What shall be the correct medicine to cure the various problems that jeopardize our present world and the quality of life of future generations on a finite planet?
MANY QUESTIONS THAT ARE ON THE TABLE SINCE OVER HUNDRED YEARS BACK AND GET RUSTY.
1) Which way is going to our world? Millions Jobless – Injustices – Crimes Suffering – Revenge – Wars – How many more millennia we need to resolve our human understanding? What Politicians and Religions stand for?
2) Injustices are the traditional cancer of Humanity of all times, with all its pains, revenge and wars – shall we take the opportunity of all the knowledge and experience gained up to the third millennium to resolve all united “all for one and one for all” to wipe out this inauspicious mankind devil function that face brothers against brothers?
3) Do we are lacking of qualified responsible Politicians?
4) There is a limit to Intelligent Growth?
5) What shall be the right interest in Capital Investments?
6) Can we eliminate lobbyist abstract philosophy from Political Science?
7) Can we reduce or eliminate the Climate Crisis as soon as possible? We have sufficient technologies to get rid of all past solutions.
8) The Gross Domestic Product (GDP) is it a correct means to define our Growth? Where even Politics’ negative expenses, costs inflation, and Taxes inflate the GDP?
9) Shall be correct to limit World Population Growth referring to World Country Areas, Production, and Consume?
10) What shall be the correct cure to reduce Global Unemployment? Do it needs an International brainstorming intervention of wise people?
11) What shall be the correct application on the Cost of Politics? No remuneration or a final recognition at the end of the service?
12) Do we have to stop further developments of Artificial Brain Machines that reduce employments and indirectly increase the cost of living?
13) Do we need a Global World Organization to guide single Nations to the respect of intelligent solutions to save our world from collapsing?
14) Why not re-establish the death sentence for inhuman behavior? For Bipedal bullying and Tyrannical human animals?
15) What is the meaning (UNO) United Nations Organization? A wisdom Cooperation between World Nations or fattening the chickens?
16) Do we need an International Organization Control on the correct application of Justice? To reduce or eliminate suffering, revenge, and wars?
17) Do we need to think about ways to adjust to a new, exciting, and more sustainable world with more qualified Politicians guided by a United World Centre of Wisdom and Scientific Social knowledge application?
18) If debts are the cause of the World Economical Crisis (named the problem), then more debts are unlikely to be the solution. Just a hint: reduce expenditure on armaments and Politicians’ peculiar remuneration to increase sustainable projects for universal friendship.
19) Do we need to create a Global Centre of information and suitable actions Giving Voice to citizens of the world to reduce spreading of injustices, suffering, revenge, and wars, to the benefit of few smarty-pants protected by Devil International Organizations?
20) What about Paedophilia, do we need to resolve that great problem or shall wait until it reaches the 99,9% like the Climate Change that has affected very badly the human health and the environment, and to marry Lord Pollution with Sir Gay for a new bipedal generation of zombies guiding to the end?
21) Are you one of the world fifty super billionaires which guide the world to the disorder, or one of the seven billion puppets that pray and hope uselessly for a new human world? Action required in place of prayers.
22) Easy money 400/500 US$ per year to maintain a Computer communication line connected to the Internet, considering two billion Active Computer in the world, plus the cost of the Computer and relative Electric consumes.
23) Growth policies in some Western Countries become a sort of game to speculate on solutions to increase costs and prices of the life to feed the Gross Domestic Product without consideration on Costs Improvements and to maintain the human capital at work to reduce the growth of poverty with indirect higher costs?
24) A possible solution to stop the World from degrading: electing unqualified zombie to a key position like the one that promoted the devastating globalization with serious consequences for many years to come, and the man still barking against President Donald Trump that is trying to reset the international situation.
25) The authors of the Pandemics CoronaVirus shall/will be executed or eventually promoted to a higher level of harming to produce an extra profit?
