The Coronavirus Blues

Ten Reasons Why a ‘Greater Depression’ for the 2020s Is Inevitable

Why Our Economy May Be Headed for a Decade of Depression

 Welcome to the End of the ‘Human Climate Niche’

I want to call it the coronavirus blues, that empty, groping housebound depression that keeps you from engaging with all that free time. It’s a coma of aimlessness—not really to be compared to clinical depression, though maybe a second cousin. Wearing a mask intensifies the detachment. Even with walks outside one feels alienated from life; taking off the mask doesn’t help much .

Social isolation causes it, and one way or another it seems to infect everybody. Camus called it a “feeling of exile, that sensation of a void within which never left us, that irrational longing to hark back to the past or else to speed up the march of time, and those keen shafts of memory that stung like fire.”

These thoughts are reinforced from reading recent remarks by Nouriel Roubini, the infamous Dr. Doom who was one of a very few who predicted the housing debacle and near-global collapse of the financial system in 2006. Now he predicts something even worse to come, what he calls the Greater Depression, which will make your coronavirus blues look like small change. (How the word depression got to be applied to economic collapse is another story.)

Roubini considers ten factors or trends that will be exacerbated to produce a severe global depression, a series of events that make another crisis inevitable. A summary of the ten: fiscal deficits and private-sector debt; the healthcare crisis and the aging; the coming deflation; currency debasement; digital disruptions like automation; deglobalization and protectionism; populism; the standoff of the U.S. and China; cyberwars accelerating to cold wars; and the environmental disruptions.

Finally in the list he considers man-made climate change.

The Paris Accord said 1.5 degrees. Then they say two. Now, every scientist says, “Look, this is a voluntary agreement, we’ll be lucky if we get three—and more likely, it will be four—degree Celsius increases by the end of the century.” How are we going to live in a world where temperatures are four degrees higher? And we’re not doing anything about it. The Paris Accord is just a joke. And it’s not just the U.S. and Trump. China’s not doing anything. The Europeans aren’t doing anything. It’s only talk.

And then there’s the pandemics. These are also man-made disasters. You’re destroying the ecosystems of animals. You are putting them into cages—the bats and pangolins and all the other wildlife—and they interact and create viruses and then spread to humans. First, we had HIV. Then we had SARS. Then MERS, then swine flu, then Zika, then Ebola, now this one. And there’s a connection between global climate change and pandemics. Suppose the permafrost in Siberia melts. There are probably viruses that have been in there since the Stone Age. We don’t know what kind of nasty stuff is going to get out. We don’t even know what’s coming.

Roubini is one of those economic savants who puts it all together in one totally depressing yet horribly believable package. For some reason, skeptics like this make entire sense to me. His grim analysis, oddly, can offer a program to treat your coronavirus despair, unlike other doom-sayers such as David Wallace-Wells. One takes a kind of weird comfort in thinking that somehow these cheerless predictions can turn into a recipe for reform and, one hopes, reconstruction.

Hard Truths about Climate Change

Climate math: What a 1.5-degree pathway would take

How McKinsey Destroyed the Middle Class

Op-Ed: The McKinsey I hope the world gets to know

Do we really have any chance to come to grips with climate change? Like many of us, I go back and forth on that one. Some recommend throwing out the whole capitalist system. If that seems a bit unlikely, you’d need to know how to redirect the system and what it would really take to decarbonize global business.

A pretty convincing roadmap for that is provided by McKinsey, the firm some love to hate. The critics hate its high-pressure culture, its stress on process, its success. But the business of America is still business, and McKinsey’s leaders have recently tried to transform their firm’s role to reflect the totally changing world we’re living in. I almost went to work for McKinsey in 2006, which would have been to the delight of my capitalistic forebears, but that didn’t happen and I’m grateful.

Anyhow, McKinsey recently issued a report on Climate Math that challenges business to meet the demands for a 1.5-C degree warming limit. This is very much worth your reading so you can understand in some coherent detail the challenges in achieving that goal.

