By Joel Makower
Published December 07, 2009

http://greenbiz.com/blog/2009/12/07/copenhagen-gets-down-business

To start with the basics: I don’t expect this week’s United Nations Climate Change Summit, a.k.a. COP15, to produce much from the perspective of global political change. I’m guessing, cynically perhaps, that the two-week event will yield more posturing and pageantry than productive policies.

But that isn’t stopping me from making the trek to Copenhagen. I’ll be there, albeit relatively briefly, to see how business, especially big business, is engaging with and responding to the proceedings and all that surrounds them. After all, while national governments will be responsible for creating commitments to reduce greenhouse gas emissions, the responsibility for implementing them will fall largely to those economic entities that produce the carbon-emitting goods and services — that is, the private sector.

So, what are companies expecting from COP15? To garner a glimpse, I asked my colleague John Davies for help. Davies, whose title is vice president of GreenBiz Intelligence, heads up the research division of Greener World Media. Part of his charge is the GreenBiz Intelligence Panel, consisting of more than 2,500 professionals who have volunteered to participate in a monthly survey we conduct to learn what the companies are thinking about and doing on a range of issues.

I asked Davies to query a subsection of the panel — nearly 1,000 members, dominated by those in companies with annual revenue in excess of $1 billion — about three questions: Whether someone from their company was going to COP15, whether they expected the UN event would have an impact on global climate policy, and whether the proceedings of COP15 “will have an impact on your company.”

Surprisingly, to me at least, there was considerable optimism among the 274 panel members that responded. Nearly one in three (28 percent) said they planned to attend the Copenhagen summit. Seventy percent agreed or strongly agreed that COP15 will have an impact on global climate policy. And slightly more than half (52 percent) agreed or strongly agreed that the proceedings of COP15 will have an impact on their company; only 17 percent disagreed or strongly disagreed with this.

You can download a more detailed summary of the survey here (PDF).

Of course, the GreenBiz panel isn’t representative of all companies. Its members are those already predisposed to have an interest in environmental issues, and they hail overwhelmingly from the U.S. and other developed nations. Nonetheless, my takeaway is that the private sector seems to have higher expectations of COP15 than I would have imagined (perhaps higher than many of the idealistic nonprofit environmental groups from which I’ve been hearing), though clearly there remain some very loud business voices that adamantly oppose most policies restricting greenhouse gas emissions.

Indeed, the corporate response to climate change to date has been all over the map — a response due in large part to the lack of political leadership in the United States and most of the world’s other large greenhouse gas emitters. It’s that cacophony of nationalistic voices that will be the focus of the 192 nations gathered in Copenhagen for the next two weeks in an attempt to forge some kind of consensus. Lacking clear, consistent regulatory signals, companies have been left to their own devices to determine what, if anything, they should do to respond to the threat of global warming.

The result, as you well know, has been a hodgepodge of responses: A relative handful of large companies staking out leadership positions, sometimes out of enlightened self-interest, due to measures they’ve already taken or the products and services they offer that stand to profit in a world where carbon emissions have a monetary price. (The climate deniers and anti-regulatory crowd have taken these companies to task, branding them as hypocrites or worse for aligning their political interests with their economic ones, with absolutely no sense of irony for the countless millions of dollars spent by the incumbent economic interests — oil and coal companies and other large emitters — to cast doubt on global warming’s existence.)

Beyond that are companies that view global warming as a moral imperative for which they hold a social responsibility to act. These are companies most often at the front of the pack of social and environmental issues: the Stonyfield Farms, Nikes, Patagonias, and Interfaces, and many of the members of BSR, Ceres, and other progressive business associations.

And then there are those who have adopted a no-regrets policy (though they likely don’t refer to it as such), taking the stance that even if, as U.S. Senator James Imhofe believes, global warming somehow turns out to be a hoax, that the emissions-reducing investments they have made will still be worthwhile, as they will have improved efficiencies and reduced costs, and done so at an acceptable rate of financial return. The fact that they may win PR points for doing so — or may actually contribute to reducing global warming — is often icing on the cake.

