So far, environmentalists have been silent on economic and political calamities tied to the housing bust. One could not expect otherwise. Environmentalists may be natural conservatives, but they are not natural capitalists.
The way forward is first of all to understand the nature of the opposition, usually painted by special interests as "what the market wants".
What the implosion of credit markets reveals, in particular related to home mortgages, is that the development patterns that engaged environmentalists in futile struggles during the housing boom now in cinders was not what the market wanted so much as what could be financed.
Environmentalists don’t need to become financiers or economic experts to decode the way forward: what they do have to do is understand that the better way to provide for growth and economic development is to demand that the securitization of home mortgages should take into account all the costs to the environment.
Putting the sharp regulatory pen to America’s vast market for housing along the lines of what benefits the environment would be anathema to so-called conservatives who made fortunes during the housing boom by wringing maximum productivity from the mass marketing and efficiencies of production home building on cheap land.
On this point, though, environmentalists need to be very clear: suburban sprawl as represented by platted subdivisions far from places of work represented the biggest subsidy ever given to any industry by the federal and state government. It wraps up billion dollar bonuses to Wall Street financiers and the budgets of the US Department of Transportation. And it turns out to wrap up trillions of dollars worth of toxic debt to investors.
In recent days, the Federal Reserve has opened the spigots hoping to ease the credit crisis in the United States. But the fallout from the housing bubble and crash is not over by a long shot.
Environmentalists need to make the case to the American people that we, the taxpayers, are becoming the lenders of last resort to a failed scheme for developing the American landscape that put hundreds of thousands of communities at risk, not to mention ecosystems, species and habitats.
The scale of financial devastation is all over the news. But the devastation to the environment has scarcely been mentioned. That imbalance must be redressed.
Environmentalists--who have been shut out from Wall Street and its important business with government in creating unsustainable debt--should do exactly as foreign investors are trying to do, today, according to a New York Times report, “Calls grow for foreigners to have a say on U.S. market rules.”
“Politicians, regulators, and financial specialists outside the United States are seeking a role in the oversight of American markets, banks and rating agencies after recent problems related to subprime mortgages. Their argument is simple: The United States is exporting financial products, but losses to investors in other countries suggest that American regulators are not properly monitoring the products or alerting investors to the risks.”
The products in question, environmentalists need to understand, are trillions of dollars of mortgages pooled from a building boom defined to a large extent by subdivisions whose low prices and homogeneity are not just because they were allowed to be built in wetlands or farmland but also because they conformed to financial formulas that allowed them to be priced at a “reasonable risk” while offering higher returns, or yields, than conventional debt.
On the retail side of the mortgage equation, liar loans and mortgage fraud ruled the day. On the wholesale side, the return on investments to indifferent investors depended on deliberately omitting "external costs" like environmental impacts--or those related to civic concerns like overburdened infrastructure, traffic, schools, and water supply.
Understand that it is as much within the rights of environmentalists to demand that underlying financial instruments should be regulated and marked to risk of species and habitat loss or poor integration with surrounding infrastructure as it is for foreign investors to ask for accountability.
“Banks and investment funds from China to France suffered losses after buying mortgage-related securities and complex financial products based on them in the United States.”
It’s true. And it is also true that the US taxpayer, as the lender of last resort, has suffered massive losses to quality of life and the environment without really understanding the complaints of foreign investors is the same as theirs.
If “moralizing financial capitalism” is going to happen, as suggested by the President Nicolas Sarkozy of France—and should—then environmentalists should prepare themselves to be at the head of the line to testify to House and Senate banking committees.
It is perfectly reasonable, for instance, to ask that rating agencies be required to penalize securitized mortgage pools that include “assets”, ie. subdivisions, built on wetlands or in buffer areas for environmentally sensitive lands like the Everglades.
The French finance minister gets the last word in the New York Times article, “Once the dust has settled we will see where the different powers stand and what will be on the bargaining table.”
If environmentalists are smart, they won’t waste a minute getting to that bargaining table—and if not invited then forcing their way in, because the home building lobby will be standing with arms-crossed barring entrance the way it always has.
5 comments:
Moralizing financial capitalism...interesting.
You give the environment too much power....it is the last thing on the list..... The army corps is still pumping through those wetland permits as fast as they can...And no one cares-- See Troxler piece about 2,000 acres of wetlands destroyed. No one cares. And, even environmentalists are in favor of Nuclear Power to feed the growth machine (because it is cleaner). No one really cares.
Except you and maybe about 100 other people.
You are giving the environment a seat at an imaginary table and it just doesn't have one. Ever. It never will in our lifetime. The destruction of a major US City -- partly because of wetland destruction -- is but a blip on everyone's radar. Nothing can wake up the populace.
Economics leaves no room for the environment. Increasing Nuclear power, destroying wetlands, strip mining our water supply...will not stop. Not in our lifetime.
That is why envrironmentalists always have to frame arguments un-environmentally. The Environment has no leverage.
So enviromentalists can demand all they want the securitization of home mortgages (what does that really mean) and not one person will EVER listen, in our lifetime.
sorry -- Despair -- remember.
Sunday New York Times had an article on China, pollution and costs of growth. China had initially called for a Green GDP, growth minus the cost to the environment. It’s now too controversial since calculations would show no growth. The World Bank report on the costs of pollution is classified in China. (New York Times has a mandarin audio summary for the 100 million Chinese internet users). The concept of a green GDP, or green measure of economic activity, would be something people would get, though the methodology would be disputed, the idea could gain traction as an “indicator.” In addition to pollution from coal dust China’s water quality and desertification are cautionary tales. (as no doubt is our subprime fiasco for them as they are some of the foreign investors).
S
Although not on the exact subject your mention of streets gives me the excuse to make one of my major sore spots public. All of our governments have become followers of the Bush gang and are selling our highways, and probably our bridges too to private interests. Of course those who buy our roads do not care about us, they only want to make lots of money. And those who have already finished their purchases are showing how it is done. They all have high tolls on their highways and will raise them quite often. They also put in their contracts with our wonderful govt officials a clause preventing competition That means when a highway which is privately owned
becomes very overcrowded the Govt cannot build a competing highway within competetive (?) distance. This is going on all over the country and unless we force our elective officials to stop selling our Country to private for profit gangs we will all suffer. We must stop it NOW!
I liked your piece, but you should have discussed the way we actually build houses besides the sprawl aspect. They are made of industrially logged two by fours and OSB, treated with arsenic and formaldehyde compounds, and not likely to last longer than a couple of generations. Other specs include vinyl windows, plastic pipes, chemically saturated cabinets and carpets- it's a joke. I'm a builder, so know these things. All of this has to change.
Post a Comment