Those of us who support globalisation, who celebrate the way it has raised living standards and reduced poverty around the world, are forever worrying that there may soon be a backlash, a revival of protectionism and economic nationalism. We mutter angrily whenever politicians make nationalist noises… A year ago, the prime candidate for a protectionist backlash was the fount of globalisation itself, the United States. If anyone had said then that in the midst of the American presidential election the country would be suffering a recession caused by a financial crisis, most economists would have predicted a big upsurge in protectionism during the campaign. It is time to admit that this hasn’t happened. America is not becoming isolationist. In fact, globalisation is not under any serious threat at all, from either side of the Atlantic…   more »

Nigerian child waits for food (AP photo)

This is not simply the erosion of national food self-sufficiency or food security but what Africanist Deborah Bryceson of Oxford calls "de-peasantization"--the phasing out of a mode of production to make the countryside a more congenial site for intensive capital accumulation. This transformation is a traumatic one for hundreds of millions of people, since peasant production is not simply an economic activity. It is an ancient way of life, a culture, which is one reason displaced or marginalized peasants in India have taken to committing suicide. In the state of Andhra Pradesh, farmer suicides rose from 233 in 1998 to 2,600 in 2002; in Maharashtra, suicides more than tripled, from 1,083 in 1995 to 3,926 in 2005. One estimate is that some 150,000 Indian farmers have taken their lives. Collapse of prices from trade liberalization and loss of control over seeds to biotech firms is part of a comprehensive problem, says global justice activist Vandana Shiva: "Under globalization, the farmer is losing her/his social, cultural, economic identity as a producer. A farmer is now a 'consumer' of costly seeds and costly chemicals sold by powerful global corporations through powerful landlords and money lenders locally...."   more »

After years of piling up debt and neglecting to save, Americans are reining in their free-spending ways -- which could signal a long road ahead... -- "We're at a watershed moment," said Jay P. Feldman, an economist with Credit Suisse in New York. "The era of consumers living beyond their incomes is at an end."

Most economists expect the gross domestic product for the first three months of the year to show that consumption inched upward a few tenths of a point, enough to keep the economy above the zero mark -- though barely. That pales next to the 2.5% and 3% leaps of recent years, and much of the rise will be the result of Americans' paying more, especially for food and gas, not buying more.

"This is going to usher in a period when consumption is going to be as weak as we've seen it in two decades," predicted Edward F. McKelvey, senior economist with Goldman, Sachs & Co. in New York. ...   more »

...In light of the present [economic] crisis..., however, two eco-millenarian novels — an old one called “Ecotopia,” by Ernest Callenbach, and a new one, WORLD MADE BY HAND (Atlantic Monthly, $24), by James Howard Kunstler — are worth a look...

Literary utopias tend to emerge when an appropriate niche opens up. The niche that suited “Ecotopia” in the early 1970s and the one that now accommodates “World Made by Hand” have certain similarities. Shortages and unrest in the Middle East foreshadow the end of oil. A brewing recession gives rise to doubts about our economic fundamentals. An unpopular president wages an unpopular war. And across the country, a growing eco-consciousness raises hope that a different system might replace classic, marauding American economic progress. ...   more »

...In his brief but brilliant book, “The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash,” [Charles R.] Morris describes how we got into the mess we are in, with bankers making loans that they expected to sell to investors through ever more complex securities...

One of the most important aspects of the financial architecture that is now collapsing was the way it allowed investors to believe they could make perfectly safe investments when they financed very risky loans. Or, as Morris puts it, “Highly rated bonds magically materialize out of a witches’ soup of very smoky stuff.” He adds, “Very big, very complex, very opaque structures built on extremely rickety foundations are a recipe for collapse.”

The collapse is now under way. In recent years Wall Street profits were built on leverage and on taking risks that were obscure both to regulators and even to the top managements of the banks themselves. Every three months now, we see banks disclosing huge losses from risks that they had never admitted they were taking.

