This episode raises two sets of concerns. First, while the bank insists on holding the developing countries to the highest standards of transparency, its own actions remain shrouded in mystery. To-date, it has offered no explanation of why it took seven long years to act against Wipro. Did the World Bank rules change in the interim, which it then applied retroactively?
Or, did the bank realise one fine morning that it had failed to enforce the rules that had existed all along and then proceeded to enforce them with vengeance, turning Wipro into a sacrificial lamb? When and precisely what action did the bank take against its own staff members? Why the reluctance to reveal the timing and nature of actions and cause of departure of offending employees?
Also disturbing is the fact that the bank waited to make its decision public until a major corporate scandal in the country broke out. Judging by the comments on various newspaper websites, the bank’s press note has left the distinct impression that the Wipro leadership is cut from the same corrupt cloth as the outgoing Satyam leadership. Unsurprisingly, Wipro shares plunged 8% the following day. (via Did World Bank go wrong in banning Wipro- Software-Infotech-The Economic Times).
First, the World Bank is actually a US-Euro Club – to fool the world, with the intentions of the Bretton Woods. The world should have never accepted what the West calls the World Bank.
And second, the World Bank list of banned entities were significantly, from two sectors – Software and Pharma. These are the two sectors where the US still has a lead – and the Indians are its biggest challengers. Generic pharma firms from Indiahave become world beaters - and the Indian software companies have built up US$50 billion a year business, in less than 10 years. These 50 billion dollars have come out of US pockets.
At least, the actions against Wipro and Nestor Pharma were pathetic excuses to ban a business – and no Third Party arbiter will uphold these actions.
Third, on January 9, Standard & Poor’s announced that Greece, Spain and Ireland were on review for a possible downgrade, indicating that a Eurozone country could default.
Whats the Quicktake
These actions seem like offensive actions from the US – to undermine its competitors and to bolster US businesses. It makes me doubt about the Satyam saga. To carry the conspiracy theory thread forward, was there a Merrill Lynch-Ramlinga Raju ‘deal’?
Modern day protectionism, huh?
On January 9, Standard & Poor’s announced that Greece, Spain and Ireland were on review for a possible downgrade, indicating that a Eurozone country could default. If financial crises have taught us one thing, it is to take such “black swan possibilities” (as Nicholas Nassim Taleb would describe it) seriously. A sovereign default by a small country could wreak havoc on the markets for credit default swaps (CDS) and might even destroy financial institutions in other Eurozone countries. It could trigger panic rise in bond yields and the threat of contagion could turn into a self-fulfilling prophecy. A far more serious threat would be a cascading series of defaults that would eventually include one or more of the Eurozone’s large countries. The 10th birthday of Eurozone seems to be holding out ominous portents. (via Sunil Kewalramani: Will 2009 be the year of sovereign defaults?).
For the last 50 years, under the garb of macro-economic aggregates, total Government finances were seen as proxy for a nation’s economic health. And that assumption, based on faith rather than logic has been been inverted in the last 20 years.
While country and Governmental finances were analysed to within a hair’s breadth away from death, private debt and aggregates of private debt were given a cursory analysis.
As the ‘demand side’ economics crash-landed into the stagflation of the 70s , it gave way to ‘supply side’ economics. With increasing supplies, consumers needed money to buy the supply.
Welfare statism became unfashionable - and the Petro-Dollar alternative became available. Shortly, after Petro-Dollars, a new source of enthusiastic cheap funding became available – China. With Petro-Dollars and China competing for Western favor, a mountain of debt was within a realm of possibility.
With the arrival of ‘frothy Alan’ and ‘helicopter Ben’ and the ‘ménage à quatre’ was soon complete. The dollar hegemony allowed this build up of debt – and while China is acting as the injured party, it is time someone informed them of the Western concept of ‘caveat emptor’.
The more worrisome aspect is the desire to fall into Western arms – by many ‘developing’ economies, all over again. And leading the default league tables are the US and Britain.
The illustration of bathos! Indian policy-bureaucracy complex looking Westward for inspiration.
