Green Options

Millions of Americans are declaring financial sustainability, even if they don’t exactly call it that. After all, we can’t borrow our way out of debt.

We’re paying down or paying off credit cards. We’re getting rid of our mortgage or putting an extra payment toward the principal balance (which has huge cost savings advantages). Or we’re practicing other frugality rules. According to data from the Federal Reserve, the amount Americans owe on consumer loans and credit cards plummeted $21.6 billion in July of 2009 – the largest monthly drop in consumer debt since the Federal Reserve started to track it in 1943. The “cash for clunkers” will, no doubt, alter the outcomes for August and September, but the trend continues to be less appetite for debt, not more.

People are working to get the bankers out of our lives, demanding that we become someone other than a “consumer.” So while the Federal government continues to re-affirm their “wise” decisions to bailout bankers and big finance, Americans are choosing to fire their credit card companies and break their “death pledge” (aka mortgage) by paying it off early. Of course, there are also many Americans who are in so far over their heads that unfortunately, personal bankruptcy and home foreclosure are the only remedy.

I am, however, focusing on those who thrive in abundance, simplicity and sustainability when it comes to community, lifestyle and, yes, financial intelligence. As my wife and I write about in ECOpreneuring, you cannot have ecological sustainability without a large degree of social and economic equity. The ECOnomy is not about “free trade” but fair trade; it’s about commerce that restores the planet, not destroys it or exploits people.

You can join these financial freedom-seekers too, by practicing financial sustainability. As most of us intuitively recognize, the best things in life are free (or close to it).

Economist, James Galbraith, on bank stress tests

The results of bank stress tests released this week, do not bear good news. The bottom line is that at  total of $75 billion needs to be raised from 10 major banks to prop them up for losses that could come from a deepening recession.

Here is a Top 4 summary of who needs what in the next six months:

• Bank of America (BAC) will have to raise $33.9 billion;
• Wells Fargo (WFC), $13.7 billion;
• GMAC (GJM), $11.5 billion; and
• Citigroup (C), $5.5 billion

The question people are asking is whether this is the worst news yet? Or whether it is news that the worst is over?

There is no easy answer. The truth is that if unemployment continues to rise, housing prices continue to fall and the economy continues to shrink, then much more money might be needed as problem bank loans could be on the rise.

The longer I am here at the Wall Street Green Trading Summit, the less this feels like anything to do with environmentalism. At some point, when does off-setting stop being feasible, and when does carbon reduction become the name of the game?

For years politician have promised affordable housing. When the market delivers it, the politicians act like it’s the bubonic plaque!

The banks have been paid after all as have massive bonuses for the very AIG employees that dragged the company down. All this with bailout money!

President Barack Obama gathered politicians and public last night to talk about how to avert the worst economic disaster in since the depression through his plan to improve health care, schools and the environment.

As ‘nationalization’ appears to be the U.S. government’s answer to saving the banking industry, the banks themselves are doing all that they can to boost shareholder confidence.

The latest news from Citibank is that they have approached the US government to agree on a new capital injection that would increase their stake in the troubled bank to about 40 per cent but prevent an outright nationalization.

Yesterday I received another email from small businesses asking for advice on where to get financing so I put together this list.  Three out of the four the resources are recycled Ecopreneurist.com posts.  I simply gathered them in one place:

How To Finance A Green Business by Leah Edwards is an excellent post that covers four potential sources of cash for green businesses: SBA loans, social-venture venture capital funds, Friends-and-Family financing and partnering with a nonprofit organization.

Recently, Leah also posted about Financing for Energy Efficiency Improvements. In that discussion she talked about how some private banks are starting to offer “green loans” for the financing of clean energy systems or energy efficiency improvements. These same banks may offer small business loans for green businesses. Community banks often favor green loans so after you read the post, if it seems like an option check with your community bank.

Rainforest Action Network has declared yesterday and today, November 15th, as national days of protest against Citibank and Bank of America for their consistent support of the coal industry and its impact on global warming.

The failure of Lehman Brothers is seen as the last straw that broke the credit market. The financial markets have been in a state of complete disarray ever since the U.S. Government allowed Lehman Brothers to file for bankruptcy on September 15th 2008 instead of intervening to save it as it had done with Bear Sterns and later with the insurance company, American International Group.