Blame bankers not oil for climate impasse
It's time the green brigade joins the banker-bashing, Occupy Wall Street movement
Another climate summit and another potential disappointment facing the green brigade. Even before it officially kick-starts, there is a widespread feeling that the Durban Summit is expected to be another brick in the collapsing climate wall. The reason this time, though, is that governments in the West are overwhelmed by the sovereign financial crisis and hence climate change mitigation action is out of the window.
For long, the green parties and activists in the West have blamed the fossil fuel lobby for blockading climate negotiations from the time of the Bali Summit in 2007. The oil and coal behemoths have been summarily criticised for intense pressure tactics and lobbying in the corridors of the Western governments so that they don't step aboard the green bandwagon. Numerous allegations of financing of climate sceptics by these companies to spin-doctrine the Intergovernmental Panel on Climate Change (IPCC) findings are familiar.
But covertly, over the years, there is another powerful set of people who have derailed not only the green ambitions but also the basic foundations of the day-to-day economy itself. They are the esteemed banking community of the West.
While the term banker for normal folks would imply the normal cashier/bank manager of your savings bank, the actual offenders sit far behind, shrouded in a veil. These untrustworthy bankers of the West are, broadly speaking, of three kinds.
The sinful trio
One, the central bankers, comprising the so called knowledgeable economists, who print loads of money and believe they have a firm grip on the strings of each and every citizen’s life. To make matters simple, the treasury departments can also be clubbed with central bankers. Together, they publish complex academic papers loaded with jargons and theories. They attend numerous conferences (in no less than five-star hotels) each year to espouse how the world works according to their formulas and theorems.
A number of these bankers come from haloed universities, and hence are considered above board. The US Federal Reserve, the Bank of England and European Central Bank and their treasury departments come to mind.
The second lot are people in financial institutions who are busy creating complex financial products, called securities, to trade with their counterparts. The notable thing here is that both believe they are or will be making a profit. These security transactions are so hidden and inter-woven that even the central bankers dare not unwind them. The traders take deposits, make risky investments and take home fat bonuses. The Lehman Brothers, Goldman Sachs, Merrill Lynch and UBS come to mind here.
The third lot are the financial regulators who are to police the financial institutions. These regulators at some point of their careers would have been financial traders themselves. It is a kind of revolving door game where the role of the police and crooks are interchangeable, as in stage shows. Their job is to discipline financial lapses, but they always give the culprits the feather touch treatment like those given to errant school boys.
So, over the years, the trio have blindly side-stepped financial prudence and have gone about their lives to create wealth for themselves at the expense of common men and women. The financial services industry, which simply involves money changing hands, now accounts for a massive 8 per cent of the GDP in the US, 10 per cent in the United Kingdom and 5 per cent in France.
While the trio go about their casino methods of doing business, the credit crunch of 2007 and 2008 brought into the open how short the horizon of central bankers were, how self-centred the traders turned out to be and how lax the regulators became.
What is, however, appalling is that when economies unravelled, the trio have come back to the same taxpayers (the common men and women) with cap in hand for salvaging their institutions and their bonuses. So, the central bankers printed more money, treasuries bought stakes in distressed banks and bailed out institutions and regulators made some small fraud cases to show their activism.
Now, after three years of the 2008 Lehman moment, it is realised that those governments are in deep debt with their sovereign credit ratings under stress. The budget deficits have reached historic highs and now governments are targeting sharp spending cuts even on benign investments such as health and clean energy.
Another reason for delay
So out goes solar and wind subsidies, carbon markets and, more importantly, green jobs from the door. It’s shocking that the same politicians who rose on their green promises in the US, the UK and the EU have cowed to the bankers lobby on lighter regulations and more bail-outs. The latest bail-out programme is the proposed European Financial Stability Fund (EFSF) for strengthening banks at the expense of taxpayers. The bankers have convinced their leaders that banking bonuses, light financial regulations and standards are more important than welfare and green investments. Taxing financial services is a strict no-no.
In hindsight, economists in different roles—central bankers, treasury departments and regulators—are principally to be blamed as they are never held culpable of wrong policy moves and alter stance easily when theories go wrong, leaving citizens stranded.
No doubt carbon emission over the past two years have marginally decreased in developed countries due to the crisis and is surely welcome, but the vulnerability of governments will only delay long-term global efforts to promote clean energy and reduce fossil fuel dependency.
The result now is that the youth in the West, who feel cheated, are coming out in hordes to lead Occupy Wall Street and Occupy London campaigns. While the movement is currently claimed to lack enough punch, it is time the green brigade too joins the banker-bashing as all roads lead to the same Goliath.