Monday, March 26, 2012

How Much Will it Cost to Save Our Economy’s Foundation?

From Lester Brown, president of the Earth Policy Institute: 

During the past two summers, Pakistan was hit with catastrophic floods. The record flooding in the late summer of 2010 was the most devastating natural disaster in Pakistan’s history. The media coverage reported torrential rains as the cause, but there is much more to the story. When Pakistan was created in 1947, some 30 percent of the landscape was covered by forests. Now it is 4 percent. Pakistan’s livestock herd outnumbers that of the United States. With little forest still standing and the countryside grazed bare, there was scant vegetation to retain the rainfall.

Pakistan, with 185 million people squeezed into an area only slightly larger than Texas, is an ecological basket case. If it cannot restore its forests and grazing lands, it will only suffer more “natural” disasters in the future. Pakistan’s experience demonstrates all too vividly why restoring the earth is an integral part of Earth Policy Institute’s Plan B to save civilization. Restoring the earth will take an enormous international effort, one far more demanding than the Marshall Plan that helped rebuild war-torn Europe and Japan after World War II. And such an initiative must be undertaken at wartime speed before environmental deterioration translates into economic decline, just as it did for the Sumerians, the Mayans, and many other early civilizations whose archeological sites we study today.

Our natural systems are the foundation of our economy. We can roughly estimate how much it will cost to reforest the earth, protect topsoil, restore rangelands and fisheries, stabilize water tables, and protect biological diversity. The goal is not to offer a set of precise numbers but rather to provide a set of reasonable estimates for an earth restoration budget.

Click here for the full article…

(Source: earthpolicy.org)

Sunday, March 25, 2012

Protect El Yunque Rainforest from Corrosive Development

Protect-el-yunque

El Yunque is a sacred place, and the only true virgin rainforest in the US National Parks System. It is the most biodiverse place on the island of Puerto Rico and should be valued by all people across the world as a location of global natural heritage. The rainforest preserve is now under threat from corrosive development projects, including housing, transport, energy and tourism.

The new Protect El Yunque site is open to anyone who wishes to share their experiences of the beauty and energy of El Yunque, or to post updates on events, petitions, and efforts to halt all attempts to invade this tropical paradise with short-sighted development. (Se puede agregar información en inglés, en español, o como quieran.)

Thursday, March 22, 2012

Today is World Water Day: more than 1.2 billion people have no access to clean, drinkable water. As much as half the world’s population struggles with little to no reliable access to clean, drinkable water. We are overconsuming our global fresh water resource at unprecedented, unsustainable rates. All of us owe it to future generations to correct our water management patterns, to make sure they will have what they need to survive and to enjoy their time on this Earth. For a brief review of the facts: 

  • The Earth contains 366,000,000,000,000,000,000 gallons of water. 
  • That’s 366 quintillion gallons of water. 
  • Only .007% is potable. 
  • Today 7 billion of us share this precious resource. 
  • The ice on Kilimanjaro has shrunk 85% in 100 years. 
  • The Aral Sea — once Asia’s second-largest lake — is one tenth the size it was 50 years ago. 
  • Groundwater depletion in Mexico City has made it sink 30 feet. 
  • 2 million residents now lack piped water.
Across the world: 
  • A child dies every 20 seconds from a water-related illness.
  • Women spend 200 million hours per day collecting water. 
  • There are more mobile phones than in-home faucets or toilets. 

Get educated and find out what you can do to make the world’s fresh water supply last longer. 

Wednesday, March 21, 2012

No Sympathy for the Great Vampire Squid

In April of 2010, Matt Taibbi, the untiring investigative reporter, wrote in Rolling Stone the single most epic lament to emerge from the 2008 financial collapse and subsequent worldwide economic turmoil. Describing the legendary and problematic firm Goldman Sachs, he wrote: “The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

The metaphor has stuck, and now people in the financial community, in government, in the Occupy Wall Street movement, populists, libertarians, Tea Party Republicans, even international policy makers and some at Goldman itself, repeat the moniker “vampire squid”, in part because it explains a lot about the many-tentacled profit-extraction machine the firm is devoted to being. It rings true. 

