Two recent articles with related themes caught my eye. They are important for anyone who manages money, either professionally or for themselves. Together, they may just indicate a turning point in the debate on what might be the response to anthropogenic global warming.
The first, from former Treasury Secretary and Goldman Sachs Chief Executive Officer Hank Paulson, was headlined “The Coming Climate Crash.” In it, Paulson observes: “There is a time for weighing evidence and a time for acting. And if there’s one thing I’ve learned throughout my work in finance, government and conservation, it is to act before problems become too big to manage.”
That posture comes from the rational wing of the Republican Party, an ever-decreasing niche. Despite the best efforts of the extremists, there are still some Republicans who believe in science. Many of these folks (regardless of their faith) do not think that the Bible was the literal word of God, and that humans were given a brain for a reason, namely, to think, to reason, to make judgments based on scientific evidence.
Paulson goes even further, drawing parallels between the recent financial crisis and a brewing environmental one in the near future:
For too many years, we failed to rein in the excesses building up in the nation’s financial markets. When the credit bubble burst in 2008, the damage was devastating. Millions suffered. Many still do.
We’re making the same mistake today with climate change. We’re staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing more urgent as the risks go unchecked.
This is a crisis we can’t afford to ignore. I feel as if I’m watching as we fly in slow motion on a collision course toward a giant mountain. We can see the crash coming, and yet we’re sitting on our hands rather than altering course.
The politics of global warming are not where my interest lay. (See “Profit From Global Warning or Get Left Behind.”) I am far more interested in your cognitive biases and how they manifest themselves in your investment portfolios. Continues here