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MONDAY, NOVEMBER 23, 2009
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 OPINION 
3

Climate, Financial Crises Two Sides of One Coin

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(Newser) – The key issue behind both the global economic and climate crises is exactly the same: “mispricing risk,” Thomas L. Friedman writes in the New York Times. “We have been mispricing risk in both arenas,” he contends, “producing a huge excess of both toxic assets and toxic air that now threatens the stability of the whole planet.” Only “smart regulation and carbon taxation can heal both.”

The issues are connected, Friedman writes. “We built more and more stores in America to sell more and more stuff, which was made in more and more Chinese factories powered by more and more coal that earned more and more dollars to buy more and more US T-bills.” Sure, this was a “powerful engine of wealth creation,” but with an unacceptable result: Companies ended up “privatizing their gains and socializing their losses.”

Coal is piled beside a coal-burning electrical plant.
Coal is piled beside a coal-burning electrical plant.   (AP Photo)
Protestors march near London Bridge during the G20 protests.
Protestors march near London Bridge during the G20 protests.   (AP Photo)
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Just as A.I.G. sold insurance derivatives at prices that did not reflect the real costs and the real risks of massive defaults, oil companies, coal companies and electric utilities today are selling energy products at prices that do not reflect the real costs.
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3 comments
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nick
Apr 1, 09 10:22 AM CDT
And waist more and more time writing about it, while offering no concrete solutions. Reply
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IN RESPONSE:
Robert_Dada
Apr 1, 09 4:19 PM CDT
Didn't you even read the article? New regulaton for the financial services industry and a carbon tax is detailed throughout the article.
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radnip
Apr 3, 09 3:52 AM CDT
I'm still waiting for more emphasis on savings, which would provide funds for banks to loan, instead of credit, which seems to be much riskier than savings. Reply
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