26) The World needs to double the United Nations Organization (UNO), one for the State Governments Membership and one for the Citizens of the world, to appeal and pretend Justice for Human Rights application and the right to live with dignity.
27) Since its birth Humanity depends mainly and incorrectly on traditional speculative systems imposed by smartypants focused on personal interests of no help to resolve world problems that need sane minds able to interconnect the teaching principles of wisdom hinted long time ago by Marx, Henkel, Seneca, and Capitalism, the most important function for developments and create works. Topics of primary importance suggested by People aiming to perfection the human thought for the Universal Social Unification left to rust up without even trying to solve the continuous huge problems that afflict world situations since many centuries back.
28) Globalization does not mean to centralize world production in a Country or Area of major speculation to increase Western Countries’ servant titbit remuneration but to spread globally scientific, technological, and social knowledge in virtue that each Country can produce its own needs to satisfy employment and a better quality of life.
29) Human enemies at work. Do we really need to develop the G5 in communications? Considering the additional consequences to human health and the fact we are sufficiently well served by the present G4?
30) Do you agree that we need a World Organization able to intervene as a boss to take action against square heads that pretend to be free to act as they please against their own citizens and threatening overall peace?
31) In many world Countries the Genuine Progress Indicator (GPI) or the Human Development Index (HDI) result flat (Zero), while the Gross Domestic Product (GDP) is manipulated by Governments adding high incomes from Injustices, Taxes, Costs Inflation, inflated Remunerations and mass Import of foreign production as it was domestic products.
32) In some European Countries, the Gross Domestic Product (GDP) is supported exclusively by Injustices that maintain the Judicial apparatus of Courts, Judges, Lawyers, and the Police organization to the service of the Power. Can we say: “what a beautiful world of shit” or not yet?
33) The Author has stopped purposely the infinite questions and problems that jeopardize mankind present and future world Governance for respect to the man “Jesus” that has been crucified at the age of 33 years old trying alone to guide humanity with empty hands, no bombs, no missile, for the reciprocal respect one the others and the poor man ended on the cross, but today we have no excuses in joining all together taking the opportunity of the United Nation Organization for a real change.
CONCLUSION ABSTRACT: Of course, each one of the above question mark has more that one solution depending on the general level of preparation on the basic function of the proponent, with competency and ethics on problem solving: without the damned participation of Politicians, which means maintaining the tradition, because at school they learned that problems can be solved exclusively on encreasing Taxes and reducing social services, but to come out from the crisis that one follow the other, generated by unqualify Politicians, first of all we shall innovate the traditional concept focusing on the following important functions: Social, Human, Scientifics, Economics, Technology, Mathematics, Equity, Ethics, Efficiency, Consciously and Cost Improvement of Politics, on short and long terms where the Capital investment is the dominant Function and where Growth shall be limited to innovative developments focused to correct some of present extravagant Projects that in place to improve the quality of life has directed the world to the crisis.
SOLUTIONS ABSTRACT: Change gear reducing the Growth speed and approve Projects focused only on innovative solutions of important Projects to save the waste of money and also from damaging the human health and the environment, with an eye to increasing the employment of the Human Capital.
CAPITALS ABSTRACT: ROI on Loan interests belong to the past. The Capital speculation is dead, and to produce profits, Capitals shall participate directly to Project Development focused on innovative technologies formulated on Project Saving and promoting jobs. Dormant Capitals standing on Banks for over a determined period shall be penalized to produce works.
PROJECTS PROPOSAL SUMMARY: Energy is the world main function of survival in the present world, either Economics, Industrial, Commercial, Healthy, and Environmental. The present Project proposal refers to exploiting a new free and pure Natural Primary Energy, suitable to generate a continuous power with remarkable advantages:- Pure – Endless day and night – Available free costs in Nature: To generate cheap and clean Electric Power to any requested extend, away from negative Hydro Carbon, Nuclear, Wind, and Solar Plants with imposed inefficient solutions by unconscious Lobbyist.
