. CIA)

Monday, December 3rd, 2012

* Monaco (1st) 89.68 years
* Japan (3rd) 83.91
* Australia (9th) 81.90
* Canada (12th) 81.48
* New Zealand (25th) 80.71
* United Kingdom (30th) 80.17
* United States (51st) 78.49
* Chad (225th) 48.69

Source: CIA Factbook

 

Who do you trust on Climate Change?

Sunday, December 2nd, 2012

It’s a valid question.  We all know that there are climate change deniers and climate change proponents out there.  And they each seem to be deeply convinced of their point of view.

One could get cynical and jaded regarding the issue and it’s easy to believe that these ongoing arguments are just the same old arguments being hashed out over and over again with neither side budging year after year.

But is it a static and unchanging argument?

Well, I’m going to tell you that it is not.  And I’m going to give you the proof.  And afterwards, you can ask yourself if,  perhaps, you’ve been a bit too lackadaisical about all of this.

Who loves you, Baby?

When it comes TIME to put your money and your belief down on a issue like this, who would you trust?

Would you trust the tree-huggers who seem to go on and on about saving nature – with seemingly no regard for preserving our jobs, our communities and our way of life?

Or would you trust the big oil, gas and coal corporations who tell us there’s nothing to worry about but whose profits are deeply dependent on all of us continuing to burn the fossil fuels they produce and sell to us?

Well, that’s a tough choice and it’s one we’ve been looking at for some time now.

New boys in town

But there are new players in this game now.  And these new folks have some very serious money and responsibilities on the table.  So, it is worth waking up again on this issue and seeing what they have to say.

Among these new players are the U.S. Pentagon, Lloyd’s of London and The World Bank, to name a few.  I think you’d agree that in a world full of monkey’s, these are some of the gorillas.

All of them have decided that the threat of Global Climate Change sounds serious enough that they’ve commissioned major studies to get at the truth of the matter for their own good.  And it is not surprising that they would.

The World Bank makes huge investments around the world and the success or failure of these investments may hinge on whether the threat of Global Climate Change is real.

Lloyd’s of London sells insurance. And when they do so, they are making a bet that they know what the odds are that a disaster might happen.   The fact that they’ve been in business for centuries, and that they are one of the world’s largest insurance firms, says that they know what they are doing when it comes to estimating risk.

And, of course, the U.S. Pentagon has the enormous responsibility of making sure that United States is, and remains, secure in the face of a changing world.

The studies they’ve commissioned have all come back saying that we, as a world, are proceeding into some very deep and serious problems.  These studies have confirmed what the environmentalists and the climate scientists have been trying to tell us for more than twenty plus years now.

Read it all for yourself

But don’t trust what I have to say on all of this.   Read it for yourself.  Here are the direct links:

The World Bank:

http://climatechange.worldbank.org/

Lloyd’s of London:  http:

//www.lloyds.com/~/media/3be75eab0df24a5184d0814c32161c2d.ashx

U.S. Pentagon:

http://www.cna.org/sites/default/files/news/FlipBooks/Climate%20Change%20web/flipviewerxpress.html

The Central Point

The central point in all of this is that Global Climate Change is real and it is a MAJOR threat to all of our futures.

That said, the worst aspects of these threats may still be a decade or two away.   Many of us are old enough (myself included) to think that none of this may matter to us.

But reflect for a moment on those you love.   Your sons, your daughters, your grandchildren and your relatives and their families and all the other folks you care about.

Just imagine the kind of a world we are on the brink of bequeathing them if all of this is true.  I know that none of you would willingly leave your dependents in dire straits.   So, you owe it to yourself and to them to open your mind and take a good look at these issues again, my friends.

A few samples from the reports

Here we’re going to learn that the world is well on its way to being 4°C [7.2°F] warmer by the end of the century.

Ironically, twenty years ago in 1992, the climate scientists who met in Rio then warned that the world could simply not sustain a temperature increase of more than 2°C with out major consequences.

Of that 2°C, we’ve now risen .8°C.

 

The World Bank Report says:

A 4°C warmer world can, and must be, avoided – we need to hold warming below 2°C.  Lack of action on climate change threatens to make the world our children inherit a completely different world than we are living in today. Climate change is one of the single biggest challenges facing development, and we need to assume the moral responsibility to take action on behalf of future generations, especially the poorest.

A 4°C [7.2°F] warmer world would also suffer more extreme heat waves, and these events will not be evenly distributed across the world, according to the report.

Sub-tropical Mediterranean, northern Africa, the Middle East, and the contiguous United States are likely to see monthly summer temperatures rise by more than 6°C [10.8°F]. Temperatures of the warmest July between 2080-2100 in the Mediterranean are expected to approach 35°C [95°F]– about 9°C [16.2°Fwarmer than the warmest July estimated for the present day. The warmest July month in the Sahara and the Middle East will see temperatures as high as 45°C [113°F], or 6-7°C [10.8-12.6°F] above the warmest July simulated for the present day.

Hotter weather could in turn lower crop yields in a 4°C [7.2°F] world—raising concerns about future food security. Field experiments have shown that crops are highly sensitive to temperatures above certain thresholds. One study cited in the report found that each “growing degree day” spent at a temperature of 30°C [86°F] degrees decreases yields by 1% under drought-free rain-fed conditions.

The report also says drought-affected areas would increase from 15.4% of global cropland today, to around 44% by 2100. The most severely affected regions in the next 30 to 90 years will likely be in southern Africa, the United States, southern Europe and Southeast Asia, says the report. 

The Lloyd’s of London Report says:

If the sea level were to rise just four meters due to climate change, almost every coastal city in the world would be inundated.

