credo quia absurdum est
has put out a study stating global fossil fuel subsidies amount to almost $600 billion a year. I guarantee that’s vastly, vastly under counted, but it’s an improvement over ten years ago when I was working in the energy world. At that time, there was one study from the late 90s, from the IMF if I remember correctly, that estimated fossil fuel subsidies around $200 billion. It was pretty much the only one. The renewable energy industry, who I was working with, was dead in the water. Their existence completely dependent on subsidies, and
has put out a study stating global fossil fuel subsidies amount to almost $600 billion a year. I guarantee that’s vastly, vastly under counted, but it’s an improvement over ten years ago when I was working in the energy world. At that time, there was one study from the late 90s, from the IMF if I remember correctly, that estimated fossil fuel subsidies around $200 billion. It was pretty much the only one. The renewable energy industry, who I was working with, was dead in the water. Their existence completely dependent on subsidies, andof course, it being the pinnacle of America’s Friedmanite, Randian, Greenspanian, free marketeer era, the renewable industry spent most of it’s time trying to convince they would eventually strive in the “free-market”. Most subsidies for fossil fuels are so baked-in the system to be unrecognizable as such, to broach the topic of the existence of fossil fuel subsidies in established energy circles was to be considered absurd, and that folks is real power.
Much of our economic thinking today is simply a rationalizing of the existing power of our mega-corporations, centralized government, and just as importantly, though far less understood, entrenched technologies. Larry Goodwyn made an excellent point in the The Populist Moment:
A far more permanent and thus far more desirable solution to the task of achieving domestic tranquillity is cultural — the creation of mass modes of thought that literally make the need for major additional social changes difficult for the mass of the population to imagine. When and if achieved, these conforming modes of thought and conduct constitute the new culture itself. The ultimate victory is nailed into place, therefore, only when the population has been persuaded to define all conceivable political activity within the limits of existing custom. Such a society can genuinely be described as “stable.” Thenceforth, protest will pose no ultimate threat because the protesters will necessarily conceive of their options as being so limited that even should they be successful, the resulting “reforms” will not alter significantly the inherited modes of power and privilege.
This of course is power’s greatest trick, and by no means necessarily illegitimate, but essential for any sort of continuous structure of power. brand viagra However, putting aside the question of legitimacy, there comes a time when many of the “conforming modes of thought and conduct” constituting the culture of power are no longer viable. The contradictions between ruling cultural doctrine and reality become not simply unsustainable, but in fact detrimental. For our society, if present unaccounted subsidies in our society were actually accounted, it would be obviously apparent they are both unsustainable and detrimental.
Two of the easiest examples of unaccounted subsidies would be for fossil fuels and of course the financial sector. In the past two years, we have watched the complete failure of the banking and financial sectors, so called “free-markets”, and then seen the greatest continuous subsidized bailout in history, making the financial sector close to worthless in valuing anything. At present, we continue as if nothing failed. The fossil fuel subsidies are problematic on so many levels to be mind-numbing. I’ll choose one, China. The subsidizing of oil has created a Chinese economic structure that is simply not sustainable, just as the oil soaked United States economy. Culture can warp reality for awhile, but not endlessly.
Counter to the propaganda of our meeska-mouska-free marketeers, subsidies can be perfectly fine, you do however need to account for them. Subsidies can be ways in which political economy influences the society’s direction, meaning you need a healthy politics for this to function well. Today, the culture created by centralized corporate and government power is not only unaccountable, but failing spectacularly. We need to fix our markets and our government, starting with some honest accounting.
What will the government and banks do if the economy continues to get worse?
The decision to scale back the program rests on an assumption that the stabilization of financial markets since then and the return to profitability among some of the banks are sustainable. The risk, some experts warn, is that the worst may not yet be over. Many banks may still face big losses this year and next, particularly if unemployment remains high or, as many economists predict, home foreclosures mount and commercial real estate continues to founder.
