US jobs for US citizens: Gov't must demand corporate patrioticism.

In the past, I have made blog entries on this issue of mainstay American corporations — like General Electric (GE) — benefiting from U.S. tax subsidies and the loyalty of American consumers who buy their products generation after generation to the tune of billions upon billions of profitability.  BUT now these companies, solely in the name of corporate profitability, reciprocate neither their loyalty, nor duty to Americans to be good corporate citizens. Here we have a case in point about GE methodically shipping their entire energy efficient lighting manufacturing operation out of Ohio to China with the primary reason being given as lower labor costs. 

CFL light bulb

 GE is asking consumers and its employees to sign a pledge to “go green” by start purchasing the new energy-efficient CFL light bulbs, which cost three times more than conventional bulbs AND are imported from China. The problem is that each pledge leads to the loss of jobs in U.S. lighting plants. Adding insult to injury, GE is actually asking workers in its lighting plants to pledge to put themselves out of a job!  Learn more about what you can do here to send a clear message to GE that you find such corporate irresponsibility and unpatriotic behavior unacceptable as a consumer of their products. 

But GE isn’t the only culprit. According to Doug Brown, co-author of the inflential 2009 Green Outsourcing Report, U.S. corporations have shipped over 22,000 new green jobs overseas to places like India, Mexico, China and the Philippines.

It is manifest hypocrisy in my view that U.S. corporations who owe their lobbying access, success and influence — often to the detriment of individual citizens — on a legal foundation that extended to “corporate entities” the same rights and protections afforded to individual citizens under the U.S. Constitution. Yet, as a society we do not hold accountable these corporate citizens for the same level of loyalty and patriotism that we expect of individual citizens in times of national peril. This is nothing short of corporate treason by a company, GE,  that owes its very success, if not its existence, the American consumers. There must be recourse to such behavior.

U.S. corporations, acting purely in the name of soul-less profitability, reciprocate neither their loyalty, nor duty to American taxpayers and consumers to be good corporate citizens, while profiting from billions upon billions of government incentives and consumer brand loyalty.

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(HuffPo, Jul 24, 2009) While Ohio is traditionally thought of once being a center of auto manufacturing, there was such a strong tradition of light-bulb production in the state that the world’s largest maker of light bulbs, General Electric, located the headquarters of its light bulb division in Cleveland. The jobs provided by light-bulb manufacturing allowed people to buy homes, send their kids to college, and fuel a vibrant economy in Ohio for decades. But in the last decade, GE has closed over fifteen factories in Ohio and downsized numerous others. Since 1980, employment in GE Lighting has dropped by 68 percent.

 A large chunk of that manufacturing has gone to China, and now GE plans to send even more to China in the wake of new clean energy policies. By 2014, Americans will only be able to purchase more energy efficient CFL light bulbs. However, GE has located all of its facilities for high-efficiency light bulbs to China and has told the union representing the workers that they have no intention to locate compact flourescent facilities in the United States.

GE is currently threatening to close one factory in Niles, Ohio that produces light bulbs. The workers, members of United Electrical, Radio, and Machine Workers of America (UE) at one are calling on GE to look for a way to refit their plant so that they can be part of the new clean energy economy. Ohio Sen. Sherrod Brown and Rep. Tim Ryan wrote a letter to GE’s CEO Jeffery Immelt expressing “deep concern” for the workers at the plant:

“The workers and tradition of the Niles facility present an enormous opportunity to show how we can transition manufacturers from contracting industries, like incandescent bulbs, to emerging industries in energy and medical IT.”

Ohio could indeed be a hub of new light bulb production. Recently, a Chinese-owned manufacturer of high-efficiency light bulbs has opened a factory, citing Ohio as having some of the world’s most highly skilled light-bulb workers.

Ohio’s legacy of bulb production, and its factories that could easily be converted from incandescent production to CFL production, presents a grand opportunity to employ workers in building a green energy economy in Ohio.

