The stage is now populated by Trump’s insane tariff scheme. Its advocates proclaim grand consequences, while Democrats yammer about adopting populist economics and finding a leader. In the back row of the theater two old Greenies, thus far silent, rise to point out the madness of ignoring climate change.
It’s hard to be silent in the face of something as demented as the tariff moves. But climate change, like death, cannot be ignored. As the eminent John Maynard Keynes once stated, “In the long run, we’re all dead.” He also said, “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”
If the world does not wake up to the realities of global heating, capitalism itself will be at stake. So says Günther Thallinger, of Allianz SE, one of the world’s biggest insurance companies. He warned “that without insurance, which is already being pulled in some places, many other financial services become unviable, from mortgages to investments.”
It’s already happening in California, where insurers are pulling coverage, throwing the ball to government, which drops it. Premiums exceed what people can pay. “Heat and water destroy capital. Flooded homes lose value. Overheated cities become uninhabitable. Entire asset classes are degrading in real time.”
Risk management is the foundation of insurance, and the credit crunch applies to all elements of the economy—”not only to housing, but to infrastructure, transportation, agriculture, and industry,” Thallinger said. “The economic value of entire regions―coastal, arid, wildfire-prone―will begin to vanish from financial ledgers. Markets will reprice, rapidly and brutally. This is what a climate-driven market failure looks like.”
And governments will never be able to cover this kind of damage. When heating reaches 3⁰C, human life is at stake and “the financial sector as we know it ceases to function. And with it, capitalism as we know it ceases to be viable.”
Mark Gongloff of Bloomberg thinks Wall Street is pouring fuel on the climate fire. So is the idiocy of “drill, baby, drill.” Banks’ financial means, along with real political will, are essential to achieve net zero and avoid catastrophe.
Banks are a key element in [that], and they keep choosing to finance oil, gas and coal instead. They have pumped $6.9 trillion into those industries since the 2016 Paris agreement that set 1.5C as a warming target, according to a report by the Rainforest Action Network, the Sierra Club and others.
Again, the banks aren’t solely to blame. If society could get its act together and price carbon emissions to match the destruction they wreak on the world, then those tempting fossil-fuel deals would be far less plentiful and profitable for banks. Instead, the world’s political leaders keep carbon dirt-cheap, effectively subsidizing fossil fuels by another $7 trillion per year, according to the International Monetary Fund. Eliminating those subsidies alone, including real taxes on carbon, would more than cover the $5 trillion or so annually that BloombergNEF [a research and analysis group for clean energy] has estimated we will need to hit net zero by 2050.
The reckoning is surely coming as the world continues heating up. Cleaner energy is definitely the answer, but “Trump is apparently happy to cede such fertile ground to China, Europe and elsewhere.” He’s too busy with his lunatic tariff schemes and destruction of the government to care.
Well researched, well said. Europe and China still seem to get it, here in the US nothing will happen until the orange turd is gone.
good that the other powers are responding appropriately. suspect we’ll return to the fold in a few years.