Earthside Comments: The problem with the direction of the Obama and Bush administrations' handling of the economic crisis is that it is retrospective. The goal of bailouts and stimulus packages is "stabilization" ... in other words, getting back to the balloon-filled days of consumer, corporate and government borrowing and spending, the resulting debt we can all pay back later.
But, as Jim Kunstler points out (and as we have said for years now), those days are gone, for a variety of reasons. Instead of trying to re-inflate the bubble, Obama should be truly bold and be proposing the new policies that can leap-frog us into the genuinely 'new' economy -- the sustainable economy, the steady state economy, the post carbon economy, the decentralized economy.
Bailouts of convoluted and overly complex financial (and automobile) corporations -- that are also insolvent -- is going backwards. Citigroup and AIG should fail because they made horrible investments and are broke; GM should go bankrupt because even its forthcoming new business model is going to be very 20th century (the now you see it, now you don't 'Volt' notwithstanding).
If Obama and the Congress will not finally get on board with the American people -- dumping their corporate campaign contributors -- then it is going to be time to act on the words found in the Declaration of Independence that we have invoked here before.
And ... we are starting to get a bit impatient.
Forget About Recovery | James Howard Kunstler
At the risk of confirming my critics' dumbest charge -- that I am a "doomer" -- the mandate of clarity requires me to ask: to what state of affairs do we expect to recover? If the answer is a return to an economy based on building ever more suburban sprawl, on credit card over-spending, on routine securitized debt shenanigans in banking, and on consistently lying to ourselves about what reality demands of us, then we are a mortally deluded nation. We're done with that, we're beyond that now, we've crossed the frontier and left that all behind, and we'd better get our heads straight about it.I maintain that there are countless constructive tasks waiting to occupy us on a long national "to do" list for rebuilding a national economy, but they are way different than the ones currently preoccupying government and the mainstream media. The Obama White House, Congress, and The New York Times are hung up on exercises in futility -- "rescuing" banks and insurance companies that cannot be rescued (because they are hopelessly trapped in "black hole" credit default swaps contracts), and re-starting a "consumer" binge that was completely crazy in the first place, based, as it was, on a something-for-nothing standard-of-living.
Meanwhile, if the buzz on the blogosphere is a measure of anything -- and I think it is -- then a new consensus is forming out there about where to start doing things differently. Unfortunately after less than two months in office, President Obama finds himself awkwardly behind-the-curve on this. It begins with the understanding that a general bank rescue is hopeless and, going a step further, that the people who caused the train wreck of "innovative" securities have to be prosecuted. The public's collective voice on this is muted but growing. It has been muted by the general air of blackmail that the banks have used to enthrall policy and opinion -- the "too big to fail" idea -- in effect holding the nation's future for ransom.
Last week, New York State Attorney General Andrew Cuomo hauled Bank of America chief Ken Lewis into his office to explain who, exactly, received an aggregate several billion dollars in bonuses late in 2008 after the US Treasury forked over billions of dollars in TARP money to his bank. That was a good start. Mr. Lewis, being lawyered-up to the max, had the temerity to reply that answering the question would compromise his ability to keep talented people in his employ. For that impertinence alone, Mr. Lewis ought to be dragged over fifteen miles of broken chardonnay bottles behind a GMC Yukon -- but that is not how we do things in American jurisprudence. To be more realistic, a simple indictment would be in order, and then Mr. Lewis can answer this question, and a few others, in the comfort of an air-conditioned courtroom. Ultimately, that might lead to Mr. Lewis becoming the wife of a bodybuilder in one of New York State's houses of correction -- a just outcome that would go far in rejiggering the nation's expectations about how people in authority ought to behave. And such an outcome might lead to the conviction of many other brides-to-be from the Wall Street debutante pool.
Now it has come to light, just last week in the wake of AIG's latest bail-out, that previous AIG bail-out money to the tune of $50 billion was distributed to a set of banks including Goldman Sachs (former employer of then Treasury Secretary Hank Paulson and then New York Federal Reserve Governor Tim Geithner), plus Morgan Stanley, Merrill Lynch, Mr. Lewis's Bank of America, and a long list of European banks with operations in the USA. Since the transactions took place in New York State, the investigation of these irregularities alone could solve the unemployment problem here if NY Attorney General Cuomo were given a free hand in hiring staff to depose everyone involved -- including the hiring of caterers to bring in coffee and meals for round-the-clock proceedings.