The IMPACT Act introduced by Brown in the Senate would help small and medium-sized manufacturers transition to the clean energy economy. Brown’s bill creates a $30 billion Manufacturing Revolving Loan Fund to provide these manufacturers with much-needed access to credit to improve energy efficiency and retool for the clean energy industry.

The Apollo Alliance–a coalition of business, labor, and environmental groups–estimates that the IMPACT Act could create 680,000 direct manufacturing jobs nationally and 1,972,000 related jobs over the next fiver year.

So far, GE has shown every intention to take the American tax dollars being used to subsidize the green-energy economy and use them to build Chinese factories and pay Chinese workers. As I wrote earlier this week, in spite of GE CEO Jeffery Immelt’s statement that companies need to stop outsourcing, GE continues to lead the effort to outsource clean-energy jobs. Most recently, GE has cut off a contract with a windmill factory in Indiana and shipped the work to China despite the factory offering to sell their parts at the same price as their Chinese competitors.

To add insult to injury to workers losing their jobs from foreign outsourcing, GE has even launched a television ad campaign promoting American manufacturing. “GE has the ability to locate its new manufacturing for CFL’s, LED’s, as well as the new incandescent lighting technologies in Ohio and elsewhere in the U.S. So far they have not done this, and we see no sign that they are even considering doing this. GE Lighting workers in the U.S. see little to cheer in GE’s pronouncements and feel good advertising because for several decades now every plant has been on an extended deathwatch,” said Chris Townsend of the United Electrical, Radio, and Machine Workers.

It’s time that CEO’s like Jeffery Immelt live up to their word and help rebuild the American economy by keeping American manufacturing jobs in America. It’s also time that we adopt a comprehensive policy that promotes American manufacturing and prevents companies like GE from using taxpayer funds intended to stimulate the American economy to undermine our economy instead.

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Hosted by the Obama Administration, the U.S. and China are holding two-days of top-level bi-lateral talks in Washington, D.C. this week. The talks are being held Mon-Tues, July 27-28^th and will cover a broad range of economic, national security, diplomatic, energy and environmental issues. China sent a 150-man delegation led by State Councilor Dai Bingguo and Vice Premier Wang Qishan. The U.S. delegation is led by Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner, but representing the United States, President Obama hosted the event and made opening remarks. The U.S.-China Strategic and Economic Dialogue traces its origin to a finance ministers’ meeting in December 2006. With China’s growing presence on the global stage, the dialogue evolved into higher-level talks covering various global issues.In his opening remarks of the session today, President Obama noted that the relationship between the U.S. and China will “shape the 21st century” and that neither nation should be wary of competition and coordination. “No one nation can meet the challenges of the 21st century on its own, nor effectively advance its interests in isolation.” He added, “Some in China think that America will try to contain China’s ambitions; some in America think that there is something to fear in a rising China,” he said. “I take a different view.” And certainly, he does. As I have written here in the past, although the president speaks the language of globalization and global interdependence, this two-day bi-lateral conference is yet another example of President Obama’s preference for a foreign policy based on ‘Economic Nationalism.‘ This brand of economic foreign policy is really nothing more than trade and economic protectionism with a fancy name, and more akin to conservative trade principles than to liberal. In truth, the president is neither a liberal global ‘free-trader’ nor is he a hard-core protectionist, but a lack of a clear committment, and a preference for bi-lateral agreements, via official policy, actually serve to undermine his statted global economic and foreign policy agendas.

At stake, for instance, is continued demand by China — the largest foreign investor in U.S. Treasuries or ‘IOU’s — for U.S. government debt. The U.S. also wants China to continue financial industry reform and development, and increase domestic demand to reduce dependence on exports. While China, hedging its concerns about the sagging greenback, has been calling publicly in recent weeks for replacing the U.S. dollar as the preferred world currency reserve, with a basket, or index, of global currencies

‘Some in China think that America will try to contain China’s ambitions; some in America think that there is something to fear in a rising China. I take a different view. The relationship between the U.S. and China will shape the 21st century, making it the most important bilateral relationship in the world.’

