"Loss & Damage" beyond charity, into solidarity, and suffused with Climate Justice?

Patrick Bond

An important article about one facet of the Warsaw Conference of Polluters 19, “Loss & Damage”, was published last week in The Star (Malasia) by the very highly-regarded political-ecologist/economist [and regular TCB blogger] Martin Khor (New climate deal on loss and damage). As always, the South Centre and Third World Network provide invaluable information, and Martin has taught me incalculable amounts since we first met in Johannesburg in 1990.

Good reading. Yet from the outset I must propose, with full respect, that Martin is absolutely wrong here: “There were two other pieces of good news – the adoption of a programme for reducing emissions from forest-related activities (known as REDD-plus) and pledges from developed countries up to US$100 million for the adaptation fund whose resources had dried up after the drastic fall in carbon prices.”

The March 2013 World Social Forum in Tunis witnessed the establishment of a No-REDD-in-Africa network, which was extended at a conference in Maputo hosted by Justica Ambiental in September: http://www.redd-monitor.org/2013/09/25/no-redd-in-africa-network-maputo-statement-redd-does-not-reduce-emissions-redd-does-not-halt-deforestation/. The activists there, and in many other countries suffering REDD attacks, will be surprised to hear that UN confirmation of REDD+ is ‘good news’.

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The Big Casino

Doug Orr, Guest Blogger

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John Maynard Keynes (1936)

Every night on the evening news we hear something like this: “In economic news, the Dow is up by 1.5%, the S&P is up by 1.2% and the NASDAQ is down by 0.3%, based on ….” Reporting these numbers so prominently and giving a supposed link to the events of the day gives the impression that the stock market plays a central role in moving the economy forward and that everyone has a stake in these daily changes. In fact, the movement of these stock indices on a day-to-day basis has almost nothing to do with the actual economy and, except in times of economic crisis, the stock market has almost no impact on the lives of most Americans. Fewer than half of American families own a single share of stock, and only about a third own shares totaling more than $5000. The stock market is the realm of the elite, and for the past several decades has had a negative impact on the real economy.

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The Eurozone Balanced Budget Disaster

Philip Arestis and Malcolm Sawyer

In the immediate aftermath of the financial crisis, most European governments allowed the automatic stabilisers to kick in and implemented some mild discretionary measures, despite the strictures of the Stability and Growth Pact (SGP). But it was not long before the siren calls for “fiscal consolidation” arose, spurred on by spurious claims of “expansionary fiscal consolidation” and the now discredited claims that debt ratios threatened the economy. This has been followed by claims that it was failures to constrain budget deficits in the mid 2000s, which were to blame for the debt crisis and which placed limits on the ability of governments to respond to the Great Recession. Within the eurozone, fingers were pointed at the failures of the SGP, which had been intended to keep national budget deficits below 3% of GDP at all times, to have budgets which balanced over the business cycle, and to keep debt-to-GDP ratios below 60%. In the years 2002 to 2007, budget deficits averaged around 2% of GDP, the 3% limit was breached on numerous occasions, and, even in 2007, seven countries (of the then 12 members) had debt ratios of over 60%.

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Future of Public Climate Finance: What Should Happen to the Climate Investment Funds?

Dario Kenner, Guest Blogger

As storms like Typhoon Haiyan shockingly reminded us, developing countries urgently need climate finance. As defined by the UN, this is the transfer of public funds from developed to developing countries to support them in reducing greenhouse gas emissions and adapt to the impact of climate change. But much of this money does not look like it is going to arrive anytime soon because the main global mechanism to manage and transfer climate finance, the Green Climate Fund (GCF), only has $7.5 million deposited in its accounts. Established at the 2010 Cancun climate change summit, the GCF is supposed to be operational from 2014 and could channel $100 billion a year from 2020. To the dismay of developing countries no major new pledges (unless you count $45 million from Sweden) were made by developed countries to the GCF at the UN climate change negotiations that ended in Poland last week.

In the GCF’s absence, one of the main mechanisms to distribute public climate finance continues to be the Climate Investment Funds (CIFs), which has deposits of $6 billion. This is for investment plans in 48 developing countries, including up to 100 projects with a focus on clean technology, resilience to climate change, reducing deforestation, and renewable energy. Housed at the World Bank, the CIFs transfer public climate finance from 14 developed countries through multilateral development banks, such as the Inter-American Development Bank and the Asian Development Bank.

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Typhoon Haiyun and a Global Strategy for Protecting Coastal Populations

Edward Barbier

Typhoon Haiyun has killed more than 4,400 people in the Philippines and displaced at least 900,000. Around 12 million Filipinos have been affected by the consequences of the storm, which is one of the deadliest coastal disasters on record.

Given the scale and frequency of recent coastal disasters—Typhoon Haiyun, Hurricanes Sandy, Katrina, and Rita, the Fukushima and Indian Ocean Tsunamis—it is time to develop a global strategy for protecting coastal populations. There should be two elements to this strategy: a short-run emergency response and investments in long-term global adaptation.

