- Behind Anna Hazare … (quicktake.wordpress.com)
- Celebrity Yoga Guru Has Indian Politics Knotted Up in Twists (time.com)
- Controversial yoga guru under investigation for purchase of remote Scottish island (telegraph.co.uk)
- Chetan Bhagat’s 4th Mistake (quicktake.wordpress.com)
An Indian problem
Now one of the problems of India, having English as an important language, is the amount of swill, garbage and propaganda that we are subjected to.
In spite of being less than anybody, British media can be pretty biased.
One example was a post by Ian Campbell on Japan’s economic problems. He says,
Japan has … has the worst debt to GDP ratio among major economies … But the interest yield on Japanese government bonds is … not much more than 1 per cent, so the debt is not yet so problematic – and might not seem an obstacle to still more spending. … In just five years, even assuming the economy grows, debt might climb to 230 per cent of GDP … the hideously large debt would finally drive the fiscal deficit far higher and become intolerable.
Japan’s only route then would be drastic fiscal reform or, more probably, huge resort to the printing press, as Latin America did in the old days and Zimbabwe in more recent times. (via Nokia’s billion-dollar man).
Sad Brits …
Campbell, a British journalist, compares Japan with Latin American and African Governments who have printed a lot of money.
But surely he knows that Western Governments – under the leadership of Ben Bernanke printed much more than Africa and Lat-Am could and did! Why is Campbell not talking of British, European and American printing presses?
Is there a racial smell and smear somewhere? Did I hear him say ‘These irresponsible Blacks, Latinas, Browns, Yellows …’
Now Japan’s problems are minor – because they have solid, well run, high tech companies, whose products are in demand all over the world.
Off their peaks, these Japanese firms still have mean clout in business world. Japanese interest rates being so low will not change Governmental economics by much. So, why compare Japan with Latin America or Zimbabwe?
Of course, you cannot compare Japan to Spain – where prostitution is a national industry. Or Ireland, or Greece, which have lived on handouts for the last 100 years.
Maybe you should look at British debt my dear sir!
Is it wishful thinking Mr.Campbell? Balanced your judgment is not. Or is it just plain malarkey? Methinks, it is ‘White’ noise!
Ian Campbell, who has “recently returned to the UK, where he is writing a book on rural Mexico.” could utilize his time much better writing about rural Britain, which depends on huge subsidies from a nation groaning under 500% Gross-National-Debt (GND-that is Govt.+Corporate+household).
Now British GND (no hindi puns intended) is a much-more-hideous. Than Japanese at 500%. We both know that British exports are going nowhere!
Let us look at British economy
First the biggest sector of British corporate sector is about digging, extracting and selling natural resources.
A historical legacy – with little value-addition. Royal Dutch Shell, BP, North Sea Oil, XStrata, Anglo American, Rio Tinto Group, BHP Billiton, BG Group, National Grid, Scottish and Southern Energy, Centrica. That is 10 of the top 30 British companies. These companies mostly have their assets abroad – and if push comes to shove, you know these companies will go where their bread is buttered.
The second leg on which British industry stands today is cracked leg of banking and insurance – HSBC, HBOS, RBS, Lloyd’s TSB, Barclays, Standard Chartered, Aviva and Prudential. The British part of the business of these 8 financial firms is in mess. The international business is subsidizing the British business. How long do you think this will last?
The third wobbly leg is pharmaceuticals made up of two companies. Glaxo-Smithkline-and Astra Zeneca. Both are in doldrums due to competition from generic Indian companies – and may look good to beery British journalists boozed in a pub. Now these are the three legs of British economy. We know that three legged stools are always prone to topple over.
That was lesson No.1 for you Campbell.
Lallu has a few things to say here
Lesson No.2 is what our colourful former Railway Minister said, “इस हमाम में सब नंगे हैं” (meaning “everyone in this bathhouse is naked”).
No offense to colour black, but then black pots must not call yellow kettles names.
It is plain bad journalism!
- Our Government Is Now So Huge That It’s Choking The Private Sector (businessinsider.com)
- Dollar hits 15-year low vs yen, jumps vs euro (seattletimes.nwsource.com)
- China Buys More Japanese Debt Than Ever Before (businessinsider.com)
Economic theory holds that all crises are caused by bubbles or overheating, so if you can manage to prevent bubbles, you can prevent crises. The most important thing for “ironing out cycles” is not the stimulus policy implemented after a crash has already occurred, but to be proactive in boom times and stop bubbles in their early stages.
