For those who still believe that stock markets steer decisions in the most rational way, or that governments do what is necessary to control them, a look at what’s happening right now should be enough to change your mind.
In recent weeks, evidence of global warming has been piling up. And while some may point to reassuring data to prove the contrary (for example, in most European countries, the number of hectares burnt by forest fires in 2023 is currently well below what it was during the same months in the period 2006-2022 : the number of hectares burnt is down by 15% in Spain, by 21% in Italy, by 85% in Cyprus – as Nial Ferguson reminds us in his excellent latest editorial for Bloomberg), and even if temperatures in Northern Europe are sometimes below former normality levels, the facts are stubbornly obvious:
The planet is warming up. For example, on average, during the years 2019-2022 (compared to the 1950s), there were 2.7 times as many days with a mid-afternoon temperature above 30 degrees in Athens; 3.7 times as many in Barcelona; 8.1 times as many in Paris; and even 10.4 times as many in London. Thousands of other scientific data support this observation, in particular for ocean temperatures, on which the cycle of all life on our planet directly depends, and which are rising at a rate far exceeding all forecasts.
One might expect that, in order to fight against global warming and all its consequences, the stock markets would take the right decisions and companies would invest massively in the sectors of the life economy, and in the reconversion of the sectors of the death economy. But this is not the case. The share prices of fossil fuel companies are at record highs. The production of coal, oil and gas has never been higher, and it is carried out by companies in every country, including so-called European companies. What’s more, knowing all this, investor behavior is still irrational: for example, companies would be better off settling to regions where the weather is or will be milder: this is not the case.
As a result, American businesses are currently moving to the regions of the country most threatened by the consequences of global warming, such as Florida and Texas. The American population itself is moving to places where the temperature is becoming infernal, like Arizona. More generally, companies are not even anticipating the dramatic consequences for them of the inevitable increase in insurance premiums against these catastrophes.
While all signs point to dark days ahead, the stock markets are at their highest, and the global financial crisis that will one day happen seems to have been postponed once again by the agreement of Congress and the US President to raise the public debt ceiling, and by the immense masses of capital pouring into markets where money is increasingly profitable for bond buyers, with inflation getting lower and lower; without, for the moment, hurting share prices, as simple rationality should lead us to expect. And yet, in only two months, US public debt has risen by an amount close to that of Great Britain’s total debt, and Fitch, the rating agency, has downgraded, for the first time, the world’s leading financial power, the anchor of the capitalist system, which is not AAA anymore.
Once again, political leaders are bowing to market orders. For example, the very recent meeting of G20 environment ministers in India ended with a refusal to set any limits whatsoever on global greenhouse gas emissions, which everyone now knows are suicidal in the very short term. Even worse, many countries claimed that the G20 was not the right place to talk about climate, and that the COP (which has unfortunately become an impotent farce) was enough.
As long as public opinion does not truly mobilize to ask for a massive reorientation in the use of capital, the deadly alliance between markets and governments, whether democratic or totalitarian, both obsessed with their own survival, will create more and more conditions for a tragedy for humanity. And yet, solutions do exist. They are within our reach without jeopardizing our standard of living, growth or life expectancy. Quite the contrary, in fact.
In the meantime, happy holidays…