 . . . With further warming unavoidable over the next decade, the risk of physical hazards and nonlinear, socioeconomic jolts is rising. Mitigating climate change through decarbonization represents the other half of the challenge. Scientists estimate that limiting warming to 1.5 degrees Celsius would reduce the odds of initiating the most dangerous and irreversible effects of climate change.

The report offers five necessary and difficult steps to get to that goal. “The good news,” they say, “is that a 1.5-degree pathway is technically achievable. The bad news is that the math is daunting.”

None of what follows is a forecast. Getting to 1.5 degrees would require significant economic incentives for companies to invest rapidly and at scale in decarbonization efforts. It also would require individuals to make changes in areas as fundamental as the food they eat and their modes of transport. A markedly different regulatory environment would likely be necessary to support the required capital formation.

The report traces five needed interdependent “shifts” in areas that we all know, with varying means and prospects of achieving reform:

    • reforming food and forestry
    • electrifying our lives
    • adapting industrial operations
    • decarbonizing power and fuel
    • ramping up carbon capture and carbon sequestration activity.

Each of these areas plays out in three scenarios the report envisions, not as predictions but as “snapshots” to get where we have to go.

All the scenarios, we found, would imply the need for immediate, all-hands-on-deck efforts to dramatically reduce GHG [greenhouse gas] emissions. The first scenario frames deep, sweeping emission reductions across all sectors; the second assumes oil and other fossil fuels remain predominant in transport for longer, with aggressive reforestation absorbing the surplus emissions; and the third scenario assumes that coal and gas continue to generate power for longer, with even more vigorous reforestation making up the deficit . . . .

Relying so much on reforestation seems to me dubious at best, despite the report’s qualifications. The final pages state in bold type, “It is impossible to chart a 1.5-degree pathway that does not remove carbon dioxide to offset ongoing emissions. The math simply does not work.”

The challenges here are immense and the report does not shy away from them. But finally we are getting serious analysis of how feasible (or unlikely) the 1.5-degree goal is.

Turning Off Fossil Fuel Funding

Why the Climate Movement’s Next Big Target Is Wall Street

Want to Do Something About Climate Change? Follow the Money

BlackRock C.E.O. Larry Fink: Climate Crisis Will Reshape Finance

The financing spigot has provided way over half a trillion dollars during the last three years to America’s fossil fuel producers. That’s from just four Wall Street banks—JPMorgan Chase, Citibank, Wells Fargo and Bank of America. This money invariably goes for the worst kinds of anti-climate projects, like oil pipelines.

Only a very few of the largest companies, like Exxon Mobil, can self-finance their projects. The others are wired to the biggest banks and investment firms, and the climate movement is beginning to take note of the problem.

Though many banking institutions have branded themselves as green, the world’s top 33 largest banks collectively provided $1.9 trillion in financing for coal, oil, and gas companies since countries put forth the Paris Climate Agreement in 2015.

Bill McKibben has organized StopTheMoneyPipeline.Com to “demand that banks, asset managers and insurance companies stop funding, insuring and investing in climate destruction.” Just getting started, the group has targeted Chase, BlackRock Asset Managers (with its nearly $7 trillion in investments) and Liberty Mutual Insurance—all of whom could stop fossil financing tomorrow without any real damage to their business.

McKibben writes that “These titans may be too big to pressure. Yet if we could get just one offending bank to move toward divesting from fossil fuels, the ripple effects would be both swift and global.” And even now, BlackRock’s website leads off with the statement that “Sustainability, and climate change in particular, are transforming investments.” They post a letter from CEO Larry Fink about “how climate risk is an investment risk” and how sustainable strategies are the future. Maybe Fink and McKibben can now have lunch.

Several writers predict a sort of domino effect if even one of these “banks” (what an outmoded term for these guys!) gets serious about this kind of funding strategy. Fink wrote that he believes “we are on the edge of a fundamental reshaping of finance.” He would “introduce new funds that shun fossil fuel-oriented stocks, move more aggressively to vote against management teams that are not making progress on sustainability.”

We would note that sustainability is always a tricky and ambiguous word, but let’s give Larry credit for evidently trying finally to monitor the fossil funding spigot.  According to one of Bloomberg’s opinion writers, his letter marks the end of the road for coal.

