A debt spiral we could have avoided

Published 23 October 2008

Economists simply would not accept that their model could fail

Who, five years ago, would have predicted the part-nationalisation of private banks, the UK Treasury considering abandoning its fetish of “inflation targeting”, and prudent Gordon Brown breaching the EU cap on government spending?

Well, some economists did, and five years ago the New Statesman ran a piece about their concerns.

In September 2003, I edited a book for the New Economics Foundation called The Real World Economic Outlook. It warned of "a collapse in the credit system of the rich world, led by the US, leading to soaring personal and corporate bankruptcies . . . The risks of a debt-deflationary spiral in the rich world are significant."

In a New Statesman article based on the book, I wrote: "If unemployment were to rise here, that could lead to a downward spiral in . . . house prices, making it harder to pay off debts [and] a debt-deflationary spiral.

"This threat is very real. But few economists, politicians and consumers appear to understand the nature of the risk." The cover carried a picture of a middle-class dinner party with the caption: "Coming soon. The new poor."

And so it has proved.

For more than two decades, economists operated behind an intellectual blockade where their theories calcified into an ideology that, remarkably, made no provision for systemic economic failure. Instead, powerful "security services" such as monetarists and their successors enforced strict global adherence to a theory of fantastic, always self-adjusting and self-regulating markets that could be relied upon to act efficiently. Mathematical models always allowed a return to equilibrium. There was no theory for systemic economic failure.

Those who still had time for the ideas of Karl Marx, John Maynard Keynes or J K Galbraith were denied professional posts, journal publication and media commentary. As a result, mainstream economists were not analytically equipped for near-systemic global economic failure and thus failed to alert their masters in the banks, central banks and finance ministries. They still do not fully grasp the scale of the crisis (after each of six bailouts, beginning with Bear Stearns, we were promised that the bottom had been reached and recovery was nigh).

The big US and EU bailouts treated the symptoms, not the disease. The disease is debt, and though it takes two to create debt, the bailouts helped only creditors, not debtors; banks, rather than homeowners or companies; the world of finance, rather than workers or industry. There remains a high risk of a systemic meltdown and a severe and prolonged global recession. One reason is that central banks have lost control over real interest rates. Their co-ordinated lowering of rates was followed by an immediate spike in mortgage rates. These are based on the privately set British Bankers' Association's Libor rates. The committee of bankers that raised them was serving the interests of the finance sector - not those of homeowners or companies. But high rates of interest exacerbate the disease of unpayable debt.

The very opposite is needed if we are to avoid ten years or more of sustained economic failure.

Interest rates rose because of risks posed to banks by indebted homeowners and companies, and by plummeting property prices. Bailing out banks, and not private and corporate debtors, means property prices will continue to "deleverage" chaotically and destructively.

Faced with these falling property prices, compounded by extensive fraud and deceit within the financial system, nobody can calculate the scale of outstanding financial liabilities; the probability that liabilities will, or will not be met; or the timing of such payments.

Property prices have been falling in Britain for just one year now, but have fallen for three years in the US. More disturbingly, prices in Japan (as Graham Turner points out in his book The Credit Crunch) are still falling, fully 18 years after Japan's credit bubble burst in 1990.

Only by bailing out homeowners and companies can we arrest chronic property deflation, and restore confidence and solvency to the international capital markets.

Fortunately, there is a simple, cheap policy that would address property deflation. It is based on Keynes's monetary theory, which has always been sidelined, but which he considered even more essential for breathing life into the corpse that was the global economy in the 1930s than his proposed fiscal policies.

Cheap money, ie, very low rates of interest, will help make mortgage and corporate debt repayments affordable. To achieve low rates, we first have to abandon the cross of "inflation targeting" on which the economy is being crucified. Second, the government must remove from the private British Bankers' Association the power to set interbank lending (Libor) rates. If it is to help homeowners and businesses, the government must restore to the Bank of England, accountable to society as a whole (not just the finance sector), the power to set all interest rates.

Only then can we hope to regain financial stability.

Ann Pettifor is a political economist

www.debtonation.org

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31 comments from readers

writeon
23 October 2008 at 14:42

Dear Ann,

At the risk of sounding 'sexist', after reading your piece I wanted to give you big hug and a kiss, but as we are virtually standing on the deck of the Titanic and I've noticed something that looks like an iceberg over your shoulder, and the moon's out, I imagine appearing 'sexist' is the least of our worries!

