Preparing for Global Financial Crisis 3 – Building Financial Resilience

“It was the best of times, it was the worst of times..”

So begins Charles Dickens’ famous novel ‘A Tale of Two Cities’. It is an apt metaphor for our times.

The richest one hundredth of one per cent have never gotten so rich so fast. The rest of us haven’t been so thoroughly screwed over since 1929 and there is more to come. The good news is that people are now sensing that the emperor is indeed naked and new ways of doing commerce are not only being talked about, they are actually working. More-over we are seeing a shift in perception as significant perhaps as that which followed Martin Luther nailing his thesis to that big old door at the local Cathedral in Wittenberg (about which read more in my book)! The following video provides some background.

Money and Life

 

In my previous posts I touched briefly on how the current financial system has become de-linked from the real economy to the extent that it is now predatory upon it. We explored what I term ‘Biblical capitalism’ as an alternative capitalist model, and looked at what we can learn from those groups that have best weathered the GFC – the Amish, and the Islamic banking sector. It is now time to cast the net wider.

How are people surviving the GFC and what is working in practice?

In researching this question I found four things that are working stupendously well.  They are local time limited currency, community exchange systems, worker take-overs of factories, and the free economy.

Local time limited currency

One of the strangest experiences I had following a long bushwalk (5 days) was handing some cash over a counter and getting stuff in return. It felt unreal. The food I got was real. But after five days immersed in nature the bit of plastic impregnated paper I handed over seem unreal – ephemeral, disconnected. Something someone just made up – because money is just made up. Banks create it out of nothing and so can we.

In the 1930’s German mines and towns were threatened with closure and starvation for lack of available currency. With hyperinflation any currency they did get devalued so quickly it was barely worth getting. Faced with the imminent collapse of their businesses and communities local authorities and companies simply issued their own currency. The currencies they issued were time limited to prevent hoarding and were used as tender for certain goods or within defined communities. Their communities, factories and mines kept going, and public works flourished until local currencies were stamped out by the central bank in the early 1930’s. It is worth reflecting that if the German central bank had encouraged this innovation Hitler might be a footnote to the successful history of the Weimar Republic and WWII in Europe might not have happened (see further here: http://www.guardian.co.uk/commentisfree/2009/jan/20/george-monbiot-recession-currencies).

Well, the Europeans are at it again. In towns across France and Southern Europe local currencies are being issued and are once again rescuing local economies. After all, the productive capacity of those communities hasn’t changed; all that has is the movement of computer code on distant servers representing something that doesn’t exist, owned by people who don’t care, controlled by people who don’t contribute.

Note however that local currencies work best as a compliment to the national currency, and like all currencies, there needs to be a match-up between the amount in circulation and the value of the goods and services traded. For a discussion of local currencies in Europe see here: http://www.cafebabel.co.uk/politics/article/alternative-local-currencies-in-europe-money-must-be-funny.html

 

For a bit of a clue about where the 'real' currency is going see below:

 

 

 

 

 

 

 

 

 

 

Community Exchange Systems

A community exchange system is essentially a tally system where goods and services are exchanged by members of the system and tallied on a database accessible to all members. The beauty of this system is that it works entirely outside of the money economy (although some exchanges may be tax liable). This has enormous benefits for people who have skills but little income – retirees, unemployed, and poor people in developing countries – since money is no barrier to participation. The benefit for those on fixed incomes is that they don’t have to earn the money and pay tax on it before spending it in order to buy things. You can just exchange and your money stays in your bank. That frees more money to pay down debt or to invest, or simply survive. The benefits for business are that they can reach a bigger market for their products and services. They are also seen to be good corporate citizens.