And there’s also everyone else: the companies that have offset their emissions by purchasing renewable energy credits or other mechanisms, perhaps even claiming to achieve carbon neutrality without necessarily significantly cutting their actual emissions . . . the companies that have incrementally, almost symbolically, reduced their emissions but have taken great efforts to tell the world . . . those that have one great climate story to tell — a single product or brand or facility that has set an admirable example — leaving the rest of the company largely untouched . . . the greenwashers, with their empty “carbon-friendly” marketing claims . . . and, not insignificantly, the clueless and the laggards.

They’ll all be in Copenhagen — either in person or via their industry groups or other representatives. From the looks of the unofficial program — the countless dozens of events taking place in and around Copenhagen over the next two weeks that aren’t part of the official UN agenda — scores of them will be visible, variously making announcements, speaking on panels, exhibiting at trade shows, or holding endless discussions and coffee klatches.

My visit will coincide with the so-called “business weekend” starting December 11. On Friday, the Geneva-based World Business Council on Sustainable Development will host Copenhagen Business Day, “a day for business leaders to explore, share and project their vision and commitment to implement climate solutions now and for the next four decades.” On Saturday and Sunday is the Bright Green Expo, a trade show hosted by the Confederation of Danish Industry (a group to which I spoke during my recent speaking tour in Scandinavia). Saturday afternoon and evening will see a CEO-heavy event held at Kronborg, Hamlet’s Castle in Elsinore outside Copenhagen, gamely titled To Be or Not to Be? (The event concludes with “a candlelight dinner in King Frederik II’s Wine Cellar.”) There will also be a slew of other business events, from groups like Ceres, the Business Council for Sustainable Energy, and Business for Innovative Climate and Energy Policy (or BICEP). Plus company-sponsored events from the likes of Cisco, Dell, General Electric, HP, IBM, Johnson Controls, Microsoft, and pretty much every other high-tech or cleantech company of note.

I’ll look forward reporting back on what all of these business voices have to say — whether they’re merely talking the talk, or whether COP15 does indeed stand a chance of changing corporate and governmental policy.

And whether all of this offers a snowball’s chance of making a difference in the climate.

US banks move to repay bailout loans
By Andre Damon
11 December 2009

http://www.wsws.org/articles/2009/dec2009/bank-d11.shtml

Citigroup is negotiating with regulators in an attempt to pay back its government bailout funds before the end of the year. The bank’s drive to repay its loans comes a week after Bank of America announced that it had repaid the $45 billion it received under the Troubled Asset Relief Program (TARP).

Citi’s push to repay its loans has sewn divisions between regulators, with the Federal Deposit Insurance Corporation (FDIC) and Federal Reserve arguing that the bank is not yet healthy enough to repay its loans, and Treasury Secretary Timothy Geithner pushing for repayment as soon as possible. The bank posted a $3.2 billion loss in the third quarter, following two consecutive quarterly profits.

Of the $45 billion in bailout funds Citigroup received last year, $25 billion has been converted to common stock, leaving $20 billion in outstanding loans. The US government can sell its $25 billion in shares, which gives it one-third ownership of the bank, whenever it chooses, and the Financial Times reported Wednesday that the government is “likely” to sell the stock over the next “year or so.” The government also guarantees $301 billion of the bank’s assets.

By virtue of the fact that Bank of America and Citigroup received “exceptional assistance” from the government, over and above the funds made available to the other big banks, they were placed under the purview of Kenneth Feinberg, the Treasury’s special master for executive compensation. Feinberg’s remit initially covered seven firms—American International Group, Citigroup, Bank of America, General Motors, Chrysler and the financing arms of the two auto makers.

Earlier this year, after intensive negotiations with the seven firms, Feinberg announced modest restraints on their pay awards to top executives. However, Wall Street considers any form of government oversight an impermissible infringement on the right of the banks to pay seven-and-eight-digit compensation packages to top executives and traders.

