February 12, 2009

Sorry is not enough

Filed under: Economy, Politics/News — Tags: , , — 4fooey @ 11:00 am

This week we got apologies from all the UK bankers who were, to a greater or lesser extent, responsible for the collapse of British banking. But what exactly are they apologising for? If they feel they have something to apologise for, then they must feel that somehow they have made some mistakes and they are to blame for the mess we’re in. In this case, they should be punished or sanctioned in some way: they should be held to account for their actions. In this case, sorry (how ever many times they say it) is not good enough. Their collective apology is reported here: Former banking bosses say ‘sorry’ .

It was relatively easy for the bank managers to turn up this week and suffer the indignity of having to apologise (and their apologies seemed well rehearsed), but they personally will be able to keep all the millions that they made in salaries and bonuses — and you could ask where are all the billions of profit these companies have made over the past few years. The banks have really screwed up and it’s taxpayers who had to bail them out and will be paying for years for their mistakes — this is very unfair. And to cap it all, it turns out that Mr Hornby, the former boss of HBOS, is still getting £60k a month for his advice – this is a scandal, bearing in mind we all more-or-less own the bank.

Yes the regulators and the government are also to blame for the bank crisis, plus we were all complicit in the credit boom and housing bubble, and the UK banks were partly victims of the worldwide problems in financial markets (in particular the sub-prime scandel in the US), but it’s the actions of these large financial institutions and in particular their executives that got us into this terrible mess. I’m not sure how this could be done, but the banks and their leaders should be made to pay for their mistakes.


November 3, 2008

The Candidate of Hope

Tomorrow, the American people go to the polls and we all hope they will make the right choice, finally putting the last eight years behind us. If you look back over the presidency of George W Bush, it has been a tragic case of missed opportunities, and some would say terrible disasters.

The catalogue of missed opportunities and disasters is a dismal and shocking one:–

– Iraq, the biggest disaster of them all; the US believed Iraq had WMD when they had none. Their invasion of Iraq, with their “Shock and Awe” campaign unleased death and destruction on a weak country — the country fell in 2-3 weeks, overwhelmed by the mighty US military. Since then it is estimated that around 100,000 Iraqis have died, many more bereaved and injured, with terrible inter-ethnic fighting, excerbated by Al-Quaeda and Iran. Everybody’s lives there turned upside down, a country wrecked. There’s nothing about it to be proud of.

– ‘War on Terror’, the most ludicrous statement, lacking even the merest insight into the problem of jihadist fundamentalism. Tactically the so-called ‘War on Terror’ is probably unwinnable. From 911 onwards the US has lashed out, killed many thousands of innocent people, wreaked havoc across the middle-east, and all for nothing. They failed to tackle the root of the problem; disaffected and angry young men, with misguided views of islam, who have been manipulated by their masters. The jihadists have a politcal and religious agenda which has only been strengthened by the ‘War on Terror’.

– Afghanistan, a lot of people have said this is the real battle to be fought, although others say it’s a battle that cannot be won. The Taleban should not be allowed to regain power, but it seems that the only long-term solution for this country, which has been at war for over 30 years (Russia invaded in the 1970s), is a political one. And bordering Afghanistan is Pakistan, now unstable and greatly weakened, and the training ground for jihadist fighters — and it does have nuclear weapons. The middle east is as unstable as ever, Eastern Europe is more tense, with a resurgent Russia, and Africa is a terrible failure (Congo, Sudan, Zimbabwe) – the world is in greater danger now and will see continuing conflict in these areas.

– Guantanamo, how can this be at all justified, to anyone with any sense of justice or what is right. How could the US lock people up without trial, for many years in some cases, without proper legal process. GW Bush has also admitted the existence of secret CIA interrogation camps where they have used ‘water-boarding’, humiliation and other punishments — this is torture and totally unacceptable. Guantanamo should never have been allowed to happen, and should now be closed. If people have commited crimes they should be dealt with in the proper way.

– Palestine, this problem has been allowed to fester. Eight years without any real progress at all. Meanwhile the tit-for-tat violence goes on, with Israel the dominant, brutal force killing thousands of Palestinians and illegally occupying territory, and the terrifying use of suicide bombers from the Palestinians side. And during this time, Hamas have taken over throughout the West Bank and Gaza Strip.

– Financial crisis and meltdown, and now an almost certain lengthy recession. The markets were not regulated enough, people borrowed too much, spent too much, consumed too much, and now the whole system is busted. The US Trade deficit, plus the cost of bank rescues and final cost of Iraq war leaves the US over $10 trillion in debt. A bankrupt state propped up by foreign money. The consumerist society also needs a major rethink, if we are to avert environmental and social collapse.

