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PaulS's picture

Yours truly in the Mail

From time to time I put down my thoughts on paper and send them to some of the National papers. It looks like yours truly is now having an article published in the Daily Mail! Here it is:

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I am frustrated by the media world's, yours included, failure to understand the nature of our current crises and failure to question our politicians properly on these issues.

Not a single politician, not one commentator or presenter and certainly not a single 'expert' in the news has correctly identified the true nature of the two interlinked problems the world is facing today, which currently manifest themselves as a recession:

1. The little financial difficulty.

True, it started with sub-prime mortgages, BUT it is far deeper than that. After all the total of sub-prime mortgage debt is reported as being some $2.5 trillion, whereas world Governments have so far pump close to $10 trillion into the banks. If the problem was sub-prime mortgages, or now 'banks not lending to each other', this $10 trillion cash injection would have solved it in one go.

No, the problem is 'derivatives'. These debts and bets are worth some $500 trillion. Compare that to the GDP of the whole planet of just $50 trillion and you get some idea why this fantastic burden of debt and/or potential liabilities can NEVER be repaid.

The only solutions I can think of are
a) hyperinflation to degrade the whole of that debt (following Zimbabwe)or
b) legal cancellation of all derivative contracts (!!) or
c) collapse of the whole financial system incl just about all banks, and starting all over again.
We need to choose one and go for it. The future is bleak whatever Gordon and other governments do, but pumping borrowed money into the economy in the utterly vain hope of recovery is just about the worst possible strategy.

2. The little problem of Energy and Growth.

Next year the world production of crude oil, for the first time in history, is likely to decline for geological, not political or economic, reasons. Peak Gas will follow some 10 years later.

2008 is the end of the Era of Growth (as growth is predicated on the availability of cheap energy) and the start of the Era of Decline.

No matter what investment is made in oil or gas fields, the total production from 2009 onwards will decline by perhaps 4% on average every year, thus our primary energy sources will halve every 20 years or so. This ‘peaking’ has already happened in 60 oil producing countries around the world, incl USA (1972) and UK(1999) and now, from 2009, global production will also begin to decline.

The 1930s depression was bad enough, but this decline will be on a massively larger scale. To start with, it will be at least 40 years long. 40 years will take us to about 25% of current energy usage, which is about the level of energy we can expect from all renewable sources combined. So at that stage, provided Governments have been wise enough to have invested massively in renewable energy, renewables may be able to take over from fossil fuels and perhaps stabilise the world economy.

However, pumping trillions of dollars into rescuing banks and car manufacturers and further trillions into ‘restarting the economy’ may impoverish governments to a point where no investment will be possible where it is really needed, such as renewables.

So, what should we do now? I suggest:
a) embrace the Green New Deal ( http://www.neweconomics.org/gen/greennewdealneededforuk210708.aspx) incl. £50 billion per year invested in renewables in UK. This £50 billion investment will be easily repaid through lower import bills for fossil fuels in the years to come.
b) forget about tax cuts or increases in current spending, they won’t do any good anyway and just add more and more to national (mine and yours) debt
c) choose one of the strategies above for the self inflicted financial crisis - and follow through
d) and go sustainable ( meaning: if you can't continue doing the same thing for say 100 years without damage, then its not sustainable)

Maybe you can work some of these ideas into articles or at least questions to politicians.

These subjects are grossly misunderstood by the media and therefore reported badly if at all to the public. How can the public even begin to consider these issues if you are not reporting them.

Paul