The timing of the repayment scramble is significant. The banks are seeking to get out from under government pay restrictions in preparation for paying year-end bonuses, and to attract new executives with multi-million-dollar signing perks. Bank of America, in particular, has had difficulty finding a replacement for outgoing CEO Kenneth Lewis. The need to offer a “competitive” bonus package is one of the reasons cited by commentators for the bank’s rush to repay its TARP loans.

Andrew Ross Sorkin of the New York Times made this point Monday in an article entitled “Bailout Refund Is All About Pay, Pay, Pay.” Sorkin wrote that people within the Treasury Department told him “the No. 1 reason offered by the firm during weeks of back-and-forth—even when it was discussed indirectly—was compensation.” He summed up the policy of the Obama administration toward Wall Street by citing a research note from Standard and Poor’s which, he said, “suggested the $45 billion repayment didn’t really matter, because if the bank got in trouble again, taxpayers would be there with another bailout.”

This was underscored Wednesday, when Treasury Secretary Geithner, citing the threat of further financial problems, announced that the White House will extend TARP through October of 2010.

Citigroup and Bank of America were hit harder by the financial crisis and recession, and have taken longer to recover, than competitors such as JP Morgan Chase, Goldman Sachs and Morgan Stanley, which repaid their TARP loans on June 17. The latter have been able to reap bumper profits through speculative trading in stocks, bonds, currencies, commodities, derivatives and other complex and murky investments—the very types of parasitical and debt-driven practices that precipitated the financial crash of 2008.

That any of these banks, which lost billions in 2007 and 2008, are able to even consider repaying their government handouts is a testament to the unprecedented plundering of the Treasury carried out by the Bush and Obama administrations in order to rescue the financial aristocracy and protect its wealth. Aside from the trillions provided to the banks—in the form of TARP cash, cheap loans, subsidies, government guarantees of debt and assets, etc.—the Federal Reserve has carried out a policy of near-zero interest rates and the printing of billions of dollars in order to inflate stock prices and make possible a new surge in speculative profit-making.

Meanwhile, nothing has been done to address the underlying insolvency of the banks. Instead, the government has assumed their bad debts, undermining global confidence in the US dollar and raising the specter of state insolvency. No reforms have been carried out to limit the speculative activities of the banks, and none are in the offing. Nor are any of those chiefly responsible for the financial debacle and resulting social disaster to be held to account.

Instead, the policy of the Obama administration is to use mass unemployment to drive down the wages and living standards of the working class, and carry out a program of austerity to slash spending for social programs. On this basis, the ruling class intends to make the working class pay for the bailout of Wall Street.

All of the major banks continue to hold on their books billions in “toxic” assets, including mortgage-backed securities and loans, commercial real estate assets, credit card loans, and other consumer credit assets that continue to plunge in value as unemployment rises and defaults and bankruptcies increase. The banks refuse to write down these assets or sell them, in order to avoid recording the resulting losses. The government has already obliged by watering down accounting standards so as to allow the banks to value these assets far higher than their market price. The big banks are confident that, in the end, the government will step in either to make them whole or rig the markets so as to allow them to sell off these assets at artificially high prices.

At the same time, the banks continue to reduce their lending to small businesses and consumers, finding it more profitable to speculate on the financial markets. When TARP was passed in October of 2008, it was justified to the public by Bush, and backed by Obama and congressional Democrats, as the only means of getting the banks to start lending again.

In his New York Times article, Sorkin noted data showing that Bank of America’s new loans actually fell from $942 billion in the second quarter to $914 billion in the third. For the banking system as a whole, total commercial and industrial loans fell from $1.36 trillion in June to $1.28 in September, according to a recent report by the FDIC.

Among nearly all of the major banks, the lending arms have been hemorrhaging money, while the securities and commodity trading operations have been responsible for the vast majority of profits. Citigroup is a case in point. In the third quarter, the bank’s credit card and mortgage units lost $9.4 billion, offsetting profits at its trading arm.

Those banks furthest removed from the consumer sector have returned to profitability the fastest.

