sábado, 23 de maio de 2009

Green technology should be shared

Big business is gearing up to fight the use of green technology by developing countries seeking to reduce carbon emissions

Mark Weisbrot guardian.co.uk, Wednesday 20 May 2009 19.00 BST Article history

The battle over intellectual property rights is likely to be one of the most important of this century. It has enormous economic, social and political implications in a wide range of areas, from medicine to the arts and culture – anything where the public interest in the widespread dissemination of knowledge runs up against those whose income derives from monopolising it.

Now it appears that international efforts to slow the pace of worldwide climate disruption could also run up against powerful interests who advocate a fundamentalist conception of intellectual property

According to Inside US Trade, the US chamber of commerce is gearing up for a fight to limit the access of developing countries to environmentally sound technologies (ESTs). They fear that international climate change negotiations, taking place under the auspices of the United Nations, will erode the position of corporations holding patents on existing and future technologies.

Developing countries such as Brazil, India and China have indicated that if – as expected in the next few years – they are going to have to make sacrifices to reduce carbon emissions, they should be able to license some of the most efficient available technologies for doing so.

Big business is worried about this, because they prefer that patent rights have absolute supremacy. They want to make sure that climate change talks don't erode the power that they have gained through the World Trade Organisation.

The WTO is widely misunderstood and misrepresented as an organisation designed to promote free trade. In fact, some of its most economically important rules promote the opposite: the costliest forms of protectionism in the world.

The WTO's rules on intellectual property (Trade-Related Aspects of Intellectual Property, or Trips) are the most glaring example. These are designed to extend and enforce US-style patent and copyright law throughout the world.

Patents are monopolies, a restriction on trade that creates inefficiency in exactly the same way that tariffs, quotas or other trade barriers do. The economic argument for relaxing patent rules is therefore the same as that for removing trade barriers, only times 50 or 100 or even 1,000 – since the average tariff on manufactured or agricultural goods is quite small compared to the amount by which patent monopolies raise the price of a pharmaceutical drug.

These restrictions cost US consumers an estimated $220bn a year compared to competitive pricing – many times the gains from trade liberalisation that we could even hope to get from a successful completion of the current Doha round of negotiations in the WTO that began in 2001 in Qatar.

It took years of struggle by non-governmental organisations to loosen the big pharmaceutical companies' stranglehold on the WTO, to the point where the organisation's 2001 Declaration on Trips and Public Health reaffirmed the rights of member countries to produce generic versions of patented drugs in order to promote public health.

But this was just a first step, and seven years later these rights have been applied almost exclusively to anti-retroviral drugs for the treatment of Aids, in just a handful of developing countries. The power of the pharmaceutical companies, with their governments in the United States and Europe as advocates, still keeps life-saving medicines priced out of reach for hundreds of millions of the world's poor.

The legal procedure that has been used – although very infrequently – to allow for the production of generic drugs for the treatment of Aids is called a compulsory license. This means that a government can legally authorise the production of a generic version of a drug that is currently under patent, provided that this is done for public health purposes. A royalty is paid to the patent holder, but this is generally not very expensive.

Developing countries such as Brazil, India and China want to make sure that such possibilities are open for new environmentally sound technologies, eg in the areas of renewable energy, that might enable them to meet future targets for reducing carbon emissions. A Brazilian official noted that his country had only issued one compulsory license, for the anti-Aids drug Efavirenz, produced by Merck.

But big business doesn't want to take any chances. Today they are launching a new coalition called the Innovation, Development and Employment Alliance (Idea). (You've got to love the Orwellian touch of those marketing consultants). Members include General Electric, Microsoft and Sunrise Solar. They will reportedly also be concerned with intellectual property claims in the areas of healthcare and renewable energy.

For the intellectual property fundamentalists, the income claims of patent holders are property rights, seen as analogous to a homeowner's right to her house. But the framers of the US constitution (article I, section 8) didn't it see that way, and neither, for the most part, have US courts.

Our legal system has long taken into account that protection for patent and copyright monopolies must reflect an important tradeoff between rewarding innovation and creativity, on the one hand, and allowing for the dissemination of knowledge and the development of new technologies.

The WTO rules, driven by the protectionist interests of powerful corporations, have gone far to advance the fundamentalist view of intellectual property, at the expense of the world's economy and public health. Now our corporations fear that negotiators at the United Nations, under the UN Framework Convention on Climate Change, might not share these fundamentalist views, especially when the future of the planet is at stake.

Ten years ago environmentalists played a major role in exposing the built-in prejudice of WTO rules, which tend to strengthen commercial interests against environmental regulation. A tipping point was reached when they helped organise large-scale protests that shut down the WTO negotiations in Seattle in 1999, raising alarm bells and building opposition worldwide.

Environmental awareness and a sense of urgency with regard to climate change are much more broadly shared today. The Obama administration should take note of this and place itself squarely on the side of promoting the spread of environmentally sound technologies.