The rising culture of resistance to remote extractive finance has led to major financial sector regulatory reform, a Consumer Financial Protection Bureau, and to repeated rounds of uncomfortably intimate “stress tests” for major banks, to determine whether their capital holdings are substantive, speculative or entirely too fictional. This week, it led to a high profile defection from Goldman Sachs, in which Greg Smith, an executive of the firm, resigned and published a New York Times op-ed explaining the many reasons he could not in good conscience continue to work there. 

Among the reasons, he wrote: "It makes me ill how callously people talk about ripping their clients off". Smith argued that there is a culture of moral bankruptcy running so deep the firm seems to have morphed into an engine for profits of a specific kind that depend on working against client interest. Smith elaborated, explaining that the company was too important to the world financial markets to continue to behave in such a flagrantly “toxic” manner. 

In his words: 

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

The Christian Science Monitor reminded readers this week that there is real credibility to this analysis: 

The bank paid $550 million in 2010 to settle civil charges that it misled investors while selling them investments in the U.S. housing market as the bubble burst — even as Goldman reaped hundreds of millions from its own bets against housing.

Many have been critical of Goldman Sachs for allegedly altering its entire operating structure, at least in legal terms, in order to receive direct assistance from the United States government, to cover up or get rid of bad investments, even as it has—allegedly—continued to behave in a way that works deliberately against its clients’ interest. 

So the question begins to arise: why have so many in the financial industry, among top economists and government policy makers, defended Goldman Sachs, as evidence continues to emerge that Taibbi’s characterization of a “great vampire squid” undermining sound policy and medium- to long-term economic stability, is the fairer view? A little conceptual back-and-forth might help to illustrate how policy regarding toxic finance has developed in the wake of the 2008 collapse. 

Sympathy for the vampire squid: The argument has been made many times that “too big to fail” means “to useful to challenge”. Such institutions need to be massive, and highly connected, rooted in and reaching out to as many segments of the wider society, because this will have a constructive and even stabilizing effect on the wider society and the financial markets themselves… or so the argument goes. 

No sympathy: The prevailing counter-narrative is that such a massive, highly connected financial institution, rooted in and reaching out to so many segments of the wider society, devolves from a purveyor of legitimate services, fostering genuine value for clients and society, into a wealth extraction engine, addicted to the kind of operations whereby the firm takes money without its business partners fully understanding how, or the degree to which their relationship with the firm might be detrimental to their own interests. 

Sympathy: Finance is the foundation of a sound economy. Aggressive finance is the foundation of a boom economy. If we want the US economy to grow, as it did in the 90s and the 2000s, we need to let big banks operate in as unfettered a manner as possible—”laissez-faire”, let them be and do as they wish—so that fresh capital flows to as many people and institutions across the economy as possible. 

No sympathy: Historically, it turns out that laissez-faire economic policies create unhealthy dynamics defined by a hyper-concentration of wealth and influence that routinely and systematically impedes the flow of fresh capital to newcomers and to those not already on the inside of the privileged coven of interests tied to what is—far from an open market—a rigged game. Goldman Sachs is increasingly facing criticism that its many “tentacles” are used to rig markets and financial products so that it will profit, even when everyone else sees wealth evaporating. 

Sympathy: The atmosphere of deregulated overlapping financial markets, spanning personal banking, insurance, securities, commodities and real estate, put institutions like Goldman Sachs in a position of perhaps undue influence, but given that, they were required to develop complex mathematical systems for hedging against the corrosive tendencies of a financial system without adequate protections or firewalls. 

No sympathy: The credit default swaps, mortgage-backed derivatives, anonymous hedge funds and subprime mortgage resale products, were specifically designed to distance the firm from risk, without reducing overall risk. It was a shell game that sometimes worked like a pyramid scheme, sometimes like a labyrinth of booby traps and “blood funnels” laced with a handful of sweeteners to tease investors into handing over their trust. 

