Note: In this piece, I take a break from my usual topic of the green economy to discuss the current financial crisis. I'll be back with commentary on green issues soon.--MM

How bad is the economy? According to some well respected financiers, it is in its worst shape since the Great Depression. That was the judgment of George Soros in a recent article. And at Goldman Sachs' annual meeting yesterday, CEO Lloyd Blankfein echoed other Wall Street leaders in calling it the worst economy in 55 years. The consensus on Wall Street is that the travails of the financial markets denote a weak-even cataclysmic economy.

But at yesterday's Goldman meeting, Blankfein also successfully defended his $68.5 million compensation in 2007 to shareholders. And, asked his opinion of the future, he hazarded that the financial turmoil may be almost over and that the economy should resume expanding in the fourth quarter. Another Great Depresssion? Thankfully, no. What we have seen is the collapse of an asset bubble that enriched a limited swath of the population over the last eight years. Those able to benefit from global liquidity made fortunes and some have had to give them back. But current financial market turmoil is not synonymous with the real strength and weakness of the US economy. The strength is that of the American people and the weakness is the stressed state of the middle class.

The source of the recent financial crisis--the inability of sub-prime borrowers to make monthly payments- has its roots in middle class stress. The sub-prime lending boom helped push home ownership from about 65% of American households to about 70%. This last 5%, what might be termed, if flipped around, the 30 to 35% percentile of American households, proved unable to make monthly payments. The conventional wisdom is that they deserve their fate-for taking out no doc loans or choosing to walk away from houses once their equity disappeared. The fact that incomes for the lower four quintiles of Americans have been flat or declining in real terms for years, that sub-prime borrowers typically must pay double digit interest rates in contrast to their well heeled counterparts and that budgets are being devoured by rising health care and gas costs has gone ignored.

Indeed, when one looks at proposed solutions to the housing crisis, conspicuously absent are provisions to strengthen the middle class. The housing bill passed by the Senate yesterday contains billions in funds for home builders and money to demolish housing to reflate prices, but not one provision to raise the after tax incomes of American families..

NDN has highlighted a series of specific ways to rebuild the American middle class from putting a laptop in every backback to strengthening our ideas based economy to reforming health care. Investment in new clean technologies promises to restore American technology leadership while updating environmental standards has the potential to create millions of new green collar jobs. It can be done! During the 1990s, income inequality began to decline thanks to the positive influence of Clinton era policies only to expand as a result of the Bush tax cuts and related measures.

The recent unprecedented activities of the Fed-designed to stem the financial crisis-may indeed be ushering in a new era of Fed activism. While they have an emergency quality, reform of our financial architecture is needed to keep pace with changes in financial markets. However, the Fed's actions and reform at the Fed will not address the problem at the root of the recent crisis-the growing financial stress experienced by America's working families. As Paul Krugman has tirelessly observed but as others have refused to acknowledge, the Gini index of inequality and numerous academic studies unequivocally show the gulf between the wealthiest Americans and every one else increasing at an alarming rate. The next president and Congress must deal with this issue.

At the end of the day, even a stratum as light as that of hedge fund managers and private equity managers cannot comfortably exist astride a financially stressed nation. America must reacquaint itself with the real source of strength in our economy, not the financial markets per se but the economic health of the working families who undergird it.

NDN has been talking about the great transformation underway in the United States and across the globe. One new challenge that poses great risks but also great opportunity is climate change. How the United States and the world adapt to this challenge may well define the Century. Indeed, with oil trading at over $110 per barrel, the clean technologies and policies implemented to create the post carbon economy may well represent the greatest business opportunity of the coming Century.

In Europe, a cap and trade system for carbon emissions has already created a multi billion dollar market in carbon credits. That market may soon expand to include the United States. On the technology front, the next generation of electric cars and other technologies such as carbon capture, solar power, wind power and bio fuels may prove transformative. Venture Capitalist John Doerr has called green technology the biggest investment opportunity of his lifetime, bigger even than the Internet. Al Gore says it’s vital to saving the planet. But is all the hype justified? Or is clean technology potentially another bubble?

Learn the answer to these important questions on Wednesday, April 16 in New York City, when NDN Green Project Director Michael Moynihan, hosts a panel with leading clean technology experts entitled “Understanding the Cleantech Investment Opportunity.” It will feature Peter C. Fusaro, Chairman and Founder of Global Change Associates, best selling author of What Went Wrong at Enron and perhaps the world’s leading expert on clean technology funds and well known analyst, David Kurzman, Senior Vice President of the Clean Technology Research Group at Panel Intelligence, LLC. The panel will get to the heart of the green technology issue from an investment perspective and discuss what policy approaches to climate change including cap and trade, a carbon tax, tax, the solar tax credit and other investment incentives.

NDN’s Green Project is working to answer these and other questions and develop a legislative, regulatory and advocacy framework to address climate change, move toward energy independence, and accelerate the development of new technologies to promote economic growth.

For background reading, check out Michael's original NDN paper on public investment in infrastructure and his recent blogging on green issues.