There are hundreds of CES setups (also known as LETs) worldwide. I read one estimate of USD 10Billion equivalent in trades but no one really knows. Like local currency these are also complimentary systems but are growing rapidly in reach and scope. Conceptually there is no reason why most domestic commerce could not happen this way. To gain a fuller understanding of the practical workings and philosophy of CES setups I suggest starting with their own websites. The peak one for Australia is here: http://www.communityexchange.net.au/ Note that you can join one or start your own with freeware available here: http://www.gmlets.u-net.com/zips/index.html

Worker take-overs of factories

A factory starved of funds and in debt closes. The workers occupy it, take physical control of the machinery, elect a management group, incorporate a cooperative, and keep working. This has happened in hundreds of factories in the last few years, mostly in Argentina and Brazil, but also in Greece. The thing I love about this (apart from the obvious good things) is that it makes non-sense of the traditional worker/boss, socialist/capitalist divide. You could call it ‘social capitalism’. Make no mistake - these are privately owned commercial enterprises selling products in a competitive market place. The difference is that the workers are making money for themselves and their families, not for the share profits of people in other countries. Anecdotally these arrangements have worked best in small to medium enterprises with local markets, but there is nothing wrong with that! See further: (http://www.solidarityeconomy.net/2012/07/08/argentinas-200-recovered-factories-a-new-global-trend/comment-page-1/#comment-81008/ ).
 

The freeconomy

This is the most unlikely sounding option. There is no real exchange. You join a group. You indicate the kind of stuff you do for free or give away. You do it for free or give it away. Other people do the same for you. That’s it. See further here (http://www.moneylessmanifesto.org/about-the-author/ ) OK the whole world can’t work that way but it is working very well for some things – notably hot showers (for cyclists and backpackers) and homestays. While it attracts a fair amount of derision it is growing in popularity in Britain and Ireland and is making a helpful contribution to combating real poverty. In a way it is what the Amish and countless other communities in the developing world do all the time – it’s just that it is considered radical in industrialised countries.

Doubtless new ways of cooperative commerce will evolve with time.

 

Tag Line: Mondagon, solidarity economy, freeconomy, community exchange systems, CES, LETs, GFC, global financial crisis, federal reserve, Islamic banking

 

Global Financial Crisis, Biblical Capitalism, and the case for What Works

OK so the GFC isn’t all that bad. Granted real unemployment is over 20 per cent in many countries, an entire generation have lost their life savings, hundreds of banks have collapsed, one in seven Americans is living on food stamps, bankruptcies, suicides and broken dreams stalk the land, and the social fabric is unravelling, but it could be worse. For starters the richest one per cent of North Americans have more than doubled their wealth. US Congress can still afford to spend US$300 billion plus plus on a fighter plane that doesn’t work …and then there is the historical perspective.

The last time we had a financial melt-down on this scale was 1929. Millions starved. In Germany the majority voted for a centre left government but austerity forced by the banks and by the treaty of Versailles created the conditions for extremism. In Germany, Italy and Spain it was the Nazi’s who won out. The rest is history.

What is astounding about this round of global financial rorting isn’t that it happened, or that no one has gone to jail, or that there has been no real financial reform, or that the people who created the crisis profited from it, or that the rest of us are paying. What is astounding is that there has been very little critique of system itself among the mainstream commentariate, and even less advocacy of an alternative system. After-all, three simple laws would stop these events and associated wars both now and forever. They are:

1.      ban derivative financial instruments;

2.      all contracts must be non-transferable and non-saleable to a third party; and

3.      restrict futures contracts to agricultural products (where they actually help farmers).

This is not to say that there are no other useful measures such as a Tobin tax, or that these three measures alone would stop economic bubbles or inflation – these are facts of economic life. However they would have stopped the Great Depression, World War Two in Europe, GFC 1 in the USA and GFC 2 in Europe. Oh, and the sharks haven’t finished feeding yet. GFC 3 is on its way…

On the one hand this sort of regulation would stop women dying in child birth because they can’t afford privatised medicine. On the other hand it would force speculators to make a living by actually producing something. For that reason it is not a policy option in any OECD country.

So what is the alternative? Despite the obvious and demonstrable failure of the free market / endless consumption / endless economic growth / exponential population growth model, it appears immune because there is no alternative meta narrative. Nazism is an unfortunate memory. Communism is discredited. State cronyism is facing hard limits in China, Russia and Iran. Social democracies in which the State distributes some of the wealth and provides for social goods like education and health care have fared the best. This has been Australia's story but it is hardly an 'ism' and we remain exposed through a free trade policy, high levels of foreign ownership and a floating currency.