Let the Big Banks Pay

Why Central Banks Need to Step Up on Global Warming

Climate Finance

Why We Need Finance to Fight Climate Change

“That’s where the money is” was Willie Sutton’s reply when someone asked why he robbed banks. I’ve used his cool rejoinder before, but it’s especially apt when you think about the overwhelming problems coming: mitigating and adapting to what the world faces in global warming.

Bill McKibben talked about getting the big banks to just quit lending to the oil industry—which they fund to the tune of hundreds of billions of dollars a year. This seems about as likely as getting a junkie off fentanyl but, as he said, it’s kind of a Hail Mary pass.

Bernie Sanders’ grandiose climate proposals ($16.3 trillion) are just unrealistic when it comes to funding. Elizabeth Warren’s are only a bit more practical. The amounts for underwriting any kind of comprehensive Green New Deal are staggering. Great bags of money will be required to have any hope of success.

But it does seem right and proper, as Columbia’s Adam Tooze proposes, that “a decade after the world bailed out finance, it’s time for finance to bail out the world.” That is, it’s time for the world’s largest financial institutions to step up on climate change, which a few of them have already committed to do, the IMF being one. But the grand scale that will be required is something else again.

How would you get the central banks—like the Federal Reserve and the Bank of England—to cough up, or backstop, long-term loans? Tooze put it in terms of moral obligation and the threat of financial crisis:

Acting as a backstop to the issuance of a massive volume of publicly issued green bonds is certainly a novel role for the central banks. But after their exertions in the 2008 financial crisis, central bankers, of all public officials, can’t plausibly retreat into an insistence on the limits of their mandate. . . .

Decarbonization is a vastly more complex technical, economic, and social problem. But to embark on solving it we need to mobilize all the resources we can muster. The essential responsibility of the central banks is to ensure that money does not stand in the way.

The World Resources Institute projects the scale (for the short term, it seems) of public/private investment needed to remediate and adapt to what’s coming:

    • The World Economic Forum projects that by 2020, about $5.7 trillion will need to be invested annually in green infrastructure, much of which will be in today’s developing world.
    • This will require shifting the world’s $5 trillion in business-as-usual investments into green investments, as well as mobilizing an additional $700 billion to ensure this shift actually happens.

How is it possible to persuade the mercantile banking industry to get in on the action—and indeed make money doing it? A National Climate Bank has been proposed to sidestep the big banks and foster greenhouse gas reductions. Read more about that here. I’m not sure that will do the job; it’s mostly for smaller-scale projects.

What’s required is a Congress dedicated to transforming banking regulations to demand that a certain percentage of big commercial bank investments be made in wide-ranging, large green projects with commercial potential. Once again, like so much involving climate change, it’s a political problem. We are talking about trillions of dollars, folks, and Willie Sutton knew where that money was hiding.

Big Oil and Big Tobacco Long in Cahoots

New Documents Reveal Denial Playbook Originated with Big Oil, Not Big Tobacco

Did Exxon Deceive Its Investors on Climate Change?

Exxon Climate Plan Wasn’t Fake, Tillerson Says In N.Y. Trial

Failing surge barrier, New Orleans

We are just discovering how long and how deeply the tobacco and oil industries joined together to deceive the public about their toxic products. Their connections go back to the 1950s, studying and funding deceptions about smog science and cancer science.

The Center for International and Environmental Law wrote about this over three years ago, and like most other important news it got swamped by the furor over Trumpism. The Center used documents unearthed from the tobacco industry to establish the connections. Tobacco, they reveal,

used the same playbook of misinformation, obfuscation, and research laundered through front groups to attack science and sow uncertainty on lead, on smog, and in the early debates on climate change. Big Tobacco used and refined that playbook for decades in its fight to keep us smoking—just as Big Oil is using it now, again, to keep us burning fossil fuels.

