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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

April 22, 2010 at 10:15 AM

Earth Day economics — reality gets bagged; Mr. Obama goes to Wall Street

Earth Day at 40 is rather pitiful. In 1970, President Nixon and Congress responded to the growing environmental movement by passing numerous laws and energizing the EPA, efforts to clean up the air and water from which we still benefit. Somehow the economy kept growing. Today, even though the environmental challenges have become more serious, including climate change, water shortages and overpopulation in many areas, the movement itself is marginalized.

Earth Day is a great marketing moment for companies, however green they actually are. Or we can read about “green” technology and industries, no matter how many fossil fuel inputs they require. But the heavy lifting to deal with climate change, which would require a movement away from an economy so dependent on emitting fossil fuels, is too much.

The popular Freakonomics is among the so-called climate change skeptics, despite the overwhelming consensus of climate scientists. The energy industry has spent billions of dollars on misinformation campaigns. The cost of action on climate change is prominently autopsied, while the cost of doing nothing and the benefit from action get short shrift. The status quo is powerful and most Americans probably can’t imagine different ways of living. Internationally, developing nations want their shot at creating greenhouse gases.

Today might be a good one to take stock of the near-death experience we had two years ago with the many chickens of unsustainability coming home to roost, from high oil prices and and the leading edge of global peak oil, to Ponzi scheme sprawl and an economy increasingly based on swindles and casino capitalism. The many unsustainable aspects of our highly complex society won’t go away. They’ve just taken a breather during the Great Recession. Sadly, we’ll soon get more painful object lessons.

The Back Story: Here are some highlights from President Obama’s excellent speech in New York this morning on financial reform:

“I believe in the power of the free market. I believe in a strong financial sector that helps people to raise capital and get loans and invest their savings. But a free market was never meant to be a free license to take whatever you can get, however you can get it. That is what happened too often in the years leading up to the crisis. Some on Wall Street forgot that behind every dollar traded or leveraged, there is a family looking to buy a house, pay for an education, open a business, or save for retirement.”

“…we need a system to shut these firms down with the least amount of collateral damage to innocent people and businesses. And from the start, I’ve insisted that the financial industry — and not taxpayers — shoulder the costs in the event that a large financial company should falter. The goal is to make certain that taxpayers are never again on the hook because a firm is deemed ‘too big to fail.’ “

He also quoted a Time magazine with bankers making dire predictions about what financial reform would do to their business. “Through the great banking houses of Manhattan last week ran wild-eyed alarm. Big bankers stared at one another in anger and astonishment. A bill just passed … would rivet upon their institutions what they considered a monstrous system… Such a system, they felt, would not only rob them of their pride of profession but would reduce all U.S. banking to its lowest level.” The quote was from 1933 and the radical measure was the FDIC.

Today’s Econ Haiku:

Moody’s downgrades Greece

Where were they when the bubble

Here was being set?

Comments | More in Banking, Environment


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