What Do Green IT, The Economic Crisis, And Best Selling Author, Thomas Friedman, All Have In Common? Poor Accounting.

Dougwashburn Consider the following questions posed by Thomas Friedman, New York Times columnist and author of The World Is Flat: A Brief History of the Twenty-First Century, and more recently, Hot, Flat And Crowded: Why We Need a Green Revolution - And How it Can Renew America:

“Was it an accident that Citibank, Iceland’s banks, and the ice banks of Antarctica all melted at the same time?”

“Was it an accident that Bear Sterns and the polar bears both faced extinction at the same time?”

In Friedman’s eyes, no, the recent economic and environmental woes are not accidental or coincidental. He explains that what the “great recession represents, if that what we can call this economic moment, is that both the market and Mother Nature hit wall at same time.” How? Because, according to Friedman, we’ve been using the same accounting system in both worlds that has massively under-priced risk, privatized gains, and socialized losses:

  • In the financial world, credit default swaps were sold without having adequate collateral behind them, gains were privatized to the financial institutions that sold them, and losses were socialized onto tax payers when the credits actually defaulted.
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