“It’s clear that there are a ton of losses still to come,” said Douglas J. Elliott, a fellow of the Brookings Institution. “How prepared are the banks to handle those? There is a great deal of uncertainty here.”
Still, the big banks are hiding their losses as they do normally.
Major banks have masked their risk levels in the past five quarters by temporarily lowering their debt just before reporting it to the public, according to data from the Federal Reserve Bank of New York.
A group of 18 banks—which includes Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co., Bank of America Corp. and Citigroup Inc.—understated the debt levels used to fund securities trades by lowering them an average of 42% at the end of each of the past five quarterly periods, the data show. The banks, which publicly release debt data each quarter, then boosted the debt levels in the middle of successive quarters.
Excessive borrowing by banks was one of the major causes of the financial crisis, leading to catastrophic bank runs in 2008 at firms including Bear Stearns Cos. and Lehman Brothers. Since then, banks have become more sensitive about showing high levels of debt and risk, worried that their stocks and credit ratings could be punished.
There you have it, the big banks are still our very zombie banks that have created and continue to create a drain on the American economy.
Liaquat Ahamed’s Lords of Finance is an excellent read on the financial predicaments of the 1920s. Though buy viagra tablet we face different circumstances today, Ahamed’s history of the era offers much understanding on how we got here, providing valuable knowledge on where we need to go.
Lords of Finance focuses mostly on the four men who ran the central banks of the US, Britain, France, and Germany in an era of great financial turbulence leading to the Great Depression. It is an excellent popular history, painting a wonderful picture of the era and of those whose helped, for better and worse, to define it. It also does a good job of laying forth the financial conundrums in a way people can understand.Mr. Ahamed’s main contention is that the gold standard was the main culprit behind the currency turbulence of the 1920s. However, I think the story he tells leads to a little different conclusion — debt was really the main problem — and the gold standard both a catalyst aggravating the situation and a hindrance in developing solutions. The end of WWI saw a much different world than the beginning, especially in the financial sector. Most important, three of Europe’s great powers became indebted to each other and the new American financial colossus, representing a shift in underlying economic power that would cause havoc for the next ten years. Ahamed writes:
They burdened a world of economy still trying to recover from the effects of war with gigantic overhang of international debts. Germany began the 1920s owing some $12 billion in reparations to France and Great Britain; France owed the United States and Britain $7 billion in war debts, while Britain in turn owned $4 billion to the United States. This would be the equivalent today of Germany owing $2.4 trillion, France $1.4 trillion, and Britain owing $800 billion. Dealing with these massive claims consumed the energies of financial statesman for much of the decade and poisoned international relations. More important, the debts left massive fault lines in the world financial system, which cracked at the first pressure.
In his seminal The Economic Consequences of the Peace, Keynes wrote the war debt, particularly the punitive reparations placed on the Germans, would lead to economic calamity. Over the course of the next decade, Germany, Britain and France would scramble to keep this debt from crippling their domestic economies and exports. The debt led to continuous currency volatility, including Germany’s hyperinflation of the early 20s and then the collapse of the entire system by the end of the decade.
Lords of Finance is the story of the constant interaction between the four nations’ central banks and their attempts to create a stable currency situation, with the US playing the role of lender of last resort. Mr. Ahamed shows how sticking to the gold standard aggravated the situation and getting off the gold standard eventually alleviated some of the problems. However, the debt and underlying real economy imbalances in the system would take a decade and half and another world war to come to a resolution.
The gold standard was not so much a cause of the currency destabilization as a catalyst. It forced more frequent and severe valuations and revaluations then was necessary. Gold is an anti-inflationary money base and inflation is finance’s worst enemy. All debt loses value with inflation, thus if you want the money you lent back, you want to keep inflation at a minimum. The natural scarcity of gold helps curb, but does not prevent inflation.
This is important for understanding the present global economic predicament. The question of debt, not just in the US, but in Greece and other nations in Europe is leading the news. Yet, even without the gold standard, debt is causing increasing turbulence in currency markets. Our modern lords of finance are just as fearful of inflation as their predecessors, and while they don’t have gold, they have derivatives and other financial innovations as a catalyst. They are fearful of losing their money. They are slowly turning the screws on many nations to create no more debt and pay what they owe. The debt and increasing volatility are beginning to jam the wheels of commerce.