On December 23, 2008, the Lok Sabha gave criminality a Christmas bonanza by passing a radically amended Criminal Procedure Code Bill along with seven other Bills, all of which were passed within a mere 17 minutes without any time-wasting frivolities such as debate and discussion which, in effect, prevents law enforcement authorities from arresting someone who has committed a crime which carries a prison sentence of up to seven years.
Instead of clapping behind bars the accused in such cases which include attempt to commit culpable homicide; voluntarily causing grievous hurt; cheating; outraging a woman’s modesty; death caused by negligence; and assaulting the President the police will now have to issue a ‘notice of appearance’ to the individual concerned who will be expected to ‘cooperate’ with the investigation. (via Free-for-all crime-Subverse-Opinion-The Times of India).
Ignorant journalists like Jug Suraiya and his ilk, should not be eligible to benefit from such exemptions. These lap-top toting, ignorant journos are a new breed of ‘angutha chaaps’. What these English speaking, Westernized journos, dont know and cant care about are these inconvenient facts: -
- India has the lowest per capita prison population in the world.
- India also has the lowest police-to-population ratio in the world.
- India has the second highest national gun stock in the world.
- India has the largest number of poor in the world.
- Capital punishment in India is again at low levels.
Western systems of law and order predict that India should have the highest crime rate in the world – which is not true. India has low-to-average crime rate compared to the Rest of the World.
Juggy-boy – open your mind, before you open your mouth! Or is it before you open your ‘laptop’?
Socialite Paris Hilton showed off her ignorance recently when she thought Gordon Ramsay was the British prime minister.
She said: “I love Britain. London is my favourite city in the world.” But when asked if she knew who the British prime minister was, she replied, “Yes, it’s Gordon Ramsay, isn’t it?” (via Paris Hilton thinks Gordon Ramsay, and not Brown, is British PM).
I think Rahul Gandhi needs to learn from Paris Hilton. After all, why waste time with Britain – a nation, 5 times over its GDP, in debt. A nation, that is a nobody in manufacturing, services, currency – a nation in terminal decline into anonymity?
Rahul Gandhi’s dalliance with Milliband reminded me of Nehru’s dalliance with the Mountbattens. I am still unclear who Nehru was having an affair with – Lord or Lady Mountbatten?
And I think, it was the reporters that got it all wrong. Why did this reporter think that Paris Hilton should know who the Prime Minister of Britain was?
There is something that everyone else seems to get except the SEC A1+ (top-notch buyers), ‘modern’, English speaking, large metro, ‘progressive’, ‘cosmopolitan/ global’ Indian. That there is no single, pure, pan-Indian identity, ‘cleansed’ of ethnic/ linguistic/community or region origins and characteristics; and that despite their feverish search for it, there is unlikely to be one. Worse, that it may even be undesirable to have one. Their belief is that modern Indian utopia is to have many more of us shed our specific community-based origins and influences, and assume a more uniform Indianness — one that blends well globally, and does not make us stick out like the peacock (or a sore thumb) abroad. (via Celebrating diversity is unity- Comments & Analysis-Opinion-The Economic Times).
This is one excellent article by one of India’s original market researcher.
Breaking all the shibboleths of Indian advertising, dominated by the English speaking, Westernized professionals and being successful, as . Rama Bijapurkar, has been as a market researcher, is surprising. I wish that Rama Bijapurkar would write more frequently – as she did earlier.
With the lowest levels of religious, ethnic, linguistic diversity, the sight of The West, strutting as a protector of freedom is a hoax. How can the West have a problem with Native American tribes (aka Red Indians) and the Aborigines – if there are none left. The West which has the highest levels of prison populations in the world – raucously reminds the world of lessons in freedom.
The Western pre-occupation with One God, One Book, One Holy Day, One Prophet (Messiah), One Race, One People, One Country, One Authority, One Law, One Currency, One Set of Festival are the root of most problems in the world.
And sometimes, it takes a Rama Bijapurkar to make the English speaking, Westernized, elite to wake up – and smell their own garbage.
In the 1920s the press had been infatuated with an international foursome of elite bankers who took on the challenge of restoring global economic balance after the wreckage created by World War I. They had been called the “Most Exclusive Club in the World.”
