The financial crisis, the bailout, and green investment
Over the weekend I tossed out some thoughts about how energy efficiency might serve as one response to the housing/credit crisis. As it happens, many other folk have tied the financial crisis to green(ish) considerations. Here’s a roundup.
Indeed, when this bailout is over, we need the next president — this one is wasted — to launch an E.T., energy technology, revolution with the same urgency as this bailout. Otherwise, all we will have done is bought ourselves a respite, but not a future. … The Bush team says that if this bailout is done right, it should make the government money. Great. Let’s hope so, and let’s commit right now that any bailout profits will be invested in infrastructure — smart transmission grids or mass transit — for a green revolution. Let’s "green the bailout," as [Van] Jones says, and help ensure that the American Dream doesn’t ever shrink back to just that — a dream.
Yvo de Boer, head of the U.N. Climate Change Secretariat, also says the bailout needn’t prevent new investments in clean energy.
Ex-Treasury Secretary Lawrence Summers makes roughly the same point:
The idea seems to have taken hold that the nation will have to scale back its aspirations in areas such as health care, energy, education and tax relief. This is more wrong than right. We have here the unusual case where economic analysis suggests that dismal conclusions are unwarranted and recent events suggest that in the near term, government should do more, not less.
Indeed, in the current circumstances the case for fiscal stimulus — policy actions that increase short-term deficits — is stronger than ever before in my professional lifetime. …
The economic point here can be made straightforwardly: The more people who are unemployed, the more desirable it is that government takes steps to put them back to work by investing in infrastructure or energy or simply by providing tax cuts that allow families to avoid cutting back on their spending.
Economist Dean Baker makes it yet again: "If the bailout proves to be an obstacle to effective stimulus in future months and years, then the bailout could lead to exactly the sort of prolonged economic downturn that its proponents claim it is intended to prevent."
There is much to be angry about the unraveling financial system and the taxpayer rescue. One aspect that is far too rarely discussed is how the potential costs of the bailout are being used to force the next president to pare his goals, presumably for lack of money. (In Barack Obama’s case, so this new wisdom goes, he’d have to hold back on enacting his health insurance plan, his infrastructure and energy efficiency initiatives, on an early childhood education and so on.) … This really gets to me. House Financial Services Chairman Barney Frank wisely notes that on September 10th 2001 there was no money for anything but somehow we managed to conduct two wars thereafter. So true.
In a new ad, Friends of the Earth — which strongly opposes the bailout — compares subprime loans with the loan guarantees for nuclear power Congress is now trying to ram through. Then there are defaults, and there will be, taxpayers will get stuck with the bill again:
Mindy Lubber, head of Ceres, says the failure to heed risks on home loans should make Wall Street more cognizant of other risks, particularly "subprime carbon assets that may prove toxic in the future."
Climate expert Terry Barker fears that governments are underestimating climate risks just as they underestimated credit risks, and says that massive investment is needed to reduce those risks.
Carl Pop of the Sierra Club asks what else $700 billion could do.
Larry Beinhart says the problem is that we’ve moved from a production economy to a consumption economy, and "you can’t borrow your way out of too much debt. … The ultimate problem is remaking ourselves into a production economy."
And finally, Chalmers Johnson makes a semi-green point that is dear to my heart:
Spending hundreds of billions of dollars on present and future wars that have nothing to do with our national security is simply obscene. And yet Congress has been corrupted by the military-industrial complex into believing that by voting for more defense spending, they are supplying "jobs" for the economy. In fact, they are only diverting scarce resources from the desperately needed rebuilding of the American infrastructure and other crucial spending necessities into utterly wasteful munitions. If we cannot cut back our long-standing, ever-increasing military spending in a major way, then the bankruptcy of the United States is inevitable. As the current Wall Street meltdown has demonstrated, that is no longer an abstract possibility but a growing likelihood. We do not have much time left.