The debt problem of today is exponentially larger than the 1920s. In the past decades, we have added layer upon layer of “innovative debt” on top of more traditional debt. Advocating more debt, without getting rid of existing debt, will slowly strangle the future. Mr. Keynes understood this better than his disciples.
Just as after WWI, the debt and currency volatility are pointing to underlying real economy imbalances. Unlike in the 1920s, the US is not the planet’s largest creditor, it is the largest debtor, yet it still plays the role of lender of last resort. Ahamed writes of the 1920s:
Eventually the policy of keeping US interest rates low to shore up the international exchanges precipitated a bubble in the US stock market.
Today, Mr. Bernanke keeps interest rates low and pumps up not only the US stock market, but creates new bubbles across the globe. Neither this or the debt ocean created in the last thirty years is sustainable.
We have new lords of finance. While the Fed remains powerful, debt has grown to such a degree to make it less so. Over the years, the Fed has ceded power to our new lords of finance on Wall Street and in the mega-banks, who have created more debt in the last several decades then the world has seen in all its previous history. At some point, just as the WWI war reparations and war debt was written down or off, we are going to have to do the same without cratering the economy. We need to dethrone the new lords of finance and place the real economy, in all its diversity and
concreteness in charge. We need to bring this queer thing known as money down from the marble palaces and into the democratic assembly.
concreteness in charge. We need to bring this queer thing known as money down from the marble palaces and into the democratic assembly.
Cross-posted from Archin: Lords of Finance
Come Home, America. Instead of trying to run the world, viagra online order usa let us tend our own wounded society. Let go of inflated claims to global dominance. Instead redeem the fundamental values and sacred principles of the national inheritance. Do not resign from the world. Rejoin on it on more practical and promising terms. — William Greider
Bill Greider’s Come Home, America has been released in paperback. I couldn’t recommend it more highly. The book was released last year with little notice and silence from the corporate media. Greider who worked at the Washington Post for many years and was headed to the front office, abruptly left in 1981 and has since, starting with Secrets of the Temple, wrote a series of book, including Who Will Tell the People, that pulled the curtain from power in America, revealing how things actually operate. Of course such work is essential for any system that proclaims itself “self-government”, but the powers that be don’t take too kindly to that kind of thing and any perpetrator is internally ostracized — officially disappeared from the corporate media and sanctioned political dialog.
Greider is one of the vanishing breed of old small “r” republicans. Those who look at this great experiment, the American Republic, with all its great faults and sins, but understands its rare value in Western history. Underlying the entirety of Come Home, America, which is Greider’s most appropriately personal book, is the essential understanding that any republic, any system of self-government, can only work with the active participation of the citizenry. Yet, each year we have seen both the growing abdication and forceful removal of the vast majority of the American people from their necessary roles as citizens. People at this point are so disenfranchised, and Greider doesn’t ask this, but I think its appropriate, the real political question facing us is “Do you still want this republic?”
If so, Come Home, America is a good place to start. It doesn’t provide a list of solutions and talking points, rather, it is a narrative that entwines the complexities facing us including militarism, financial oligarchy, and the environment. The book gives some suggestions for how to start talking about these issues. And make no mistake, that’s the first thing that needs to happen if we’re going to reclaim this republic, we need to start talking with each other. Not campaigning or sending letters and making phone calls into the great corrupt void that is DC, but talking to each other, so we can come up with what we’re going to do to face these challenges. Only when we understand what to do, will we be able to move our government.
This is an especially important point as we watch our electoral process now locked into a death spiral of replacing failed Republican with failed Democrats, then reversing the cycle. The small group of people who are Democratic activists have watched a supposedly imperative, but weak, health care reform dominate politics for six months, suddenly to disappear and now replaced with a supposedly imperative, but weak, financial reform effort. They will soon be asked to support the reelection of incompetent and corrupt officials espousing failed reform as a campaign platform. This is simply the politics of nihilism.