– Climate change, very little has been done to decrease CO2 emissions and halt climate change, despite the mounting evidence. Energy and resource use has carried on, and now the earth may be faced with catastrophic, environmental collapse, unless we take dramatic steps to stop the destruction. The US could and should be leading the effort.

It’s too easy to hate America, or what it does, but as a concept or idea, their multi-ethnic, liberal democracy is probably the best model we have. America is very good at some things: science, technology, medicine, and could be a major force for good on the foreign and diplomatic stage. It often appears to have the best of intentions, but their tactics or the actions they take are often counter-productive and alienate the rest of the world.

America needs to re-assert its founding principles, and given the right leadership, can look forward to a more sustainable future, and may even be liked again… In this election year, Barack Obama has emerged as the only candidate capable of remaking the American dream; he seems to connect with people and offers a believable message of hope.

There are so many urgent problems in the world that need America’s help to fix. Let’s hope the American people make the right choice! Having made the right choice, the real work will begin: it remains to be seen how successful Obama can be. This theme is summed up nicely by BOB HERBERT in the NY Times: Beyond Election Day.

October 16, 2008

The big adjustment

Filed under: Economy, Environment, Politics/News — Tags: , — 4fooey @ 10:10 am

Is this the end of life as we know it? Well, I doubt it, but with the ongoing financial crisis, and now the real threat of global recession, it seems that life for many millions will get tough (of course we’re talking about people in the western world, since there are many millions who have it pretty tough already). Many people are predicting a quite severe recession, that will probably last for a number of years, although most pundits don’t really know how bad it’s going to be. Chances are, most of us will get through it, one way or another, but I’m sure we will all have to make changes in our lives, to a greater or lesser extent.

Looking at the situation more broadly, however, this financial crisis or near meltdown, may be a manifestation of wider problems in our economies and our western society as a whole. Our whole way of life and levels of consumption have reached a level that relies on too many assumptions: relatively cheap and plentiful resources (fossil fuels & raw materials), relatively cheap and plentiful supply of food, as well as labour, and easy money/credit. Now though these assumptions have shown themselves to be completely unsustainable, as some resources become more scarce or expensive. Confidence in the whole system has broken down.

Consider the scale of the help given to the financial industry — it runs into the trillions of dollars, in the US and Europe, and we are told there are many ‘toxic assets’ that are hidden away that will probably need to be written off. We are told this help is necessry because the banking world is so central to the running of our economies. Imagine if we could spend a fraction of this on solving some of the other problems in the world, such as climate change, finding alternative energies, helping the developing world to fight disease, providing education, etc.

In the west we live in a kind of virtual dream world of relative luxury, that is supported by the media and advertising. This illusion has become shattered with the current financial crisis — consumer confidence has been hit by the crisis. A similar thing happened when the planes smashed into the Twin Towers in New York back in 2001 — immediately following the event people were traumatised and for a short while ‘normal life’ was suspended, while people stopped shopping and several websites were closed down. A blast of reality had shocked people into realising what really mattered to them — somehow they were turned off the merry-go-round of modern consumerist life. Soon after the attacks, President Bush told everyone to go shopping to get everything back to normal!

We really can’t go on living as we do, expecting our economies to carry on growing — we should aim for a good standard of living for the majority of people in the world. This financial crisis and impending recession gives us an opportunity to re-assess how we conduct our economies and lives as a whole. I’m sure the main thrust of how governments and individuals react to this will be “how do we get back to normal”, but I feel a more radical adjustment is needed — the changes needed to reach a fairer and more sustainable system are so huge it almost seems impossible to achieve. However, with the right leadership, with all the clever brains working on it, and with hope and optimism it could be possible.

Update 23/10/08; just read a good article by one “clever brain”, namely Jeffrey Sachs, writing in the Guardian: Amid the rubble of global finance, a blueprint for Bretton Woods II. He suggests that the leaders of the world should go much further than ‘just’ fixing the world economy by trying to roll climate change, poverty alleviation, and so on, into a grand ‘new deal’ — great idea, and I hope they really can pull it off, if indeed they try to do this. A similar line is taking by another “wise man” Jonathan Porritt in his article: Zero hour for a new capitalism. He sees economic and environmental issues as totally interelated, which of course they are, on a global level.

October 3, 2008

Urgent need for action

Filed under: Development, Environment, Politics/News — Tags: , — 4fooey @ 10:02 am

Imagine the situation…. millions of people are threatened, their livelihoods at risk, their homes at risk, increased hardship, instability, wars even, etc. No, I’m not talking about the fallout from the current financial crisis, but the probable effects of climate change.

