On debt and indebtedness

It is clear that the current debt talks that are going on in the US have serious implications for the future of the economy that this country, and much of the world, chooses to subscribe to. I can appreciate that. Honestly, though, I have avoided following much of the media and discussion surrounding this issue. Because regardless of the outcome of the talks, whether the US Congress extend the debt ceiling or not, what has been reinforced to me is that we have chosen to live beyond means, financially, and of course ecologically. The wheels for living beyond our means were set in motion a long, long time ago. But it doesn't matter when it started, what matters is what has happened as a result.

How the notion of debt has been playing out is fascinating and sad, particularly when it has such massive ecological ramifications. When you are in debt, it seems logical that one must be and feel indebted. What does it mean to be or feel indebted? It means that you have an appreciation of what has been offered to you by others - other nations, the air, the water, the land - and you show gratitude. It means that there a responsibility to repay the debt, at some point in the future (a massive sticking point, it seems!). It is difficult to pass through a contemporary life now and not be indebted to anyone or any institution at some point. We are all indebted.

Are we acting in a way that expresses our indebtedness? It doesn't seem so. If we were indebted for what we have, we would be led down of a path of thought known as "sufficiency". Rather than looking to the new and to the next, we would be grateful for what we have, and we would cherish and respect. On the contrary, rather than appreciate what has been given to us, we choose to want more. Of course we have tamed many segments of the natural world, and can continually abuse them, but we also demand more and more from other nations of the world, and they choose to subscribe to this system of operation, for some reason, and give us what we want. (I guess "choose" is a loaded term.)

The ecological implications of this debt are severe. If we live beyond our means financially, and the only way to bring value in to the world is through natural resource extraction (or the Federal Reserve just adding zeroes into the economy), that means that we are continuing to "borrow" from the environment. We continue to use and degrade what we cannot justify as "ours," while at the same time hoping that we can somehow repay the debt in the future. How is it possible to repay such an ecological debt? What does it even mean to be in ecological debt?

The mortgage crisis of three years ago stemmed from the exact same mentality - people choosing to accept debt, and people willing to offer others a debt-ridden situation. This may be obvious and cliche to say, but it bears repeating - we must live within our means. Living means that we should not take more than what we need, we should not borrow more than we can repay. In the end, it is impossible to wrap your mind around what fourteen trillion dollars of debt means. If you cannot understand what the debt means, how do you repay it? Does this just mean that we can continue to borrow? The types of debt we should take upon ourselves are those that we know we can repay, whether in kindness or community.

When is it right to start criticising our ethics?

Now it is Ireland that has to be bailed out by the European Union and the International Monetary Fund. Why does the country of Ireland need to be bailed out? Here's what a BBC article reads:

"Put simply, the seriousness of the situation it finds itself in with regard to the debts of the Irish banks.

As several of the banks have been part-nationalised, most of their massive debt is now actually government debt.

And the great majority of this debt is owed to foreign lenders, which the Irish banks, and therefore the Irish government, simply cannot afford to default on.

This is because the Irish Republic, as a small country, is greatly reliant upon this overseas investment. And to default on their overseas loans would make it very difficult - and far more expensive - for Irish banks to borrow from their foreign counterparts in the future.

More importantly, if Irish banks could not pay back their overseas debt, it would have a knock-on impact on the Republic's overall credit rating.

This would make it more expensive for Dublin to sell government bonds, as it would have to offer a higher rate of interest to more sceptical institutional investors."

.......
House values have fallen by between 50% and 60%, and bad debts - mainly in the form of loans to developers - have built up in the country's main banks. This almost wrecked the institutions, leaving them needing bailing out by the government at a cost of 45bn euros (£39bn; $60.1bn).

This has opened a huge hole in the Irish government's finances - which will see it run a budget deficit equivalent to 32% of GDP this year."

I don't claim to be any sort of expert on banking, international debt and investing and the proportion of GDP that a country's debt is. What I do see, however, is a confluence of events across the world, that although seem disparate to most people, are fundamentally connected through their root cause(s). I think two graphics that are particularly telling are those two below, that I have pulled from here:

 

What the two graphics together tell me is that most Western countries (including the US) live well beyond their means - services are promised to people that the government takes loans out (from other countries or the IMF or the World Bank) to provide, and these loans are used to create vested interests in those services, ones which people will absolutely not do without. Then, when a problem does arise, say that too many people are starting to default on their mortgage payments, or people's pensions are lost because an airline goes bankrupt, we address the problem by band-aiding it, and addressing it with even more complexity than that which caused the problem in the first place.