Chinese President Hu Jintao, in a written message sent from Beijing, said that China and the U.S. “shoulder important responsibilities on a host of major issues concerning peace and development.” Hu called on the two sides to “conduct consultations in an equal and candid manner,” to “seek win-win progress.” Since the global financial crisis was ignited in the U.S. last year, and the enactment in February of the Obama administration’s $787 billion stimulus program, Chinese officials have expressed concern about the prospects for the U.S. economy and the health of their investments.

“We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets,” Chinese Premier Wen Jiabao said during a March 13 press conference after the stimulus package became law. “To speak truthfully, I do indeed have some worries.”

Anticipating China’s concerns about its investment in the U.S., President Obama added that the financial crisis “has made it clear that the choices made within our borders reverberate across the global economy — and this is true not just of New York and Seattle, but Shanghai and Shenzhen as well.” It should be noted that China is still buying U.S. government notes increasing its holdings to $802 billion, double the $401 billion at the beginning of 2007, Treasury Department figures show.

Inseparable

The value of China’s currency, the yuan, is also on the agenda. The U.S. regards China’s currency policy as a distortion and wants China to let the value of the yuan appreciate. The staff of the International Monetary Fund has concluded that China’s yuan is “substantially undervalued,” Nigel Chalk, head of the lender’s Asia-Pacific division, said on a conference call on July 23^rd. Geithner also plans to talk with Chinese officials about U.S. concern over China’s resistance to foreign investment, an Obama administration official said. The U.S. will tell the Chinese that the American rebound from a recession won’t be led as much by consumers as past recoveries. The U.S. will urge China to rely more on household spending and less on exports for growth.

On the topic of nuclear security and cooperation, Obama outlined to China a way forward in mutual cooperation to help to prevent Iran from acquiring a nuclear weapon and for its continued aid in thwarting North Korea’s nuclear program. He called for the two nations to strengthen the Nuclear Non-Proliferation Treaty “by renewing its basic bargain: countries with nuclear weapons will move toward disarmament; countries without nuclear weapons will not acquire them; and all countries can access peaceful nuclear energy. “A balance of terror cannot hold,” he said.

President Obama indicated that he has plans to visit China in the near future. That may come in later this year when the president is scheduled to attend the Asia Pacific Economic Cooperation forum in Singapore in November.

U.S. Commerce Secty Gary Locke (r) and Energy Secty Stephen Chu (l) at joint news conference.

Listed below are the primary topical issues to be covered in the Strategic & Economic talks:

ECONOMIC STIMULUS

The United States, the world’s richest country, and China, the fastest-growing major economy, are likely to commit to maintaining fiscal and monetary stimulus policies to bolster their recoveries and try to help shore up a weak world economy.

BI-LATERAL TRADE & CURRENCY EXCHANGE POLICY

The United States, which ran a record $266 billion trade deficit with China in 2008, is seeking ways to rebalance trade, including persuading the Chinese to liberalize exchange rates so that the yuan currency appreciates to trim Chinese exports and boost imports. Notably, U.S. Commerce Secretary Gary Locke, himself an American of Chinese ancestry, said recently the trade imbalance between the United States and China is not sustainable, and the two countries have a joint responsibility to reduce greenhouse gas emissions.

NORTH KOREA & IRAN

The two U.N. Security Council permanent members will discuss ways to curb the nuclear weapons programs of North Korea, which has tested two nuclear devices since 2006, and the suspected nuclear arms ambitions of Iran. China has close ties with both states.

ECONOMIC RE-BALANCING

The United States, forced by economic crisis to cut consumption and boost savings, will urge China to do the opposite — consume more and save less — in order to reduce Chinese current account surpluses.

HUMAN RIGHTS

The United States remains concerned about China’s curbs and censorship of the Internet, controls on religious freedom and policies toward Buddhist Tibet, which was racked by unrest in 2008, and Muslim Xinjiang, where ethnic rioting caused the deaths of 156 people this month.

