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economy
Capitalism Eating Itself by Fueling Climate Mayhem, Warns Capitalist
If humanity stays on current course, warns top insurer, the "financial sector as we know it ceases to function. And with it, capitalism as we know it ceases to be viable."
Apr 03, 2025
A veteran financial consultant and insurance executive is warning his fellow capitalists that their commitment to profits and market supremacy is endangering the economic system to which they adhere and that if corrective actions are not taken capitalism itself will soon be consumed by the financial and social costs of a planet being cooked by the burning of fossil fuels.
According to GüntherThallinger, a former top executive at Germany's branch of the consulting giant McKinsey & Company and currently a board member of Allianz SE, one of the largest insurance companies in the world, the climate crisis is on a path to destroy capitalism as we know it.
"We are fast approaching temperature levels—1.5C, 2C, 3C—where insurers will no longer be able to offer coverage for many" of the risks associated with the climate crisis, Thallinger writes in a recent post highlighted Thursday by The Guardian.
"Meanwhile in the real world—a capitalist declares that capitalism is no longer sustainable..."
With "entire regions becoming uninsurable," he continues, the soaring costs of rebuilding and the insecurity of investments "threaten the very foundation of the financial sector," which he describes as " a climate-induced credit crunch" that will reverberate across national economies and globally.
"This applies not only to housing, but to infrastructure, transportation, agriculture, and industry," he warns. "The economic value of entire regions—coastal, arid, wildfire-prone—will begin to vanish from financial ledgers. Markets will reprice rapidly and brutally. This is what a climate-driven market failure looks like."
Commenting on the Guardian's coverage of Thallinger's declaration, Dan Taylor, a senior lecturer in social and political thought at the Open University, said, "Meanwhile in the real world—a capitalist declares that capitalism is no longer sustainable..."
While climate scientists, experts, and activists for decades have issued warning after warning of the threats posed by the burning of coal, oil, and gas and humanity's consumption of products derived from fossil fuels, the insurance industry has been the arm of capitalism most attuned to the lurking dangers.
"Here go the radical leftist insurance companies again," said David Abernathy, professor of global studies at Warren Wilson College, in a caustic response to Thallinger's latest warnings.
Despite their understanding of the threat, however, the world's insurers have primarily aimed to have it both ways, participating in the carnage by continuing to insure fossil fuel projects and underwriting expansion of the industry while increasingly attempting to offset their exposure to financial losses by changing policy agreements and lobbying governments for ever-increasing protections and preferable regulatory conditions.
In the post, self-published to LinkedIn last week, Thallinger—who has over many years lobbied for a more sustainable form of capitalism and led calls for a net-zero framework for corporations and industries—warned of the growing stress put on the insurance market worldwide by extreme weather events—including storms, floods, and fires—that ultimately will undermine the ability of markets to function or governments to keep pace with the costs:
There is no way to "adapt" to temperatures beyond human tolerance. There is limited adaptation to megafires, other than not building near forests. Whole cities built on flood plains cannot simply pick up and move uphill. And as temperatures continue to rise, adaptation itself becomes economically unviable.
Once we reach 3°C of warming, the situation locks in. Atmospheric energy at this level will persist for 100+ years due to carbon cycle inertia and the absence of scalable industrial carbon removal technologies. There is no known pathway to return to pre-2°C conditions. (See: IPCC AR6, 2023; NASA Earth Observatory: "The Long-Term Warming Commitment")
At that point, risk cannot be transferred (no insurance), risk cannot be absorbed (no public capacity), and risk cannot be adapted to (physical limits exceeded). That means no more mortgages, no new real estate development, no long-term investment, no financial stability. The financial sector as we know it ceases to function. And with it, capitalism as we know it ceases to be viable.
In an interview earlier this year, Thallinger explained that failure to act on the crisis of a rapidly warming planet is not just perilous for humanity and natural systems but doesn't make sense from an economic standpoint.
"The cost of inaction is higher than the cost of transformation and adaptation," Thallinger said in February. "Extreme heat, storms, wildfires, floods, and billions in economic damage occur each year. In 2024, insured natural catastrophe losses surpassed $140 billion, marking the fifth straight year above $100 billion."
"Transitioning to a net-zero economy is not just about sustainability," he continued, "it is a financial and operational necessity to avoid a future where climate shocks outpace our ability to recover, straining governments, businesses, and households. Without decisive action, we risk crossing a threshold where adaptation is no longer possible, and the costs—human and financial—become unimaginable."