No one — not investors, not managers, not regulators — is sure when this process will end. And that uncertainty has created a credit freeze, with lenders reluctant to lend both because they do not know whom they can trust and because they fear they may need the money to cover losses that are yet to materialize. As the recession gathers steam, there are likely to be more corporate failures than there need to be, because credit has gone from virtually free to all but unavailable. ...   more »

...Everyone has their own view of what constitutes luxury. My definition—and this is hardly original—is this: Luxury is time, customization and discreet luxe. The reason I like my definition of luxury is because it appeals to the egalitarian in me. These three things—time, customization and discreet luxe—can be experienced at every price point. Customization, for instance, be it bespoke clothing or a customized pair of shoes, is easily had in India, what with our embarrassment of riches with respect to craftspeople, artisans, and traditional handicrafts. -- At Good Earth homes, an eco-community outside Bangalore, I came across a wonderful way to customize architecture. Instead of grids, their windows have whimsical metal sculptures of animals created by indigenous Bastar tribals. It supported local artisans, served its purpose of being a window grid and was laugh-out-loud playful. ...   more »

...the Global Information Technology Report... assesses 127 economies on scores of factors ranging from the cost of mobile phone calls and available Internet bandwidth to the quality of higher education. Not just a catalog of technical specifications, the report weighs these measures to determine which economies are best positioned to compete in the information-intensive 21st century economy.

The conclusion, as in previous studies, finds Nordic countries grabbing five of the top 10 slots, with Denmark and Sweden placing No.1 and No.2 for the second year running. Credit widespread Internet usage, supportive government policies, and good education. The U.S. came in at No.4, up three positions from last year. Although the U.S. gets top marks in innovation and education, it's pulled down by "red tape and rigidities" that stifle its business environment...   more »

If we have seen the possibilities and pitfalls in Big Science given to us by the American model, we also notice its results in other places,—for example in Japan. Japan's first experience with high-level business and industrial development forms a good illustration to see how one can get trapped on the economic path when something alien enters into the system. Yoshiro Hoshino writes: “There is nothing worse than war for bringing about the destruction of nature, human beings, factories, housing, and transportation systems, and for causing starvation and sickness, the discharge of untreated factory wastes, and the destruction of farm lands. When environmental destruction is understood in its broadest and most fundamental sense, the original culprit is war.” America, after the bombing of Hiroshima and Nagasaki in 1945, invaded Japan in another way. It looks as though the evil found another soil to grow and flourish in a vigorous manner. The present article Japan’s Second Defeat after the Second World War forms a chapter of my yet unpublished book Big Science and its Impact on Society....   more »

...a massive new derivatives bubble is driving the domestic and global economies, a bubble that continues growing today parallel with the subprime-credit meltdown triggering a bear-recession...

To grasp how significant this five-fold bubble increase is, let's put that $516 trillion in the context of some other domestic and international monetary data:
• U.S. annual gross domestic product is about $15 trillion
• U.S. money supply is also about $15 trillion
• Current proposed U.S. federal budget is $3 trillion
• U.S. government's maximum legal debt is $9 trillion
• U.S. mutual fund companies manage about $12 trillion
• World's GDPs for all nations is approximately $50 trillion   more »

Jan. 28 (Bloomberg) -- Purchases of new homes in the U.S. unexpectedly fell to a 12-year low in December, ending the worst sales year since records began in 1963 and signaling little prospect for a recovery...

The median price of an existing single-family home dropped 1.8 percent in 2007, the first decline since records began four decades ago and probably the first since the Great Depression in the 1930's, the Realtors group said. ...   more »

We understand globalisation essentially in terms of economics, commerce, industry and political dynamics; but there are basic social, religious, philosophical, scientific, cultural or idealistic aspects which often get sidelined in the respective discussions. The question of humanity in its proper sense, of harmonious life of happiness as expressed by mystics, sages, rishis, enlightened thinkers is hardly raised and seen in its deeper or far-reaching implications. Globalisation today is driven by a motive force and does not have its true or authentic content offered to the larger collectivity in the enduring values of the spirit. It is a mechanistic or, to use the modern idiom, a digital phenomenon. The identity of man with things material, the appreciation of the wonder that living reality in its thousand moods is, the recognition of the all-pervasive beauty in nature, or the sweep of cosmic thought, the subtlety of creative perception and expression have to be a part of the global perception. There have to be different families and nations, there have to be different races, different languages, different arts, and even in the same kind of art different expressions, different games, different sports activities, different recreations; yet there can be a kind of genuine underlying globality in all our occupations. This world is not just a shrunken global village; it is one rich Family of God, vasudhaiva kutumbakam, as says the ancient scripture. In it each member of the family has his own unique soul, his own inalienable individuality and it is that which is valued most in the progress of the both. In the all-inclusive collective life is provided the scope for one’s own uninterrupted growth which, in turn, helps to grow itself, symbiotically helping each other. That is what true globalisation should mean. Are we nearer to it? ...   more »

The insurance industry faced $75 billion of losses from natural catastrophes during 2007, up 50% from last year despite a lack of "megacatastrophes," German reinsurer Munich Re said Thursday.

