[P2P-F] Fw: Financial Collapse: It's Only Natural

Tue Nov 15 11:55:38 CET 2011

----- Forwarded Message -----
From: John Fullerton <jfullerton at capitalinstitute.org>
To: Robert Searle <dharao4 at yahoo.co.uk>
Sent: Tuesday, 15 November 2011, 0:15
Subject: Financial Collapse: It's Only Natural

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Financial Collapse: It's Only Natural
“What does the collapse of MF Global, the Euro crisis, the sub-prime mortgage crisis, the collapse of Fannie Mae and Freddie Mac, and the 1998 collapse of Long Term Capital Management all have in common? 

Certainly these crises all shared the following characteristics: too much leverage, lack of transparency, inadequate regulatory oversight, agency problems of misaligned incentives, and failures of leadership at the very least. This is what we know, and we’re frustrated watching inadequate public and private sector responses to these problems.

Viewed through a natural systems lens these debacles can be seen with a new clarity. We see a system architecture and accompanying ideology that is the cause of these repeated failures. Only by understanding systemic design failures rather than simply reacting to problems do we find the path to real solutions.”

Read more here. 

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Andy Haldane on Financial Stability
On October 24th, Executive Director of Financial Stability at the Bank of England Andy Haldane gave the Annual Wincott Memorial Lecture in which he explained how the structure of the financial system inevitably leads to collapse and that we must fix it. Martin Wolf responded with the following description:

“In this lecture, Mr Haldane provides a compelling account of the first of these elements. He provides an analytical history of the development of western – and, in particular – British banking over the past two centuries, to demonstrate the consequences of a progressive divorce between who controls the banks – shareholders and managers - and who bears the risk – society at large and, in particular, taxpayers. 

The story is gripping, convincing and terrifying. It shows that each step along this road to ruin seemed eminently reasonable, if not inevitable, to sensible people. Yet the journey has ended up with over-leveraged, risk-taking behemoths, operated in the interests of short-term shareholders and management, which are both too big to fail and too big to save. The analysis raises profound questions about how we go from where we are.”

Read Haldane’s speech here (in PDF format).

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Breaking the Work-Spend Cycle
An article in last Friday’s New York Times reported on would-be shoppers’ strong objection to big box stores’ announcement that their employees would be forced to cut short family dinners to work on Thanksgiving evening. This may be the beginning of a massive shift in our national consumer consciousness—as we begin to understand how the “work to spend” cycle is eroding the quality of our American lives.

Exploring how we can break this destructive cycle and achieve a more meaningful life, a more sustainable economy and a healthier ecosystem has been Juliet Schor’s life work. Read our updated Braintrust profile of Schor, where we report on how her personal life’s trajectory and that of her work as a scholar of labor and consumer culture have intersected. 

(Read also about her connection to Harvard’s storied Econ 10 class, and on how Martin Feldstein cancelled the section on “radical” economics that Schor planned to teach!)

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Big Choice: Update
If you read the major papers after the Obama Administration's decision to review the Keystone XL Pipeline Environmental Impact Statement, you would think it was a major win for environmental groups and was going to negatively affect employment.  But the idea that we need to choose between jobs and the environment is wrong.  As John Fullerton presented in the Big Choice, we must find a way to leave many of our fossil fuel resources in the ground if we're going to withstand the climate crisis.  This starts with leaving dirtiest fuels, like the Canadian tar sands oil the Keystone XL Pipeline would carry.  By submitting the environmental impact statement for review, the Obama Administration is taking one small step in the right direction.

For more on Tar Sands actions organized by Bill McKibben, visit http://www.tarsandsaction.org/

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