Credit Default Swaps

The Poison in the System


In a little more than a decade, Credit Default Swaps (CDS) trading ballooned into a lucrative multi-billion dollar industry which has changed the fundamental character of the financial system and increased systemic risk by many orders of magnitude. CDS, which were originally created to reduce potential losses from defaulting bonds, has turned into a cash cow for the big banks, generating mega-profits. In the case of insurance giant AIG, losses from CDS transactions has already cost the American people $150 billion, and yet, there still has been no serious effort in Congress to ban them once and for all. Even worse, CDS is the root-cause of systemic risk which connects hundreds of financial institutions together in a lethal daisy-chain.

CDS contracts are not cleared on a centralized exchange nor are they government regulated. That means that no one really knows whether issuers of CDS can pay off potential claims or not. It's a Ponzi-insurance racket of the first order. AIG is a good example of a company that gamed the system and then walked away with millions for its efforts. They sold more CDS than they could cover and then -- the debts started piling up around their eyeballs -- they trundled off to the Fed for a multi-billion dollar bailout. Fed chief Bernanke later said that he was furious over the AIG fiasco, but it didn't stop him from shoveling the losses onto the public ledger and making the taxpayer the guarantor for all AIG's bad bets. Keep in mind, that AIG was selling paper that had zero capital backing, an activity is tantamount to counterfeiting. Still, no one has been indicted or prosecuted in the affair. Defrauding clients and then sticking it to Joe sixpack has become de rigueur on Wall Street.

CDS have spider-webbed their way into every corner of the financial system, lashing together banks and other financial institutions in a way that if one defaults the others go down too. This is what's really meant by "too big to fail"; a euphemism which refers to the tangle of counterparty deals which has been allowed to spread -- regardless of the risk -- so that a handful of banksters can rake in obscene profits. CDS has become the bank cartel's golden goose; a no-risk revenue-generating locomotive that accelerates the transfer of public wealth to high-stakes speculators. If it wasn't for the turbo-charged profits from derivatives transactions, many of the banks would have already gone belly up.

Full article here

quinta-feira, 21 de maio de 2009

Fashion Victims

Fashion victims

Garment workers pay a high price to produce cheap clothes for the UK high street. Factories in Bangladesh produce clothes for retailers like Primark, Asda, or Tesco, and garment workers working there struggle to survive on extremely low pay, suffering poor working conditions, arduous hours and a complete lack of trade union representation in the factories.

We reported on this in our acclaimed Fashion Victims report in 2006. Two years on, UK retailers have still not improved the conditions in their supplier factories. In fact, given the damaging effects of the global food crisis, workers are now in an even worse position than they were before.

For too long the UK government has supported purely voluntary initiatives for
improving the rights of overseas workers. But there have been few steps taken to improve workers’ rights, pay or working conditions within these mechanisms.

Retailers cannot continue to pay lip service to corporate social responsibility whilst engaging in buying practices that systematically undermine the principles of decent work. War on Want will continue to hold to account those UK companies that exploit workers for their own profit.

Ultimately, however, the UK government must act to regulate the operations of its companies, both in the UK and overseas. We recommend people take action for overseas workers and send a message to Primark, Tesco and Asda, and to challenge the UK government on its failure to defend the rights of working people.

quarta-feira, 20 de maio de 2009

Wall Street and the Media

Wall St. and the Media Are Trying to Make Us Forget Who Started the Financial Crash

By Les Leopold, AlterNet. Posted May 20, 2009.

It’s fast approaching the time Wall Street has been waiting for: the time when the media and the public forget what got us into this economic mess. As massive doses of taxpayer Viagra lift the stock market ticker, we hold out hope that our 401k and pension plans will re-erect themselves along with our jobs. We feel stimulated by the stimulus package… and the morning after we forget. The crisis, whatever it was, is over, isn’t it? Surely, it’s time to move on.

Wall Street is praying that we forget how they broke open the Treasury vault to the tune of trillions in loan guarantees, subsidies and interest free money in addition to the more highly publicized TARP funds -- the largest transfer of wealth since African-American slaves built the South. It would be nice if we forgot about proposed wage caps on bankers. It would be nice if we stopped talking about ridiculous reforms and regulations that might prevent banker and hedge funds operators from walking off with hundreds of millions in private booty. Better to turn our attention to the auto industry. And maybe, if it all breaks just right, most of us might start to believe that the real problem all along was Detroit, rather than the wildest Wall Street casino ever created. It would be much better for the wealthy if we returned to one of our favorite pastimes: blaming autoworkers’ health care and pension benefits, or blasting big government for interfering in the economy.

Are we really going to forget? That depends on the severity of the crisis and it depends on our ability to understand it. Some see green shoots all around. (I would like to sell them the Brooklyn Bridge) I’m no soothsayer so I can’t tell you how long this crisis will last, or how much carnage it will cause, or even if the green shoots will be killed by all the financial toxic waste still polluting our economy. But I can help us remember its key characteristics: This crisis was the result of a total failure of financial markets. It wasn’t caused by consumers taking on too much debt, or a housing bubble, or uncompetitive industries. It was caused by financial markets run wild. It wasn’t caused by Fannie Mae or Freddie Mac or big government. It was caused because our leaders believed free-markets could run on their own. Greenspan, Rubin, Bernanke and scores of others both on Wall Street and in government (or in the revolving doors between them) proclaimed that the free-market always knows best. It was ok if the elite gained riches once reserved for royalty. It was ok because their prowess and ingenuity drove our economy to new heights. They were the financial innovators of the world. It was far better for America to produce new financial instruments than to make solar energy or efficient cars.