Thallinger's solution to the crisis is not to subvert the capitalist system by transitioning the world to an economic system based on shared resources, communal ownership, or a more enlightened egalitarian response. Instead, he proposes that a "reformed" capitalism is the solution, writing, "Capitalism must now solve this existential threat."
Calling for a reduction of emissions and a rapid scale-up of green energy technologies is the path forward, he argues, asking readers to understand "this is not about saving the planet," but rather "saving the conditions under which markets, finance, and civilization itself can continue to operate."
This disconnect was not lost on astute observers, including Antía Casted, a senior researcher at the Sir Michael Marmot Institute of Health Equity, who suggested concern over Thallinger's prescription.
"It would be fine if [the climate crisis] destroyed civilization and maintained capitalism," Casted noted. "They just need to find a way for capitalism to work without people."
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Gallup Gets the Headline Wrong: Trump’s Poor Scores on the Economy Are the Real Story
The more important story in Gallup’s recent findings is that Independent voters have soured on Donald Trump, with two-thirds disapproving of his economic performance.
Apr 02, 2025
As a self-confessed polling nerd, I have studied polling for decades. One of the more interesting things I have done in my life is worked as an analyst for a prominent Democratic polling firm. There is no organization with a better reputation than Gallup. Founded way back in 1935, Gallup is truly the gold standard. Their nonpartisan reputation is without question. However, Gallup has not been perfect: It predicted New York Gov. Thomas Dewey would beat President Harry Truman back in 1948 and it had Gerald Ford edging out Jimmy Carter back in 1976. Despite these misses, you could always depend on Gallup to uphold the strictest methodological ethics and, even more importantly, they would report their data without any spin. Sometimes I liked what the Gallup reported, other times I did not.
So, when Gallup released new polling data last Thursday, I eagerly clicked on the link. I was wondering if President Donald Trump’s job approval was trending up or down. The headline of the Gallup press release was “Republicans, Men Push Trump Approval Higher in Second Term.” I was perplexed by the sub-header which said “Black, Hispanic adults more approving of Trump in second term, but still disapprove of him overall.”
The point that Gallup is making is that in 2017, 22% of Hispanics approved of Trump’s job performance while now it is 37%. Similarly, Black voters are more positive about Trump now than they were in 2017 (13% vs. 22%). This is a notable trend and one that political analysts need to watch. However, Gallup is missing the bigger point that if Trump wants to make inroads in the Black and Hispanic communities, he has a lot of work to do.
The only problem for Democrats, and it is a big one, is that the party needs to come up with an economic message.
The more important story in Gallup’s findings is that Independent voters have soured on Donald Trump. Fully 61% of Independents disapprove of Trump’s job performance. Independent voters’ feelings about Trump’s job as president are intense—fully 46% strongly disapprove of his performance.
When asked about Trump’s handling of the economy, two-thirds (66%) of Independents disapprove of Trump’s performance.
CNN 2024 exit polling showed that Trump lost Independent voters by 3 percentage points to Harris (49% Harris, 46% Trump). So, if we take voters’ perceptions of Trump’s handling of the economy as a proxy for their intention to vote for the GOP 2028 presidential candidate, it is evident that Republicans have some work to do to win over Independents.
Granted, the 2028 presidential election is years away. However, next year are the midterm elections. Historically, midterm elections go against the party in the White House. Furthermore, the polling that Gallup did does not measure the impact of Trump’s tariffs that will go into effect on April 2. Even the Trump administration has admitted that the president’s economic policies will cause problems in the short-term.
All of this is good news for Democrats. The only problem for Democrats, and it is a big one, is that the party needs to come up with an economic message. They have a real opportunity to take back the economy as an issue among Independents (34% of the 2024 electorate). For all our sake, I hope the party does not miss this opportunity.
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Look Around: The Signs of a Trump Recession Are Everywhere
The latest signs from the American heartland are not encouraging. The average voter’s confidence about their economic prospects is falling quicker than at almost any other time on record.
Mar 31, 2025
Once you start looking, the signs of an American recession are everywhere.
The second-hand market is heating up, a classic pre-recession indicator. People are unloading luxury goods. Second-hand clothes apps, such as RealReal, Depop and Grailed, are filling up with designer handbags and sneakers bought during the la-la economy of the pandemic. This always happens before a crash.
You might remember that eBay boomed before the 2008 recession. People panic-sold designer handbags faster than you could say Anglo Promissory Note. Splurges always lead to sell-offs.
