How bad is the economic downturn? (Jonathon Porritt)

Search

My Profile

Feeds

What are feeds?

Articles

Other Blogs

News Links

Organisations

« Energy as an employer | Main | Low Impact Food »

How bad is the economic downturn?

There must be millions of people sitting around in the beautiful weekend sunshine pondering one simple question: just how bad is this “downturn” going to get? Will it turn into a “technical recession” (two quarters of continuous negative growth) from which we recover relatively quickly? Or are we in for a full-blown, thirties-style Depression? Or are we already over the worst?

One group of campaigners (authors of The Green New Deal report, published last week by the new economics foundation) are in no doubt: "we expect that the sub-prime debt crisis (in the US) will soon come to be seen as just the first domino to fall in a line of adjacent dominoes, threatening a systemic crisis. This will lead to a massive wave of corporate defaults. Because their profitability is too low to repay costly debts, these companies will likely default, tipping their lenders-banks and institutions such as Hedge Funds – into crisis."

Right or wrong, their analysis of how we’ve got into this mess is devastating: irresponsible deregulation of the financial services sector, leading to unethical, greedy and even fraudulent behaviour; a deliberately induced credit crunch, with financiers borrowing and lending almost without limit, leading to totally unsustainable asset inflation – particularly in housing markets; and a total failure to crack down on tax havens and dodgy accounting systems that allow corporates and the ultra-rich to prosper at the expense of the vast majority of citizens today. As Nicholas Sarkozy has said: "we have to put a stop to this financial system which is out of its mind and which has lost sight of its purpose."

The credit crunch is the first of three "crunches" that "The New Green Deal" brings together, the others comprising much more familiar territory around climate change and soaring energy prices driven primarily by an encroaching peak in oil production. Each of these crises could of course be addressed separately, but it is precisely their "perfect storm" convergence that renders contemporary capitalist economies so unprecedentedly vulnerable.

It’s also this convergence that makes the proposed solutions so compelling. Drawing deeply on the analogy with President Roosevelt’s New Deal in the early 1930s, when he dragged America out of the worst impacts of the Great Depression, the Green New Deal depends on two essential thrusts: re-regulation of financial services (including the reasserting of government control over credit and interest rates), and the re-flation of the economy through a £50 billion a year crash programme, over 10 years to reduce – dramatically reduce! – both emissions of CO2 and other greenhouse gases and our chronic dependency on fossil fuels. A new "carbon army" will create hundreds of thousands of jobs, "make every building a power station", eliminate forever the scourge of fuel poverty and severely curtail the worst activities of profiteering energy companies.

Crazy stuff? Possibly. But its worth bearing in mind that’s exactly what all the usual vested interests kept telling President Roosevelt as his New Deal set about rescuing the United States from one of the worst periods in its history.

Posted by Jonathon Porritt on July 28, 2008 4:31 PM | Permalink

Comments (4)

Eloquently put. Now I'm off to delve into the full report itself. It's becoming increasingly clear that the 'crazy stuff' is what has got us to where we are now...

Posted by Jamie | July 29, 2008 2:54 PM

Hi Jonathan : I totally agree ! If you remember, I was an early Patron of NEF . Please see my editorials for IPS and at www.EthicalMarkets.com :
'NEW GAMES IN THE GLOBAL CASINO ' ; ' A CLOSER LOOK AT OIL SPECULATORS' ; " NERVOUS INVESTORS SEARCHING FOR NEW ASSET CLASSES "
Would you like us to make a link to your report ?
Warmest wishes,
Hazel

Posted by Hazel Henderson | July 30, 2008 9:57 PM

Funnily enough this is exactly what some of us policy geeks in the Green Party have been saying these party 30 or so years. Sad that no one out there was listening : we just have to hope it's not tooooo late.

Posted by Janet Alty | July 30, 2008 10:13 PM

Fine - as far as it goes. Remember that the 'New Deal' did not get America, or the World, out of depression; that only happenned with the outbreak of the 2nd World War. It was then being argued, and is still what is needed, that '100% Money' is needed: end the banks' priviledge of being allowed to create money (in the form of 'credit')and make a government institution (central bank?) the sole creator and regulator of the money supply, to be spent into circulation by government, and so not being chased to be repaid and cancelled out of existence, while also bearing the burden of added interest - leading to the growing debt burden on society, as well as the extremes of wealth and poverty.

Posted by Brian Leslie | July 31, 2008 11:10 AM

Search

Feeds

Recent Posts

Categories

Archives