Why aren't people like you in positions of real power in our society? I always thought the essence of proper education was the nuturing of ones critical sense and asking questions, not learning the accepted answers by dull rote.

Anyone with half a brain could see that the economic policies pursued were barmy, yet they were pursued with vigour and arrogance. I remember listening to Thatcher lecturing the world about economics and I just couldn't believe it. I was shocked and incredulous. How could anyone take this woman seriously when she so obviously didn't know what she was talking about! Scaling-up the wisdom acquired in her fathers shop and applying it to an entire country was close to insane. And the collosal arrogance involved floored me too. It was so dogmatic and primative and ignorant, a recipe for disaster over the longterm. But the damage being done was concealed by sleight-of-hand. North Sea oil revenues, privatisations and massive transfers of wealth from the bottom upwards.

Fundamentally the medicine is being wasted and applied to the wrong end of the system in the vain hope that it will rapidly trickle down to the rest of society. This is, I contend, a collosal mistake and will only worsen the problems we face.

In many respects I think we are potentially in a worse position than we were in the 1930's. This sounds alarmist and inflamatory, but it's what I think. Also it's important to remember that Keynes' ideas didn't really gain traction until after the Great Depression had hit so hard that even the most obtuse could see that something fundamental and systemic was wrong with Western capitalism.

writeon
23 October 2008 at 15:01

The question is, do we really have to repeat the Great Depression all over again before we apply the right medicine? I hope not, but I'm not optimistic, as I don't believe we have the right people in charge. Removing an entire layer of the 'ruling elite' and repacing them with better people, with fresh eyes and ideas, is probably impossible within our current economic, political framework.

The good thing about the collapse and the Great Depression was that the ruling elite was terribly weakened and lost respect, prestige and legitimacy. In the United States reform elements in the ruling-class understood that unless new methods were employed, the New Deal, one risked revolution, so better to try and save capitalism from itself than risk losing everything!

However, this New Deal strategy may not work this time. It was easier to create jobs through public works in the 1930's precisely because the overall level of technology was far lower than it is today. That's just one example. Then there is the massive level of personal debt in Britain. It's like a ball and chain around most peoples legs, turning them in close to slaves and restricting their movement.

Also we no longer really have much manufacturing industry left. No mines, no steel, no shipyards, but an awful lot of computers and services which are very vulnerable and very inflexable.

The debt blackhole vortex is probably many times the value of all the reserves of all the banks and states in the world, probably larger than the worth of all assets. If this massive debt hole collapses it'll have a tremendous effect on the world's economy. We are talking about several thousands of trillions. And if only a portion 'vanish' this will have consequences.

Finally there's the problem of whether Keynes actually worked at all, or was it the destruction caused by the second world war that really got us out of the Great Depressio? It's a scary and sobering thought in my opinion.

davidhill
23 October 2008 at 16:39

We have clearly ‘missed a unique chance to sustain humanity in this century by not changing our basic economic structures and allowing the present financial market system to prevail.

When one considers what the future holds, a world population of between 9.5 and 10.5 billion by 2050 (possibly even up to 12 billion), ever-dwindling natural resources to support human life and the dire effects of climate change through carbon and pollution emission, is it not clear that we have to change our economics to ‘Ethical and ‘Sustainable economics? For if we carry on with the present capitalist economic system, where the very few become rich beyond their wildest dreams and the majority are kept in relative poverty through the crumbs that drop from the rich mans table, our young and future generations to come will eventually have to endure immeasurably suffering. Indeed, governments are still presently blinded by current economic dogma and minority vested interests that do not look after the well-being of all people. Therefore we have to change to new economic systems that are sustainable and where the needs of the vast majority of the people are addressed. In this respect it is a little know fact but it only takes a reduction of no more than a 15% drop in global oil supply to bring eventually the whole of the global economy to its knees.

We have therefore to supplant the present capitalist systems and economics with ‘sustainable systems and ‘need economics before it is far too late to change. That does not mean that we do away with 'markets', as 'markets' are the only way in which trade occurs. It is how we operate those markets is the problem for sustainability and public need.

But unfortunately to allow this to happen, governments should have started the critical need to change to these ‘ethical economic structures at the start of the credit crunch and should not have supported the banking system as they have.

Dr David Hill

World Innovation Foundation Charity (WIFC)

writeon
23 October 2008 at 19:04

David,

You mention some unpalatable truths, relating to the massive growth in the world's population that is already built into the system and can not be stopped, that is if we rule out the return of barbarism, global warfare, plague or mass starvation. How on earth are we going to manage?