It looks like 2025 will be the year the pandemic chickens come home to roost. When the plague hit five years ago this week, governments closed down our economies and rather than impoverish workers who were forced to stay home, national treasuries opened the fiscal and monetary spigots. Government spending soared and interest rates were cut to negative territory. About $15 trillion (€13.85 trillion) of fiscal/monetary sweeties were doled out by the world’s richest governments to protect their stay-at-home electorates. (The governments had no choice; a great depression would have accompanied the plague.)
Investment and speculation took off in a splurge of credit, consumption and debt. As sure as night follows day, the credit cycle rolls and we are about to pay a terrible price for the emergency economics of Covid-19.
In tune with our always-on age, the coming American recession will be live-streamed on Instagram. Every small change in consumer confidence and business sentiment will be videoed, shared, commented on and thus amplified. We are witnessing the TikTok-isation of the business cycle, meaning the economic cycle – previously a slow-moving, deliberate phenomenon – will pick up pace, becoming fitful and immediate.
In the past, it took people time to realise that the economic backdrop was changing. Today, with social media and a US president who behaves more like a near-bankrupt day trader than a long-term investor, our collective time horizons have been slashed from years to months, weeks to minutes. The impact of a slowing economy on investment and spending will be almost instantaneous.
The latest signs from the American heartland are not encouraging. The average voter’s confidence about their economic prospects is falling quicker than at almost any other time on record. The litany of surveys pointing to recession, or more accurately a Trump-cession, not to mention the sell-off in American stock markets, suggests we are on the cusp of something enormous. The incoherence of Trump economics – with its on-and-off tariffs – is making already indebted consumers and businesses even more anxious.
Punters across all income brackets are panicking and consumer confidence is collapsing, although it is richer workers who are most worried. This probably reflects the fact that middle-class Americans are heavily invested in the stock markets, which are back to where they were in September and falling farther. Since Trump was inaugurated, the percentage of voters who are worried about their job has shot up from 30 per cent to close to 80 per cent of all those surveyed. The number of consumers worried that businesses might close has spiked up to the highest level since records began in the middle of the 1980-81 recession.
People’s confidence about where their income will be in a year has plummeted to the lowest level since 2009, right after the Great Crash. Worse still, the average American is now more worried about inflation than at any time since the beginning of the pandemic, when prices shot up because of the shutdown of industry.
This combination of a rapidly weakening economy and fear of inflation points to an old enemy not seen since the 1970s: stagflation, where unemployment and inflation rise together. In such an environment, prices rise at the same time as incomes fall. The main trigger is the broad electorate’s understanding that tariffs are a tax on spending that will raise the price of goods for working Americans.
What is going on in corporate America, the part of the economy that was supposed to be boosted by Trump? Earnings are an important leading indicator, as profit squeezes foreshadow lay-offs and investment cuts. Corporate profits surged in 2021 but have now entered a slower growth phase. By the third quarter of 2024, US corporate profits fell 0.4 per cent quarter-on-quarter, the first decline in years. By late 2024, year-on-year profit growth was 5.9 per cent, down from more than 20 per cent in 2023 – this is a huge slowdown in margins.
All the while the nonsense that is Trump’s economic plan continues to be “sane-washed” by many writers and commentators as if there is some brilliant economic rabbit about to be pulled out of a hat by the sages of Mar-a-Lago. Declaring a trade war on your four biggest trading partners – Canada, Europe, China and Mexico – will simply push up American prices, robbing US consumers.
Tariffs are a way of taking something away from somebody. Trade allows better, cheaper products to come in from abroad, putting manners on local crony businesses. Tariffs protect second-rate local businesses, allowing them to sponge off consumers, flogging second-rate goods when punters could be buying superior imported stuff. In the end, tariffs take from buyers and give money to yellow-pack local sellers who can’t compete in the international market. There’s a reason that low tariffs, which have been reduced continuously in the past 50 years, corresponded with the greatest expansion of the global economy ever seen.
Protectionism is a sign of weakness, not strength. Americans are not being “ripped off”; in fact, they are being enriched by having access to better, cheaper, superior products made by more productive people. Rather than being the beginning of a great new era of American prowess, tariffs are a sign of insecurity and fear, marking the end of the great American century that began after the end of the first World War.
The fascinating thing is that the average “Joe Six Pack” American appreciates this; otherwise, why is he so fearful about the future?
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