Archive for June, 2011

The future of banks

Thursday, June 30th, 2011

People have become rightly suspicious of banks and their doings. Banks have again been the main cause of economic trouble, putting people’s wellbeing in jeopardy. Salaries and bonuses are huge as banks are milking the system without adding value. Their dealings are difficult to understand, not open to scrutiny or transparency, they move in dark places.

Banks can not be left to their own devices, and must therefore be regulated rather tightly. There is real risk that the banks’ own profit becomes more important than the profit making of the businesses they are serving.

If bank go broke they pull businesses and households down with them – if there is no system to safeguard public interest.

So the banking system must be redesigned. The running of banks, their capitalization, size, interconnectedness, ownership, geographical spread, risk control regimes including risk coverage – may be there is more – must be reconsidered and should be vastly improved.

So the list of elements to consider is long:

  • Transparency related to interconnectedness, ownership of banks
  • Adequate  capital requirements
  • Banks profitability, wage levels
  • Higher transparency related to synthetics, designed products
  • Government or other guarantees, safety nets for borrowers, lenders, minimization of damage after failure, bad banks must fail, government bailouts should be stopped, foolishness must cost investors
  • Deregulation must go for good and proper regulation regimes must be built
  • Separation of businesses – high risk, low risk, investment banking
  • Fee levels and structures
  • Evaluation of competition
  • Control of hidden or black transactions, follow-up of what goes on outside the banking system
  • Greater consciousness related to globalization, international agreements
  • Resolution systems after failure
  • Bringing banking to everyone
  • Banks in emerging markets, local versus global banks
  • Consider if regulators should play a part in the businesses of banks
  • Banks as part of a sustainable business environment
  • Overview of the flow of credit: where, who, what
  • High risk or investment banking
  • Bank sourcing – generating new money, collecting deposits, funding sources, costs of funding
  • Technology
  • Banks size – not too big to fail
  • The monetary and fiscal institutions we need
  • Single markets, local, global markets, ownership structures
  • Is there more?

Banking crises have been part of the economic system ever since money was introduced, and now there is a fantastic concentration of money with the banks and financiers, there is interconnectedness, global dealings with global consequences making the whole system liable to repeated crashes.

It has been said in the US press that 1% of the world’s people have 80% of the assets, which is totally unacceptable – and quite unnecessary. The banks play a major role in this system of greed and control of others.

We learn as we go along, but we have so far been unwilling or unable to take adequate measures or do what is right. So the process is a slow one, many more will get hurt, but hopefully good remedies – of which we of course are fully aware – will be implemented.

The future will be bright – eventually!

Until then banking will be a dirty business. The aim must be that banks should not be allowed to cause crashes in the economic system.

Hydrogen the fuel of the future

Wednesday, June 29th, 2011

Hydrogen H is the most common substance on the Earth, about 75% of the mass around us is hydrogen. It is envisaged as the energy carrier of the future, delivering energy with no emissions – almost.

It was described in 1671 by Boyle, and Henry Cavendish found it was a separate substance in 1766. Hydrogen has been central in scientific work related to atomic structure and quantum theory.

There has lately been a lot of attention involving cars, buses, even planes and submarines. There are hydrogen burning engines being developed in several places, and Reykjavik has a bus service using hydrogen as a fuel, Norway has a hydrogen highway covering part of the country. Hamburg is at present building a large hydrogen facility for its buses.

Today hydrogen is used for many industrial purposes, e.g. for chemicals like fertilizer, refined oil products (hydrocracking) and cooling, production of ammonia etc. It is very light, and thus escapes the Earth’s atmosphere. It is involved in many chemical processes, and is used in production of electronics. The production of hydrogen in the world runs into the tens of millions of tons.

The production methods now are natural gas reforming, electrolysis, biomass reforming, water splitting and bacteria. Feeding CO2 to algae make them grow very fast making large scale production of biofuels possible – and then it can be made into hydrogen.

The energy carrier hydrogen may be made from many compunds, and all substances containing hydrogen could in principle be used: oil, natural gas, coal, biomass, other renewable hydrogen sources.

The idea is to produce it small or large scale to be used in a factory or in your home. Many techniques are feasible, and a promising one is microwave plasma technology.

The aim is a low cost energy carrier that can replace fossil fuels. There are challenges of many kinds, cost is one, general infrastructure is another, but the potential is clearly there.

So get costs down, build infrastructure and we have a widely available renewable fuel to replace fossil fuels. The hydrogen economy is moving in, the oil economy is moving out. The future is hydrogen!

The future of history – the endpoint of our world

Sunday, June 19th, 2011

History is a description of what we have done, what happened. History is always tinged with peoples´ opinion, inclusions/exclusions, preferences, interpretation and must be seen in the light of present circumstances. History may change over time. What elements we include in history or see as important also determine the history we see.