Conclusions: What we know about the period from 1998 through 2008, when the repeal of Glass-Steagall led to the compounded integration of financial firms, the overlapping of credit-based speculative investments, and an overly intimate relationship between banks and policy-makers, is that it led financial institutions to replace capital-in-reserve with speculative credit claims and financial instruments designed to make borrowing against future earnings easier, without revealing the ephemeral frame of the edifice. 

In other words, banks gave into the temptations of a marketplace in which it became possible to use assets from one department to borrow against losses in another department, often using complex accounting methods to claim wealth against which it would then be possible to borrow from the government and from other financial institutions. The result was: not enough cash in the system to fund the wealth claims of the whole of the marketplace. 

Overlap and redundancy were conducive to inflating the apparent wealth to which all had access, while the effect was to actually reduce the amount of real capital available to any given borrower or investor, except the most privileged. Credit default swaps and bundled mortgage-back securities were house-of-cards instruments, and from the market-wide global view of a firm like Goldman Sachs, all of this was actually self-evident.  The numbers made the peril clear. 

We know from the 2010 settlement that Goldman Sachs deliberately set about misleading its clients so that the firm could leverage the risk dispersed through the entire marketplace for its own benefit, even, if not especially, where that tactic would harm its own clients. Deliberate fraud was carried out, on the flimsy claim that if the clients really cared, they would figure it out for themselves. 

This is the morally corrupt and corrosively “toxic” culture Greg Smith spoke of in his landmark op-ed for the New York Times last week. According to Smith, this culture still prevails, and is enough to make him viscerally uncomfortable with the very idea of continuing to work for this firm. He argues that every individual who has participated in this kind of toxic activity, and who holds this cultural view that profit-seeking is legitimate even where it directly attacks the interests of the clients with whom one claims to have a good faith contractual relationship, need to be purged from the financial markets.

The more significant question, ultimately, is how to eliminate a “culture” of corruption and hostility to client interest, if one must presume the innocence of people at work in the system affected by that corruption? Prosecutions could be one choice. Another could be conditional lending from all government institutions. Another could be new regulations that make specific types of misleading activities into federal crimes, with significant prosecutorial discretion to file independent charges for every individual act of fraud. 

The stock market itself may also play a role: if testimony like that of Greg Smith affects the dominant views of media, the public and policy-makers, as well as investors, firms like Goldman Sachs will find it far more difficult to make money in the way that Smith and others allege they have been doing. Ultimately, while the presumption of innocence is a fundamental hallmark of a democratic society, and a necessary sophistication in the constructive deployment of public opinion for positive change, it is imperative that we not overlook the facts in evidence or the already proven corrosive quality of specific types of financial activity. 

A solution might look like the following: 

  • A sound first step would be for shareholders to demand 100% accountability from all executives who in any way, shape or form, participated in anti-client behavior or in circumventing contractual or legal obligations. 
  • Parallel to this, a credible criminal investigation should be undertaken, based on solid evidence of deliberate wrongdoing that has already emerged in previous litigation or entered the public domain through media or testimony like that of Smith. 
  • The firm will ultimately have to begin to err on the side of total transparency, protecting client privacy, but not hiding its business methodology from clients, shareholders, legal authorities or the general public. 
  • Its survival will be determined not by the ability of highly placed allies to aid the firm in undue gain, but by its actual value to shareholders, clients, the financial marketplace and to society more broadly. 
  • If the numbers are not there to support its continued leadership of the top flight of financial sector firms, then it will lose that position, and the markets will force the firm to find its level or be “unwound” through a responsible bankruptcy process. 
  • Whether by shareholder takeover or by government involvement, a new fleet of top executives could come in who would be rewarded for transparency, solvency, and good-faith follow-through on client accounts. 

The current round of US government “stress tests” has been highly criticized for allowing firms like Goldman Sachs to appear to be more stable and more founded on real wealth than in fact they are. A concerted effort will be needed, across economic reporting by the media, government examination and regulation of finance, and the financial sector itself, to discern precisely where the line is between real and fictional wealth claims, and urge all financial practitioners to move their firms back to activities and long-term projections based on real wealth, not fictionalized claims of future potential gain, esoteric financial instruments or rigging of public policy to favor bad actors.