In his speech on economic policy Tuesday, Obama defended the Troubled Asset Relief Program and hailed the fact that it has cost the government $200 billion less than anticipated. In fact, TARP was the spearhead not only of a transfer of public funds to private banks without historical precedent, it also established and institutionalized the principle of government bailouts of the banks. It is only a matter of time before the current inflation of asset values results in a new crash, and an even bigger government rescue of the financial elite.

http://english.pravda.ru/world/americas/17-10-2009/109936-marx_dollar-0

The great October fall of the US dollar is turning into an avalanche. On Tuesday, the American currency lost nine kopeks in Russia and reached a new minimum mark this year – 29.5 rubles per dollar. Within six months (April through September) the dollar lost over 10 percent at the world foreign exchange trading, which marked the sharpest decline since 1991. Some experts believe that the American currency is close to collapse, which may lead to a new financial crisis.

The tendency of the US dollar devaluation has been observed for a few years, but the current rate of decline is unprecedented. Some jokesters even rushed to re-read the letters of Karl Marx to Friedrich Engels written during the US financial panic of 1857 discussing the collapse of America. It would have been funny if it wasn’t so serious.

The chief economist of HSBC Bank Stephen King believes that if the US officials fail to stop the fall of American currency, it may provoke another financial crisis. “A dollar collapse would be a disaster all round… It would leave the international monetary system short of stability and long of fear. It would unleash economic upheavals on a similar scale to those seen in the 1970,” King wrote for The Independent.

American officials don’t seem to be overly concerned since nothing is being done about it. The US hasn’t done anything to support the currency since 1955. But is a collapse inevitable? From the viewpoint of macroeconomic indicators, the US state of affairs is, indeed, scary: record budget deficit of $1.4 trillion, record state debt that now exceeds $11.9 trillion, high unemployment and weak currency. Huge inflows of capital into the economy that Obama is proud of haven’t yet shown results.

But on the other hand, weak currency may be good for the US.

“The economy is supported by industrial orders based on the current weak dollar and higher prices in the future. Key players in the market are ready to support their manufacturers by weakening the currency,” says Alexander Kuptsikevich, FxPro financial analyst.

If the state debt is growing, it means that the US continues to obtain loans.

“Market participants prefer to borrow money in dollars, and dollar loans are relatively affordable. They invest into more active instruments denominated in currencies of developing countries,’ explains Yevgeny Nadorshin, chief economist of Trust Investment Bank.

This causes growth of stock index. For example, Russian Trading System increased by 34 percent within two and a half months.

World center banks, who used to be trusted American partners, also turn their backs to dollar. They reduced investments into assets denominated in American currency. According to Barclays Capital , in April, May, and June, the banks invested 63% of their gains in euro or yen. If it continues, this may lead to further devaluation of dollar.

However, central banks of the countries that depend on export try not to let it happen. For example, last week a group of Asian central banks carried out unprecedented intervention in the financial markets by actively buying American currency. Bank of Russia was not a passive observer either. According to experts’ evaluations, the bank purchased over three billion dollars.

The good thing about it is that it helped Russian manufacturers to maintain competitiveness and bank reserves. The question is whether we would have to spend much more when investors change their minds and flee the Russian market changing their rubles into dollars. Last year we paid a high price for it.

“I’m not afraid that the events of the last year will repeat. The circumstances now are different. The world touched the bottom of the crisis and revival began, so there won’t be sharp moves,” says profile manager of Pilgrim Asset Management Olga Izyumova.

Yevgeniy Nadorshin agrees with her. He also thinks that dollar will continue weakening. But many experts think that as soon as the US announces the raise of interest rates, American currency will stop falling and even start growing. When is it going to happen?

Ben Bernanke, the Chairman of the United States Federal Reserve evades the answer. All he says is that this will happen when the US is sure of stable growth. On Tuesday investors discussed information obtained from the US official sources that the Federal Reserve will start raising interest rates no earlier than the second half of the next year.