They were dead wrong. Left to its own devices, the financial system crashed. We gave them every kind of deregulation they wanted and they drove the economy off a cliff.

Full article here

terça-feira, 19 de maio de 2009

Credit Where Credit is Due

The Real Lesson of the Financial Crisis


The financial channels are abuzz with talk of a recovery, but we're not out of the woods yet. In fact, the deceleration in the rate of economic decline is not a sign of recovery at all, but proof that the economy is resetting at a lower level of activity. That means the recession will drag on for some time no matter what the Fed does.

The problem is the breakdown in the securitzation markets which has cut off the flow of easy credit to consumers and businesses. The credit-freeze has caused a sharp drop in retail, auto sales, furniture, electronics, travel, global trade etc. Every sector has been hammered. Fed chief Ben Bernanke's lending facilities have helped to steady the financial system and Obama's fiscal stimulus will take up some of the slack in demand, but these are not a cure-all for a broken credit system. If the system isn't fixed, asset prices will continue to plunge and hundreds of financial institutions will face bankruptcy.

From Tyler Durden at Zero Hedge:

"In order to fully understand currency and price movements, one has to realize that the securitization of debt, and creation of derivatives amounted to a huge virtual printing press, primarily fueled by a massive increase in risk appetite which allowed for a huge expansion in the value of claims on financial assets and goods and services. It is worth pointing out, that the Fed has little to no control over this "printing press" at this point, which at last count was responsible for over 90% of the liquidity in the system." ("The Exuberance Glut or the Dollar-Euro Short Squeeze Race" Tyler Durden, Zero Hedge)

The faux-prosperity of the last decade was largely the result of a wholesale credit system which created a humongous amount of credit via sketchy debt instruments, off-balance sheet operations, massive leverage and derivatives. (The Fed's liquidity and conventional bank loans play a very small part in the modern credit system) Securitization--which is the conversion of pools of loans into securities--is at the center of the storm. It formed the asset-base upon which the investment banks and hedge funds stacked additional leverage creating an unstable debt-pyramid that couldn't withstand the battering of a slumping market. After two Bear Stearns funds defaulted 20 months ago, the securitization markets froze, credit dried up and the broader economy went into a tailspin. Now that investors know how risky securitized instruments really are, there's little chance that assets will regain their original value or that the market for structured debt will stage a comeback.

(Full article here)

segunda-feira, 18 de maio de 2009

Globalization in a Turnstile: The Debate Ahead

Globalization in a Turnstile: The Debate Ahead

By Adam Parsons

February 25, 2009

Since the term globalization became a buzzword in the mid-1990s, our common understanding of the world has been defined by a succession of promised ‘ends'; the end of history, the end of poverty, the end of geography and the nation state. Today, in the midst of the worse financial crisis since the Great Depression, we are instead witnessing a very different end; that of neoliberalism itself, of laissez-faire capitalism, and of globalization theory as once studied. The result is an emerging new debate on the political economy as defined by the welcome question: what comes next?

The insufficient word ‘globalization', as the late sociologist Paul Hirst once said, soon turned into the shorthand for getting people to accept their lot fatalistically - knowing that employees and wage deals can always be bought cheaper somewhere else. Globalization may well involve the spread and connectedness of communication and technologies across the world, but for politicians, journalists and business leaders it is more easily understood in terms of trade flows, international investment, and the liberalization of market economies.

For its proponents this has remained a political project since the late 1970s; to exploit the larger process of international integration for a specific outcome, one based on investor rights and the profit imperative above the basic concerns of ordinary people. As notably reasoned by Noam Chomsky, no sane person - not even a so-called ‘anti-globalization' protester - is against international integration.

It was this successful political project, not ‘globalization', that infiltrated world affairs in the early 1980s through the polices of Thatcher, Reagan and Helmut Kohl. When stripped of such descriptive adjectives as ‘late twentieth century capitalist' or ‘neoliberal', globalization as a highly internationalized economy is a phenomenon that stretches back for several centuries. Globalization skeptics may disagree on trends and dates, some tracing its origins from France in the 1760s, others from the belle époque in the 1920s, but free trade and its accompanying theories about letting ‘natural' market forces rule is a repetitive feature of economic history.

As Hirst and Thompson argued in Globalization in Question (Polity Press, 1999), the developmental myth of the 1950s and 1960s - that capitalism without victims was a clear prospect - was subsumed by the contemporary and equally wrong-headed myth of a global free market without alternative; one that required international competition at any cost, or else the fate of being an abandoned ‘loser'. The academics arguing a hyperglobalist position, from this point of view, were guilty of a certain intellectual sin; robbing us of hope by overstating the extent of dominance and inevitability of the world market.

(Full article here)