The New York state attorney general is now bringing suit against Exxon Mobil, charging that the world’s biggest publicly traded energy company “misled its shareholders and the public by misrepresenting the risks that climate change poses to the value of its oil and gas assets.” The company took in $290 billion in revenue last year, and the suit argues not that it helped create climate change but that for years it has schemed (basically by keeping two sets of books) to defraud its investors, analysts and underwriters about the risks of climate change to its business.

That rather seems like begging the real question, though it will finally expose what many have suspected about Exxon’s business practices—assuming the state wins the suit. Ex-CEO Rex Tillerson, Mr. Trump’s one-time secretary of state, knew about this for years. Lee Wasserman, who directs the Rockefeller Family Fund (interesting, isn’t it, that the Rockefeller fortune came from Standard Oil?) wants to hold fossil fuel companies liable for reparations for the massive damages their products and practices have caused.

The company of course denies any attempt to mislead and professes to be proud of its many years of (accurate) research into climate change. The other day Tillerson testified under oath that the company knew long ago that global warming was very real, “a serious issue and we knew it was one that’s going to be with us now, forevermore.”

Tillerson didn’t deny Exxon’s role in creating the problem—which isn’t what the trial was about. But in his nuanced view, the company did its best to address the issue once it became apparent. He also said there may be plenty of blame to share, given that Exxon was providing products demanded by society.

But don’t hold your breath until Exxon becomes accountable for the huge sums that some states and cities are now suing for.

Your Money or Your Life

For the Sake of Life on Earth, We Must Put a Limit on Wealth

Money Is the Oxygen on Which the Fire of Global Warming Burns

Citigroup Yields to Pressure from Environmentalists

You elders may remember the famous radio sketch by Jack Benny: the mugger says, “This is a stick-up! Your money or your life!” A long pause ensues. “Look, bud, I said, Your money or your life!” Jack: “I’m thinking it over!”

The ultra-rich could understand Jack’s quandary. Their lives are circumscribed by money and all its attendant privileges. Writer George Monbiot has cataloged some of their more outrageous excesses, behavior that inevitably attacks the environment. He says these people are committing ecocide, the impunity to get away with destroying the natural world on which we all depend.

Perhaps we shouldn’t be surprised to learn that when Google convened a meeting of the rich and famous at the Verdura resort in Sicily in July to discuss climate breakdown, its delegates arrived in 114 private jets and a fleet of mega-yachts, and drove around the island in supercars. Even when they mean well, the ultrarich cannot help trashing the living world. . . .

Surplus money allows some people to exercise inordinate power over others: in the workplace; in politics; and above all in the capture, use and destruction of the planet’s natural wealth. If everyone is to flourish, we cannot afford the rich. Nor can we afford our own aspirations, which the culture of wealth maximisation encourages.

People of less wealth and the best intentions are still captive to the consumption culture which drives so much of the world economy. The president is our prime exemplar, a man of less wealth than the ultras and certainly without good intentions. When questioned last Monday about his fondness for arms sales to Saudi Arabia, Trump said, “Saudi Arabia pays cash.” The cash nexus seems to motivate everything he does.

An interviewer asked Willie Sutton why he robbed banks. “Because that’s where the money is,” he said. Bill McKibben would agree. He has an interesting piece in the New Yorker claiming that the big banks like JPMorgan Chase, the biggest of them all, are the true sources of capital for the fossil fuel industry, to the tune of $196 billion over the past three years. Much of that money goes to “fund extreme new ventures: ultra-deep-sea drilling, Arctic oil extraction, and so on.”

It’s kind of a Hail-Mary pass, says McKibben, but what if that flow of money could be disrupted, just as some of the largest corporations and pension funds through pressure have divested themselves of “socially undesirable” organizations? Almost twenty years ago the Rainforest Action Network (RAN) took successful action against Citigroup to slow down the deforestation in the Amazon—showing celebrities cutting up their Citi credit cards. Lately it has publicized and ranked the investments of the largest banks in terms of their damage to the climate.

Some envision campaigns to pressure the banks to disinvest. “Chase’s retail business is a huge part of its enterprise, as is the case with Citi, Wells Fargo, and the others.” The new generation of consumers cares a lot about climate and may well have the clout to demand action. Their protests will finally learn to address the distribution of wealth and power.