By Andre Damon
5 December 2009

http://wsws.org/articles/2009/dec2009/unem-d05.shtml

The US economy lost fewer jobs in November than in any other month since the recession began, according to the latest jobs report from the Labor Department. But overall economic conditions continue to worsen for the majority of the population, with wages falling and no return to normal job conditions in sight.

The Labor Department said the economy lost 11,000 jobs last month, nearly one tenth the amount that was lost in October. The department also said that the unemployment rate, which is calculated using a different measure, fell to 10.0 percent, down from 10.2 percent in October. The last time the US economy added jobs was in December 2007. About 100,000 jobs need to be added per month to keep up with new entrants into the labor force.

The Obama administration will no doubt use the better-than-expected employment report to strengthen its claims that there should be no major government initiative to create jobs. At the “job summit” held Thursday at the White House, Obama said that “ultimately true economic recovery is only going to come from the private sector.”

Job declines in the construction, manufacturing, and information sectors were offset by a sizable increase in temporary hiring. The construction sector lost 27,000 jobs last month, while IT lost 17,000 and manufacturing lost 41,000 jobs. The country has lost some 2.1 million manufacturing jobs over the past two years, with the vast majority coming in durable goods manufacturing.

Economists were quick to warn against drawing overly optimistic conclusions from the news. “It is like a patient after having collapsed with a heart attack sitting up and taking a breath―nothing more than that,” Allen L. Sinai, the founder of the research firm Decision Economics, told the New York Times.

Sinai continued, “Things are getting better, but a one-month respite, frankly, means nothing in the context of the worst labor market ever seen since the 1930s.”

Earlier this week, Paul Krugman of the Times noted, “The chances of a relapse into recession seem to be rising,” citing the fact that the impact of the stimulus measures taken by the Obama administration, including the “cash for clunkers” program, is likely to fade. He added that “the rise in manufacturing production is to a large extent an inventory bounce―and this, too, will fade out in the quarters ahead.”

Even by the relatively optimistic predictions of the Federal Reserve, the unemployment rate will remain at 8 percent, nearly double its 2000 level, two years from now. By 2012, the Fed expects the unemployment rate to be no less than 7 percent.

Many economists expect even worse conditions. David Rosenberg, chief economist for Canadian wealth management firm Gluskin Sheff, told the Associated Press that the unemployment rate is likely to peak at 12 percent, claiming that economists who say that the unemployment rate will not go much higher are “borderline delusional.”

While most figures in the employment report showed a moderate improvement, the prospects for the long-term unemployed worsened significantly. The number of people who have been unemployed for 27 weeks or more grew by 293,000 to 5.9 million. Meanwhile, the percentage of unemployed people who have been out of work that long grew by 2.7 percentage points to 38.3 percent.

The number of unemployed reached 15.4 million last month, more than double the number in December 2007. This figure is much larger than the population of Greece, Cuba, Belgium, or Portugal.

Earlier this week, the Labor Department released its October metropolitan unemployment rate survey, showing that jobless rates increased in every metropolitan area in the US. There were 15 areas where the unemployment rate was at least 15 percent, with El Centro, California registering 30 percent out of work.

Certain groups are disproportionately affected by the high jobless rates: 26 percent of teenagers looking for work are unemployed, as are 15.6 percent of blacks and 12.7 percent of Hispanics. Another 2.4 million people would like to work, but have given up looking.

Average hourly earnings increased by .01 percent in November, reaching $18.74. In the past year, average hourly earnings grew by 2.2 percent, while average weekly earnings (which are affected by reduced hours) grew by 1.6 percent. But these gains have been offset by rising prices, which grew by 2.8 percent over the past 10 months. In real terms, average weekly wages have fallen by about 1 percent over the past year.

As a direct result of falling wages, productivity grew by 8.1 percent in the third quarter, the highest level in six years, according to figures recently updated by the Labor Department.

These wage figures hint at the broader process at work behind the latest unemployment report. Whatever high level the unemployment rate eventually reaches, the fundamental fact is that the US ruling class is using joblessness to drive down workers’ wages and do away with benefits.