 

Environmentalism sounds the alarm but you have to look a long way to find a comprehensive alternative global economic model or transition strategy. The Other Economic Summit (TOES) was an attempt at this. So is the moneyless economy. The anti-globalist movement has much to say but sometimes forgets that capitalism isn’t just an evil conspiracy – its’ how normal people actually behave. Trade is good and there is simply nothing wrong with a person who has two cows selling one and buying a bull.

 

The current system has failed because the monetary economy became de-linked from the real economy. When you have a fractional reserve lending system that allows banks to lend ten times what is deposited with them, and then a shadow financial system based on derivative contracts which is over twenty times bigger than the money system (some estimates go as high as 100 times), you have an inverted pyramid with the real economy at the bottom dwarfed by the imaginary economy of obscure financial instruments at the top. Inverted pyramids are inherently unstable and so the current monetary system has proved to be.

Those with an eye to what works have noticed two groups/sectors that have both weathered the storm with equanimity and prospered. They are the Islamic banking sector and the Amish, and lesser known groups that adopt similar principles.

These groups come with their own baggage of course. This includes misogyny, patriarchy, homophobia, harsh conformity and anti-intellectualism. OK, so headscarves, unrestrained fecundity and literal six day creationism may not be your thing, but can we learn something from these people? Is there a case for Biblical capitalism? I think there is. I intend to explore this in my next post.

Note: any irony you detected in this post was intentional.

 

Tag Line: GFC, Global Financial Crisis, Islamic Banking, Amish, Amish Banking, The Other Economic Summit TOES, EU Financial Crisis, Moneyless Manifesto, self reliance, self sufficiency

GFC, Islamic Banking, and the Next War

 

 

“Allow me to issue a nation’s currency and I care not who makes its laws”  Rothschild

 

In my previous post I wrote about Biblical capitalism but noted that the church never developed a clear set of financial rules. Islam however, claiming as it does to offer a ‘whole of society’ alternative, has in the last few decades become much more engaged.

 

Islamic Banking

A couple of thousand years after the Hebrew prophets did their thing Mohamed appropriated the Old Testament for his own purposes and expanded on a number of financial themes. However it wasn’t until the 1970’s that Islamic economic scholars began to develop a hard set of financial rules which became the Islamic banking sector. That sector continues to flourish. There are several keys to this flourishing.

1.      Islamic banks don’t deal in derivative instruments so were relatively fire-walled from the GFC.

2.      They are culturally more risk averse – excessive risk taking being seen as immoral.

3.      They deal in actual property. An Islamic bank will not lend at interest so you can buy a car. However they will buy the car and re-sell it to you at a higher price to be paid by fixed instalments over an agreed period.

4.      ‘Interest’ is paid through fixed instalment contracts so there is no variable rate of interest. There are pro’s and con’s to this arrangement but it does create stability.

5.      Islamic banks tend to be better capitalised.

 

The extent to which Islamic banks are fundamentally different from conventional banking remains controversial (see for example: https://openknowledge.worldbank.org/bitstream/handle/10986/3929/WPS5446.pdf?sequence=1). They key differences appear to be a focus on real assets, greater capitalisation, stable ‘interest’ payments, and an aversion to dealing in derivatives. One doesn’t have to be a Koranic scholar to realise that this makes sense if you want to generate real economic activity rather than speculative gains. Islamic banks still only hold one per cent of global financial assets but they are experiencing double digit growth rather than seeking public bailouts.

 

Ironically a good deal of fiscal conservatism was legislated by the Western Powers after the Second World War. Keynes recommended fire-walling different parts of the economy so that if one part went down it wouldn’t bring down the economy as a whole. This basic approach to finance led to a raft of regulation which has been steadily dismantled since the 1980’s with predictable, and predicted, results.

 

An alternative approach?

What would the world look like if the global financial system was run on principles inherent in Biblical/Islamic capitalism? Or if religious terminology freaks you out, what if we returned to common sense?

 

With few exceptions only real goods or services would be traded, and those agreements could not themselves be traded. In other words:

·      there would be no currency speculation. Goods and services could be traded in different currencies and those currencies exchanged, but currency itself could not be bought, exchanged or traded

·      all interest rates would essentially be fixed

·      all lending would be backed by hard assets

·      there would be no bond market beyond the initial purchase of a bond

·      there would be no futures market beyond the initial futures contract

·      there would be no market in packaged financial products

·      communities would generate their own credit based solely on the tangible wealth of that community

 

Would the world really be worse off?