The losses rose from $50 billion in 2006, though this was still well short of the $220 billion reached in 2005 when Hurricane Katrina ravaged New Orleans and the U.S. Gulf Coast.

Still, the number of natural catastrophes tallied 950 this year, up from 850 in 2006 and the highest figure since 1974, when Munich Re began tabulating such events. ...   more »

Thanks to Rich for recommending the excellent openDemocracy.net, in which this article appeared. ~ ronjon

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The price of oil is approaching $100 a barrel, the concentration of greenhouse gases in the atmosphere is accumulating faster than the most pessimistic scenarios are predicting, anthropogenic climate change is occurring. The recognition that the world's scientists, diplomats and media gathered at the Bali climate-change summit are arguing over - the necessity of moving beyond dependency on a fossil-fuelled, carbon-emission-based global economy - is becoming increasingly hard to ignore.

Where is leadership in the quest for a new model to come from? The results of a BBC opinion-poll inviting the views of 22,000 people in twenty-one countries, released in November 2007, included the striking discovery that the Chinese were the most willing to change their lifestyle and accept higher energy prices in order to save the environment. ...   more »

...The actual solvency of the Federal Deposit Insurance Corporation is relatively indecipherable due to the fact that their treasury management processes (and the risks of their own investment strategies) are not uniformly disclosed with sufficient transparency. The FDIC was set up for isolated problems with a few bad banks but is NOT prepared to “insure” the system in an industry-wide crisis. The actual liquidity reserve of the “insurance” that Americans view as their safety net is 1/100th the actual exposure of outstanding deposits. The actual coverage ratio for the Bank Insurance Fund (BIF) fell below 1.25% in 2002, the same year that less stable credit practices were adopted by America’s leading banks.

The funny part is that the Federal Government will be on holiday when all of this happens. There will be no one to put freeze actions and moratoria on actions. The only way you stop the cataclysm is to put together civil actions on deposit withdrawals.

As I discussed previously, the Chinese currency wild-card may become relevant far sooner than expected. An effort by China to convert its $1.4 trillion U.S. Treasury holdings into euros is not viable for many reasons – not the least of which is the European Central Bank’s inability to absorb such an event. As China continues its rush away from supporting U.S. Treasuries and as Middle Eastern investors are buying them up in more diversified holdings, a new “currency exchange” is unfolding. Realizing that they cannot liquidate their holdings, it appears that the Chinese are currently using their U.S. Treasury holdings as collateral for euro denominated purchases and long term infrastructure transactions. In other words, they may be “liquidating” their holdings as collateral and, in so doing, effectively migrating to non-dollar value without ever having to officially dump their current Treasury holdings. ...   more »

China will become the world’s biggest carbon polluter this year, overtaking the United States, the International Energy Agency (IEA) said in a bleak forecast of soaring global demand for fossil fuels. The rapid growth of the Chinese and Indian economies will raise global energy demand by 50 per cent by 2030, the agency said in its annual World Energy Outlook. India and China alone will account for almost half of the increase.

The agency pointed a finger at soaring coal demand, which threatens to upset carbon reduction targets, as it painted an alarming picture of a future of energy insecurity, soaring oil prices and a massive increase in carbon emissions. The dash towards prosperity in Asia will be fuelled by hydrocarbons - and mainly by increased burning of coal – with an inexorable rise in carbon emissions, hastening climate change.

Accelerating demand for oil, which will reach 116 million barrels per day (bpd) by 2030, up 32 per cent, will require huge investments to keep pace, the IEA said, and the sums are increasing. Inflation has taken its toll, and the agency reckons that $5.4 trillion (£2.6 trillion) must be spent to raise capacity, up a quarter from the estimate last year. It gives warning that plans to raise output from new projects may not compensate for the decline in existing fields.

“A supply-side crunch in the period to 2014, involving an abrupt escalation in oil prices, cannot be ruled out,” the IEA said in its report. ...    more »