So speculating about the future and what the endpoint of history will be is not easy, it could be part of an exercise in planning, of choosing a contemporary path to serve us well as regards our own future.

The driving forces are often strong and beyond our control. Part of it may be found in culture, technology, the environment, ethics, agendas of nations/organizations/people, religion and discoveries. Strong personal qualities and activities may also influence the course of history.

The basis for future developments is found in many places: science, politics, human needs, conflicts of various kinds and environmental change including natural catastrophes or trends. There may also be agendas unfolding as people put their thinking into practice, thus vastly influencing  what others do.

Factors talked about now is local versus global, self-government versus global control. Will there be world domination by some force – by a nation – like the Mongols, the Romans etc. -  or will a strand of thinking, an idea find its way into our lives? It could also be that China and India will emerge on the world stage and balance Western domination, even put the US in the shadows.

The future of ownership is another interesting topic – will ownership be distributed or will concentration increase? New political systems may arise – like the use of co-intelligence principles, or the opposite which could be a global government with wide powers, or will it be a mixture of many systems? Big corporations owned by financiers seeking profit is today a moving force in many areas, and if this is coupled with big government we could have a new situation developing affecting our lives.

Politics is the important method ruling our lives today, but this could change as politicians are are appearing more and more unreliable and unable, or if common pool resource management becomes common. Markets are the norm for most things today, but this could change if new practical solutions are found for production and distribution of things that today are sold in markets. Candidates could be medicines, limited resources of many kinds, commodities.

The rule of law is the basis for most sensible states today and this will probably continue in the future, even be strengthened. An individualistic culture is seen today and this could change too as people become socially more responsible.

New kinds of societies are hard to fathom today, but changes in the past have been big and new entrants may be found.

Technology will be important – the chemical world will grow, new understanding will be found about our minds and bodies, the digital world will continue to change our lives radically and make possible a host of technologies, including positive and negative activities.

The practice of foresight and planning should increase in many areas – but humans have always had a tendency to act after the fact. The biggest challenge is maybe increased distribution of knowledge and of  science so that people can help themselves.

So – pure speculation is what this is – we all live in the present and do what we must do – we do not plan history´s development – or are there people out there with agendas that they work hard to carry through over the years? If this is so it is scary and it would have been nice to know!

Damage is done by our present methods

Sunday, June 19th, 2011

People are being left out, many are no longer needed. Our material goals have been fulfilled to such an extent that we can make do with fewer and fewer people – efficiency is great, supply is rich, prices are low, everybody have been happy for a long while. But now we have to start thinking about what the future system shall be – what kind of societies we really want.

This is a harsh statement: we are in deep trouble – already. The huge forces of greed and technology is carrying us in the wrong direction. Humans are becoming dehumanized, societies suffer.

It is all too easy and soon the only activity we will have is to consume mass produced goods from large scale factories all over the world. The food we eat is produced by large scale industry all over the world. And it must go on and on, because there must be growth for ever. Distribution systems move goods back and forth in a huge setup called logistics. Your own work is like that too or will be – large scale. Unchecked we will have a catastrophe on our hands.

Ownership is in the hands of large scale investors. Everything is gradually becoming large scale and in the hands of a few. 1% of the people own 80% of all values. Big money are being made, but only by some, The rest is managing reasonably or worse. To many are in the latter category. It is all very efficient, cheap, exciting, entertaining: we all do it – we are consumers.

But the strain is showing in many ways: resources depletion, finance system weaknesses and perhaps most telling: Seen from a people view this can not go on. We are starting to suffer. We are losing ourselves, this can surely not be the ultimate goal for humanity.

People who are no longer needed become lost, they lose their respectability, they have economic troubles, social relations suffer, they become restless, they make trouble. They start roaming, from rural areas to cities, from poor countries to rich ones. The economic refugee is a reality.

So the system must be changed. Local communities and local production must be rebuilt, the real costs of what we do must be put into the calculations: transport, environment, human degradation, resource depletion, social losses. We must have new arrangements of ownership with sharing and fair distribution of wealth and profits among all participants, local influence on all companies, introduction of measures to establish small scale agriculture, industry and services. The use of capital should be reduced and the use of manpower should be increased. Global thinking without checks is good only for profits, humans are becoming mere tools or wage earning slaves.

The ethics should be brushed up so that we see what we really are doing. The greed, rough competition should be given a milder form so that all people can thrive. Harsh business practices should end. We should also look into what we make and consume, start thinking long term about what is sensible.

This is not a detailed future world view, but the signs are on the wall – we must start the transition into something better – a humanized future for all – long before people become desperate.

We can all do our little part in this big change that must come.