With the angrily Prussian-mannered Hjalmar Schacht of the Reichsbank, the conniving Émile Moreau of the Banque de France and Benjamin Strong of the Federal Reserve Bank of New York as its other principals, and with Winston Churchill, John Maynard Keynes and Franklin D. Roosevelt among its secondary players, “Lords of Finance” tracks the shifting balance of economic power that reflected each country’s self-interested agenda. But one of the book’s most important points is that self-interest, in the world of global economic fluctuations, can be self-defeating. (via Books of The Times – Liaquat Ahamed’s ‘Lords of Finance’ – Monetary Horror Story That Looks Like Today’s – Review – NYTimes.com).
Another interesting book which covers a wide area – between the wars. The Western pre-occupation with itself, its total self absorption, at a cost to the rest of the world shows up in this book.
As is usual, it ignores other crucial elements and factors. For instance, how the Indian economy was used to meet Britain’s Post WW1 liabilities. To ‘dampen’ India’ gold demand, the Indian rupee was put on fixed, overvalued rate vis-a-vis the sterling.
Indian exports crashed, imports ballooned. Indian accounts would be settled at ‘official’ silver prices, with inflated silver released by the US under the Pittman Act. Gold prices were deflated – and Indians would therefore receive less for their gold. Thus with with a combination of inflated silver price, deflated gold price, high interest rates and an overvalued Indian rupee, the Indian economy was strangled. None of the book reviews or interview however identify this – unwittingly, or deliberately.
India funded the post WW1 recovery
The mechanics and the development is laid out in a better book, John Bullion’s Empire by By G. Balachandran. This book traces how much of India’s poverty was a result of economic policies between the two World Wars co-ordinated by these four central bankers.
On October 27th, 1931, the Ramsey Macdonald led “National” Government (Conservatives and Liberals coalition, fearful of the rising Labour Party) in Britain won a huge majority of 554 MPs of 615. The economic crisis of September 1931 (misnamed as the Indian Currency Crisis) was a result of this economic policy which reduced Indian economic activity – resulting in bankruptcy of the Colonial India Government.
Parallel Great Depression era problems in the US, the Weimar Republic problems – and other issues pushed this ‘National’ government to ram through a series of measures (page 130-131) that inflated silver prices, depressed gold prices and raised interest rates in India. The Indian rupee was pegged at a high exchange rate vis-a-vis the sterling. Indian exports crashed. To ensure that Indian farmers had no options, Indian money lenders were regulated and licensed into paralysis.
Indians were paid, with inflated and abundant silver stock, instead of gold. This silver was the same silver released by the Pittman Act. The silver buffer solution to the gold drain to India was seen as the “only buffer to protect Western gold reserves against the Indian drain (was) a silver buffer.” Of course, later the British Raj decided to settle Indian debts with promissory notes – and not even silver. It was this Indian ‘sacrifice’ which enabled the recovery of the West.
Done over the protests by Gandhiji, trade bodies and merchants and threats of resignation by the Viceroy and his Executive Council, the resulting ‘money famine’ (page 155) had the Lord Willingdon ecstatically say ‘Indians are disgorging gold‘ (page 156). Neville Chamberlain pitched in with his classic statement “The astonishing gold mine that we have discovered in India’s hordes has put us in clover.”
Crash in silver prices
New mines and increased silver production saw a crash in silver prices. US silver coinage was being depreciated due to increasing supplies of silver. On the other side, Britain had a large debt due to WW1. Britain and America stuck a deal at the cost of the Indian subjects of the British Raj. The US passed the Pittman Act which mandated silver sales at more than a dollar per ounce – double the 50c per ounce prevailing price of silver. Britain agreed to settle all Indian debts with silver. Gold prices were deflated. Interest rates in India were increased. Restrictions on gold imports on were placed and gold demand in India was ‘normalized.’
Impoverishment of India
With crashing exports and increased imports, the Indian citizenry had no option but to pay for all essentials and taxes with gold. As a quid pro quo, for this silver for gold scam, the US lent gold to Britain in 1926, which allowed Britain to revert back to the pre-War old standard.
Looking back, it was clear that this achieved nothing but the impoverishment of India. In 1948, Montagu Norman had to admit that with these maneuvers “We achieved absolutely nothing, except that we collected a lot of money from a lot of poor devils and gave it to the four winds.”