The challenge of just feeding so many people is going to be massive, yet they'll want jobs, education, homes, cars, fridges - all the stuff we have too. A world with nine billion people or even twelve and then fourteen and rising seems like an impossibility wrapped in a nightmare.

Yet politicians and leaders simply don't talk about this kind of thing, do they? It's a problem pushed into the future, for future generations to deal with. Our leaders are useless, incompetent and dangerously complacent. But isn't this about par for the course in relation to many other areas of civilization?

Fundamentally we have developed, or rather, a powerful and wealthy minority, a veritable aristocracy, have imposed an economic system on everybody else, that's close to insane. Capitalism, as it's configured today, is a kind of cult, quasi-religious in nature, something we worship. Yet we are being sacrificed on the bloody alter of the free-market like the victims of the Azteks, only we sacrifice millions and thousands of species in an ecological holocaust that's almost unrivalled in the history of our small, isolated, planet.

But without cancerous economic growth where would we be. Take Pakistan which we are pushing towards destruction. Its population is well over 160 million. At least half are under 25. They need 6% growth just to provide 4 million extra jobs a year, and this pattern is repeated all over the world.

I support markets too, but back in the marketplace, keep them out of the rest of society. I suppose we're going to have to install some kind of 'socialism' or we can look forward to an explosion of barbarism. Not a comforting thought.

writeon
23 October 2008 at 19:28

If we are really serious about facing and tackling the challenges we face; economic, environmental, population etc. we are going to have to somehow replace our political and economic elites with other people, one way or another, whatever it takes.

This sounds ominous, almost like a cull; but I don't see a way around it. We need new people with new values, who aren't the servants of the free-market. People who haven't been corrupted and socialized into their roles as priviliged and highly paid courtiers at the free-market, global, court.

Reluctantly I suppose I'm talking about something close to a revolution, because if we don't remove the ruling elite, people joined at the hip with voracious capitalism and steeped in its values and methods, people who love wealth and power above all else, unless we replace them and begin a programme of fundamental reforms designed to make the market and economics our servant not our master, then we are truly doomed as a civilization. We simply cannot go on the way we have been. It is impossible.

Infinite growth on a finite planet isn't feasable, and no amount of faith and belief in the God of the market - Mammon - will make it so. The invisible hand doesn't exist. It is a dangerous illusion and we are following it towards the edge of a cliff. Either we rise up, somehow, and take control, or we carry on being led towards the abyss.

gnuneo
24 October 2008 at 01:47

actually, infinite growth IS possible (well, in every practical sense) - goods can be made with other materials, technology can develop, and higher incomes can be spent purchasing higher quality. (for instance there are more Mercedes and less Ford in Scandinavia). With increases in productivity in capitalist partnerships (cooperatives) feeding directly back to the workforces (instead of being hived off by multi-nationals and 'owners'), then the workforce can afford to purchase better, ie more efficient in production/use items.

if there was global free trade upon the principles of 'fair trade' and 'cooperative production', then the living standards across the world would rise - and if there is a demand for fridges, than fridges will be produced from suitable, sustainable materials. There is no need for them to copy old industrial styles of lots of metal for instance.

the only hold-up is a lack of power - or more accurately, control of power. But there is a huge potential for solar power focussing from deserts, which could fully power 200 civilisations if we utilised it correctly - and again, it is entirely sustainable.

about Keynesianism - it only works when the Govt pumps money directly to small, locally owned business. And when the majority of the economy is based upon that. It works because the Govt can grab its 40% or so of every pound spent going around and around the local economy, which means the tax income also increases.

but when the Keynesian investment gets given directly to multi-nationals (for instance the big building firms, or the agribusiness sector, or to prime UK schools for privatisation), then there is no multiplier effect from the local economy, as the money just immediately leaves it. Which of course turns into a greater drain upon the tax-payer, as well as the general economy.

gnuneo
24 October 2008 at 01:56

last note, on the 'over-population' - the best way to cut birthrates is to increase prosperity, and ensure girls and women get a decent education. This is the only way to end runaway population growth.

ann: you are entirely correct, the Govt should have taken those £Billions and invested it creating new jobs, to boost the real world economy. You are also correct, what is important is people's incomes, as that creates the consumers the economy relies upon - 1000 people spending £60 each per week on local produce, creates more economic growth than one person buying a £60,000 sports car per week. Especially if that sports car was made abroad. (don't want to sound parochial, but that is a fact.).

