The financial crisis: the lobbying that got in the way of preventing it from getting this far. Three years ago a group of Republicans signed a letter stating:

“If effective regulatory reform legislation … is not enacted this year, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole.”

At the start, Republicans were in favour of the legislation, while Democrats were against. The mortgage giant Freddie Mac employed a firm to lobby several Republicans to change their minds so that the legislation would be defeated. Why is it that no one at Freddie Mac realized things would come to this? Things will probably get ugly for these foresightless executives now, as scapegoats are sought and governments grasp at anything to help them maintain their popularity as the economy seizes up. The lobbyist said plainly that the if the legislation went through, it might hurt the housing boom. Wasn’t it obvious that a housing boom powered by shaky mortgages given to people who can barely make ends meet, a boom that was responsible for such a disproportionate much money and credit circulating in the economy, might not be the best thing to encourage anyway? Meanwhile, factories in China are shutting in staggering numbers, particularly toy factories.

“Labor costs have gone up 70 to 100 percent in the last three or four years. But these guys have not been able to raise their prices because Toys “R” Us, Home Depot and Wal-Mart are saying no price increase. How is that possible?”

For years, there were too many factories competing to win bids
from foreign buyers demanding prices that were often unrealistically low. The winners were American and European consumers, who enjoyed rock-bottom prices.

But many factories were scrimping on materials and stiffing their suppliers just to survive, Xie said. The financial crisis will be the final culling factor that forces many wobbly factories to go belly up and end an unsustainable situation, he added.

Already, China’s toy industry is hurting. The official Xinhua News Agency reported this week that 3,631 toy exporters —
52.7 percent of the industry’s enterprises — went out of business in 2008. The causes: higher production costs, wage increases for workers and the rising value of the yuan, the report said.

Go check out Kunstler’s blog if you want someone to imagine for you where this all leads. China seems to see these factory closures as working with their plan to move these simpler industries inland while concentrating the most modern, high tech manufacturing on the coasts. The truth is clearly that the global economy has become so complex, that nobody really can say where this will all end or how it all played out even once it’s played out.

Another unsustainable situation quite possibly: According to executive director of the Saskatchewan Trucking Association, more than 90% of the products sold in Saskatchewan are moved by truck. This is causing problems now, heading into Christmas, because three oil refineries in the region are shut down (2) or running at reduced capacity (1) and there’s a diesel shortage. Just another reason why we should be using rail more and trucks less. I’ve got a career trucker and a career railroader in my immediate family (the railroading actually goes back a couple generations), so I know the impact of what I’m saying, and still it must be said. Rail requires diesel too, but the nature of rail (running coast to coast and across national and provincial borders) means the rail companies have more options to deal with problems like this, whereas localized trucking companies or contract truckers are a lot more limited in what they can do to deal with the situation. Everywhere most of our economy has moved away from localized production and more and more towards using trucks to transport goods long distances. Just-in-time delivery until trucks can’t get diesel, I guess. As long as it’s not grocery store shelves going empty…

Finally, less than a week after the Canadian federal election, our Prime Minister is promising $100 million to poor nations to help them deal with climate change. I wonder when that Green Plan is going to be implemented? I assume Harper has only adaptation in mind for this donation. It’s pretty entertaining to read the comments, which seem to swing from “There is no climate change, what a waste of money,” to “Why is Harper donated this paltry sum while doing nothing about our high per capita greenhouse gas emissions?”