Let's take the case of the automobile. We realise that we can use high-energy-density fossil fuels to power internal combustion engines that will propel people from place to place. We don't think of the consequences of sprawl, fluctuating gasoline prices, or greenhouse gas emissions. Now the world is in a bind. We have all of these people that live incredibly far from the places they work and shop, and think of an automobile as an expression of freedom. With "growing" environmental and climate change concerns, there are several options proposed - 1) let's cap carbon dioxide emissions and have companies duke it out to not be the ones paying to pollute, 2) let's tax those entities that pollute based on the amount they pollute, 3) let's find a way to continue driving cars and extract resources from the Earth, just this time let's not let it be fossil fuels. Okay, so we will drive....electric cars and have wind turbines. What do electric cars and wind turbines need? They need batteries and magnets. What are batteries and magnets made of? Lithium, lanthanum, neodymium, and other rare earth elements. Well, the largest deposits of lithium lie in Bolivia (but also in Afghanistan, now!), with an indigenous President who threatens vested interests by instituting land reform (read/listen here and here), and says "Either capitalism dies, or Planet Earth dies." At the same time, the largest deposits of rare earth metals lie in China (here's something for the techies). What will a country like the US do to get access to large reserves of lithium or rare earths? Well, maybe they go to war or assassinate those whose views are markedly different than their own. Also, did you hear about more coal miners stuck underground in New Zealand?

It seems to me that the foundational causes of these problems lie not in that the coal is too deep, or the oil is too far away, or that the rare earths are reserved in a country whose Communism we don't like, but rather in our ethics that compel us to want access to these resources so we can continue to live lives on debt and deficit. We are taking debt at the expense of those people, creatures and ecosystems that will come after we are gone, and we live in a world full of moral, ethical and spiritual deficit.

Inequality, globalisation, trash and waste

My last post was about Vanessa Baird's 1997 article from the New Internationalist, which talked about the world's ecological classes, the "under-polluted" South, and countries either incinerating their trash, or just simply exporting their trash to other places. As much as technocrats would like to have us believe that inequality across the world is slowly being erased, you should think otherwise. It is absolutely true that the gap between the rich and the poor is getting wider, not only in places like India, but also in the US. This has serious implications for trash generation - who produces it, and who deals with it.

As you may have gathered from previous posts, trash is an environmental justice issue. Most of the trash and pollution of the world is produced by so called "rich" countries, regions and locales through industrial processes and private consumption, and this trash is exported to poorer countries, regions and locales. In most cases, I would think the "rich" will pay a nominal fee to the "poor" to keep the trash away from the "rich." An absolutely wonderful and shocking example of this is the 2006 dumping of toxic petrochemical waste in Cote d'Ivoire by a Swiss multinational company of the name Trafigura. I will copy-paste some sections from the Wikipedia entry on it here:

In 2002, Mexican state-owned oil company Pemex began to accumulate significant quantities of coker gasoline, containing large amounts of sulphur and silica, at its Cadereyta refinery. By 2006 Pemex had run out of storage capacity and agreed to sell the coker gasoline to Trafigura. In early 2006, Pemex trucked the coker gasoline to Brownsville, Texas where Trafigura loaded it aboard the Panamian registered Probo Koala tanker, which was owned by Greek shipping company Prime Marine Management Inc and chartered by Trafigura.

Trafigura desired to strip the sulphurous products out of the coker gasoline to produce naphtha which could then be sold. Instead of paying a refinery to do this work, Trafigura used an experimental process onboard the ship called "caustic washing" in which the coker was treated with caustic soda. The process worked, and the resulting naphtha was resold for a reported profit of $19 million. The waste resulting from the caustic washing would typically include highly dangerous substances such as sodium hydroxide, sodium sulphide and phenols.

On August 19, 2006, after balking at a €1000 per cubic metre disposal charge in Amsterdam, and being turned away by several countries, the Probo Koala offloaded more than 500 tons of toxic waste at the Port of Abidjan, Cote d'Ivoire. This material was then spread, allegedly by subcontractors, across the city and surrounding areas, dumped in waste grounds, public dumps, and along roads in populated areas. The substance gave off toxic gas and resulted in burns to lungs and skin, as well as severe headaches and vomiting. Seventeen people were confirmed to have died, and at least 30,000 were injured. The company has claimed that the waste was dirty water ("slops") used for cleaning the ship's gasoline tanks, but a Dutch government report, as well as an Ivorian investigation dispute this, claiming this was toxic waste delivered from Europe to West Africa, after the ship had previously tried to offload at the port of Amsterdam, but was rejected there. During an ongoing civil lawsuit by over 30,000 Ivorian citizens against Trafigura, Trafigura, following an investigative report by the BBC's Newsnight programme, announced on 16 May 2009 that they will sue the BBC for libel. a Dutch government report concluded that in fact the liquid dumped contained two 'British tonnes' of hydrogen sulphide.


Indeed, the "rich" nations are sweeping dust under the rug. It is wrong to believe the "rich" are clean, and that the "rich" live impeccably by consuming. Since many "poorer" nations are in the "rich" nations' "debt," (however you'd like to define debt - "rich" nations giving loans to "poorer" nations via the IMF, World Bank, or "charitable donations" or "humanitarian aid") it would be easy for "rich" nations to take advantage of the situation by offloading the harmful byproducts of their way of life to the "poorer" nations, and pay them a fee to basically keep them quiet.