American companies, under pressure of the crisis and the necessity of cutting costs to stay in business, have found ways to permanently eliminate positions. The health and retirement plans that companies have cut will not come back, nor will wages rise at any point in the near future.

By Andre Damon
4 December 2009

http://wsws.org/articles/2009/dec2009/bern-d04.shtml

Ben Bernanke, chairman of the US Federal Reserve, testified before the Senate Committee on Banking, Housing and Urban Affairs Thursday. The hearing was a prelude to a vote by the full Senate on Bernanke’s nomination by President Barack Obama to serve a second term as the head of the US central bank. His confirmation is considered to be a foregone conclusion.

In his opening statement and in response to questions from the senators, Bernanke defended the policies of the Federal Reserve, which he claimed had prevented a second Great Depression and made possible the current economic “recovery.” He also reiterated his opposition to increased congressional oversight of the operations of the Fed.

The testimony provided the opportunity for various senators, all implicated in the handover of taxpayer funds to the banks and related policies that have enabled the major banks to return to profitability and award their executives multimillion-dollar compensation packages, to criticize one or another of the Fed’s actions.

Even these efforts to placate popular anger were, for the most part, muted. From the desultory and deferential questioning of virtually all of the senators, Democrats and Republicans alike, one would hardly suspect that tens of millions of Americans were suffering the loss of their jobs and devastating cuts in wages and income, and that millions more were losing their homes, their health insurance and their ability to properly feed their families, or that the Obama administration and the Fed were opposed to any serious measures to address the social disaster.

As every senator was well aware, Obama’s decision last August to nominate Bernanke for a second term was a declaration that policies aimed at safeguarding the wealth of the American financial elite and imposing the burden of the financial crisis on the working class would be continued, and no serious reform of the banking system would be allowed.

Christopher Dodd, the Democratic chairman of the committee, set the tone for the hearing in his opening remarks. “Mr. Chairman,” Dodd said, “you and the Federal Reserve deserve praise for your acumen and gratitude for your role in preventing a far worse outcome than we might have otherwise seen.” He added, for good measure, “I believe you have done a very good job.”

The only sharp questioning came from Jim Bunning of Kentucky, a right-wing Republican who has condemned the bank bailout as a “socialistic” subversion of free market principles. He attacked Bernanke for, among other things, engineering the bailout of American International Group, the giant insurance firm, in such a way as to fully cover at government expense the losses of AIG’s major counterparty banks.

A significant exchange occurred when Senator Dodd, referring to recent articles by New York University economist Nouriel Roubini, asked about the danger that the Fed’s policy of keeping interest rates at near zero and effectively printing billions of dollars was causing asset bubbles in the US and internationally and paving the way for another financial crash.

This policy has come under increasing attack from governments in Europe, Asia and Latin America, whose exports are suffering because of the falling value of the US dollar and whose economies are being destabilized by a flood of speculative capital, geared to the dollar’s decline, which is driving up the prices of stocks, bonds and commodities.

Much of this speculative cash is flowing into so-called “emerging economies,” creating unsustainable asset bubbles. The default last week of Dubai, which triggered a near-panic on global markets, is but a foretaste of financial eruptions and sovereign defaults likely to result from the explosive growth of credit and risky investments fuelled by the Fed’s monetary policies.

Bernanke denied that the Fed’s policies were causing assets bubbles in the US—despite a 50 percent rise on US stock exchanges over the past nine months and a surge in high-risk, highly leveraged investments. More astonishing was his assertion that asset bubbles outside of the US were not the concern of the Fed.

Bernanke declared, “US monetary policy is intended to address problems in the United States; other countries have their own tools… It’s really not the United States’ responsibility to address misalignments in other countries.”

This was tantamount to a declaration that the United States will pursue an aggressive nationalist policy regardless the cost to its global competitors. Bernanke’s statement sums up the drive by the US financial elite to offload its crisis onto its major international rivals. This policy sets the stage for an eruption of international trade war and competitive currency devaluations, ultimately leading to a new and even greater global economic breakdown.