Sunday, May 16, 2010

What if capital requirements for banks had been based on jobs and sustainability?

Our bank regulators, the Basel Committee, imposed what I have always considered to be stupid purposeless and senseless capital requirements for banks based on the risk of default perceived by the credit rating agencies. Those capital requirements pushed the banks to drown themselves in private triple-A rated waters and some well rated sovereigns. Knowing the trillions of losses incurred because of that not a day goes by without wondering about what would have happened if those capital requirements had been based on sustainability and job creation potential? Surely we would have had a crisis from meddling that way with the banks, but, that meddling, would at least have served a better purpose than the current one.

Saturday, April 3, 2010

We need to stop the Amazon from smoking… now!

The climate change threat cannot be successfully fought with only governments and NGO’s and so there must be a connection with the ordinary citizens who, whether they know it or not, are all indigenous to this planet earth.

I went to the presentation of an environmental study at the World Bank, this time about the Amazon of Brazil. Again and though it certainly seemed a serious scientific effort to look into the future of climate change in economic terms, I failed to understand how it could connect with the citizens.

The study’s basic “connection” fault is that it looks into a too distant future, and therefore necessitates concepts like present value and discount rates. Though technically correct, it opens up discussions and creates doubts that are not much helpful when trying to create the urgent unity of purpose that is needed.

Over a relative short period millions of people around the world were able to quit smoking, something that is addictive and that gives many much short term pleasure but that also poses serious health risks… mostly in the days after tomorrow. If we could recreate those conditions with respect to climate change we stand a better chance to achieve the results we need.

Having thought about these issues for a long time, with respect to the Amazon of Brazil, and on whose survival the world depends so much for its breathing, I would like to see the following happen.

* The government of Brazil presents a project of what it would cost to keep the Amazon intact or even better off in an environmental sense, for the next five years, “Keep the Amazon smoke-free for 5 years”. The project should include not only the direct costs but also the opportunity costs of not going forward with any exploitation of the Amazon that could have been envisioned for the next five year period.

* Of that project the Brazilian government would state how much it is willing to shoulder and how much it expects the rest of the world to help out with.

* Brazil would then submit the proposal to the World Bank for an analysis of reasonability and an opinion of how the rest-of-the-world costs could be distributed. When sharing out the burdens we need to remember that the poorest of the poor possess equally the human right of being allowed to share the human-race responsibilities.

* The World Bank should also present a proposal on how the project could be monitored so as to ascertain that if the resources are given it will live up to its promises.

* After that Governments, NGOs and hopefully also the individual citizens could dedicate themselves to market a concrete “Keep the Amazon smoke-free for 5 years” with a clearly identified cost, and which hopefully at the end of year 4 would lead to the preparation of the “Keep the Amazon smoke-free the next 5 years”.

Friends, if we are not able to keep the Amazon from smoking during just the next 5 years with the aid of will, nicotine patches, chewing-gum or whatever it takes, how can we argument that we will be able to help it quit its addiction altogether?

The Amazon's about the mother of all dangerous second hand smokes!

Photo: Michael T Coe, The Woods Hole Research Center.

Thursday, April 1, 2010

What is your HEER?

At last someone else is calling the attention to the fact that the climate change could be extremely serious precisely because it is so difficult to analyze that problem scientifically. The Economist

For years I have been arguing that I do not need some scientist to confirm to me what I have so often seen with my own eyes, namely that there is something awfully bad happening out there as a likely result of the way we treat our little pied-à-terre to which we are all indigenous.

I have a 157 HEER (human energy efficiency ratio)… what´s yours?