The Project foresees the construction of medium and large industrial engines operated exclusively by natural means, to be connected to suitable Electric Generators, to Water Pumps, to Air Pumps, for continuous operation, or arranged to any request of cheap industrial power as per example: Construction of Desalinating Sea Water Plants producing drinking water for homes, agriculture, industry, Purifying Rescue Water, Heating systems, providing additional clean Power for Cars, Power all branches of the Industry, Road lights, Hospitals, Armed and Marine Force, etc., and crank progress towards a cheaper cost of living, improving living condition for developed countries, as well as for million human beings in precarious conditions, without water and the essential human services.
Energy represents over 25% of World costs from the employment of the prime material to the finished product, of all products necessary to mankind to live and in ten years we shall eliminate all Nation debts and crank our lives for a new start.
TOP GEAR THE PROJECT: I am looking for finance to create an International Corporation or a Company Group to back the Project Development and share internationally the outcomes of the above trend. (firstname.lastname@example.org) – (email@example.com).
PROJECT AVAILABILITY: for all free Countries where the cost and condition of Politicians are equal to country workers without additional privileges.
Further: Also the pension scheme and health facilities shall be equal to any citizen of the State and more: all Politicians shall also be subjected to the respect of the Law like any citizen of the Country where ethics is the main function to occupy the position at the service of the Nation with fast judgments to be shown the door on the spot with an additional penalty.
COMMENTS ARE WELCOME.
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It’s Time to Rethink Growth and the Implications for Sustainable Investing. Excellent general abstract from Glenn Silverman, CFA.
We live on a finite planet with finite resources, where continued economic growth is no longer sustainable. As such, we need to rethink how we define growth. As financial professionals and stewards of our clients’ capital, we need to take a more balanced approach to invest―one that focuses both on sustainable capitalism and on sustainable growth.
Financial markets and industry commentators are obsessed with the notion of growth.
The idea is that if we don’t grow our economies, we somehow stagnate, we “rust,” and as a result, our stature in the world is diminished. Yet as Jeremy Grantham, chief investment strategist at Boston-based GMO, states: “Rapid growth is not ours by divine right; it is not even mathematically possible over a sustained period.”
Australian environmentalist and businessman Paul Gilding have an excellent book on the subject titled The Great Disruption: Why the Climate Crisis Will Bring on the End of Shopping and the Birth of a New World.
Part of his argument is that we have a system design error:
You cannot have infinite growth on a finite planet. Not ‘should not’, or ‘better not’, but cannot.”2 Growth may thus prove more difficult to achieve than many think; cheap fossil fuel is inarguably something from the past, and debt levels in many critical areas of the global economy are at record highs.
So, why do we have this fixation on growth?
Is growth the “be all and end all” and the panacea to all the world’s woes? We are told by governments and their central bankers that if the world can only get (massive) growth going, all will be resolved. Surely, this can’t be so. What lessons did we learn from the global financial crisis of 2007–2008?
The Great Recession, as it is now known, so shocked world leaders that they implemented numerous measures to try to deal with the consequences. In the process, we added lots of acronyms and phrases to the financial lexicon―quantitative easing (QE), Operation Twist, long-term refinancing operations (LTROs), the European Financial Stabilisation Mechanism (ESFM), and more.
Each of these measures was launched with great fanfare and greeted with rapturous applause by the markets as being the ultimate solution to the growth problems afflicting the world’s biggest economies. These programs have now morphed into even more extreme measures and language. At Investment Solutions, we refer to them as the “nuclear options,” words that suggest we will do whatever it takes! Desperate measures for desperate times, indeed.
At the root of the problem is how we define growth. The most common and widely accepted measure is GDP (gross domestic product). But this is a flawed measure in many respects because it focuses entirely on the income statement instead of on the balance sheet, adds expenditure to the growth numbers (whether those numbers are savings or funded by debt), and ignores many other important measures, such as quality, equality, and happiness.