"Why aren't people like you in positions of real power in our society?"

indeed!

Carl Jones
24 October 2008 at 11:30

There will be a planned human cull. It maybe a phased event, it maybe sudden, but it will look nartural. 6.5 billion, down to 1 billion....some suggest 500 million.

Things are happening with H5N1, but the MSM have been rather quiet. The indonesian government has openly claimed that the US it tampering with the virus and as a consequence, they do not share their H5N1 samples.

It could be H5N1, it could be something else, it could a combination of things. I wouldn`t be supprised if we had a couple of large volcanic erruptions...that should cut food production further.

Biden has already suggested that Obama will face a major crisis. I can`t wait....bigger than 9/11, maybe more global, somrthing will happen to disappear his empty pre-election mantra.

The last question in the comment above has been asked before in this thread. I am often told that governments, the military, corporations and the SIS can`t organise. And this is often cited as a reason not to believe 9/11, 7/7 conspiracies....they could never pull it off. lol Of course they can and have. The vast majority of people on this Earth are GOOD PEOPLE, so on balance, the world and its people should be better off....maybe not as well off as the super rich, but noticeabley better off. But this is not the case. Even with all the 70`s strife and that EVIL woman, people were happier than they are today. The reason for this is simple, we live in a constructed event world. People like Ann WOULD become infected when they enter the small circle of power. The decisions are simple, like Greenspan cutting US rates, even I cringed. Greenspan knew what he was doing. They are all in it together and they soon get rid of those who question policy like David Walton and Jorge Heider...VW are shocked at the level of safety systems failure...but these cars, like Di`s are fly-by-wire and can be accelerated from afar, or shut down (BA38, flight deck and backup battery power).LOL

gnuneo
24 October 2008 at 14:24

carl: it is undoubted that a part of the global 'Elite' do indeed believe that over-population needs to be "culled", and there are indeed plans for that in development - and quite possibly already being field tested. (HIV springs to mind).

in large part though, this is due to a lack of understanding of alternatives, and also basic ecological systems.

for instance, trying to reduce birthrates through war, epidemics, or absolute poverty (leading to starvation, lack of access to basic medicines), has in virtually every case actually *increased* the rate of population growth! If the elites understood the processes, and were serious about cutting the world's human population into sustainable levels, they would be attempting to spread global prosperity, would be enormously investing in and pushing for female education around the world, would tell the Pope to shut his bloody trap, and would be putting aid into the Grameen Bank instead of into arms.

do you not honestly realise that the 'problem, reaction, solution' model is also used to convince members of the Elite as well? You don't seriously imagine that there is a Global Conspiracy, and every member of that conspiracy is fully up to spec on every little detail do you? People are told "there is no other way", and many believe it - both in the general population and also decision makers. They actually *honestly* believe it!

what is needed is to give alternatives, so people can look at the options, the arguments, and make their own minds up. This IS what Free Speech is all about, and indeed what it is for.

once again, democracy is the way out of this mess, getting People to understand what is going on, and allowing them to make rational choices between the options. People know there are problems, what they are often unaware of is possible solutions, underlying patterns and structures, and that decision makers are often as bewildered as they themselves (but believe they can't show it).

Carl Jones
24 October 2008 at 23:52

gnuneo; how much oil will be required to enable global properity? I understand the basic mechanisms, that after a crisis the people have a lot of sex....so if you cull the population down to 1 billion, the population might reach 2 billion in 10 years....assuming current morbidity.

PRS model is a top down therory...the Gods may use it against each other to determin objectives/policy.

Now you are being silly.....does everyone in MI6 see the big picture? Of course not, but they all have a notion of their objectives. The fact that most have no idea of whats going on, does not hinder their fuction. Its the same in government, corporations and Freemasons. The people believe they are FREE, that they are MIDDLE CLASS (lol), that we now live in a class-less society.....there is a global conspiracy....just look at Westminister...its full of people who are nobodies....well, there is David Davis and David Icke

Look at Enron...the whistle blown by a new female employee who was not EMBEDDED (like our BBC journos) and smelt a rat. I emailed No10 over the attempted assassination of Gordon Brown...I know others understand the technology, but in general, everyone believes it was ice crystals...LOL

When you fund the political system. control the MSM, its very easy to conduct a global conspiracy...every time I make a dodgy comment to a NS article, it get taken off the main page.