CLEAN ENERGY AND CLIMATE CHANGE

The United States and China, the leading emitters of greenhouse gases, want to promote clean energy technology trade and other ways to cooperate in reducing heat-trapping gas emissions blamed for global warming.

GLOBAL HOT-SPOTS

Conflict-ridden Myanmar, Sudan and Zimbabwe are all countries isolated by international sanctions but states with which China has close economic and political ties and influence.

(Read more from Reuters about what’s on the agenda here.)

The Heretics of Finance

The Heretics of Finance  provides extraordinary insight into both the empirical nature of technical analysis, and the character of its successful practitioners.  Distinguished MIT professor Andrew W. Lo and private sector Research Analyst Jasmina Hasahodzic interviewed thirteen highly successful, award-winning market professionals who credit their investment acumen and success to technical analysis. The result is the story of technical analysis in the words of the people who know it best — the lively and candid interviews with these gurus of technical analysis.

The first half of the book focuses on the Technical Analysts’ careers:
–How and why they learned technical analysis
–What market conditions increase their chances of making mistakes
–What their average workday is like
–To what extent trading controls their lives
–Whether they work on their own or with a team
–How their style of technical analysis is unique  

The second half concentrates on technical analysis and addresses questions such as:
–Did the lack of validation by academics ever cause you to doubt technical analysis?
–Can technical analysis be applied to other disciplines?
–How do you prove the validity of the method?
–How has computer software influenced the craft?
–What is the role of luck in technical analysis?
–Are there laws that underlie market action?
–What traits characterize a highly successful trader?
–How do you test patterns before you start using them with real money?  

Interviewees include:
Ralph J. Acampora, Laszlo Birinyi, Walter Deemer, Paul Desmond, Gail Dudack, Robert J. Farrell, Ian McAvity, John Murphy, Robert Prechter, Linda Raschke, Alan R. Shaw, Anthony Tabell, Stan Weinstein    

Goldman Sachs' Broad St HQ (NYC)

July 22 (Bloomberg) — Goldman Sachs Group Inc.’s repayments to the government of last year’s bailout money, including an agreement today to repay warrants, generated a 23 percent annualized return for U.S. taxpayers.

Goldman Sachs agreed to the Treasury’s request for $1.1 billion to repay warrants the government received when it invested $10 billion in the New York-based firm last October. The payment is in addition to $318 million in preferred dividends.

That 23 percent return compares with the 42 percent surge in Goldman Sachs’s share price since October, and the 5.1 percent gain in the Standard & Poor’s 500 Index. Goldman’s decision follows criticism of the bank by lawmakers who questioned its decision to set aside a record $11.4 billion to pay employees in the first half of the year.

Atlantic magazine: Goldman Sachs makes us all rich.

The company’s warrant transaction “was the best deal for taxpayers yet,” said Linus Wilson, a finance professor at the University of Louisiana at Lafayette.

The firm is paying about 98 percent of the warrants’ value, based on Wilson’s use of the Black-Scholes and Merton option pricing models. By contrast, he estimates that BB&T Corp. and U.S. Bancorp have struck deals with Treasury to pay less than 60 percent of the value of their warrants.

Unlike JPMorgan Chase & Co., the second-biggest U.S. bank by assets, Goldman Sachs agreed to pay the full amount sought by Treasury for its warrants. New York-based JPMorgan, which has repaid $25 billion it received from the government, said earlier this month that it couldn’t agree with the government on its warrants’ value, leaving them to be sold in a public auction.

Read more here . . .

The End of Male Dominance in the 'Men's Club' of Global Finance.

For years, the world has been witnessing a quiet but monumental shift of power from men to women. Today, the Great Recession has turned what was an evolutionary shift into a revolutionary one. The consequence will be not only a mortal blow to the ultimate macho Men’s Club called ‘global finance’ and ‘free-market capitalism’ that defined the post-Victorian world order, and ultimately got the world into the current economic catastrophe; it will be a collective crisis for millions and millions of working men around the globe.  How will this shift to the post-macho world unfold?  And what will be its legacy in the world of 21st century capitalism and the global economy..??  Foreign Policy magazine’s  July/Auguest summer issue has an interesting and insightful analysis of this phenomena that students of global affairs will find compelling — at the least, intriguing. 

