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Money
There is sufficient money for global warming
Governments last week raised half a trillion dollars to head off a threat to bonuses for speculators
By Kevin Potvin
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Last week, central banks in the world’s leading economies chose to “pump liquidity” into the “ailing stock market” to head off a “credit crunch.” In lay terms, governments of Canada, the United States, Europe, and Japan created almost half a trillion dollars and directed traders at their central banks to use the cash to elbow their way into record-breaking busy stock and bond markets and start bidding up their falling prices. This “market intervention” was about half the size of a similar “liquidity pump” that took place in the days after 9/11. The two events alone saw a few national governments committing close to $1.5 trillion to battle a problem.
That problem, one would thus suspect, was severe. In fact it was not. All that happened last week was a few bad loans for houses made to people who couldn’t afford them were predictably falling into default. The myriad speculators in the markets who placed bets that those loans (offered in the obviously risky sub-prime mortgage market in the US) would turn out to be good, stood to lose a little money.
To cover their losses, those speculators needed to cash in other bets placed around different markets, bets they hoped to back with the winnings in the risky sub-prime game. It was not unlike a bad poker player out of money and covering his ante with his gold watch.
With so many speculators last week needing to sell off other assets to meet their debt obligations, prices fell a bit across the stock market. It wasn’t a big fall; it didn’t even match price rises that have come since the beginning of the year.
Nonetheless, analysts, government finance ministers, and the speculators themselves began to worry that profit on equity rises, as opposed to profit from the actual operations of a company, would run a little flatter than what they had hoped for this year. For those involved in the game, it no doubt looks like a life and death situation when returns on investment threaten to fall below 20%. But from the point of view of humanity as a whole, relatively no one would notice even if it did mean literally death for all speculators.
This could easily turn into a negative article about speculators and the spineless toadying government officials who kowtow to their whiny demands. But instead, it’s a positive article about what is possible for leading governments to do together when they perceive a big problem.
Global warming is one such big problem, in this case a real one, and one that does indeed mean life and death for humanity. The global cost of refitting factories, updating transit systems, and developing alternative energy sources around the world to the extent needed to make a serious dent in the causes of global warming has been estimated at around $1 trillion. Too much, the business world and those governments have said. At the very best, it would take thirty years to gather the funds to invest that much in saving the world.
Nonsense. It took forty-eight hours for those same governments, with the enthusiastic approval of the business world, to raise half a trillion dollars to meet a much less severe threat. The problem, therefore, is not lack of money, and officials from the worlds of business and government must now stop saying it is.
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The Republic of East Vancouver masthead
The Republic of East Vancouver supports no party, advocates
for no cause, represents no group, serves no master, and considers
problems with no preconceived notions. We hope to afflict the comfortable,
both materially and intellectually, and comfort the afflicted—of
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time.
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