The only way we’re going to change things is to reject this Sisyphean cycle. A great way to start would be to read and get a group of friends to read Come Home, America, and then sit down and ask, “What are we going to do about it?”
from WSJ: “executives, traders and money managers at 38 top financial firms can expect to earn nearly 18% more than they did last year, and slightly more than they did in the record year of 2007.”
from ED: “the lack of competition among the largest banks has caused compensation within the industry to become even more concentrated.”
“the increase in compensation (and risk) is now concentrated among only these top banks. Bonuses at these “big four” banks are up a whopping 25% since 2007 (all other firms are down 18% since that time) and 40% since 2006 (whereas all other firms are down 2%).”
“For all the talk and supposed intervention, nothing has changed (actually, with these banks even more “too big too fail”, things may actually be worse).”
Bloomberg reports that the biggest banks haven’t signed onto the program to modify mortgages like they said they would and like they need to do in order to make up for their predatory loans.
Numbers are showing that “Bank of America, Wells Fargo, JPMorgan Chase & Co. and Citigroup Inc. carry such mortgages at about $150 billion more than their value”.
The U.S. Treasury Department has failed to win agreements to get struggling borrowers’ home- equity debt reworked, among the biggest roadblocks to reducing foreclosures that may reach a record 3 million this year.
None of the lenders holding a combined $1.05 trillion of the debt has signed contracts requiring participation in the second-mortgage modification plan announced eight months ago. The largest banks remain “committed” to joining, Meg Reilly, a department spokeswoman, said in an e-mail.
President Barack Obama in February announced a $75 billion program to cut first-mortgage payments. The Treasury detailed a plan on April 28 in which second-mortgage owners modify or retire debt when the first lien is changed, saying it would be running in a month. The near-record level of home-equity debt held by lenders including Bank of America Corp. and Wells Fargo & Co. may lead to foreclosures that threaten housing stability after the worst slump since the 1930s.
As a reigning bank-focused Senator is about to retire, a financial industry lobbysist said that the reigning Senator Dodd will now be free to “dance with the special interests that brought him to the dance in the first place. Us, his loyal donors in the banking community.” But, we pay his salary now and what will he do as financial regulatory reform comes up and the next couple of months is considered the last dance of his stay in Congress?
Now that he is retiring, the corrupt, liberal, head honcho senator, Chris Dodd is most likely going to concede even more to the big banks in his signature reform bill going through Congress. Some say he would fight harder for the public to leave a legacy, but no one yet knows. The Consumer Financial Protection Agency is a measure included in the bill and is credited the most with protecting consumers against predatory and usurious products, yet its survival is in question because the big banks want it out of the bill. Ridiculous, right?
Dodd and the rest of Congress need to stop their shenanigans and tell the big banks NO for once!
The big banks are probably right that Dodd wants to dance with them because they brought him to the dance in the first place. It’s a weird thing for them to say, but if it’s true, say hello to the next economic crisis coming up and even larger banks sucking up more public money.
BanksterUSA made a video asking Dodd who he will be taking to the last dance of his career — Jamie Dimon of J.P. Morgan Chase or Elizabeth Warren of the fight for consumer protection. You can help fill out Dodd’s dance card and tell him to not flirt with the idea of dancing with the big banks. He can do some good and leave a legacy or he can just get super rich and gut the country at the same time.
It’s pretty clear that he will become a big bank lobbyist himself when he retires –he has been a recipient of some of the highest amounts of lobbyist cash and big bank political contributions, he also got a deal on his mortgage for his political power. What else is a man like that going to do because he can’t get elected again in 2010 and is forced to retire and loves the silent ring of A LOT of money in the bank?
Well, we can’t stop him from doing what he desires after he is out of office, but what about not helping the big banks on taxpayer dollars? Dodd, we pay for your pitifully small $200,000 salary. Do what we say. Sign the petition here.