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The death throes of macho are easy to find if you know where to look. Consider, to start, the almost unbelievably disproportionate impact that the current crisis is having on men—so much so that the recession is now known to some economists and the more plugged-in corners of the blogosphere as the “he-cession.” More than 80 percent of job losses in the United States since November have fallen on men, according to the U.S. Bureau of Labor Statistics. And the numbers are broadly similar in Europe, adding up to about 7 million more out-of-work men than before the recession just in the United States and Europe as economic sectors traditionally dominated by men (construction and heavy manufacturing) decline further and faster than those traditionally dominated by women (public-sector employment, healthcare, and education). All told, by the end of 2009, the global recession is expected to put as many as 28 million men out of work worldwide.  

Of course, macho is a state of mind, not just a question of employment status. And as men get hit harder in the he-cession, they’re even less well-equipped to deal with the profound and long-term psychic costs of job loss. According to the American Journal of Public Health, “the financial strain of unemployment” has significantly more consequences on the mental health of men than on that of women. In other words, be prepared for a lot of unhappy guys out there—with all the negative consequences that implies.

Good Riddance
Why macho had to go.
By Valerie Hudson

The Rise of Women

Things will only get worse for men as the recession adds to the pain globalization was already causing. Between 28 and 42 million more jobs in the United States are at risk for outsourcing, Princeton economist Alan Blinder estimates. Worse still, men are falling even further behind in acquiring the educational credentials necessary for success in the knowledge-based economies that will rule the post-recession world. Soon, there will be three female college graduates for every two males in the United States, and a similarly uneven outlook in the rest of the developed world.

As the crisis unfolds, it will increasingly play out in the realm of power politics. Consider the electoral responses to this global catastrophe that are starting to take shape. When Iceland’s economy imploded, the country’s voters did what no country has done before: Not only did they throw out the all-male elite who oversaw the making of the crisis, they named the world’s first openly lesbian leader as their prime minister. It was, said Halla Tomasdottir, the female head of one of Iceland’s few remaining solvent banks, a perfectly reasonable response to the “penis competition” of male-dominated investment banking. “Ninety-nine percent went to the same school, they drive the same cars, they wear the same suits and they have the same attitudes. They got us into this situation—and they had a lot of fun doing it,” Tomasdottir complained to Der Spiegel. Soon after, tiny, debt-ridden Lithuania took a similar course, electing its first woman president: an experienced economist with a black belt in karate named Dalia Grybauskaite. On the day she won, Vilnius’s leading newspaper bannered this headline: “Lithuania has decided: The country is to be saved by a woman.”

Although not all countries will respond by throwing the male bums out, the backlash is real—and it is global. The great shift of power from males to females is likely to be dramatically accelerated by the economic crisis, as more people realize that the aggressive, risk-seeking behavior that has enabled men to entrench their power—the cult of macho—has now proven destructive and unsustainable in a globalized world.

Indeed, it’s now fair to say that the most enduring legacy of the Great Recession will not be the death of Wall Street. It will not be the death of finance. And it will not be the death of capitalism. These ideas and institutions will live on. What will not survive is macho. And the choice men will have to make, whether to accept or fight this new fact of history, will have seismic effects for all of humanity—women as well as men.  What this all means is that the problem of macho run amok and excessively compensated is now giving way to macho unemployed and undirected—a different but possibly just as destructive phenomenon. Long periods of unemployment are a strong predictor of heavy drinking, especially for men ages 27 to 35, a study in Social Science & Medicine found last year. And the macho losers of globalization can forget about marrying: “Among the workers who disproportionately see their jobs moving overseas or disappearing into computer chips,” says sociologist Andrew Cherlin, “we’ll see fewer young adults who think they can marry.” So the disciplining effects of marriage for young men will continue to fade.

