Riding the Commodities Roller Coaster: Look, Ma, no hands!

Jayati Ghosh

Ma, why do we have futures markets?

We have them because there are all sorts of goods that people know that they will need to buy or sell in the future, say six months from now, and they want to be sure they can buy them at a certain price. Economists call this “hedging” against the risk that the price can change in a way that you may not be prepared for.

Which kinds of goods are these?

There can be futures markets in almost anything. They first started with agricultural commodities like rice and wheat, because no one could know exactly what the harvest would be like and so it helped some people to choose a price to buy or sell at in advance. Now futures markets cover not just agricultural commodities but also minerals and oil and metals, and also lots of other goods. And even some services!

So these futures markets stabilize prices?

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Financial Reform: Whatever Happened to the Stiglitz Commission?

Kevin P. Gallagher

At the onset of the financial crisis the United Nations put together an all-star group of global economists and economic policy-makers, chaired by Nobel Laureate Joseph Stiglitz, to assess the causes and consequences of the financial crisis and to make a set of recommendations to make sure such a crisis never happens again. The commission’s report was published with great fanfare and fed into a 2009 UN conference on the financial crisis that was met with little fanfare outside the UN system.  After the conference the UN focused primarily on the global climate crisis and the Copenhagen meetings in 2010.  The UN is only now beginning to pick up where it left off on global finance.  This summer the UN is to decide whether it should implement one of the Stiglitz’ Commission’s core recommendations: form a panel of experts modeled after the Inter-governmental Panel on Climate Change (IPCC). It should.

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Did environmentalists kill climate legislation?

Frank Ackerman

Climate legislation, even in its most modest and repeatedly compromised variety, failed last year. And there won’t be a second chance with anything like the current Congress. What caused this momentous failure?

Broadly speaking, there are two rival stories. It could be due to the strength of opposing or inertial forces: well-funded lobbying by fossil fuel industries, biased coverage by increasingly right-wing media, the growth of the “Tea Party” subculture and its rejection of science, dysfunctional institutions such as the U.S. Senate with its filibuster rules, and the low priority given to climate legislation by the Obama administration.

Or it could be because environmentalists screwed up and shot themselves in the foot.

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Principles for a Green Economy

Henrik Selin, Guest Blogger

The organizing of the United Nations Conference on Sustainable Development (UNCSD) is just over a year away, scheduled for June 4-6, 2012. The conference preparations are fast under way, focusing on “a green economy within the context of sustainable development and poverty eradication” and the “institutional framework for sustainable development.”

Hopefully – but definitely not a given – UNCSD can help accelerate progress where a long line of earlier conferences and other major political efforts have come up embarrassingly short, moving from grand rhetoric to actual change. It is vital to recognize that this is not just an exercise in politics, but of critical importance to people all over the world as well as future generations.

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The Dollar versus the Euro

Triple Crisis blogger Matias Vernengo published the following working paper for the Levy Economics Institute of Bard College on why the dollar is not currently threatened as the dominant international currency.

Hegemonic Currencies during the Crisis: The Dollar versus the Euro in a Cartalist Perspective

Conventional wisdom has suggested that the US dollar is on the verge of loosing its hegemonic position in international monetary markets at least since the 1960s with the seminal work of  Robert Triffin. In fact, many authors believe that the collapse of the Bretton Woods system was  the proof of the weakness of the dollar. The creation of the euro in 1999, and to a lesser extent the spectacular rise of China, consolidated the view that the dollar’s days as the key international reserve currency were numbered.

Read the full working paper at the Levy Economics Institute of Bard College.

Good News on the Right to Food

Timothy A. Wise

Those of us advocating for changes in global and national policies on food and agriculture just got some good news. The UN Human Rights Council just renewed for another three years the mandate of Olivier De Schutter as the UN’s Special Rapporteur on the Right to Food.

If you haven’t followed De Schutter’s work since the 2007-8 food price spikes brought renewed attention to the issues of hunger and agricultural development, he has been a clear and uncompromising voice for change. His rights-based approach has taken him well beyond the withering rise of hunger to the roots of the global crisis, linking climate change, agribusiness concentration, commodity speculation, and the ongoing debates of industrial versus agro-ecological development.

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Recovery: The Global Green New Deal

Jomo Kwame Sundaram, re-posted from the World Policy Institute’s World Policy Blog, a Triple Crisis partner. The World Policy Journal, in its Spring 2011 issue, asked nine global experts – including Esther Duflo and Triple Crisis blogger Timothy A. Wise, among others – to provide short answers to the journal’s “big question”: What policy fixes or new innovations are needed to sustain the global economic recovery? Jomo K.S.’s answer follows. Read all the responses here.

In the 1960s and 1970s, the Green Revolution dramatically increased crop yields and food production in wheat, maize and rice. It was an achievement that would have been impossible without considerable financial support from governments, international institutions, and philanthropists. Yet, 40 years later, we need a second Green Revolution for other food crops, especially water-stressed food agriculture in arid areas. The key is finding a way to finance it that will sustain, rather than threaten, the global economic recovery.

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Budget Fallacies: Why the Ryan Plan Won’t Work

Triple Crisis blogger Jeff Madrick published the following opinion article in The New York Review of Books Blog on the flawed assumptions underlying Congressman Paul Ryan’s budget proposal.

Among the economic fallacies embraced in Congressman Paul Ryan’s budget proposal, two are particularly egregious: that getting rid of Medicare will reduce health care costs and that enacting yet further tax cuts for the rich will spur growth and investment.

Critics on the left are up in arms because Ryan’s proposal to force Medicare recipients to buy private insurance will raise the amount those now under 55 will pay when they are old enough to get Medicare by an average of $6,000 a person. In other words, critics say, we are trying to cut health care costs—and supposedly reform it through more privatization—on the backs of future elderly Medicare recipients.

But the Ryan plan won’t reduce health care costs. As Peter Orszag, the former White House budget director, told me recently, the bipartisan Congressional Budget Office calculates that overall health care spending will go up as Medicare recipients are forced to buy private insurance, since private insurance has far higher administrative expenses than Medicare. Health care expenditures, as Orszag nicely puts it, are not being reduced on the backs of seniors, they are being raised on the backs of seniors.

Read the full article at The New York Review of Books Blog.

Ecological scarcity, poverty and development

Edward B. Barbier

The Triple Crisis Blog is pleased to welcome Edward B. Barbier, John S. Bugas Professor of Economics at the University of Wyoming, as a regular blogger.

In my recent book, Scarcity and Frontiers: How Economies Have Developed Through Natural Resource Scarcity, I have argued that the world is entering a new era, the “Age of Ecological Scarcity”.  The main development challenge of this era is the implications for global poverty.  Exacerbating the problem is that, compared to past eras in human history, economic growth through exploiting abundant “frontiers” of land and natural resources will no longer be the means to improve the livelihoods of the poorest human populations.

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Demystifying Syria

Salim Kassem, Guest Blogger

Two relationships have long been at play behind the stability of the Syrian regime. The first relationship is an economic relationship, in which the regime would put back into national production just enough to create jobs and produce cheap national goods to keep the working population in steady or, better yet, improving living conditions. The second is a political relationship, in which the regime soberly assesses the balance of power, commits to the right of return under UN resolution 194 and raises the dose of repression the more power, control and wealth become concentrated in the hands of the ruling military elite and its adjunct bourgeois class. As the recent popular uprising has come to show, serious distortions have been incurred to both relationships, which are also, under more concrete conditions, inseparable.
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