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Taking it to the (Position) Limits One More Time

Jennifer Clapp

One of the Commodity Futures Trading Commission’s (CFTC) most colorful commissioners, Bart Chilton, announced last week that he is stepping down soon. Chilton, one of the few commissioners at the CFTC with agricultural experience, has been a rock-n-roll hero of position limits during his term, frequently referring to rock music in explaining his views on commodity derivatives regulation. For example, he referred to position limits—a ceiling on the number of futures contracts a single non-commercial trader is allowed to hold—as “suggested speed limits on a dark desert highway” (a reference to the 1977 Eagles song “Hotel California”).

Chilton’s parting speech noted that the CFTC was “taking it to the limits one more time” (a reference to another Eagles song). This was in direct reference to the CFTC’s announcement that same day of new, rewritten regulations to establish position limits on speculative commodity futures trading. The proposed rules mark an important milestone for the CFTC in its attempts to rein in excessive speculation that can disrupt commodity markets. But in the longer history of the issue, how best to regulate these markets is likely to remain contested.

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China’s Speculation Problem

Sara Hsu

In 2008, I came up with a concept that I refer to as the “speculative spread,” which states that if the relationship between shadow banking (non bank financing) and production (GDP), on the one hand, and financial deepening (M3, or currency, small and large deposits at banks, and money market funds) and production (GDP), on the other, gets too far out of whack in the wrong direction, the financial economy becomes unstable. I had performed the calculations on the United States and the eurozone during the crisis, finding that the U.S. had an unstable financial economy, while the eurozone, for all of its debt disasters, had a relatively stable financial economy, with the exception of the period just leading up to the crisis in 2007.

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Federal Reserve in Uncharted Waters

Yilmaz Akyüz

According to Triple Crisis contributor Yilmaz Akyüz, the U.S. Federal Reserve and, by extension, the entire global economy are in uncharted waters, as the Fed begins to back off the expansionary monetary policy it has followed since 2008. Dr. Akyüz’s comments in conversation with Real News Network producer Lynn Fries, were delivered after a UN workshop in Geneva. He argued that the United States’ zero interest rate policies, and China’s high-investment policies, which have buoyed up world demand, are both “unsustainable.” Meanwhile, income inequality and the declining labor share of total income has put the world economy in a serious “underconsumption” bind. “And income distribution,” he notes, “has gotten much worse during the crisis … and therefore we have [an even bigger] consumption gap.” – Eds.

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Global Finance Celebrates at the Gates of Paradise

Erinc Yeldan

In the episode The Apple, of the classic TV series Star Trek, our heroes, led by Captain Kirk and Mr. Spock, land on a paradise planet inhabited by seemingly peaceful and immortal humanoids. At first, the bounties of the planet dazzle the Enterprise crew, but they soon discover that the planet is actually trying to kill them. Eventually, their investigations lead them to the discovery of an all-controlling artificial “god.”

Witness the reaction of the global “markets,” the artificial gods of global capitalism, to the Fed’s reassuring announcements that it will postpone the withdrawal (or “taper”) of the so-called quantitative easing (QE) packages. It mirrors, in many ways, the drama that played out on that unknown planet, where no one has gone before.

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“Sitting on a Sack of Gold”: Ecuador’s Turn Toward Extractivism

Elissa Dennis, Guest Blogger

Declaring “the world has failed us,” Ecuador’s President Rafael Correa signaled the termination of the Yasuni ITT Initiative in August 2013.

Back in 2007, Correa had presented a challenge to the world community: If governments, companies, international organizations, and individuals pledged a total of $350 million per year for 10 years, equal to half of the forgone revenues from the Ishpingo, Tambococha, and Tiputinti (ITT) wells in the Yasuni National Park, Ecuador would chip in the other half and keep the oil underground indefinitely, as its contribution to halting global climate change. Citing a meager $116 million in pledges, Correa announced the decision instead to move forward with the Plan B that was always in the background: extraction of oil from the Ishpingo, Tambococha and Tiputini fields. The drilling will only impact .1% of the parklands, Correa contends, noting that the estimated value of oil in the targeted area has increased from $7 billion to $18 billion. Despite street demonstrations in Quito and Cuenca and calls for a national referendum, the National Assembly ratified Correa’s action in October 2013.

Correa, a U.S. trained economist, has consistently ridiculed “infantile” environmentalists, and is clearly most comfortable with a pragmatic economic development model of extractivism with equitable distribution of resources. Like his Bolivian counterpart Evo Morales, Correa has run afoul of indigenous communities and the environmental Left through efforts to transform the nation from exploited exporter of raw materials into savvy user of natural resources to fuel economic growth and social programs.

“We can’t be beggars sitting on a sack of gold,” is Correa’s constant refrain. Read the rest of this entry »