 

Admittedly there would be some inefficiencies and inconveniences for some people.

 

Especially these people: (http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggest-financial-scandal-yet-20130425)

 

Oh, and these people: (http://www.rollingstone.com/politics/news/the-last-mystery-of-the-financial-crisis-20130619?link=mostpopular4)

 

Speculators couldn’t make a living solely out of speculation. Economic activity would slow and economic growth might take a downward turn in some areas. This would be extremely irritating for a lot of people. There would be a lot of bleating about ‘freedom’ and ‘development’.

 

On the other hand the GFC is pretty inconvenient too. So was the crash of 1929 which, as I mentioned in my previous post, led to the Second World War in Europe. In this context we might let history be our guide and consider for example how many Germans died of starvation before, during and after WWII.

 

Let’s mention the war

WWII ended the British Empire, devastated much of Eurasia, brought America to the ascendancy, led in time to the creation of a multitude of independent states and associated conflicts, and ushered in the Cold War. These are not trivial issues, and if the GFC of 1929 led to war, we have to ask ourselves, could it happen again?

 

Frankly the Nazis had a point – not about Jews or invading the world, or bumping off anyone they didn’t happen to like – but about banking. Why should German people starve because of excessive risk taking by American banks and the wealthiest one per cent? No one else was prepared to stand up to the banks, tell the international community to get stuffed and re-vitalise the economy. Hitler did; and found jobs for a generation of disenfranchised and unemployed young men. There are many reasons why Hitler had a fanatical following but one of them is because there was no demonstrable alternative. OK so the Nazi’s were an aberration, but poverty always leads to war, internal or external. What alternatives do we have in our day? I don’t profess to have the answer but history and the Bible surely give us some clues, and we had better find an answer fast – nature abhors a vacuum and our current state of non-leadership is, well, vacuous.

 

Another war? In the 1920’s talk of another war was considered absurd and people (including Churchill) who warned of the coming catastrophe were considered unhinged, war mongers, or communists. Nevertheless the war happened and we were not prepared. The powers of State and corporate surveillance, propaganda and repression, are so much more sophisticated now – it would be much harder for extremist movements to succeed…but there are countries with little to lose. Indonesia has over 200 million Muslims who cannot take a massive cut in living standards and feed themselves. If we learn nothing else from the last great depression it is that when people are starving, war and political violence surely follow. That's why financial regulation matters - because its the powerful undercurrents of international finance, not the political froth on top, that really directs where we go.

 

 

 

Next post: Why Environmentalists Should Care About the Military – and why Australia is vulnerable.

 

Tag line:  Islamic banking, Biblical capitalism, GFC, Global Financial crisis, alternative economics, Keynes, financial regulation, Rothschild.

 

Biblical Capitalism, the Amish, and the GFC

        

Once upon a time people used to swap things. It was called trade. Some people were better at swapping things than others. Some people were able to make more things and store more food than others. They had more than they needed so they did more swapping, that is, they traded surplus. This was great but people wanted to be able to swap with people they might only meet once, or might never meet at all. This was made possible by a substitute from of exchange called “money”.

The creation of currency led to a great leap forward in human development. People began to trust money so much that they would give goods to someone who promised to pay them what the goods were worth plus some more, if they didn’t have to pay until later. That was called credit. If they couldn’t pay, they had to return the goods. These kinds of arrangements gradually kept getting more and more complicated. Governments started issuing sovereign bond for example, someone invented insurance, and people could invest in enterprises for a share of the profit.

As complicated as these developments became they had something in common with our very first swappers. There were two parties, an agreement, and a good or service was provided. Money was generated from surplus wealth and then re-invested. Money was simply a way of helping us honour our agreements between ourselves to exchange goods and services.