I am not quite sure whether all Chinese policymakers are good students of modern economics. But it seems that what they had been doing in practice happened to be better than what their counterparts in some other countries were doing—a lot on “deregulation”, but too little on cooling things down when the economy was booming and bubbles were forming.
The problem for the world economy is that everybody remembered Keynes’ lesson about the need for countercyclical policies only when the crisis erupted, after demanding to be left alone—with no symmetric policy intervention—during the preceding boom. But managing the boom is more important, because it addresses what causes crises in the first place. (via Chinese economy’s secret recipe – Views – livemint.com).
Fan Gang, till recently the only academic advisor on monetary policy committee of the People’s Bank of China, gives a rather interesting take – albeit an insider’s view.
Amid harsh rhetoric, Chinese Vice Commerce Minister Zhong Shan and U.S. Treasury Secretary Timothy Geithner sounded some conciliatory notes on Wednesday.Mr. Zhong, making a 30-hour visit to the U.S. to try to ease bilateral tensions, expressed confidence that politicians from the two countries “have the wisdom and ability to resolve existing problems.“Mr. Geithner said he be- lieved China would allow its currency to appreciate over time, according to a CNN interview transcript. While the U.S. “can’t force them to make that change…I think we can work through the tough things we have together,“ Mr. Geithner said.The stakes are high for both sides. The U.S. and China are among each other’s biggest trading partners, and numerous U.S. companies have investments in China. The U.S. is increasingly looking to China to cooperate on international strategic issues, such as nuclear nonproliferation and the fight against terrorism. (via WSJ ON YUAN – China and U.S. soften tone on yuan).
Let the games begin!
The Dragon and the Eagle are squaring off! An experienced US stalks China, waiting behind high walls of US$2500 billion foreign exchange reserves.
The US-China game has started in earnest. US, egged on by ‘macho’ voters and a cheering media, will:-
- Act tough
- Behave in a morally outraged and indignant manner
- Commentators will prescribe a trade war and sanctions
In parallel, analysts, academics, think-tanks, journalists will talk-up China. Like Greenspan talking-up the US dollar or Dow Jones. They will: -
- Hold up China an nation-exemplar
- Write books analysing on China. Such books will start pour out of our ears
- Make movies and novels about the ‘dominant’ Chinese in the US
- Study, extol Chinese culture /tradition /history, and hold forth as a shining example.
And China will be ‘uncompromising’! Act as though, they have a choice.
The change in dollar-yuan exchange ratio will happen. Peacefully, or with violent side shows. Assuming that the dollar-yuan revaluation will happen smoothly, is fraught with risk. That it will happen, without any significant disruption, is one, big, huge, slippery assumption. What will follow the Chinese moment in the sun?
What remains to be seen
What could set off economic mayhem in China? Crime in China (a simmering threat), terrorism in Xinjiang (remote possibility), real estate bubble (a real scenario)?
Will the Chinese Government be able to ride this storm? Without a war with India? Which side of the fence will China fall? Answers to these questions will be worth waiting for! And prepared with!
Last time …
It would do well to remember that last time when China had a problem, it resulted in the India China War of 1962. Just after the disastrous Great Leap Forward and before the equally disastrous Cultural Revolution.
The Great Leap Forward began in 1957-58, saw famine and hunger across China. After the Communist takeover of China, land seized from land owners, was given to peasants in 1949. Ten years later, in 1959, the Chinese State took away the same land from the same peasant. Food shortages, starvation followed. Western (questionable) estimates are that 30 million people died during this period. War with India followed in 1962 – a diversion from the domestic Chinese catastrophe.
What will it be this time?
- Treasurys sink as euro hopes encourage risk (sfgate.com)
- Gallup: Regulations are Small Business Owners’ Number One Concern (reason.com)
- Depression Debt (krugman.blogs.nytimes.com)
- What Are All These Crazy Politicians Doing Trying to Cut Spending?! (reason.com)
- ‘Left’ vs. ‘Right’ Debate Not Solving Our Economic Problems (usnews.com)
- Are Small Businesses Really Big Job Creators? (entrepreneur.com)