All of this raises another awkward question: where is United States Attorney General Eric Holder in this situation? Surely the federal statutes offer some grounds for inquiring about the misuse of Treasury funds -- and many other issues arising from Wall Street's stupendous orgy of misbehavior. What I'm hearing out in the blogosphere is a growing clamor to call people to account before we are really able to move on to the massive task-list that awaits us in rebuilding our economy.
The bigger question for now is whether any of these authorities will act effectively before the public simply goes apeshit and starts burning down Greenwich, Connecticut. The dangerous shift in public mood is liable to occur with shocking swiftness, in the manner of "phase change," where one moment you see a bewildered bunch of flabby clown-citizens vacuously enraptured by "American Idol," and the next moment they are transformed into a vicious mob hoisting flaming brands to the window treatments of a hedge funder's McMansion. The moment of opportunity for avoiding that outcome is looking sickeningly slim right now.
Another thing that President Obama can set into motion anytime -- and pull himself back to the head of the curve of leadership -- is to either by executive order or by proposal to congress, shut down the credit default swap system for a period of time while procedures are drawn up to place all these dubious contracts in a "clearing" market, where the holders of them will have to come clean about what they're sitting on. The lack of this procedure is allowing zombie banks to hold the United States hostage for never-ending bail-out ransoms. None of these banks are going to survive another six months anyway, so the basic blackmail motif that the whole money system will collapse if ransoms are not paid is a bluff that has to be called sooner or later in any case. So Mr. Obama might as well get on with it.
Once these two matters are dealt with -- an earnest start-up of prosecutions and disabling the credit default swap blackmail racket -- then perhaps a stressed-out and impoverished public might be induced to not go apeshit and instead get on with the mighty task of rebuilding our nation along lines that have a plausible future.
New Economic Model Helps Earth | George Plumb/.BurlingtonFreePress.com - Vermont
There is a very close relationship between the economic crisis we are facing, the many environmental problems stressing the Earth and population growth. It is time for a new economic model, one that better serves both the needs of people and the Earth.At the root of the economic crisis is the myth that the economy can grow forever with new housing construction and the mortgage fiasco a major part of this. This myth is even more false in a world where the growth is dependent on cheap fossil fuels that have probably reached their peak production.
The problem with the growth economy as an economic model is that it conflicts with the principles of physics and ecology. There is a limit to economic growth, and there is mounting evidence that global economic growth is having negative effects on the long-term health of the environment, resulting in climate change, loss of biodiversity and pollution of our air and water.
Fortunately there is an alternative economic system: the steady state economy as first envisioned by economist Herman Daly. The key features of a steady state economy are: (1) sustainable scale, in which economic activities fit within the capacity provided by ecosystems; (2) fair distribution of wealth; and (3) efficient allocation of resources. A steady state economy can be compared to a mature and healthy Vermont forest ecosystem where a wide variety of fauna and flora living in healthy balance, but the volume is not growing.
Leading the movement to transition to a different economy is the Center for the Advancement of the Steady State Economy (www.steadystate.org). CASSE states that "Environmental protection, economic sustainability, national security, and international stability are all threatened by perpetually increasing populations and per-capita production and consumption."
In Vermont we are also fortunate to have the Gund Institute for Ecological Economics at the University of Vermont. One of its fellows is Joshua Farley, Ph.D., who co-authored with Herman Daly in 2003 the book, "Ecological Economics: Principles and Applications."
How do we transition from our present growth economy to a steady state economy? Like any major change, this will require a paradigm shift. The same fiscal policy tools that have been used to promote an economic growth policy will need to be used to promote a steady state economy. We will have to gradually readjust the current spending, tax, interest rate, banking, regulation and trade policies that are set for growth.
As individuals we can help to transition to a steady state economy by buying local, buying organic, vacationing as close to home as possible, limiting consumption, growing at least some of our own food and shifting to green energy. Becoming involved in one of the several community sustainable living networks that are organized by the Vermont Earth Institute will also help lead to a steady state economy.
According to an analysis of the Global Footprint Network's ecological footprint data, U.S. bio-capacity -- domestic surface area available to produce resources and assimilate waste -- provides only 48 percent of our annual subsistence. Fifty-two percent is gained by importing bio-capacity, drawing down resource reserves and degrading habitat. It also calculates that to align population with actual domestic bio-capacity the United States could support only 147 million -- 158 million less than today!
Whatever one calls it, Herman Daly's steady state economy, the Gund Institute's "ecological economics," Bill McKibben's deep economy, or Peter Brown's whole Earth economy, it is time that we as a society started to move in the direction of an economy that provides economic benefit to all people and protects the ecosystems of the earth at the same time.
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