India and Pakistan are not neighbours. They are worlds apart.
1947 divided us, but did not separate us. We still met, through family and media. Separation came with war in 1965, instigated by fantasists like General Ayub Khan and Z A Bhutto. It extinguished the flickering embers of trust. Walls of regulations were raised to block knowledge, and then vision. If you do not see a neighbour he is not a neighbour. There are no neighbours in the huge apartment blocks of Mumbai, only adjacent numbers. (via India, Pak aren’t neighbours; they are worlds apart-The Siege Within-MJ Akbar-Columnists-Opinion-The Times of India).
Another piece of solid analysis – by MJ Akbar.
Sixty years after Kashmir threw in its lot with India, the state remains an enigma for policymakers. Even back then, the Kashmiri Muslims – the majority in the state – led by Sheikh Mohammad Abdullah, had defied popular perception that Muslim majority states would prefer joining Pakistan. Abdullah had snubbed Jinnah by refusing to even meet him when the latter came to the Valley in the hope of convincing the young leader to support Pakistan. (via The forgotten Sheikh).
An enigma, inside a puzzle wrapped in a mystery …
Kashmir remains an interesting complication – from a historical perspective. It was Muslim majority – so Pakistan could take a technical refuge under the Indian actions in Junagadh and Hyderabad. Since, it had a Muslim majority, Pakistan could lay claim to it.
The Hindu ruler wished to remain independent – and then changed his mind – and decided to join India. Popular leaders of Kashmir, like Sheikh Abdullah, also wanted Kashmir to be a part of India. Hence the legitimacy of Indian claim.
The jokers in the pack were the legacy Colonial rulers – in India and Pakistan. The Governor General of India was Mountbatten – and the Pakistani Generals and some Indian army officials were British.
The collusion between these colonial agents in the dying days of the Raj, has created a festering problem – which India and Pakistan are still fighting over.
Westernization of the sub-continent
India’s independent movement created leaders like Khan Abdul Ghaffar Khan and Sheikh Abdullah – who have been forgotten. Instead we now see only the Taliban – created by the West.
Even in the depths of a downturn, Indian consumers and companies are surprisingly confident, putting the country on top. Seven months ago … consumer confidence in India had fallen 11 points to 122, the lowest in the last five rounds of the Nielsen Global Consumer Confidence Survey.
Since then, Lehman Brothers, the 158-year-old investment bank, has collapsed and the Detroit carmakers have been gasping for money. Still worse, in end-November, 10 gun-and-grenade-totting terrorists killed 192 people across Mumbai, the nation’s financial capital.
Even as all these events sink in, India has topped the latest round of the Nielsen survey with 114 points, a massive 30 points above the global average of 84. (via Consumers and companies are confident).
Strange. In fact, very strange.
What gives Indian the confidence that things will improve? Year after year, such global surveys routinely show anxiety, unease, dread in Europe and USA. This sense of unease should be absent considering the prosperity levels, the best health-care systems, a welfare state, guaranteed unemployment benefits, their technology, their currency and their democracy.
The Indians and Chinese routinely are more optimistic – which should not happen considering the low income levels. Fancy theory apart, to my mind, it is the ‘sword fatigue’ in response to constant exposure by Western Governments (to which they are exposed) which causes this low optimism.
The only thing that worries Indians was the well being of their parents.
India expects to get USD three billion from the World Bank in two tranches by March 31, 2010, to help it recapitalise public sector banks, besides National Housing Bank and EXIM Bank.
The World Bank may most probably give the first phase of the loan by June this year, a senior finance ministry official said here.
He said 17-18 public sector banks as well as National Housing Bank and EXIM Bank require more capital. In total, Rs 20,000 crore is needed to recapitalise these entities. (via WB to give $3 bn to India for bank recap – The Financial Express).
Crumbs coming your way …
The US is throwing a few bones, our way, to keep us quiet. While they continue the flooding the world with these depreciating pieces of paper. India is losing 10% of its foreign currency reserves every year due to dollar devaluation. What we are getting from the IMF/WB duo is just 1% of this as debt.
And we have a few preening bureaucrats who think this calls for some self-congratulaions!