Your last paragraph would never be allowed...sorry, it is allowd, they believe what they see and are told...of course its a pack of lies, so why would the ELITE give the people the reality that you suggest? Its just not going to happen.

fla56
25 October 2008 at 15:40

it is becoming tiresome to hear ongoing calls for more

money to be put into the system.

given the influence of the financial elite of course they

will be bailed out but even giving away money to any

owner of over-inflated assets such as houses is not

the answer. money is not wealth & asset inflation does

not equal growth.

the bottom line is that the system is over-indebted and

needs to deflate. the nation needs to work hard & learn

to live within its means. cheap money will just create

(hyper)inflation, punish responsible folk & postpone

the inevitable.

to stand any long term hope there needs to be

population and resource utilisation control. nuclear

fission/fusion/cold fusion/whatever may help but

there’s no such thing as a free lunch

Douglas Chalmers
25 October 2008 at 15:46

Well, that is all very interesting, Ann Pettifor, but what you have described is essentially the Boys' Club run rampant. What is worse, though, is that they have once again deified the cult of elitism and the social climbing that they fawned over has ensured that an exclusively powerful and wealthy super-class was re-created at the expense of the many.

No wonder, then, that it has all happened and in the manner it has. Such people see themselves as infallible and always right. Conversely, they only ever see faults in others and diminishing the value and worth of others is thus imperative to their modus operandi. So they have been perfect in every way and a universe unto themselves as long as things went up..... http://www.youtube.com/watch?v=efdfGeUKXuU

But falling property prices in Britain may be the outcome of the same low interst rate deflationary financial black hole as followed Japan's credit bubble in the past. Thus a carry trade in British pounds or even US dollars may eventuate to punish those who have tripped us up. Getting release from that might not be as easy as it sounds and most probably will take decades, though.

In "bailing out homeowners and companies", it is assumed that those who have already been foreclosed and repossessed or bankrupted will be abandoned. How will that "...restore confidence and solvency to the international capital markets...." when it indicates the same essential thinking and the same framework of potential for error and disaster fancifully exists in a supposed economic lifeboat when the rule is still "every man for himself", uhh?

Conall
25 October 2008 at 17:37

What to do now? Surely the first thing is to make sure that Never Again will we have a house-price bubble. Actually is wasn't a *house*-price bubble, rather an easy-credit fuelled Land price bubble. The solution: as always To tax the unearned land value increment, value which is created by Society, not the landowners. Yes, our dear old friend Site-Value Rating (instead of Council tax, stamp duty, IHT, ga-ga granny tax etc)

Secondly, ask yourself: Where did all this debt-money come from? And you know the answer only too well. All the money in circulation bar a paltry 3% is created within the private banking system (well completely private until a couple of weeks ago!). These bankster clowns, Masters of the Universe have screwed up big time. What to do about it? The extreme answer is Huber/Robertson's idea of 100% reserve banking, with the Government issuing (spending) the necessary new money into existence. Alternatively, the banks could pay interest on their debt-created money at current bank rates. Either way the past excesses could not be repeated.

C'mon NEF let's have some really 'new' thinking about the solutions!

Douglas Chalmers
25 October 2008 at 18:13

"What to do now..... let's have some really 'new' thinking about the solutions..."

You (and others) say that, Conall, but nothing you choose actually shows any way of genuinely changing anything. Its fine to point out that asset bubbles are a problem and that excesses should not be repeated. In fact, you are merely muttering as we shuffle towards the gallows.....

Nothing will change unless the license for irresponsible speculation is withdrawn - and nationalizing banks will eventually make another kind of incompetent and utterly inept mess as well. Thus we are ever caught between laziness and rampant greed. There is a way out but people don't want to change.....

A lot of the money that is being lost is from pension funds and that is because the share market is a kind of casino, not a vehicle for responsible long-term investing. That is quite separate from the collateralized debt obligations (CDO's) and the added layers of credit default swaps (CDS) for mortages and God only knows what else.

None of it has been in any way a formula for meeting the imperatives of climate change yet, along with the ridiculous war on terror, it is still all only distracting us from the main issue impacting economies through this century. The effects of rising sea levels, long-lasting droughts and super hurricanes cannot just be wished away.....

Better start thinking - and hard, uhh!

William
25 October 2008 at 20:32

Last month it was widely reported that World population increased by 7million in August, Conservative estimate 84million per annum. In 12 years time easily in excess 1Billion. We are passed Peak oil development that features prominently in the cultivation of food crops. We really need to care for our future.

