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Books for Review: Portfolios of the poor
Natalie Bennett, The Guardian Weekly
…But the PR who sent us Portfolios of the Poor: How the World’s Poor Live on $2 a Day certainly knew what they were doing.
We have already reviewed it in the paper (p36 of the 17 July edition), but it’s certainly worth highlighting again. The focus is on finance – very much on financial products and models – but the question is absolutely fundamental to many of the debates about aid and development that the Weekly regularly publishes. How can we help people living at the bottom of poor societies – and how can they be helped to help themselves?
Pretty well anyone interested in the issue is au fait now with Grameen Bank and its microloans for businesses, but what Portfolios of the Poor demonstrates is that a little bit of capital can be useful to the poor in many more ways than helping build up a small chicken-growing or vegetable-selling business.
It might seem counter-intuitive, but the book shows that going into debt to buy a piece of jewellery, or even just to put some money aside, can be a sensible, even essential strategy. And it also demonstrates what difficulty the poorest have in accessing sensible ways to store money and protect their savings…
(21 Sept 2009)
Post-Bubble Malaise
Mike Whitney, Information Clearing House
We keep hearing that “The worst is behind us”, but the spin doesn’t square with the facts. Sure the stock market has done well, but scratch the surface and you’ll find that things are not as what they seem. Zero hedge–which is quickly becoming the “go-to” market-update spot on the Internet–recently posted an eye-popping chart which traces the Fed’s monetization programs (Quantitative Easing) with the 6-month surge in the S&P 500. The $917 billion increase in securities held outright equals the Fed’s $1 trillion increase to its balance sheet. In other words, the liquidity from the Fed is following the exact same trajectory as stocks, a sure sign that the market is being manipulated. Surprisingly, traders seem to know that the Fed is goosing the market and have just shrugged it off as “business as usual”. Go figure? Perhaps it pays to take a philosophical approach to market rigging. Who needs the gray hair anyway? The result, however, has been that short-sellers (traders betting the market will go down) who have placed their bets according to (weak) fundamentals, have gotten clobbered. They appear to be the last holdouts who still place their faith in the unimpaired operation of the free market. (Right)
Here’s how former hedge fund manager Andy Kessler sums it up in a recent Wall Street Journal article, “The Bernanke Market”. Here’s a clip:
“By buying U.S. Treasuries and mortgages to increase the monetary base by $1 trillion, Fed Chairman Ben Bernanke didn’t put money directly into the stock market but he didn’t have to. With nowhere else to go, except maybe commodities, inflows into the stock market have been on a tear. Stock and bond funds saw net inflows of close to $150 billion since January. The dollars he cranked out didn’t go into the hard economy, but instead into tradable assets. In other words, Ben Bernanke has been the market.”
So, the Fed has given a boost to stocks while keeping the bond market priced for deflation. That’s quite a trick. One market is flashing “recovery” while the other is signaling “contraction”. Bernanke has worked this miracle, by simply changing the definition of “indirect bidders” (which used to mean “foreign buyers” of US Treasuries) to mean just about anyone-anywhere. Here’s an explanation of this latest bit of chicanery from the Wall Street Journal in June:
“The sudden increase in demand by foreign buyers for Treasurys, hailed as proof that the world’s central banks are still willing to help absorb the avalanche of supply, mightn’t be all that it seems…
(17 Sept 2009)
A year after financial crisis, the consumer economy is dead
Kevin G. Hall, McClatchy Newspaper
One year after the near collapse of the global financial system, this much is clear: The financial world as we knew it is over, and something new is rising from its ashes.
Historians will look to September 2008 as a watershed for the U.S. economy.
On Sept. 7, the government seized mortgage titans Fannie Mae and Freddie Mac. Eight days later, investment bank Lehman Brothers filed for bankruptcy, sparking a global financial panic that threatened to topple blue-chip financial institutions around the world. In the several months that followed, governments from Washington to Beijing responded with unprecedented intervention into financial markets and across their economies, seeking to stop the wreckage and stem the damage.
One year later, the easy-money system that financed the boom era from the 1980s until a year ago is smashed. Once-ravenous U.S. consumers are saving money and paying down debt. Banks are building reserves and hoarding cash. And governments are fashioning a new global financial order…
(8 Sept 2009)
It’s Business as Usual Again for Wall Street’s Casino Capitalists
Staff, Spiegel
One year after the bankruptcy of US investment bank Lehman Brothers, governments are divided over what lessons should be learned from the crisis. But the more the economy recovers, the less desire there is to implement radical reforms — and many bankers have already returned to their old casino capitalism ways.
Everything moves faster on Wall Street, whether it’s winning, losing — or forgetting.
On New York’s Seventh Avenue, between 49th Street and 50th Street, there is no evidence today to suggest that this is where the investment bank Lehman Brothers had its offices until a year ago.
The digital screen that encircles the front of the building has been reprogrammed, to reflect the change from the past to the future. The background color is now blue instead of green, and the name on the screen is no longer Lehman Brothers, but Barclays Capital, the building’s new owner. The financial world hates losers…
(17 Sept 2009)
Why the era of economic growth is over
Walker, lovesalem blog
Study that graph. (Y-o-Y . . . “Why, Oh Why” you might pronounce it –means “year over year.”)
What the graph should show but doesn’t is oil price. According to the conventional economic wisdom, plummeting demand for oil means plummeting prices … not prices fully at 50% of their all-time peak.
What’s going on? Why, oh why, is the world and particularly the US in such a state? Well, it’s actually simple to understand, once you know that economic “growth” is simply a shorthand way of saying “measuring, in monetary units, of using more energy and materials.” Given that, and given that our economic chefs assumed that there was a limitless energy supply when devising the recipe for everything grown, mined, made, or moved in this country, the consequences of reality seem abrupt and painful: energy is actually quite finite, and the kind of energy we’re most dependent on — cheap oil — is now starting to decline in availability….
(22 Sept 2009)
sent in by EB contributor John Gear.
The “green-Prometheans” – better, but still a futile gesture?
Paul Mobbs, ecolonomics blog
We’ve got problems – and across society people are trying to advance ideas to avoid eco-catastrophe, but what many of these solutions cannot or will not address is the present structure of the human ecosystem that’s creating much of the impact.
An intellectual debate where a whole set of questions or positions are excluded from public examination is not a real discourse, it’s a distraction to deflect criticism from the ideological viewpoints that constrain society. From the structure of building codes through to global climate negotiations, governments and lobbyists put emphasis on markets, or the marshalling of large resources – both vestiges of early industrialisation – to solve problems; but what if the true solution lay beyond this boundary? What if the structure of globalised markets and the growth paradigm that underpins their operation were to be the problem that we must solve? If the problem is the structure of modern society, and especially the global economy, how can “mainstream ideas” possibly solve the underlying trends driving the destruction of the Earth’s ecosystem; more to the point, if these ideas originate from within this system, to what extent will they perpetuate it?
(12 Sept 2009)
Access the PDF of this article. Paul Mobbs is the author of Energy Beyond Oil. -KS