Because credit was based on the lender having a surplus it encouraged enterprise, thrift, saving, and productivity in order to generate a surplus. You either did this yourself, or you owned the means of production, such as land, slaves, serfs etc. In Biblical times this was how money was understood. The main issues of controversy were providing for the poor (through gleanings for example), allowing fair (though not always equal) wages, not extorting, respecting private property and inheritance, and not charging excessive interest or taxation. The Biblical prophets were quick to condemn what trade law today calls ‘unconscionable conduct’ with respect to the vulnerable – widows and orphans. This is what might broadly be termed ‘Biblical capitalism’. It was as fair as it could be in pre-literate societies, and it worked. The church however never established a clear set of economic rules that could give modern expression to ancient principles so things drifted along.

Now we have a fractional reserve lending system which allows private bodies to create money out of thin air and lend at interest. Agreements between two parties can be bought and sold electronically in seconds. Money and certain contracts have become tradeable commodities in themselves. In this way the financial system has become de-linked from the real economy. Money no longer serves us, the economy, or the community, we serve it - except the Amish and their Mennonite cousins don’t. 

They continue to trade and bank as they have done for three hundred years based on what they consider to be Biblical principles. None of them is spectacularly wealthy but their communities are prosperous and no one is hungry. It’s pretty simple:

·        You work hard from a young age;

·        You don’t buy stuff you don’t need (no consumerism);

·        You don’t try and keep up with anyone (no marketing propaganda);

·        You look after your family first (they are your cause and your security);

·        You generate a surplus through saving (no credit cards);

·        You use that surplus to invest in the means of production: land, plant and equipment etc. (No parties and drinking saves a lot of money);

·        You make more money;

·        You have more children;

·        You leave an inheritance (like your parents did for you, rather than having to borrow to get a start in life, then pay for your family, then fund your parent’s retirement, then fund yours);

·        You don’t owe much (because you don’t spend much), you pay what you owe fast, and to delay payment of any debt is stealing;

·        You sleep well at night and everyone goes to your funeral. Chances are you or a close friend builds your coffin.

There are now a plethora of books about the Amish, some of them quite misty eyed. I don’t think I could be Amish. I like art, music, travel and science too much, but I have to give them credit. The Amish/Mennonite have never had a financial crisis, a great depression, a war, austerity, or handed over control of their lives to the State. Banks that mostly lend to the Amish have weathered the GFC just fine. If nothing else the Amish are living proof that credit driven consumerism and highly leveraged debts are choices, not as it were, ‘acts of God’, and there are other ways of living.

On a personal note I have not used a credit card since 2001 when I had to use one to travel on our honeymoon. We are a middle income single income family. We have a home mortgage but apart from that if I can’t afford stuff I don’t buy it. We have the same television we were given in 2001 and I have never bought one. I ride the same bicycle I had when I was 17 but I am now considering electric bike options as an alternative to driving. I’m a consumer to be sure but I like to save and I hate debt…

Next post: Islamic banking

 

Tag line: GFC, Global Financial Crisis, Amish, Amish Banking, Amish Businesss, Mennonite, alternative economics, Biblical capitalism, monetarism, fractional lending, investment

On Gold

 

 

The autumn leaves are beautiful even as they fall; perfect yellow from perfect green. Is that why they call this aging ‘the golden years’?

We sat in the orchard, my son and I. Picked out by the autumn sunlight the leaves were more beautiful than gold. They lay scattered on the ground like a pirate’s treasure hoard tipped from the chest, only fragile and ephemeral.

I have seen gold in the palaces and cathedrals of Europe. The sweat of peasants stolen and immortalised in leaf on ceilings, and in angel adorned feasting trays.

Wars have been fought and people killed to gain gold – a yellow metal less appealing than these scattered autumn leaves. What fools are men! The hair on my child’s head, gold shot through with red, is the best gold yet. Long may he live while I turn grey – age an injustice no gold can allay; our comfort rather to see our children play.

Harry Potter and the Tasmanian Forestry Agreement – Lessons from Canada

It’s official – Canada has a forestry peace agreement. The agreement has been signed by 21 forest companies and nine environmental organisations. It covers 76 million hectares of publicly owned boreal forest across northern Canada. Included in the agreement is immediate cessation of logging in 29 million hectares of caribou habitat in return for a cessation of ‘divest and boycott’ campaigns by environmentalists, and a joint approach to future management. See further here: (http://www.canadianborealforestagreement.com/) and here.