GDP figures are also boosted by increases in government spending, even though one could cogently argue that this spending is, in fact, a tax on the economy and hence could be seen as a reduction in the growth of the producing part of the economy rather than an addition.
A number of other growth measures are available, including the Genuine Progress Indicator (GPI), the UN’s Human Development Index (HDI), the Organisation for Economic Co-operation and Development’s Better Life Index, and the Happy Planet Index. Why should GDP and its measure of growth be the official standard or only measure of growth? And how does GDP account for the damage to the capital account, the environment, and the fabric of our society through the evident inequalities that characterize the current system?
With a world population of about 7 billion people, forecasted to grow to 9 billion by 2050, the challenges we face are unprecedented. We can bury our collective heads in the sand, but the problems, unfortunately, won’t go away. The status quo is clearly unsustainable, and the cracks are starting to appear more frequently.
“Are we approaching a tipping point? If not now, then when?
These are all critical questions for anyone with a longer-term investment horizon (or with children, for that matter)”.
To my mind, economics has never been murkier. Anyone who says he can, with any degree of certainty, explain why the global financial crisis happened, what its true underlying causes were, which solutions were the correct medicine, and what their long-term consequences will be should be regarded with some suspicion.
“I believe that our single-minded pursuit of growth at all costs has been at the root of much of what now afflicts the world”.
Have the measures I outlined earlier saved the world? Or have they simply postponed the inevitable―maintaining the old system that has been shown to be increasingly flawed (a system design error) and increasingly held together with “Band-Aids” (cheap money)?
As investment professionals, we need to take a far more balanced approach, one that focuses both on sustainable capitalism3 and sustainable growth. Although this idea resonates with many people who support it intellectually, few actually embrace it or act on their convictions.
There are many reasons why this may be the case. For one, it’s hard to overcome apathy and powerful vested interests. Many people argue that math or science or economics is not absolutely clear, or it’s simply just too darn hard. Others ask: “How can I, as an individual, make a difference, anyway?”
Whatever the reason, it is indisputable that the Great Recession and its aftermath are still with us―millions of people who were retrenched remain unemployed, hundreds of smaller banks have closed down in the United States and elsewhere, and we have zero interest rate policies (ZIRP) in most of the West and in Japan (now in its second decade, and with no end in sight).
Moreover, many government balance sheets are in a shocking state. As Chris Hart, chief strategist at Investment Solutions has said: “If the debt was the cause of the problem, then more debt is unlikely to be the solution!”.
Clearly, debt is a huge issue, and in a world of deleveraging, achieving any (non-debt driven) growth, let alone strong growth, in the West or Japan seems highly improbable.
The more likely outcome in these regions is increased taxation (both in terms of percentages and what is taxed), more regulation and government interference, various forms of financial repression (e.g., exchange controls, prescribed assets, etc.), increasingly creative accounting methods (with their associated new acronyms), manipulation of rates and markets (both increasingly transparent and visible), and other dubious actions. With financial repression, a term coined in the 1970s, again upon us, the investment implications can simply no longer be ignored.
Another issue that cannot be ignored is demographics. Japan and Europe, and soon China, have rapidly aging populations. And in many areas of the world, there are staggering levels of jobless youth. Corporate productivity gains, which resulted in massive retrenchments globally, have some nasty spin-offs.
Moreover, the welfare state, especially in Europe, is increasingly under threat. Government promises regarding entitlement programs are no longer affordable. There will be defaults, either the official kind―the less likely option―or through inflation, as the debt numbers and the associated central bank responses are simply too large, in the opinion of many, to allow for a more sanguine outcome.
We thus have a very interesting and challenging decade or two ahead of us. Much of what we have simply taken for granted will be or will need to be challenged. In a world of zero short-term interest rates (and promises by the likes of the U.S. Federal Reserve to keep it that way for years to come), with the “safe haven” government bond yields already forced lower through the various QE programs and trading below both current and future expected inflation levels, the fixed-income market is unattractive.