In publishing this report, it is not Lloyd’s intention to take a particular position, or to support a specific scenario. We simply aim to present the facts from the most reliable sources in a way which we hope will be helpful for those who trade in, and with, our market. We also want to generate debate about the specific steps which we might take as an industry to prepare for the increasing volatility of the climate.

Although debate continues, the growing body of evidence on greenhouse gases suggests that significant climate change is inevitable. Even if we stopped producing greenhouse gas emissions immediately, we would still experience rising temperatures for decades to come and sea temperatures will continue to rise for many centuries, due to inertia in the climate system.

We might hope that extreme ‘tipping points’ – the point beyond which change cannot be reversed – can be avoided. However, evidence so far must lead us to conclude that some level of change has already occurred and that it will continue to occur, perhaps at a higher level than previously thought.

One recent paper in Nature warns starkly: “Global warming may proceed at or even above the upper extreme of the range projected by the Intergovernmental Panel on Climate Change.”

The Pentagon Report says:

Projected climate change poses a serious threat to America’s national security. The predicted effects of climate change over the coming decades include extreme weather events, drought, flooding, sea level rise, retreating glaciers, habitat shifts, and the increased spread of life-threatening diseases. These conditions have the potential to disrupt our way of life and to force changes in the way we keep ourselves safe and secure.

The nature and pace of climate changes being observed today and the consequences projected by the consensus scientific opinion are grave and pose equally grave implications for our national security. Moving beyond the arguments of cause and effect, it is important that the U.S. military begin planning to address these potentially devastating effects. The consequences of climate change can affect the organization, training, equipping, and planning of the military services. The U.S.
military has a clear obligation to determine the potential impacts of climate change on its ability to execute its missions in support of national security objectives.

In the national and international security environment, climate change threatens to add new hostile and stressing factors. On the simplest level, it has the potential to create sustained natural and humanitarian disasters on a scale far beyond those we see today. The consequences will likely foster political instability where societal demands exceed the capacity of governments to cope.

Unlike most conventional security threats that involve a single entity acting in specific ways and points in time, climate change has the potential to result in multiple chronic conditions, occurring globally within the same time frame.  Economic and environmental conditions in already fragile areas will further erode as food production declines, diseases increase, clean water becomes increasingly scarce, and large populations move in search of resources. Weakened and failing governments, with an already thin margin for survival, foster the conditions for internal conflicts, extremism, and movement toward increased authoritarianism and radical ideologies.

So, what do you do with all of this?

You might wonder why I am writing this?  What do I expect you, my readers, to do with this information?  Maybe you suspect that I am hoping that all of you will undergo a sudden conversion and become rabid tree-huggers?

Nope, it is none of those and this is not a partisan based appeal either.   This is decidedly not about Conservative vs. Liberal or Religious vs. Secular.

It may be true, in general, that Liberals have been quicker than Conservatives to embrace a belief in Global Climate Change. But, in truth, neither side’s response to these problems has been anything other than tepid and lukewarm.  The best you can say for the Liberals is that they are still willing to “talk” about it though they’ve showed no serious signs of engaging it.   And with the Conservatives, it’s even worse as they are seeming moving away from the issues.

In 2008 the Republican party platform at least included language that called for a “decrease in emissions, reduction of excess greenhouse gases in the atmosphere and mitigation of the impact of climate change“.

By this most recent election cycle, there was a major shift away from this point-of-view.  The Republican 2012 platform eliminated any reference to climate change with the exception of prohibiting the “EPA from moving forward with new greenhouse gas regulations.”  Their platform also supported vice presidential candidate Paul Ryan’s accusation that climatologists use “statistical tricks to distort their findings and intentionally mislead the public on the issue of climate change.”

It is deeply scary that the Republican Party, that represents half of the American population, is in active denial of Global Climate Change.  And it is only slightly better that the Democrats at least still profess to still “believe” in the issue.  But all President Obama has really offered up in terms of improving things is to implement some better mileage requirements for cars.  In truth, he’s literally just messing with the deck furniture while the Titanic sails on to its appointment with an iceberg called Global Climate Change.

Folks, I’ll repeat myself.   This isn’t a partisan rant, this isn’t about Republicans vs. Democrats.  The  issues we’re talking about here cut a lot deeper than any of that.

What this is about is trying to convince you that these threats are terrifying and real,  And that they are going effect everyone and everyplace on this planet before long and that some of the biggest power players and smartest people on the planet are coming to that profound realization.

Vote – that’s what it’s about

This is about getting you to think about who you vote for because that is the leverage that each of us in a democratic society has to affect things.  Political parties don’t lead.   They simply reflect the beliefs of those whom they consider their electorate.  You, the voters, have to change and your parties will follow.  Show your change by who you vote for.

I urge you to vote for people, regardless of whether they are conservative or liberal, who’ve

A. Shown that they understand the issues around Global Climate Change.

B. And shown that they believe the issues are real and hugely important.

C. And shown that they are motivated to do something about it.

Many of our current politicians on both sides of the aisle  just cannot seem to see that the world is changing around us in dangerous ways.  For whatever reason, many of our current politicians are in serious denial about the coming consequences of Global Climate Change.

And in their denial they are frittering away all of our futures.  And most especially they are frittering away the futures of our children.

If you still have doubts about all of this, then go back and reread the reports I’ve referenced by the Pentagon, The World Bank and Lloyd’s of London again.  And then reflect on who these organizations are.  They are not tree-huggers or environmental destroyers.  And they most definitely are not here with ulterior motives to pull the wool over our eyes.

And these three organizations are not the only ones.  Governments and major business organizations all over the world are beginning to worry about what’s coming.

Wouldn’t it be nice if we could get the people we elect to wake up  and smell the coffee too?