Surly, lonely, and hard-drinking men, who feel as though they have been rendered historically obsolete, and who long for lost identities of macho, are already common in ravaged post-industrial landscapes across the world, from America’s Rust Belt to the post-Soviet wreckage of Vladimir Putin’s Russia to the megalopolises of the Middle East. If this recession has any staying power, and most believe it does, the massive psychic trauma will spread like an inkblot.

How will this shift to the post-macho world unfold? That depends on the choices men make, and they only have two.  Read more here.

Corporate Bait & Switch..??

Bait and Switch: The futile pursuit of the ‘American Dream’                     By Barbara Ehrenreich (Henry Holt & Co., 2005)

Barbara Ehrenreich, the bestselling author of ‘Nickel and Dimed,’ goes back undercover — this time in a white collar Corporate gig — to expose to America’s ailing middle and upper-class the ephemeral realities and often predatory nature of achieving the ‘American Dream.’  As Ehrenreich uncovers through her qualitative as well as quantitative research, America’s middle class is now the most vulnerable and in-crisis sector of the U.S. economy. The problem with this is that this group has historically been the engine — the economic driver — of the American economy.  And with the advent of the current financial and global economic crises, the vulnerability of this foundation of, and centrality to, the economy is crumbling. . . And the damage is accelerating. Bait and Switch is ultimately about the crumbling of the ‘American Dream’ where the promise and pursuit of upward socio-economic mobility and financial security has given way to the harsh, violent reality  of unchecked competition and capitalism with little social support for newly disposable workers — and their families — and no assurances about the future for those who are fortunate enough to still have a ‘good paying’ corporate career.

The book highlights the people who’ve done everything “right” — college degrees, often ivy-educated, developed marketable skills, with impressive track-records — yet, they’ve become repeatedly vulnerable to the seemingly never-ending string of Wall Street scandals, economic  “crises,” eviscerating mergers & acquisitions, and your basic business cycle. Further, today’s globally competitive corporations take pride in shedding their “surplus” employees (i.e., downsizing) or by increasing corporate profit margins by shipping technology and call center jobs overseas into lower labor cost markets like India or the Philippines where they don’t have to pay for healthcare,  retirement or vacation benefits for workers.  Inevitably, this plunges white collar employees into months or even years at a stretch into the twilight zone of white-collar unemployment where a job search itself becomes a full-time occupation.

In her earlier book, a New York Times bestseller, Nickel and Dimed, Ehrenreich explored the lives of the working poor and other low-waged workers.  Now, in Bait and Switch, she enters another hidden realm of the American labor market: the shadowy world of America’s white-collar unemployed.  Armed with a new identity and a plausible curriculum vitae of a professional in transition, she attempts to land a good paying middle-class gig.  In the process she undergoes “outplacement” counseling, executive career coaching and personality testing — measures all too common in the upper echelon of corporate job placement process — then trawling a series of “career fairs,” corporate boot camps, networking events and evangelical job-search ministries — popular with the large established churches in / around Wall Street and in the midtown business district  She gets an image makeover to prepare for the corporate world and works to project the winning attitude recommended for a successful job search.  She is proselytized, scammed by executive “head hunters,” lectured, but rejected over and over.

Real Clear Markets

RealClearMarkets, a sister site of RealClearPolitics, and is among my favorite sites while on the go or in a hurry for a one-stop-shop solution for Market-related news, analysis, commentary and insights.  RealClearMarkets collects and publishes content from across the political & ideological spectrum dealing with the major topics and issues in the worlds of business, finance, global economics and political economy. From the Financial Times (FT) to Forbes, from the Wall Street Journal to the blogsite, Infectious Greed, RealClearMarkets allows you to peruse and dissect information from your favorite blogs, news channels, journals, think tanks, magazines, and online publications, all in a daily, easy-to-read format.

URL:  www.realclearmarkets.com

G-8 nations to confront global economic and bevy of regional crises.

