Have Your Heard: An Environmental Credit Crunch is in full swing (FT Alphaville)

[Paul Donovan] The 21st century is when everything changes

Posted by Paul Donovan on Jul 26 10:55.

With government finances still dealing with the aftershocks that are rippling out of the epicentre of the financial credit crunch, the world economy could do with a period of calm in which to heal.

Unfortunately, it is not going to get it.

Globally we are in the midst of an even bigger credit crunch. The world is undergoing an environmental credit crunch, and the consequences of this for economies and markets make the financial credit crunch look positively tame.

Credit is a simple concept. Credit is just the ability to use tomorrow’s resources to raise today’s standard of living. A credit crunch is when that time travel transfer is no longer possible. The financial credit crunch stopped us leveraging off tomorrow’s income to raise today’s consumption. The environmental credit crunch is about the inability to keep consuming finite resources to raise today’s standard of living.

Those who think that the concept of an environmental credit crunch is an abstract notion or something only for the medium term are missing the point.

READ FULL POST HERE