Looking for alternative models- Compassionate Capitalism

Some economic pundits are now predicting that there are eery similarities between the Great Depression of 1932 and the current economic meltdown that started in the Wall street with the burst of the US housing bubble and quickly spread across the Atlantic to Europe and around the world to Japan and Asia.

For the last three decades, the leading economic power and the only super power in the world, the United States of America has seen a strong dominance of political leadership by the Republican party starting with President Ronald Reagan in 1981, interrupted only by the two terms that Bill Clinton served as president. Successive administrations have championed the growth of commerce unfettered by government regulation. Even Clinton, a political centrist who abandoned many of the progressive legacies of Democratic presidents such as Roosevelt and Lyndon B Johnson, did little to control the excesses of Wall Street.

In the 1920s, as now, political leaders created the conditions that precipitated economic crisis. In both instances, a lack of effective regulatory oversight fostered a climate of reckless speculation on the stock market. And just like the federal government in 1929, the outgoing Bush administration failed to see the emergency coming.

In 1929, the US president Herbert Hoover, who presided over the worst depression in history that sent millions into unemployment believed that the economy will fix itself and no government intervention was necessary.

At his inaugral speech in 1929 Hoover is reported to have said, "I have no fears for the future of our country. It is bright with hope. We shall soon be in sight of the day when, God willing, poverty will be banished from this nation." Seven months later, the stock market crash precipitated an economic crisis unprecedented in US history.

In a speech in November 2008 , George Bush, also a Republican president echoed the same sentiments that were heard in 1929 that the fundamentals of the American economy were strong. To President Bush's credit, he subsequently moved his Treasury department to intervene agressively and rescue the ailing financial institutions.

Although America is used to have depressions, the magnitude of the current meltdown in a globalised world has revived the memory of the horrors of the Great Depression in 1929, causing some experts to worry whether the current economic crisis could lead to suffering on a similar scale.

With the world's money markets in turmoil, international banks failing and stock markets crashing, the anti-globalisation movement is stepping up their opposition to liberal principles that allows the unregulated use of capital to operate markets with minimum interference from national governments.

One book, "The Anti-Globalization Breakfast Club: Manifesto for a Peaceful Revolution" brings together the views of many of the world's leading thinkers in alternative policy studies. Their collective views represent a fascinating insight into a growing movement that is slowly but surely affecting the way the world does business.

Here is part of Amazon's editorial review of this book.

Alternative models for grass roots economic development such as micro-financing are now being widely adopted in Bangladesh, India, Pakistan and elsewhere. New views on measuring development such as GDH (gross domestic happiness) have been adopted by Bhutan rather than GDP, and China's own hybrid approach combining market and planned policy to achieve economic transformation offer new choices for developing countries. All of these are representative of a new wave of thinking that rejects the increasingly discredited policies of the IMF and World Bank.

Obama is elevating science to the top

President Bush's administration has been consistently at odds with the scientific community over global warming. Scientists explain global warming as a result of increased concentrations of greenhouse gases like carbon dioxide and methane in the atmosphere. These gases trap heat in the lower atmosphere, making the Earth warmer. They also say that's why glaciers in Alaska, Greenland and Iceland are melting at alarming rates, coral reefs are dying from warmer water, and sea levels are rising.

Although the United States is largest emitter of greenhouse gases, President Bush has refused to sign the Kyoto treaty which 141 countries signed promising to reduce greenhouse gases.

US President-elect Barack Obama has promised to make clean energy a top priority in his new administration. Over the next ten years, he wants the US government to spend US$150 billion on promoting green technologies. But a substantial portion of the funds will go into propping up America's failing car industry. Obama wants to invest US$15 billion a year in renewable sources of energy. He is hoping it can create 5 million new green jobs in the next decade."

Many scientists who objected to the Bush administration's policies, from restrictions on embryonic stem cell research to the global warming are hopeful that Obama is giving a more prominent role to the scientists.

"I think they'll be restoring the role of science in the federal establishment," said Alden Meyer, director of strategy and policy for the Union of Concerned Scientists, a Cambridge-based advocacy organization. "We've got a bunch of people across the [new] administration who get it."

In a sign that President-elect Barack Obama intends to elevate science to greater prominence, John P. Holdren, a Harvard physicist widely recognized for his leadership on energy policy and climate change, has been named to be appointed White House science adviser.

In 2004, Holdren joined other prominent scientists to sign a letter accusing the Bush administration of undermining and censoring scientists.

"When scientific knowledge has been found to be in conflict with its political goals, the administration has often manipulated the process through which science enters into its decisions," the letter said.

Holdren, who was an adviser to the Obama campaign and a member of a scientific advisory committee to President Bill Clinton, is a specialist on energy, climate change, and nuclear proliferation.

Holdren is the Teresa and John Heinz Professor of Environmental Policy at Harvard’s John F. Kennedy School of Government and director of the Science, Technology, and Public Policy program in the School’s Belfer Center for Science and International Affairs.