Tuesday, March 20, 2012

This display of in-motion sand art, by Kseniya Simonova from the Ukraine is one of the clearest examples of how intuition and insight allow an artist to draw forth and propagate the human story that makes both the greatness and the tragedy of our history what they were. 

Sunday, March 18, 2012

Deep Green Daily: Support Bill Barron for US Senate

Bill Barron is running as an independent for the United States Senate seat currently held by Republican Orrin Hatch, of Utah. Bill’s commitment to our achieving our absolute best in terms of stewardship of the natural environment, conservation of wilderness, natural resources and life-sustaining ecosystems, is the foundation for a campaign that will give Americans of all political persuasions more of a voice in federal government policy than at present. Support Bill Barron, and help to build a freer, greener future for us all: BarronforUSSenate.com

Read the Deep Green Daily here…

Saturday, March 17, 2012

Regarding Imperfection

We move from imperfection to imperfection
certain that we know something
beyond the agile & limitless
fabric of constructive interpretations

we conjure & distribute gazes
that work like magnets for humility
& so we create & observe the vastness
of human frailty with the same act… 

Deep Green Daily: Editorial note on going deep green

Deep green economics means thinking beyond sustainability, to forge a future that is not only characterized by a balanced relationship with nature, but by a thorough and civilization-wide commitment to a world in which the principle is not just respect, awareness and sustainability, but pervasive, mutual flourishing, and an economic model generative of more resources, and more quality of human life, not reliant on processes which undermine such aims.

Read the Deep Green Daily here…

Monday, February 6, 2012

Oil Spill in Gulf of Mexico Ongoing for Seven Years

NEW ORLEANS (CN) - A broken underwater wellhead has been dumping 4,000 gallons of oil a day into the Gulf of Mexico for seven years, and neither its owner nor state or federal governments have informed the public or seriously tried to stop it, six environmental groups claim in Federal Court.

Lead plaintiff Apalachicola Riverkeeper sued Taylor Energy Co., acting with its co-plaintiffs as the Waterkeeper Alliance.

"This lawsuit is necessary because of Taylor’s slow pace in stopping the flow of oil from its well(s) into the Gulf," the complaint states." To the best of the Waterkeepers’ knowledge, this contamination continues after seven (7) years of flow.

"This lawsuit is also needed because of the secrecy surrounding Taylor’s response to a multi-year spill that threatens public resources. Such secrecy is inconsistent with national policy that ‘Public participation in the … enforcement of any [Clean Water Act or RCRA] regulation … shall be provided for, encouraged, and assisted." (Brackets in complaint.)

[Keep reading…]

Wednesday, January 25, 2012

Congratulations to the people of Egypt

… for showing the very best of what is human in all of us, for showing that major change can come because millions of people peacefully come together to make it happen.

 honor your heroic achievement.

Full SOTU Transcript: “An America Built to Last”

Remarks of President Barack Obama – As Prepared for Delivery
"An America Built to Last"

Mr Speaker, Mr Vice President, members of Congress, distinguished guests, and fellow Americans:

Last month, I went to Andrews Air Force Base and welcomed home some of our last troops to serve in Iraq. Together, we offered a final, proud salute to the colors under which more than a million of our fellow citizens fought – and several thousand gave their lives.

We gather tonight knowing that this generation of heroes has made the
United States safer and more respected around the world. For the
first time in nine years, there are no Americans fighting in Iraq.
For the first time in two decades, Osama bin Laden is not a threat to
this country. Most of al Qaeda’s top lieutenants have been defeated.
The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home.

Read More

Tuesday, December 27, 2011

Opportunity Finance Network: Crowdsourcing Job Creation

The Opportunity Finance Network is now taking donations to channel funds from concerned citizens to community investment projects that will help finance and create lasting new jobs in low-income communities across the United States. Starbucks is one of the most visible partners, and is giving bracelets that read “Indivisible” to anyone who donates $5 or more. The project is helping to crowdsource the national investment in new job creation. 

