Save the banks or the world?

26 11 2008

bailout-spending-inequit1

The Institute for Policy Studies has produced a report that contrasts the levels of spending on the economic collapse with those directed to climate change and international development. Obviously, the financial sector received trillions more. It is completely stupid, climate change has the potential to seriously threaten the lives of many people and the existence of species across the world, including developed countries. Priorities need to change now and fast.

“The world is facing multiple crises. In the United States and Europe, the financial crisis has now spread to the “real economy,” causing mass layoffs and dire predictions of more to come. In the developing world, many countries were already reeling from a food crisis — even before the financial crisis went global. Increased grain prices cost poorer economies $324 billion last year. And this food crisis is not yet over. While world prices for some products have declined in recent months, declines in the values of most developing world currencies have kept the cost of food in the stratosphere for the world’s poorest. And on top of the financial and food crises, the world faces a climate crisis that threatens the very future of the planet.”

Financial Sector

“The key components of the U.S. financial sector bailout amount to $1.3 trillion, while the European financial sector bailouts amount to $2.8 trillion. Combined, they add up to approximately $4.1 trillion in commitments. And while officials have attempted to assure taxpayers that they will recoup some of these funds eventually, the ultimate cost to federal budget is entirely unknown.”

Development

“The $4.1 trillion that U.S. and European governments have committed to support struggling banks and other financial institutions is more than 45 times the $90.7 billion they spent on development aid last year.”

“Many advocates for the poor have justifiably criticized current aid policies. ActionAid, for example, reports that some 86 percent of U.S. foreign assistance is so ineffective in fighting poverty that they call it “phantom aid.” This international development group charges that much of U.S. aid supports geostrategic interests (e.g., Pakistan and Colombia), rather than poverty reduction. The U.S. government also continues to tie some aid to purchases of U.S. goods and services, which benefits U.S. corporations but lengthens delivery time and raises costs.”

Climate change

“The UN Framework Convention on Climate Change (UNFCCC), the international body that negotiates global climate deals, has put the incremental price tag of moving to a low carbon economy at $200 billion to $210 billion above today’s investments in greenhouse gas mitigation per year. It estimates that about half of that will be needed in developing countries. In addition, the United Nations Development Program calls for another $86 billion each year to help communities in the developing world deal with the impacts of global warming that is already “locked-in”…U.S. and European governments appear to be a penny wise but a pound foolish when it comes to climate finance. Total European new and additional funding commitments for a variety of climate-related bilateral and multilateral efforts over the next several years add up to only $13.1 billion, and very little of this has been disbursed. The U.S. government has not yet approved a single dollar for these initiatives.”

Check the report out at ips-dc.org.

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