Carl Jones
25 October 2008 at 22:06

William, you are so right and this is why I have out lined the human cull above.

J Tomlinson
26 October 2008 at 10:08

Present circumstances provide a window of opportunity to initiate incremental changes in the process of money creation which globally could improve life in respect of finance, of the economy and the environment. In the UK we can urge the government to instruct the Bank of England to make interest-free loans (administered by the existing banking system) available for public capital projects.

In the words of a petition from the London Global Table* (shortly to be presented to parliament):

“The Petitioners therefore request that the House of Commons urges the Government to bring forward legislation to enable the Bank of England to issue interest-free loans for public, environmental and clean electricity capital projects such loans to be repaid and, on repayment, cancelled thereby halving or more the usual cost in a non-inflationary way”.

If this proposal were to be implemented it could become the thin end of a wedge that, when driven home, would marginalise the role of the existing commercial banks from national money creators** to High Street agencies of the central bank. The commercial banks would implement the provision of interest-free central bank money as loans for major capital projects but also for micro-credit, small farms and businesses, student loans and also - provided wider ownership is thereby furthered (on some sort of John Lewis or Cooperative Society model) - for private capital investment.

Anne Pettifor elsewhere (Guardian, 11-10-2008) has argued powerfully that usury - ie interest - is sinful. Others like her perhaps also believe debt, if not sinful, is highly undesirable. On the latter point, this viewpoint is unlikely to prevail against the more powerful argument that repayable debt is necessary for almost any sort of economic activity, preferably restricted to activity perceived as bringing benefits at every level.

Jasper Tomlinson

*www.globaltable.org.uk/

**The process by which banks create money is so simple the mind is repelled.

philosopher_king
26 October 2008 at 10:46

The future is too important be left solely to the current elites because they dont always listen to even well read, radical and expert opinion. i think the main difficulty during the next 5 to 10 years which is the period i expect the current crisis to last is:- the inadequacy and closed nature of our democracy. Neither of the main political parties seem able to be able to escape the strangle hold of being the standard bearer for one vested interest after another. Not only that but they seem destinied to a race to the bottom in ever increasing conservative or neo con policiies. The current rhetoric from Gordon Brown sounds good but its only superficial. We are in uncharted waters and we need new radical ideas and new people. And when i say radical i dont mean the corrupted use of the word by blairite members of the current cabinet! i cant see a debate happening this side of the election at least one involving the people who have the power to change things. Things are moving fast and appear at intelligent glance to be unimaginably grim compared to the situation last time there was a global slump. Capitalism and well and truly stuffed itself! It will take more than international conference and buying the preference shares of leading banks to get us out of this one.

tony in leicester

my point is we need electoral reform and greater democracy in our institutions.

fairplay
26 October 2008 at 13:45

reserve banking would be a sham too. it would be done through the bank of england which is.....wait for it...................................run by private banking families!! you dont think the likes of the queen and the rest of the royals along with their bankers through the ages would ever allow us serfs to be in control of our own money do you?

cant anyone see through this scam? do you people really believe this is a case of bad management? the people at the top arent as stupid as you obviously think they are

this was planned and executed with precision. there are plenty of fall guys but the main players at the top will rape and pillage everything thats left at bargain basement prices giving them even more control over our lives. face facts, theyve dumbed us down with the help of the media and now there is no fight left in us.

it doesnt matter what policies are inplemented. until we rout these despicable creatures from their ivory towers and make them suffer as we do daily nothing will change

gnuneo
26 October 2008 at 14:27

"gnuneo; how much oil will be required to enable global prosperity?"

oil is not necessary - ENERGY is, as energy can be transformed into ie hydrogen, to power non-connected transport. ENERGY is however incredibly plentiful, its just we haven't invested in secure, sustainable sources.

read up on:

https://www.blogcatalog.com/topic/solar+farms+in+the+desert/

http://www.guardian.co.uk/environment/2008/jul/22/solarpower...