With this backdrop, it would be up to either growth assets, such as equity or real estate, or the alternative asset classes to provide acceptable market returns going forward. However, considering that governments and central bankers have spent an estimated $10 trillion or so (combined with a massive rally from the early 2009 lows in equity, real estate, corporate bonds, and commodities) and the fact that earnings (and even a few indices) have already surpassed their 2007–08 peaks, some word of caution is required.
We recommend focusing on three key themes, namely, quality/solvency, yield, and growth. Stocks, which had a very poor first decade from the start of the 2000s, are typically beneficiaries of financial repression, and there is a cogent argument for a great rotation out of bonds and back into equities.
Today, the markets appear to be as calm as a lake.
The enormous firepower of the Fed, the European Central Bank, the Bank of Japan, and the People’s Bank of China has been brought to bear on the problem. Will it be enough? Will the current euphoria be maintained? Will sustainable growth be reactivated? More likely, though, the cycle that we have increasingly encountered will continue to play out, with growth likely remaining elusive, volatility once again rearing its ugly head and more solutions than being introduced.
To paraphrase market commentator John Mauldin, we are in the endgame, just not yet at the end.
Growth, as currently structured and practiced, is problematic and not a panacea to the world’s woes. In fact, growth is more likely to accentuate some of the excesses. The current system is increasingly being challenged, and importantly, the issues are manifesting on our watch. We need to think about ways to adjust to a new, exciting, and more sustainable world. The challenges, as well as the opportunities, abound.
Many commentators talk of the return of inflation; the bolder talk of hyperinflation. This may already be evident in asset classes, if not necessarily in the official Consumer Price Index data (i.e., consumer goods inflation).
So, why is the whole concept of sustainability important for individual investors? And why should financial advisers care? As Herbert Stein, chairman of the Council of Economic Advisers under Presidents Richard Nixon and Gerald Ford taught us, an unsustainable trend will not be sustained. (His so-called Stein’s law has different wording, but one popular version is “things that can’t go on forever don’t.”)
As financial professionals, many of us have the memory of the dotcom bubble (which popped spectacularly in 2000–2001) and the U.S. housing crisis to serve as reminders that if we invest in something that is unsustainable, there is a high risk we will lose some of our capital.
In the case of the tech bubble, the NASDAQ lost about 75% of its value from its peak, and more than half of the companies that were listed went out of business. When the U.S. housing bubble burst, house prices dropped more than 40% over a five-year period. A focus on sustainability should lead to lower risk, but many studies point to higher returns, too.
The concept of sustainable investing is thus not simply an idea that is nice to have; it has real-life implications. As such, you and your clients may benefit from a greater focus on the topic.
1 Jeremy Grantham, “Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever, ”GMO Quarterly Letter (April 2011): http://articles.businessinsider.com/2011-04-30/markets/30051518_1_price-declines-essay-rise.
3 Generation Investment Management, “Sustainable Capitalism” (15 February 2012): http://www.generationim.com/media/pdf-generation-sustainable-capitalism-v1.pdf.
4 Chris Hart, communication with the author.
5 John Mauldin and Jonathan Tepper, Endgame: The End of the Debt Supercycle and How It Changes Everything (Hoboken, NJ: John Wiley & Sons, 2011): http://www.amazon.com/Endgame-Debt-Supercycle-Changes-Everything/dp/1118004574.
- Portfolio Management
- Environmental, Social, and Governance (ESG) Investing and Faith-Based Finance
- Environmental Investing
- Social Investing
- Private Wealth Management
Glenn Silverman, CFA, is chief investment officer at Investment Solutions. He heads an investment team in South Africa and the United Kingdom that covers all major local and global asset classes. Mr. Silverman will be speaking at the 66th CFA Institute Annual Conference in Singapore.