Not the environment again…?
No, indeed not. This post is about the financial crisis.
I have been taking some time to read through the latest set of pages on Schalk Cloete’s One in a Billion blog and came across an excellent animated video, which I believe deserves to be made mandatory viewing for all citizens of planet Earth who have never formally-studied economics (i.e. like me).
Schalk has produced a great series of posts, under the collective title of Collapse, which look at the interconnected nature of all our problems but, it has to be said, they are not for the faint-hearted. Schalk has a wonderful ability to speak plainly but, when the truth is spelt out to you so clearly, it is very challenging stuff.
However, if you are (or have been) as confused by the complexity of the financial services industry as I was; and don’t know what the difference is between a collateralized debt obligation and a credit default swap…
Just watch this – it explains a lot:-
As Schalk points out in “More profitable to speculate than to produce” (i.e. the page where I found this video embedded):
Just to avoid any confusion, I would immediately like to draw a clear distinction between speculators and investors. Investors put the money they have earned through the production of valuable goods and services into some investment fund and trusts that the people who get to use this money will put it to good use (producing even better goods and services) so that it generates a return. This is good and very necessary to make society prosper. Speculators, on the other hand, use a variety of rather bizarre financial vehicles to lever up their bets and manipulate the market so that the valuation of all kinds of assets and commodities fluctuates widely over time. The more volatile the valuation of assets and commodities becomes, the greater the potential to buy at cheap prices and sell at high prices, thereby making a killing every time.
What scares me most about all of this is that, just at the time where humanity is finally facing up to the reality of a problem it has been (more-or-less) collectively ignoring for over 50 years, the pyramid-selling scam that is the financial services industry has finally collapsed. Thus, just as Meadows et al (1972, 1992, and 2005) warned, it is now becoming increasingly self-evident that…
Our Earth is unable to cope with the rate at which we are polluting it.
We have spent decades denying that the Earth has a finite capacity to deal with our pollution; and now we have just run out of money to spend on solving the problem. Basically, we’ve screwed-up, big time. What we need is politicians willing to admit it. What we’ve got is politicians apparently still fixated on the need to stimulate our economies into growing again. What we need is politicians willing to spend money we don’t have (only governments and investment bankers can do this) on investing in the future – renewable energy. What we’ve got is politicians refusing to give up on the past – fossil fuels.
Fossil fuels are history. We need to move on. To do that, we must all connect the dots
(Apologies for misleading you – this post was about the environment after all.)
I posted this on Learning from Dogs yesterday but it seems apt here too:
No it is not. This is the World we have corrupted… And, if it does not make you either angry or sad, I think you must have mislaid your humanity (which is very careless of you).