"that after a crisis the people have a lot of sex....so if you cull the population down to 1 billion, the population might reach 2 billion in 10 years"

you misunderstand - the environmental/social measures that people automatically put into place to survive environmental pressures such as high death rates - large numbers of children to replace the statistically high deaths - wipe out any 'gains' (in this sense population drops) from such. It is the rational behaviour of the species itself that defeats such conditions. What is required is to ensure the population itself is educated and rational enough to control its own population growth, when a society has educated women and girls, when it has food/health security, it will automatically switch to a sustained/sustainable pattern, fall in many cases, because *that* is then the rational behavioural pattern. Note that in the West, as these conditions have been met, we now have the necessary population decrease (because we are so massively over-populated considering our geographical size and resources), whereas Malthusian/right-wing conservative 'Nature is red in Tooth and Claw', 'everything exploits as much as it can' would have foretold that European populations would continue to increase considerably given their advantage in food security/resources generally.

once it is accepted that people behave generally rationally, given the information available to them (consciously and/or subconsciously), then the path to change is clearly seen.

gnuneo
26 October 2008 at 14:35

it is to create conditions of social improvement in all areas of the World, to invest in projects like the breath-taking and uncorrupted Grameen Bank that creates local businesses owned by the people in them, generating local independence, wealth creation, grass-roots democracy, and the strengthening of Civil Society.

come to think of it, perhaps we in the UK could benefit from a few local branches... :|

gnuneo
26 October 2008 at 15:08

"the share market is a kind of casino, not a vehicle for responsible long-term investing. "

what are the conditions of the Share Market?

originally a vehicle for allowing those who owned the Land (and made money from the sweating and starving peasants who paid 'rent') to invest their ill-gotten gains into the new industrial factories, who needed Finance Capital.

the new industrialists could have gotten their investment of Capital from the workers themselves, had (S)he have given more profit back in wages allowing them to invest, but that would have eventually forced him to respect them as equal shareholders - equals - clearly out of the question for someone wanting to be part of the 'Cool Gang' in class structure. So the Stock/Share Market was born.

but having allowed 'people' (lol) to invest in these new companies, it then inevitably created the next step - that of swapping shares for higher 'increasing-in-value' shares.

basic economics - the more demand for a limited item, the more the price goes up for the item.

for example, if there are 200,000 PS1s being sold every year, but 6,000,000,000 people want one, the price will go up. However if there are 200,000 PS1s and only 50 people wanted to buy one, their price would fall.

so now the value of the shares/stock is not just the value of the company, but, perhaps more so, the value of the shares themselves.

can you see where this is leading yet?

(feels like Rolf Harris doing a sketch, if any of you remember that ;) )

so the more money on the Exchange, chasing limited number of shares, creates 'growth' in the value of shares - an apparent growth in the value of the companies/economy, and so the "'Conomy, Stupid!" was born*.

now, when the pension funds, people's long term savings, debt leveraged from mortgages, all go in the Stock Market...

*its a quote from a film i won't mention, but its a very amusing film, quite 'anti-American', but by an American. It rhythms with "idiocracy".

gnuneo
26 October 2008 at 15:18

... then there is apparent growth in the 'conomy, even if the underlying economy is unhealthy. The 'Confidence Factor' has kicked into play.

so, "what are the conditions of the Share Market?"

OK, what has been described so far? If you can't see this is a basic 'Pyramid Scheme', go back and read it again with that in mind.

the best way for a society to evolve, is to have the workers own the companies themselves and borrowing money as necessary from the mutual societies which removes the Stock market, and the possibility this kind of pyramid scheme can bring down our economy.

carl jones: i wonder if this will survive... or for how long? ;)

Carl Jones
26 October 2008 at 19:28

gnuneo, but as you say, money chasing limited shares, increases the value of those shares.....but the orginal reason to buy shares, is to receive a dividend. Most big companies/corporations achieve growth by acquisition, sack a bunch of workers in order to manufacture a profit. Usually both merging businesses will see a share rise

Your last full paragraph won`t happen. The government should have said to the banks, ok, will will refinance you, but only in direct proportion to your lending and it returning to 2007 levels. This has not happened.

Don`t be fooled by the banks apearing to be rolling around on their backs. The government is in a VERY weak position....it was the banks (all of them) who decided to stop lending....who gave the signal to stop? Why didn`t the banks talk to the politicians before things got so bad (alledgedly) ?

Real and notional wealth is being stripped from pension funds, shareholders, employees and businesses.....this is daylight robbery and the government is complicit. We were told that the ME, Asia and BRICK were decoupled from the western economy....more elite lies....all over Chna, factories are closing. People and businesses are being forced to sell parts of their businesses (reduced in value) to raise cash because the banks aren`t lending.

You could call it a pyriamid scheme, but fundamentally its a NWO construct.

