Black Monday

by: Heather on 10/06/2008
Posted in: Guest Posts

This just in from Mike Nickerson, author of Life, Money & Illusion: Living on Earth as if We Want to Stay , reflecting on the state of the financial markets in the context of other historic downturns. Thanks Mike!

The current stock market plunge has more in common with its name sake "Black Monday," two decades earlier, than the news has explained.

The original Black Monday was October 19th 1987. It was the day that the United Nations convened a discussion about "Our Common Future" the report of its World Commission on Environment and Development. The report had been tabled, and the date for the discussion set, six months earlier, so the October 19 date was no surprise.

"Our Common Future" authoritatively documented how the human family was in danger of overwhelming the Earth and would foreclose many future options if we continued to expand our exploitation of natural resources and production of waste.

An initial sell off of heavy industry that day started a computer feedback loop that triggered more selling and quickly amplified into the biggest single-day loss since 1929. Moving away from industries that are threatening our long-term well- being seemed a prudent move on a day during which the nations of the world were to discuss curbing the dangers caused by such firms.

While the initial response to "Our Common Future" was a surge of remedial action, that response changed as recession emerged in 1990. The need for sustainable investment opportunities trumped environmental concern and globalization, in its present form, took over.

Nearly 21 years later we have another Black Monday. The connections go far deeper than the stunning drops in stock values. In an effort to maintain the perpetually expanding money supply needed for our present economic system, ways and means were pioneered to make money on money, rather than from material production. The result, after many years of apparent success, is the present crisis. Money has no enduring value unless it is tied to things that people are willing and able to produce and work for.

Since 1987, humanity has burned more than 400 billion barrels of oil. (Comparable to Saudi Arabian reserves and Canada's Tar Sands combined.) Because this drain has made it harder to meet demand, the price went up, stimulating inflation and interest rate increases to stem that inflation. The higher interest revealed that many sup-prime mortgage holders didn't actually have the wealth to back up the money created for their mortgages.

There is a message here if we choose to hear it. We are stretching petroleum supplies, and the environment's ability to absorb our waste. We have also grown past the ability of creative accounting to back up an exponentially expanding money supply.

All these issues point to a human family that has grown to fill its planet. We must now give up our childish growth, take responsibility for our strength and start living on Earth as if we want to stay.

For a very timely deep analysis of how the economy must be restructured to remain within planetary limits, read Life, Money & Illusion: Living on Earth as if We Want to Stay .

 

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