Ellen Brown writes: Economist John Kenneth Galbraith famously said, “The process by which banks create money is so simple that the mind is repelled.”  If banks can create money, why are we suffering from a “credit crunch”?  Why can’t banks create all the money they can find borrowers for?  Last fall, Congress committed an unprecedented $700 billion in taxpayer money to reversing the credit crisis, and the Federal Reserve has already fanned that into $8.5 trillion in loans and commitments.  But the bank bailout has proven to be no more than a boondoggle for a handful of lucky Wall Street banks, without getting credit flowing again.

To understand the real cause of the credit crisis and how it can be reversed, we first need to understand credit itself – what it is, where it comes from, and what the real tourniquet is that has limited its flow.  Banks actually create credit; and if private banks can do it, so could public banks or public treasuries.  The crisis is not one of “liquidity” but of “solvency.”  It has been caused, not by the banks’ inability to get credit (something they can create with accounting entries), but by their inability to meet the capital requirement imposed by the Bank for International Settlements, the private foreign head of the international banking system.  That inability, in turn, has been caused by the derivatives virus; and only a few big banks are seriously infected with it.  By bailing out these big banks, the government is actually spreading the virus by furnishing the funds for them to take over smaller regional banks.

A more effective alternative than trying to patch up the hopelessly imperiled derivatives positions of these few Wall Street banks would be to simply create another credit system with a pristine set of books.  We don’t need to fix the Wall Street disease; we can bypass the whole problem and create a new, healthy, parallel system.  A network of public banks (federal and state) could create “credit” just as private banks do now.  This credit could be extended at low interest rates to consumers and at very low interest to local governments, drastically reducing the cost of public projects by reducing the cost of funding them.

That is not a radical proposal.  It is what private banks themselves do every day. (01/24/09)
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Stephen Leahy writes: Our trees are dying. Throughout the western United States, cherished and protected forests are dying twice as fast as they did 20 years ago because of climate change, researchers reported Thursday in the journal Science.

Fire did not kill these trees, nor did some massive insect outbreak. The trees in this wide-ranging study were “undisturbed stands of old growth forests”, said Jerry Franklin, a professor of forest resources at the University of Washington and one of 11 co-authors of the report. “The data in this study is from our most stable, resilient stands of trees,” Franklin told IPS.

What this means is that the United States’ best forests are getting thinner. It is like a town where the birth rate is stable but the mortality rate for all ages doubled over the past two decades. “If that was happening in your hometown you’d become very concerned,” said Nate Stephenson, an ecologist with the U.S. Geological Survey (USGS).

This dramatic increase of in tree mortality applies to all kinds, sizes, ages and locations of trees. In the Pacific Northwest and southern British Columbia, the rate of tree death in older coniferous forests doubled in 17 years. In California, doubling mortality rates took a little longer at 25 years. For interior states it took 29 years. Mortality has increased in lock-step with rising temperatures of about 1 degree C in the last 30 years. Air pollution and ground level ozone were investigated and eliminated as the cause of the increased mortality, Stephenson told IPS.

Warmer temperatures in the west have meant the summer drought period is longer. The mountain snow pack contains less snow and melts much earlier in the spring. Warmer temperatures also favour insects like tree-damaging beetles. The combination of trees suffering moisture stress and a few more insect pests appears to be enough to tip the balance, said Tom Veblen of the University of Colorado at Boulder. “We’re seeing continental-scale evidence of warming,” Veblen said. “It is very likely tree mortality will increase further as temperatures continue to rise.”

Previous research has shown global warming is largely responsible for the enormous increase in forest fires in the west and the massive insect outbreaks like that of the mountain pine beetle, expected to kill 80 percent of the pine forest in Canada’s province of British Columbia by 2013.

Forests of all kinds contain more than 80 percent of Earth’s terrestrial biodiversity. Not only do they absorb carbon, forests produce 30 percent of the world’s oxygen. They are also a key part of the planet’s climate regulating system. About half of the world’s forests are already gone. (01/24/09)
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