Event Details:
Wednesday, April 16th
12:00pm
Regency Hotel, Regency Room
540 Park Avenue
New York, NY
Click here to RSVP

Check out what Simon wants the next President to do on day one:

I sent the following letter to President Bush today:

Dear President Bush,

Today your Administration announced that tomorrow you intend to send to Congress implementing legislation for the U.S.-Colombia Free Trade Agreement. Your Administration has not done what is required to pass this important agreement. If you send it tomorrow it will surely fail, undermining a staunch American ally in a troubled region, and weakening nascent bi-partisan efforts to find a new economic strategy that responds to the recession, shores up our financial markets and once again makes globalization work for all Americans.

In the weeks ahead you will surely blame Congress for not passing the Colombia Free Trade Agreement. But make no mistake - if this agreement fails the fault will be yours, and the nation will be able to add gross mismanagement of our global trade portfolio and a more unstable Latin America to your already terribly disappointing economic and national security legacy.

I call on you to put our national interest over your political party's interest, work with Congress to find a path forward on this Colombia Free Trade Agreement and introduce it when more work has been done to ensure its passage.

Given the warnings from Congressional leaders that the time was not right to introduce this important agreement, and given the stakes involved for our economy and our hemisphere, there can only be one plausible explanation for why you have chosen this reckless path now - the tens of thousands of votes of Colombian-Americans in South Florida. Out of respect for our close ally Colombia, and in recognition of the significant strides President Uribe has made in recent years, it is simply irresponsible to let this important agreement collapse out of hope for a political advantage in a pivotal Presidential state this fall.

I wish I could discern a more noble motive behind your decision, but given that Congressional leaders have told you the Agreement will fail if introduced, then your present course ensures that you will damage our ability to find a better path forward for our struggling economy and the interests of working people here and abroad; damage future efforts to liberalize global trade; undermine one of our most important allies in Latin America; and weaken our already diminished standing in the region. There can only be one explanation for why you have chosen this course - once again you have chosen your party's interest over the interests of the nation itself.

The people of both the United States of America and the nation of Colombia deserve better.

Statement from Senate Majority Leader Harry Reid on the Colombia Free Trade Agreement:

April 7, 2008

Reid: President's Colombia Free Trade Proposal A Continuation Of Failed Policies

Washington, DC—Senate Majority Leader Harry Reid made the following statement today in response to President Bush’s proposed Colombia Free Trade Agreement:

“President Bush has made numerous bad decisions during his Administration that have already cost countless American workers their jobs and have done profound harm to U.S. foreign policy – harm that will take years for the next President to undo. By sending up the Colombia FTA legislation under circumstances that maximize the chances it will fail, he will be adding one more mistake to his legacy and one more mess for the next President to clean up.

“There is strong support for Colombia in the U.S. Congress, evidenced by the fact that Colombia is the largest recipient of U.S. aid money in the hemisphere. Many in Congress have tremendous respect for the progress that President Uribe has been able to make under difficult circumstances. It is a major mistake, however, to set up the Colombia FTA legislation as the proxy for support for Colombia, as the Bush Administration is trying to do.

“An FTA is not a foreign-aid package. It is neither a favor for friendly governments, nor a substitute for sensible and sustained foreign-policy engagement in the hemisphere. An FTA is an essentially permanent economic integration agreement. Many Democrats continue to have serious concerns about an agreement that creates the highest level of economic integration with a country where workers and their families are routinely murdered and subjected to violence and intimidation for seeking to exercise their most basic economic rights. And the perpetrators of the violence have near total impunity.

“The Government of Colombia has undoubtedly made progress on this front, but the level of violence against trade unionists is still the worst in the world. Further, as Rep. George Miller has said, serious questions need to be addressed about the Government of Colombia’s sustained commitment to this effort. By sending up the FTA before these concerns have been fully addressed, President Bush is significantly undercutting support for the FTA.

“Further, the President’s decision to act unilaterally in sending the FTA disregards three decades of established precedent under fast-track legislation, and demonstrates yet again his lack of respect for Congress. The Colombia FTA will have enough problems purely on its merits; President Bush will exacerbate those problems by sending up the FTA in this manner. And by thumbing his nose at the basic processes that underlie Congress’ willingness to extend fast-track authority to a President, President Bush is dealing a serious blow to U.S. trade policy for years to come.

“If President Bush really believes that successful passage of the Colombia FTA is critical for U.S. foreign policy in Latin America, it is difficult to understand why he would send the FTA up under circumstances of his own creation that maximize the controversy associated with it. While it is understandable that a lame-duck Administration wants to notch accomplishments in its final year in office, I am very concerned that this short-term focus will leave long-term problems for U.S. foreign policy and U.S. trade policy.”

We at NDN have been promoting a new book called Futurecast: How Superpowers, Populations, and Globalization Will Change the Way You Live and Work. The author of that insightful book, Robert J. Shapiro, who is Chair of NDN's Globalization Initiative, recently spoke on some of the themes discussed in Futurecast at our March 12th Forum. Check it out below, and be sure to order his book while you watch. Head's up: the video is about 43 minutes long.

Be sure to pick up your copy of Futurecast: How Superpowers, Populations, and Globalization Will Change the Way You Live and Work, the new book by Dr. Rob Shapiro, Chair of NDN's Globalization Initiative. Our copies just arrived! If you're going to be in San Francisco, CA on April 10, you're welcome to attend our Schwartz Forum where Simon and Rob will discuss Futurecast.