 

If you thought Tasmania’s forest wars were unfortunate go to Canada. The level of conflict, violence, and sheer bloody minded devastation over decades makes one weep. It would take a wizard to fix that mess -and it did. JK Rowling (God bless her) is credited with helping tip the balance. Rowling, in part at the urging of Canadian ENGO ‘Canopy’ insisted that paper for her books come from sustainably managed forests. Her decision to print the last of her Harry Potter books in 2007 on recycled and sustainable paper sent reverberations through the publishing industry. Industry had a choice – miss out on multimillion dollar contracts for book printing and face ongoing market sanction, or get their act together. See further here: (http://canopyplanet.org/news/4/299/JK-Rowling-Accepts-Award-in-Toronto-Recognizing-Her-Role-in-Protecting-Canada-s-and-the-World-s-Forests/)

The Canadian boreal forest agreement has many parallels but there is a warning. Canada has struggled to make real headway because of lack of legislative support and because of some examples of industry failing to abide by the agreement. This has led Greenpeace and one of the prime ENGOs behind the agreement to withdraw. See here: (http://canopyplanet.org/canopy-seeks-new-path-for-boreal-forest-protection/)

What does this mean for Tasmania? Put simply it means:

a) forest agreements can happen;

b) they require good will, independent verification, and government backing;

c) they create wealth and stability;

d) they can protect the environment;

e) markets want forest products that meet specific sustainability criteria;

f) while Tasmanians have been fighting the world has moved on; and

g) the world will continue to move on whether Hodgeman wants it to or not.

Some years ago I read Gerry Adam’s autobiography. Some may remember him as the Sinn Fein leader who led the IRA to the negotiating table. Others will remember him as a terrorist. Either way his explanation for how theNorthern Ireland peace process came about was startlingly simple. He wrote simply that the people who were participants in the ‘troubles’ grew up, had kids, their kids grew up, and suddenly they didn’t want their kids getting blown up. Middle age does that. Both parties realised they couldn’t ‘win’ so they decided to talk. Tasmania’s ‘forest wars’ date from the mid-seventies. Many of the original protagonists are now grandparents. Neither side can ‘win’. If the Irish could more or less settle 300 years of conflict in which thousands have died, surely Tasmania can settle a 30-40 spat over forestry?

Much has been said and will be said about how the peace deal is all a Labor Green conspiracy. It is nothing of the sort. The forest industry approached environmental NGOs because they had run out of options. Roughly eighty percent of all the old growth (that isn’t burned on the ground or bulldozed into rows) gets turned into woodchips as the first stage in paper/cardboard manufacture. This product, for sound technical and economic reasons, cannot compete against plantation timber from New Zealand, Australia, Chile and elsewhere.

Without a market for chips it becomes hard to manage the forests for sawn timber, veneer, and special species. It is getting harder to sell those products to environmentally conscious markets without environmental certification. Certification is hard to get if green groups are running international boycotts and corporate campaigns against you. Add the GFC and a high dollar and the industry is on its knees. The last time I looked they were getting $120 tonne for woodchips and paying $4.00 royalties. No wonder Forestry Tasmania can’t record a profit. Of course Gunn’s strategic decision to get out of old growth, sell the Triabunna woodchip mill, and not pay its debts, created huge problems for the industry as well. Gunns was responding in part to green lobbying. However they were also taking a long term strategic view of markets. If the economics of old growth woodchipping were so great, why is it that no one in the industry could get finance to purchase the Triabunna mill?

And so we come back to the current agreement. Enter the Liberal Party…..

State Liberal leader Will Hodgeman has vowed to tear up the forest agreement. It appears that the Liberals inhabit a universe where, if only those pesky selfish vego left leaning greenies would get out of the way decent hard working men could make a living cutting down high conservation value forests and nothing would need to change. There is probably more truth in Harry Potter. As the Canadian experience has shown, the world has changed whether Hodgeman likes it or not. So how might this play out in the event of a Liberal victory?