The global economic crisis and finding agreement on the regulatory framework to confront it; regional crises such as stabilizing Afghanistan, the Democracy movement riots by ethnic Chinese muslims in Guadong province; the repression of opposition protesters following the Iranian elections; the never-ending quest for Middle-East peace; food safety and security; policy struggles surrounding climate change and the emission of greenhouse gases, and WTO deregulation of world trade are the main issues with which the world’s leading nations will be confronted at the G-8 2009 Summit of major industrialized nations. The summit is taking place in L’Aquila, Italy later this week (8-10 July). Silvio Berlusconi, the Italian PM in the midst of a very public divorce and sex scandal, will Chair the event.  As Chair of the event, he has set on the agenda global economic crisis, climate change, and the economic integration of Africa in world affairs as his top priorities.  Although protesters have announced plans to be present, it will be relatively subdued. The effort will have neither the presence, nor the impact of the London G-20 protest movement.

G-8 Ministers

 Foremost on the L’Aquila G-8 Summit agenda is the necessity to find consensus among G-8  members on defining common international financial regulatory policy; finding agreement on banking & financial industry ethical and legal standards; new international rules governing the transparency, propriety and integrity of Global Markets and  international capital flows; and setting common Central Bank rules for global economic and financial activity as the world struggles to recover from the global economic crisis precipitated on Wall Street.  President Obama and PM Berlusconi, during private 15 June meetings two weeks ago, collaborated on the agenda for the then upcoming G8 Summit point-by-point. “We want this G8 to reach concrete solutions,” said PM Berlusconi, after the meeting at the White House. They focused in particular on rules and principles for confronting the global economic crisis.  In addition, China’s premier just last week called for an open debate about a global reserve currency at the G-8 Summit as an alternative to the U.S. dollar. Although these issues were addressed during the London G-20 Summit, these issues are given more import in this summit because the G-8 is composed of the seven wealthiest nations in the world. The G-7, plus Russia makes up the G-8 group of nations. Russia was voted in as a strategic matter following the fall of the Soviet Union. In addition, the presidents of the European Union, and large emerging economies called the G-5 — Brazil, China, India, Mexico and South Africa – as well as Egypt representing Arab and Islamic interests — are included in discussions. 

Perhaps the second highest priority on the agenda, voiced by PM Berlusconi, is the hope that the eight major countries’ meeting in L’Aquila will impart a renewed sense of urgency and importance to resuscitating the stalled World Trade Organization (WTO) negotiations — known as the Doha Round. The WTO’s goal in the Doha Round of trade negotiations is to eliminate trade barriers (tariffs) in all Global Markets under one agreement.  However, despite several rounds of negotiations, the failure of the Doha Round is the result of the unwillingness of the major Western  industrialized nations to end protectionist practices — such as providing generous government subsidies or tariff support — in their domestic markets (e.g., agricultural and textile sectors); while at the same time requiring emerging market nations to end theirs. 

The third, but perhaps most pressing, issue on the agenda is a unified response to regional crises  – perhaps economic sanctions — such as the political repression in Iran following the Islamic republic’s recent presidential elections. However, this will be complicated by off-the-record reports from diplomatic circles in New York that under President Obama’s new policy of engagement with Iran, the U.S. will oppose sanctions against Iran.  Summit officials are predicting pointed debates between the leaders of the industrialized nations over an appropriate response to Iranian authorities’ repression of reformist demonstrations in Iran led by opposition leader, Mir Hossein Mousavi amidst rumors that the U.S. might oppose sanctions against Iran. In addition, just this past Friday, G-8 foreign ministers — meeting separately in Rome and in advance of the Leaders meeting this week — strongly condemned North Korea for its nuclear testing, recent long-range rocket launch, and their testing of short-range rockets in the Sea of Japan saying in a draft statement that the actions threatened regional peace.