In addition to his Kennedy School appointments, John Holdren is also Professor of Environmental Science and Policy in Harvard’s Department of Earth and Planetary Sciences and President and Director of the independent, nonprofit Woods Hole Research Center. He has been at Harvard since 1996 and affiliated part-time with the Woods Hole Research Center since 1992.

Fascinating Year 2008

China hosted the Beijing 2008 Olympic Games from August 8-24, 2008. A total of an estimated US$42 billion was spent, making it the most expensive games ever. The Olympic games showed the world that China has finally come of age. The Communist China dazzled it's economic might causing some angst in the West. The western world who always saw that democracy and free enterprise exist hand in hand are forced to accept the emergence of Communist China as an economic and military super power.

According to a USNews report, China is teaching the West something new. Its economy, growing at 9 percent per year, will most likely become the second largest in the world by 2020, behind only the United States.

Americans continue to spend billions more on Chinese goods than the Chinese spent on U.S. products. And that gap has been growing by more than 25 percent per year, as China moves from building toys into more-sophisticated appliances, auto parts, and semiconductors. China's consumer class, meanwhile, is spending like lottery winners on everything from bagels to Bentleys--and will soon outnumber the entire U.S. population. China's explosive growth "could be the dominant event of this century," says Stapleton Roy, former U.S. ambassador to China. "Never before has a country risen as fast as China is doing."

The year 2008 has shown the policy makers and countries of the world that everyone lives in a truly global community. The startling financial crisis that started in US due to the subprime lending has quickly spread to other economies. Lehman Brothers, a global investment bank became the largest bankruptcy filing in the US history totalling over $600 billion in assets.

The American economy is built on credit. Credit is a great tool when used wisely. For instance, credit can be used to start or expand a business, which can create jobs. It can also be used to purchase large ticket items such as houses or cars. Again, more jobs are created and people’s needs are satisfied. But in the last decade, credit went unchecked, and it got out of control.

Mortgage brokers, acting only as middle men, determined who got loans, then passed on the responsibility for those loans on to others in the form of mortgage backed assets (after taking a fee for themselves originating the loan). Exotic and risky mortgages became commonplace and the brokers who approved these loans absolved themselves of responsibility by packaging these bad mortgages with other mortgages and reselling them as “investments.”

The United States treasury has committed US $700 billion as a rescue fund to prop up financial lenders. While the Treasury Secretary Mr Paul Hanson, a respected Wall Street veteran was criticised on the collapse of Lehman Brothers, the Treasury secretary’s supporters point to failures that were averted – including Bear Stearns, Fannie and Freddie, and AIG, the insurance giant.

As markets around the world felt the impact of the financial crisis, the FTSE Asia Pacific index dropped by more than 43 per cent in value – its worst annual loss since the benchmark started in the 1980s.

Students of the markets say the only recent parallel with the current turmoil is Japan in the 1990s, but other than that they have had to study the 1930s, the Great Depression.

Ben Bernanke, chairman of the Fed, spent years as an academic studying the Great Depression and his actions over the past six months have been interpreted as a sign that he is determined the lessons from the past should be understood.

America and the world are looking upon US president-elect Barack Obama, the first black president to create the jobs, spur economic growth and make the world a more peaceful place.

Man's search for meaning

Victor Frankl who wrote about the Holocaust survivors in his book 'Man's Search for Meaning," said this:

"Everything can be taken from a man but one thing; the last of human freedoms- to choose one's attitude in any given set of circumstances- to choose one's way."

Understanding brain based education

The brain based learning theory is based on the structure and function of the brain.
How the brain works has a significant impact on what kinds of learning activities are most effective. Educators need to help students have appropriate experiences and capitalize on those experiences.

More on understanding brain based education here.

US liberal icon Ted Kennedy's latest battle

The United States Massachusetts Democrat Ted Kennedy suffered a seizure Saturday and has since been hospitalized at Massachusetts General Hospital in Boston. Doctors at Massachusetts General Hospital, who were investigating the cause of a seizure that Kennedy, 76, suffered at his Cape Cod compound on Saturday, said preliminary results from a biopsy of the brain had revealed that the senator has a malignant glioma in the left parietal lobe, the upper left part of his brain. News of the brain tumor surprised people in Washington, Massachusetts and beyond, generating reaction around the world, where Kennedy's family legacy and his 46 years in the Senate have made him a well-known figure. More on this news and responses from US leaders..

Oil to reach $200 a barrel

Analyst Arjun Murti on FT.com writes, crude oil prices could surge to $200 a barrel in the next two years, according to the Goldman Sachs analyst who three years ago correctly predicted a price “super-spike” above $100 a barrel.

The warning by Arjun Murti came as oil prices hit a fresh high above $122 a barrel, boosted by supply disruptions in Nigeria, lower output in Russia and continued robust demand in China ahead of the Olympics.

Mr Murti said the energy crisis could be coming to a head as a lack of adequate supply growth was becoming apparent.

He said: “The possibility of $150-$200 per barrel seems increasingly likely over the next six to 24 months.”

Link: FT.com