Protest

A Liberal State government can be expected to enact vicious anti-protest legislation. I well remember being on the East Picton blockade in 1991when the Groom Liberal Government introduced legislation that would have sent us to prison for three years – roughly the same period of incarceration you might get for rape. Anti protest legislation may largely shut down ‘direct action’ at State level, but what direct action does occur will be more militant.

Payouts

Industry has already been paid tens of millions of your hard earned tax dollars and not a tree has been protected. They won’t be giving it back, but they won’t get any more from a Labor federal government either without a forest peace deal.

Politics

Environmentalists will press the case for world heritage listing and Federal protection of forests. There will be no rational outcome to this. A Liberal federal government (aka Eric Abetz) will reject listing on principle. A Labor federal government will do the maths in the marginals. They have hung the Tarkine out to dry to save Sid Sidebottom’s seat but they may well try and shore up green votes elsewhere by supporting another forest lock-up in Tasmania. In that event they might even splash some money around and try and buy some blue colour votes back from the Liberals.

Boycott

Local ENGOs will join hands with international organisations like Greenpeace and World Wildlife Fund to run international ‘divest and boycott’market campaigns against Tasmanian forestry. This will hurt Tasmania but the movement will have nothing to lose and nowhere else to go.

Burning

Forestry may just burn a lot more timber on the ground –unless someone decides to build a pulp mill to take the chips. Gunn’s won’t take them even for a mill so this would require a new proponent and a new approval from the Feds. Forestry could try and turn chips into chemical products or burn them for electricity. That latter option is really the wild card – the unstable element in an explosive cocktail. An Abbot Liberal government in Canberra might even be nutty enough to ‘green wash’ such a proposal.

Nothing else would galvanise or unite the green movement like burning world heritage value forests for electricity. We would see a movement betrayed with nothing to lose and nowhere to go, powerful international players, a neocon government, an industry struggling to stave off collapse, a single power plant, hundreds of miles of vulnerable power lines, ….. I would say there is potential for things to get very messy. I would rather it didn’t. Where is JK Rowling when we need her?

Tag line: Canadian boreal forest agreement, canopy JK Rowling award, JK Rowling environmental record, Tasmanian forest peace deal, Tasmanian forest agreement, Harry Potter, markets for change, divest and boycott, Canopy forest campaign, canopy publishers campaign.

Forest Peace Deal - Back to the Future Since 1989

 

 

For those with long memories, the last time industry and conservationists sat around a table and ‘talked turkey’ was in 1989 at the ‘Salamanca Talks’. They failed, in part because conservationists would not accept or legitimise the ‘clearfell and burn’ method of forestry. Both sides were overconfident. Conservationists were on a roll and imagined that they could still get Fed intervention for large scale protection of wild places. For their part the industry figured they could keep gaming the system at State level. A quarter of a century of conflict later and no one is confident. The conservationists have endured a quarter century of clearfelling in HCV forest. As predicted 20 years ago the industry is now on its knees. Without FSC certification they have limited options. One of these is to burn HCV (high conservation value) forests for electricity. See here: http://findinghomebookspace.blogspot.com.au/2013/01/burning-forests-for-electricity.html

 

The biggest and perhaps most dangerous compromise the ENGOs have made is to do what they didn’t do in 1989 – legitimise ‘clearfell and burn’ forestry. Their willingness to do so now is perhaps the most significant shift in the history of this conflict.

If contemporary forest practices are OK then rationally there is no reason why they shouldn’t be applied to HCV forest. This is what foresters have been arguing forever. On that topic see my post here: http://findinghomebookspace.blogspot.com.au/2013/04/why-foresters-are-from-mars-and-forest.html

If ENGOs accept these practices as sustainable then it will be very difficult to argue against future roll-back of reserves. Essentially ENGOs have said ‘we will legitimise what you do as long as you give us the bits we want’. This is a pragmatic approach but it may open a Pandora’s box. No wonder the green movement is split.

As a participant and observer of this conflict for the last 30 years I can say that this was a compromise forged on realism. For that reason it is likely to work. Let’s hope the political dinosaurs and naysayers of this world will end up on the wrong side of history.

Tag line: Tasmania Forest Peace Agreement, High Conservation Value Forests, forest stuardship certification, forest practices code, sustainable forestry, world heritage area, TWS, FIAT.