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Bail, Baby, Bail: What General Motors can Teach us about Policy Distortions

This is a joint posting with David Wheeler and Robin Kraft

When countries in Latin America or Africa descend into crisis, economists in Washington take a harsh view. Governments are forced to reduce spending in return for IMF rescue packages and in some instances, countries are even put on a cash-only budget. In the United States, we have a very different approach designed to minimize hardship of any kind -- the bailout.

Tiger, Tiger Burning Bright: The World Bank Undermines Own Conservation Efforts With Fossil Fuel Projects

This is a joint posting with Vijaya Ramachandran
The World Bank Group's board appears to be operating under a severe case of cognitive dissonance, supporting efforts to save tigers - threatened in India and Bangladesh by habitat loss due to climate change - while helping build coal-fired power plants that will only speed up this process.
Back in June the Bank launched a campaign to help governments develop and better manage forests inhabited by endangered tigers, including in the Sunderbans. This massive mangrove forest spans the India-Bangladesh border and is home to the Bengal tiger. While the Bank has a less-than-stellar conservation track record in Sunderbans, more important is the fact that this impoverished World Heritage site would be one of the hardest hit by climate change, whether from rising sea levels or the disappearance of the glacier that feeds the Ganges river.
But the Bank's commitment to poverty reduction and biodiversity stands in stark contrast to its bread-and-butter financing choices. As the Bank planned its save-the-tiger campaign, the International Finance Corporation (IFC), the Bank's private sector arm, was putting together a deal to finance $450 million of the misguided $4+ billion Tata Mundra Ultra Mega coal-fired plant in India. Financing 10% of the cost of a plant being built by India's largest company will help propel India's power sector emissions to third highest in the world within a few years, behind China and the U.S. Is this a smart use of scarce international public resources?

Another Banner Year for IFC -- NOW Is The Time for A Big Push into Renewable Energy

This is a joint posting with David Wheeler
The International Finance Corporation, the private sector investment arm of the World Bank, is set to have yet another banner year with profits in the range of $2 billion. As the IFC's equity stakes in services, telecommunications and particularly in oil and gas have grown, so have its profits. In FY07, IFC invested more than $8 billion of its own money and mobilized nearly $4 billion more. In Sub-Saharan Africa, it invested about $1.4 billion, doubling its investments from the previous year. In FY08, these numbers look to be even larger. If the IFC continues on its current path, in five years its portfolio will be larger than that of the World Bank itself.

Is Google The Solution To Africa's Energy Needs?

The search engine giant Google (google.com) announced yesterday that it will spend $500 million (or 3 percent of its cash holdings) on developing inexpensive energy alternatives to coal. The goal is to lower the costs of solar, geothermal and wind energy to produce 1 gigawatt of energy at costs that are lower than coal. Google says that it aims to accomplish this task in 10 years and is optimistic that it will take even less time than that.