The Planet’s  Health and Wall Street

The US Senate passed a bill on May 20, 2010 of a major financial institutional reform. The main purpose of this is to avert future damage to the US and world economy due to a major bankrupt. This problem was an unwelcome   result of the failure of Lehman Brothers Bank and the 2008-2009 planetary financial crises, in which bad deals of all kinds and questionable investments and other financial operations lead to world recession of 2008. 

Some two weeks ago (early May 2010) a  major oil spill in the Gulf of Mexico hit the news as an unsafe way of   deep water oil drilling by British Petroleum  Corporation to deal with a fiasco in oil exploration and exploitation. Two weeks later after huge resources deployment and an immense effort of BP engineers and technician, tried unsuccessfully to with the ecological catastrophe were hardly enough to handle a desperate battle to plug the huge oil spill in the Gulf of Mexico. Of course, this is an unwelcome accident. But it has also underscored  that big business  can have a blinding effect of the limited aim for profits, should   also be balanced  with a  sustainable development effort to protect the environment—and all of us, not only humans ---and has to be balanced in all exploration  of natural resources projects. This may certainly decrease the profits, but it might also enhance a sustainable development effort, not only corporation’s profits or success.

A simplification of the high risk US mortgage market was called NINJA by financial analysts, not referring to the Japanese turtles, but a new acronym name for sales done to people with No Job, No Income and No Assets. All these speculative fake real estate sales we then sold by the banks and major Hedge Funds the world over and packed as “legal”. When the “sand castle” of financial speculation collapsed, hardly few were aware they had bought only paper money disguised as “real money assets.”

The reasons for the massive 2008 financial failure are many, but put in a nutshell the big financial operator were seeking huge profits in a runaway speculative spree with billions of invertors money. They failed. They failed to convince investors and losses came by the Federal financial institutions from a major collapse. Former Secretary of the Treasury in the Bush Administration Henry Paulson has written his account in his book “On the Brink”. This followed form Fed Chairman Alan Greenspan “The Age of Turbulance” an account of his Fed years as regulator.

This is the second time in a century that Wall Street collapses. The first was the speculative spree of the 1929 known as the Stock Crash. This major crisis leads to the new regulatory frame of the F.D. Roosevelt administration. A major financial depression broke out, the entire free market world collapsed.  These financial crises are not new. They are documented as recurring and happened many times before. What is new is that the whole world is in financial turmoil and a huge loss of trust has ensued.

Some analysts speculate that a full 20% of corporations’ profits may be at risk due to this senate reform. But this is not only a legal reform. It is almost a “demand” to limit speculation and abuse of the planet’s natural resources. For decades oil and petroleum was almost cheaper than water. Now water is at risk the world over. Oil spills are increasing due to speculative drive of major corporations. So US congress, hearing the outrage of many taxpayers is limiting the speculative ambition of runaway profit.  A blind ambition at the expense of the planet is no longer tolerated.

Even though the financial sector seems far removed from ecology altogether, they are certainly connected. A few financial institutions cannot play at whim with billions of assets and dollars that may destabilize the whole world economy. The second Wall Street collapse of 2008, spread in two months due to the Internet and frenzy news and transactions. Former President Bush had even to called the emerging nations of the Group of 20” to save the highly dangerous financial collapse. The famous Group of seven major industrial countries wasn’t enough by itself to restore the needed balance to the ailing world economy of 2008-2009. Not even the FMI.

Therefore the new US Congress financial reform to major institutions aside from a legal financial reform is a welcome modification of a major financial imbalance. The world population and the planet cannot be ruled by a handful of greedy speculators form Wall Street or any other corner of society.