Global Emissions

 Also on the agenda is the sensitive topic of climate change, greenhouse gases and global carbon emissions trading regimes, like the so-called ‘Cap & Trade’ legislation currently being debated in  the U.S. Senate. This is particularly important since all eight member nations account for an overwhelming portion of dangerous greenhouse gas and carbon emissions in the atmosphere worldwide (See world carbon emissions by nation here).  What’s more, is that depsite the shift in U.S. policy on climate change currently being worked out, the Europeans still have concerns that the U.S. and China — the two largest global polluters — will strike an accommodation with each other effectively gutting recent moves forward in this area.  Read more about G-8 2007 climate change consensus here, and here. 

In addition to the formal agenda, PM Berlusconi in recent interviews with the international media has also stressed the need to re-think the nature and structure of the G-8. The aim is to make it more representative and more efficient through the stable and structured involvement of the emerging economies (China, India, Brazil, Mexico and South Africa), along with Egypt to represent the Arab, Muslim and African world.  Nicolas Sarkozy, the French president publicly supported that position during an annual Franco-Italian summit in Rome earlier this Spring.  

Is Cap & Trade the market-based answer to reduce greenhouse gases..??

Americans are a stubborn lot.  We resist change and even the most minor of inconveniences.  And I suspect the newly emerging ‘Cap & Trade’  schemes under the American Clean Energy & Security Act — also known as the Waxman-Markey bill — just passed in the House, and now being hotly debated in the Senate, will be no different.  Cap & Trade is an environmental and energy-use policy tool that has delivered impressive results in other industrialized developed nations (See carbon emissions chart below) by mandating an annual global cap on emissions while providing market-based tools, resources and flexibility in how to comply. Successful Cap & Trade programs reward innovation, efficiency, and early action and, ideally, provide strict environmental accountability without inhibiting economic growth.  Examples of successful cap and trade programs include the nationwide Acid Rain Program and the regional NO_x Budget Trading Program in the Northeast. Additionally, the Environmental Protection Agency (EPA) issued the Clean Air Interstate Rule (CAIR) in March  2005, during the Bush administration, to build on the success of these programs and achieve significant additional emission reductions.

The concept of tradable carbon allowances for manufacturers, governments and corporation, though new to Americans, is not unfamiliar in most other developed nations, where carbon trade has proven successful.  The idea is that manufacturers, corporations and governments — the largest end-users of carbon based energy — are allocated a fixed number of carbon units for the purchase of energy and fuel, but which can also be traded on an open market.  All these entities receive an equal allocation initially, but those who use less can sell their excess credits to those who want or need more in a regulated Market.  All this takes place in a framework where the total number of units is capped and regulated.  And the economic principles for the consumption and utility of these carbon credits that will drive this newly emerging Cap & Trade Market is what I referred to earlier as ‘Carbonomics.’

But even more radically, with carbon trading by governments and corporations proving successful, and  in order to reduce the ‘carbon footprint’ of individuals, in Britain they are now considering a personal carbon trading scheme that will give everyone a free, equal allowance of carbon units, which can be exchanged for carbon-dependent consumption credits and usage — say for oil, gas or electricity — or, it can be traded in a market, but whose overall goal is to drive carbon use down, ergo driving down exigent consequences such as global warming, air pollution and carbon-based energy dependence. The concept was first proposed in the mid 1990s, when it was largely ignored — and I was guilty of this — as utopian fantasy and untenable in ‘the real world.’  But it is now being taken seriously by the British, China and So. Korea, among others. In addition, there is a potential for a global carbon trading market, in which more efficient nations could trade credits with other less efficient countries, lending credence to the emergence of promising new frontiers.

2002 Carbon Emissions by Nation (Source: Oakridge National Labratory CO2 Emissions 2002)

If you’re interested about learning more about this topic, the Center for American Progress – a think-tank dedicated to improving the lives of Americans through progressive ideas and action for a strong, just and free America — has written an excellent primer on the topic titled: Cap & Trade 101. You can download a PDF version of that document here.

Read more about the ‘Ins & Outs of Cap & Trade’ here.

FAQs about the U.S. Climate bill here, courtesy the Miami Herald.