I must draw your attention to The Sunday Times, TST is a Murdoch owned rag. Murdoch is also a closet --- sorry, I`m not allowd to say. TST has run a huge spread on Deripaska and in its News Review section it carries on with Osborne and Nathaneial Rothschild. TST goes on to say that Lord Jacob Rothschild isn`t happy with NR`s letter and the attention its attracted to the family. TST also gives over half a page to the Rothschild family and a family tree.....so why would a distant/fringe family member attack/belittle the global grand master? Are the Rothschilds rasing their profile and why?

davidhill
26 October 2008 at 20:26

The only way in which humankind can address the enormous ever-emerging global problems is in simple terms, to unite the world. That is the only way. But unfortunately, the vested interests of politicians and the financial masters of the world (the elite 5,000 or so and no more), will not allow this to take place, for this disunity makes the great wealth for the powerful that they continually have and control. The divide and conquer philosophy is therefore as prevalent today than it ever has been, probably even more so to those in power. But again if we do not gather together humankind into a holistic unit, on our present system we shall clearly pay for this in the end (and no more than 40 years from now). Our Foundation consider therefore that only by constructing the international infrastructure, so that all countries and their people can develop together, will we be able to solve the world's major problems. For this to happen, governments would have to act on this premise, but will they. I very much doubt it !

Consequently more people throughout the world will have to eventually force the issue. It is therefore this connectivity in a physical problem solving sense that the world needs. This needed investment would be in the order of some $150 billion but where with the recent financial turmoil this seems now only to be a very small price to pay for our salvation and ultimate survival as a species. When we eventually grasp the vital need for such a global infrastructure that allows humankind’s most powerful commodity to flourish, innovation, and where our financial/economic infrastructures are only a support mechanism to such a structure, we shall then be on the right road to sustainability, but not before. Therefore there is an answer, but where vested interests of the very few and powerful will always hold this vital mechanism back. For humankind in its entirety is not the main concern for them, but only their personal wealth and dictatorial position played upon the world’s stage of capitalism.

Dr David Hill

World Innovation Foundation Charity (WIFC)

Bern, Switzerland

Carl Jones
26 October 2008 at 21:39

David Hill....are you a Bliderberger?

We already have a de facto world government. The people of Earth are not supposed to understand this. Chaos and conflict allow change and wealth creation for the elite. However, there is now talk about global financial oversite....global financial control. What this amounts to, is the power to play one country, one continent off against another as local elites compete for a slice of the cake and maintain their local power base..

You people will be owned....and with the DNA data base, there will be programmed birth and death....you will need to apply so you can have a near perfect baby....lest you cost the COPORATION too much.

BIG BROTHER is coming and people better smell the coffee real quick.

Carl Jones
27 October 2008 at 19:58

Http://www.thetruthseeker.co.uk/article.asp?ID=9583

The above link is a Telegraph article. Odessa`s industrial carriers have gone bust, thats 52 vessels out of the the loop. Cargo deliveries were down 15.2% last months at the US port of Long Beach, this is a lagging indicator.

As I have WARNED in previous comments, there is a SERIOUS risk of food/goods shortages. Hyperinflation could take off. Keeping it simple, if rice imports falls by 10%, then demand for rice and pasta will rise, it won`t be long before the shelves run empty. The NWO would love to introduce food rationing....please bring your ID card.LOL I can see blood on the streets.

Carl Jones
27 October 2008 at 20:00

Sorry, the second mention of "rice" should say "potatoes". :)

fairplay
28 October 2008 at 04:41

with GM foods and their control over them it will be more of the same for evermore. hybrid crops that kill all the natural vegetation of the world or at least most of it is on the cards.

the money supply controlled bu these animals is a scary thought. the food supply doesnt bear thinking about

gnuneo
06 November 2008 at 21:18

http://www.projectcensored.org/top-stories/articles/19-globa...

Trevor
19 March 2009 at 00:02

In an egoistic system of self-gain over others, economists operated behind an intellectual blockade where their theories calcified into an ideology that, remarkably, made no provision for systemic economic failure. Likewise, did their successors enforced strict global adherence to a theory of fantastic, always self-adjusting and self-regulating markets that could be relied upon to act efficiently. Altruistic models always allow for a return to equilibrium. There was no theory for systemic economic failure, however the results speak for itself.

In order to make plans, we must have knowledge of the general system of interactions in the world (in a closed system), and our plans must account for the need for new relationships. Specialists should acquire knowledge of the global laws of nature and act according to these laws, rather than according to some made-up, artificial “regulator.” Then there will be jobs for everyone.