One of the keys to long-term economic recovery has to be the rebuilding of the base of capital at the community level, where more people are able to leverage their economic activity to move up into a vibrant and sustainable middle class. With Congress in disarray over opposition to such policies, concerned citizens, businesses and social enterprises are now taking the lead in developing or redeveloping affordable asset-building at the community level. 

The Opportunity Finance Network may be just one example of what could be a new national paradigm for financing projects that lead to sustained job creation: people put in what they can, when they can, and institutions devoted to fomenting socio-economic vibrancy, not seeking profit or personal or factional gain, devote those funds to local entities, individuals and start-up businesses, NGOs and community groups, that will provide not only jobs but a way to sustain them. 

The project is another example of what seems to have been the defining characteristic of political and economic change in 2011: people are simply taking the reins where powerful institutions will not or cannot lead. From citizen volunteering to Tahrir Square to Occupy Wall Street, to the incredible apotheosis of crowdsourced do-gooding, like the Kiva microlending initiative, people are now taking control of the human condition, whether governments support them or not. 

Working together to effect positive change is what the most virtuous projects of all kinds do, and need to do, and 2011 has seen upheaval across the spectrum, as citizens, students, innovators, artists, educators and entrepreneurs, are finding new ways to use the collective will of “the crowd” to produce better outcomes in the vast “elsewhere” that is the world at large.

People are connecting to people to create solutions to big problems, or to brainstorm expressions of discontent. The Opportunity Finance Network is a start, a jumping off point, from which many good things can happen for building community-level economic vibrancy, through Community Development Financial Institutions (CDFI). It is the people working at the human-scale, in the community, creating new projects and putting them into practice, that will make the ultimate difference. 

Tuesday, November 29, 2011

U.S. Needs Immediate, Indefinite Moratorium on Foreclosures

The foreclosure process is being systematically misused by the banking sector to manipulate books filled with “troubled assets” and to put institutional short-term solvency ahead of the long-term interest of the nation’s communities, people and the wider economy. This is demonstrable, and can be fixed, if we start to take seriously the simple fact that we need to stop foreclosures now, until such a time as the banking sector can do business without depending on extractive evictions to close gaps in its accounting. 

What, precisely, is the manipulation that is so worrying, and which we need to prevent in order to restore fiscal and financial sanity to our economy? It is the manner in which major financial institutions have come to see the lender-borrower relationship as an entirely one-sided affair, in which borrowers sign away virtually all basic rights and lenders can use leverage, coercion and a numbers game, to make sure that in the exchange of goods and services, wealth always flows in one direction. 

In a depressed market, this puts borrowers (homeowners) at a flagrant, and disturbing disadvantage. Without any plan whatsoever to provide some humane solution to families facing hard times, banks facing hard times simple extract wealth from those families, and use the extracted wealth to cover up the bad bets they have made.

The same institution that seeks to punish in the most inhumane way those who have sought to have a good-faith relationship with them, for having anticipated higher income than they have been able to muster, did the very same thing and finds itself in the very same crunch. The only difference is that the individual borrower is thrown out on the street, while the institutional borrower (borrowing from other banks and directly from taxpayers, including those being thrown out on the street) is able to gloss over the problem, using someone else’s wealth. 

A financial system in which the people who make the system work are left with no options and no rights, with no ground to stand on and no way out of mounting hardship, is not a system for financing a dynamic market of exchange in a democratic society, but rather a broken mechanism that undermines the health of the whole in service of narrow interests. Such a dynamic cannot promote healthy capital investment or the growth of a solid, vibrant, democratically empowered middle class. 

Over the last three years, we have seen clear evidence that major financial institutions took taxpayer funds, through the Troubled Asset Relief Program (TARP), also commonly called “the bank bailout”, only to invest that money in repairs to the bottom line, bonus payouts and the direct funding of unjustified profits and dividend payments. The money was not generally used to repair the mortgage management process, to secure borrowers that were now underwater because the banks had overvalued the market and overestimated the potential for real capital return. 

