Tuesday, February 23, 2010
There are some startling claims made in Matt Taibibi's latest piece for Rolling Stone Magazine on the financial collapse that led to the economic meltdown.
Here is just one paragraph from his compelling piece:
"The bottom line is that banks like Goldman have learned absolutely nothing from the global economic meltdown. In fact, they're back conniving and playing speculative long shots in force — only this time with the full financial support of the U.S. government. In the process, they're rapidly re-creating the conditions for another crash, with the same actors once again playing the same crazy games of financial chicken with the same toxic assets as before."
As the ramifications of this crisis ripple out in the world we now see some of the larger macro effects not just in terms of high unemployment, increased poverty and economic dislocation but in terms of the way entire nations and federations of states function. For example, the financial crisis now faced by countries like Greece, Italy and Spain seems to be about to threaten European unity. This is well described by Mathew Yglesias in American Prospect
The 21st-century effort to broaden and deepen that project, through the expansion of the European Union and the more robust political integration of its members, is one of the most ambitious efforts of our own time. The result is the world’s largest economic area and a continent that features a kinder, gentler social model than the one prevailing on this side of the Atlantic. In a number of ways, this united body has weathered the economic downturn better than the United States. But as the recession drags on, the EU’s underlying approach is showing some serious flaws—experienced most acutely as a crisis over the Greek budget deficit—and threatening both the viability of the EU and the global economy as a whole.
As Zach Carter makes clear all of this could spread and creating "a very real risk that the investor “unease” could spread to Portugal, Ireland, Spain, Italy, and by extension the European Union and the global economy. The bonuses at Goldman Sachs and J.P. Morgan Chase this year were not a sign of renewed strength in the global economy."
What is even more worrying that the Wall Street operators have not learned many lessons and are still engaged in risky behavior. Why have Congress and the President have been so slow to act to ensure that the 2008 meltdown is never repeated? Could it be that as Robert Kuttner points out because too many (politicians)were complicit.
We can at least expect the media to point out the yawning gaps in our national and international security--but so far only Rolling Stone seems to be prepared to tell the truth about what is occuring. Why?
Tuesday, February 9, 2010
I am reading Plan B 3.0 Mobilizing to Save Civilization by Lester Brown (You can get a free download of the book at the EarthWatch site
I know--the title sounds a bit hysterical--a bit Armagaddeonish but Lester Brown is no tabloid alarmist. He has a serious bio and credibility--President of Earth Policy Institute--described by the Post as "one of the world's most influential thinkers." It is a sobering read--here are a few highlights:
* China has now overtaken the US in consumption of basic resources and is on a trajectory to consume more cars and oil well above the world production. It believes that the US disposable lifestyle is right for China just as India now does at a price that the planet cannot provide or sustain.
* We are in a "race between tipping points in nature and our political systems as more states fail and we head for the kind of decision points described in Jared Diamond's book Collapse--in which some societies find the will to save themselves but others go under.
* In six of the top 20 failing states at least 40 percent of the population is under 15. Young people without jobs and a future will mean more political instability ahead.
*Desertification continues as a result of overproduction and mismangement of land affecting fast growing countries like Nigeria, Africa's largest country.
Lester Brown calls for a restructuring taxes and to reorder fiscal priorities--the US for example spends more money on defense than all the other countries combined. The costs of the Iraq war alone will end up being around $2 trillion which could have been better spent preparing for the emergency we face. The budget he sets out may provides a way we might restore some sanity to our US society and if we managed-by some miracle to get our own house in order so we might be able to devote roughly one third of the US military budget to providing basic health care, education while eradicating poverty and disease around the world
Where Brown is weaker is on the way we can work internationally and globally to solve these complex problems. The book gives you a feeling it was written for a future historian looking for evidence that someone in the early part of the 21st century actually "got it." It is all too easy for the media to ignore this book and others who should know better--politicians and commentators to dismiss it by saying that only policy wonks would be really interested in the detailed recommendations. So we are left with the question if the intelligentsia is out to lunch on the issues of global survival--do we really have a hope? How do we at least start a conversation that can connect with the intelligent caring individuals who will need to support some of the sound policies advocated in this timely book? Are we way too cynical to even think we can start to carve out a road to recovery and sanity?