The evidence that CO2 and other emissions are warming the planet are incontravertible — in the past few months/years numerous research organisations and NGOs have shown this (including the Stearn report, various UN reports etc), and although there are still a few doubters both political and scientific, it is now time to take URGENT action.

Fast forward to now, and everyone is gripped by the financial crisis and the issue of climate change has taken a back seat. I would suggest the two things are linked, in both causes and effects. Our modern lifestyles and our rising level of prosperity have created climate change — the rise in living standards has been fuelled by the past few years of “living beyond our means”, both in terms of the “easy money/credit” from banks and increasing levels of consumption of goods, energy and resources. We are now racing towards a future of disastrous effects due to our profligate lifestyles and culture.

If we are to face a period of scaling down our lifestyles, of cutting back, due to economic hardship, then this might be a silver lining on some very dark clouds — if everyone borrows less, buys less, consumes less, then we damage the planet less. But don’t get me wrong the financial crisis is a disaster and I would rather it was not happening now. We need strong economies to tackle problems like climate change and other important issues (like those on the UN millennium development goals) — and I’m hopeful that America and the wider world will recover from this crisis.

Short term we need to get ourselves out of the dire financial mess, but longer term we need to rebuild the financial system, and the global economy as a whole, in a more sustainable way, to create a system that truly helps the majority of people towards a better life. It’s somewhat disappointing that relatively bold and swift action is being taken to solve the financial crisis, while the problem of climate change is potentially more damaging and yet nothing so radical is being done.

Update 14/11/08: Although the threat to humanity and planet from Climate change and its effects are far greater than the effects of the financial crisis or of global terrorism, large numbers of people seem to ignore the threat. This phenomenon is examined here: Are Human Beings Hard-Wired to Ignore the Threat of Catastrophic Climate Change?

September 15, 2008

What goes up…

Filed under: Politics/News — Tags: , , , , — 4fooey @ 8:30 pm

Today may become a significant day, an especially black Monday to trump all previous ‘black days’. As yet no-one knows whether today is the end of the troubles or at least the beginning of the end, or whether the financial turmoil unfolding in the past few days and weeks is just the start of our troubles.

In the past few months, financial companies and banks in the US have been announcing bigger and bigger losses or write-downs, and now several are going out of business or are being bailed out. I wouldn’t claim to know what some of these companies actually did, what they dealt in, how it’s all gone wrong and quite what the solution is. It does seem that things are very bad and that no-one really knows if the situation has hit the bottom or whether or not things are going to get a lot worse.

What I do know is that only 2 years ago companies like Lehmans, Bear Stearns, Merrill, Goldman Sachs, and the like were making humongous profits, tens of billions in profits and the employees of these companies were being rewarded with huge bonuses in the tens of millions. Meanwhile consumers were borrowing more and more, spending it on consumer goods that they really didn’t need (China said thanks very much and is now on the way to being the biggest economy), while the value of people’s homes was soaring ahead, and they borrowed more on the value of their over-inflated houses — everyone felt so good and everyone spoke about continual and continuous growth. The whole thing was unsustainble, and it wouldn’t and couldn’t last. Now the bubble has well and truly burst and the system has faltered — now everyone is going to feel the pain (except for most of the executives who will walk away with millions).

Amongst all this turmoil it was good to see the interview of Stephen Green, Chairman of HSBC, by Robert Peston on the BBC: see it here. In it, Green points out where the mistakes were made and how we should fix them. Like many other financiers and commentators he is suggesting more transparency — no-one knows how bad it is at the moment, so the solution is not entirely clear. He wants to see banking have a firmer capital or asset base, i.e. based on real stuff of real value. Somehow, confidence needs to be restored and money needs to become more liquid, needs to flow more readily. Many commentators are saying confidence will only return with more regulation, tighter controls, and a more stable system.

I find it hard to see how we have got into this mess. Many people have been predicting doom and gloom for several years. In the UK Geoff Randall and Vince Cable have said for many years the system was unsustainable, warning of meltdown. Many clever people must have seen this coming. Stephen Green seems a very sensible, right thinking man — he described how the world needs the financial and banking system, it is essential, and here to stay warts and all, but did concede that changes need to be made. Given that this is true, it seems that we do need a more sustainable model, one that works for the longer term, one that works for all of us (fair and equitable), and one that will deliver a sustainable future.

It’s slightly portentous that a pawnbrokers shop opened in our high street today — hopefully not too many of us will be needing their services.

As a footnote, this article was publised in the NY Times today: On Wall St. as on Main St., a Problem of Denial (subscription may be necessary). Basically people had deluded themselves into thinking the value of their houses (and businesses) would continue to grow, while borrowing money they could not afford to pay back.

Create a free website or blog at WordPress.com.