That taxpayer money was absorbed into the banking sector, without the benefit flowing to those who fund the banking system. And, it was taken on top of the loans that are taken every day by banks from the Federal Reserve, as instruments for doing business, and as a means of subsidizing what is often a faulty approach to allocating resources, investing in the future, or asset-building—shoring up families and communities against economic unraveling. 

We need a moratorium on foreclosures, because they are not economically justifiable, they are not financially justifiable, they are not justifiable in terms of their impact on the fiscal health of any level of government, and because they are working like a cancer to undermine economic recovery, impede the restoration of the middle class, and degrade the future potential of our communities, our children, and our nation.

The foreclosure process, as it has been deployed, over the last several years, has morphed from a rational tool for maintaining a healthy credit-based housing market into an instrument of imbalance, promoting undemocratic manipulations of economic reality, useful mainly for building dangerous pathologies into the credit markets. This is, in part, why lending has not recovered even as profits in the banking sector have. 

When financial institutions become accustomed to numerical improvements in their accounting from unjustified borrowing, aggressive lending and fee structures and a lender-centered foreclosure process, the pathologies built into the system make it less likely those institutions will provide real value to the wider economy. Just as power corrupts, so does easy cash, and so we need to take seriously how vitally important it is for out banking system to require banks to earn the money they label as profit. 

There are vital and irrevocable differences between deposits, holdings, assets, earnings, profits, gambles and accounts receivable, and just as individuals are required to distinguish between the different values of those different kinds of financial phenomena, banks must be accountable for the fundamental differences between and among the respective values of those distinct phenomena.

The foreclosure moratorium should: 

  • be indefinite in length, and universal;
  • be accompanied by comprehensive federal investigations into the manipulation of asset valuation, lending projections, profit statements and the foreclosure process, by financial institutions; 
  • remain in place until such a time as the housing sector has begun to work for people, families and communities; 
  • be focused on preventing any foreclosure anywhere from being a manipulation designed to cover bad financial planning by lenders. 

The economy needs to work for everyone. 

Group of Lecce Issues Statement on European Integration

GoL_Reforming_European_Economic_Governance.pdf Download this file

Amid the mounting fiscal and economic crisis that is threatening to undermine the project of European integration, the Group of Lecce has issued a new statement on the need to reform European economic governance. The Group of Lecce aims to develop policies “to strengthen economic and financial multilateralism”, strengthening the democratic underpinnings of the Union, along with the dynamism of the European economy, through advanced ongoing cooperation. 

According to this report: “we do not see any alternative to reinforcing cooperation and to achieving stronger unity across and within the EU, with the very same spirit that has animated in the past all major reforms of the European institutions. Indeed, a major step forward to greater cooperation and unity would make Europe the strong international player that all its national economies need to face the challenges of today’s globalised world.”

As today’s more-than-ever integrated Europe faces a crisis of unprecedented proportions, and some in government speak openly of dismantling, at least in part, the common currency or other mechanisms for long-term cooperative integration, the Group of Lecce argues that major structural reforms are needed, to move the Union closer to real, viable, and more agile, policy integration. 

The report also concludes that: “We strongly believe that the apparent trade offs between democracy and efficiency, and between solidarity and rigor in managing EU economic policies can be resolved by establishing an adequate system of checks and balances, and by limiting to the extent possible emergency and transitory intergovernmental measures and actions. Severe difficulties seem to lie in the different degrees of integration characterizing the Euro area and the other EU members. A higher economic and fiscal integration is necessary for the European Monetary Union to work effectively…”

Tuesday, November 15, 2011

Report Reveals Lies about Shale Gas Job Creation

FalseJobsPromise-Fracking.pdf Download this file
This report from Food and Water Watch finds that while the natural gas industry is aggressively promoting hydraulic fracturing (“fracking”) and shale gas drilling as a way to create tens of thousands of highly paid jobs, the reality is such jobs rarely materialize and where there has been job creation, it has been limited at best. Whereas the flawed PPINYS study predicted 125 jobs created for every new shale gas well, independent analysis finds there have only been 2 created for each well, making the industry remarkably poor at job creation, given the billions of dollars invested.