Of mice and men
While the US dollar is weakening, by design, Greece, Ireland, Portugal and Spain are being bankrupted by a deliberately overvalued Euro.
an unexpected $7.3 billion trade deficit, the biggest in seven years. The nation’s (China’s) exports rose at the slowest pace since November 2009.
For Europe, the grand prix is to replace the dollar as the currency of international trade – especially oil trade. Euro as a international trade-currency-of-choice, will give the Euro region access to more than 1 trillion euros in zero-cost floating balances.
China is expecting the yuan to play a similar role. Such are plans made by mice and men.
Monsieur Murphy says
What can go wrong with these plans? Plenty.
The eternal enemy of currency manipulation – gold. As a million bureaucrats work on the mechanics of their plans,
Sales of gold coins are on track for the best month in a year amid the worst commodities rout since 2008, a sign that bullion’s longest bull market in nine decades has further to run, if history is a guide.
The U.S. Mint sold 85,000 ounces of American Eagle coins since May 1 as the Standard & Poor’s GSCI Index of 24 raw materials fell 9.9 percent. The last time sales reached that level, bullion rose 21 percent in the next year. Gold will advance 17 percent to a record $1,750 an ounce by Dec. 31 and keep gaining in 2012, the median estimate in a Bloomberg survey of 31 analysts, traders and investors shows.
UBS AG, Switzerland’s biggest bank, had its second-best day this year for physical sales on May 9, according to a report the following day. The bank’s sales to India, the world’s top bullion consumer, are more than 10 percent higher than in 2010. (via Gold Coins Show Bull Market Unbowed in Commodities Decline – Bloomberg).
You take free advice …?
Back in late January, as the world’s important people rubbed elbows in Davos, billionaire investor George Soros had some rather definitive thoughts to offer on gold, which he called “the ultimate asset bubble,” according to reports.
However, he neglected to mention that his hedge fund had been buying.
Another report points out that the liquidation (by people like Soros) of investments in public investment vehicles may be replaced by private investments.
The new filings from funds “may show that big names exited ETPs and this news may cause prices to slip in the very short term,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. Some funds switched to holding gold directly so they wouldn’t have to announce it publicly, he said.
Is gold a bubble?
A rather disbelieving journalist writes of the situation in the West
Gold is in a bubble. Anyone will tell you that. They’ve been saying it since gold was about, oh, $500 an ounce. But it’s a funny kind of a bubble. It’s the only one I’ve encountered where so few people seem to own the asset in question.
During the dot-com bubble, you met lots of people with tech stocks. Taxi drivers told you what dot-coms they owned. During the housing bubble you met normal, ordinary people who were trading up to expensive homes using adjustable-rate mortgages, buying new condos off plan to flip, and cashing out their fictional “equity” through a refinance mortgage.
But who actually owns gold? I keep hearing about the gold bubble, but every time I ask people if they own any themselves, they say, “no, no, of course not, it’s a bubble.”
Central banks around the world are printing more dollars, euros, pounds and yen. Gold may simply be a less awful currency than all the others. Banks can’t print any more of it, so its price should probably rise while other currencies fall.
For this year, the question in India seems to be, “Will gold cross Rs.25000, by 2011 Diwali?”
- Gold Coins Show Bull Market Unbowed in Commodities Decline (businessweek.com)
- Soros Sells Most of Gold ETP Holdings During First Quarter (businessweek.com)
- A closer look at George Soros’ big quarter of selling gold (financialpost.com)
- Why is George Soros selling gold, but John Paulson not? (theglobeandmail.com)
- China Is Now Top Gold Bug (online.wsj.com)
- Gold Investment Demand in China (lonerangersilver.wordpress.com)
- Chinese set new standard in buying gold (ft.com)
- Gold grand prix – The Chinese challenge (quicktake.wordpress.com)
- Shanghai Planning Gold Exchange-Traded Funds as Demand Jumps (businessweek.com)
- Oil, gold back in demand (news.theage.com.au)
Fat and lazy
Between 1875-1935, Britain was dependent on India for gunpowder, on USA and Iran for oil, on Malaya and India for rubber. British economy had grown fat and uncompetitive – unlike Italian, German and Japanese economies.
Even though Britain won WWII, their economy was a lost cause. Though Germany, Italy and Japan were losers, with their economy in shambles, they could make a brilliant recovery and vastly out-compete Britain.
The story of Middle East oil is similar for USA and West. The Welfare State, built on a diet of cheap oil, easy dollars, is now too expensive for the West to sustain. The above book extract gives an excellent snapshot of the oil industry in the 20th century.
And the shadow of oil on the 21st century.
- Onward, American Soldiers! Another million await death. (quicktake.wordpress.com)
- Out with the old? (bbc.co.uk)
- UK economy trailing (thesun.co.uk)
- Skidding Oil Prices: A Blip or a Trend? (green.blogs.nytimes.com)
Things go bump in the night
In the early hours of 2nd May, 2011, an obscure twitter-user started tweeting about the US raid on Osama Bin Laden’s safe-house – 35 km from Islamabad, 200 miles south of the Afghanistan border, in Abbottabad. In a city, which houses Pakistan’s equivalent of Indian Military Academy.
But Pakistan’s police, para-military, military forces claimed ignorance, showed surprise, feigned outrage. Par for the course. Was it abject failure or a cover-up in Pakistan , by the powers-that-be?
Afraid of the mullah-madrasa-mujahid combine, predictably, Pakistan started denying any role in the killing of Osama Bin Laden. Truly Pakistan ‘doth protest too much, methinks’. Secret deal or not, in the past or post-facto, a deal around killing Osama could have been easily hammered out between Pakistan and USA.
It suited both the leaderships.
It is election time in USA
Pakistan was not alone in using Osama. Osama alive was source of US funds for Pakistan. Osama dead is an election ticket and a feel-good factor for the a USA being battered by the Great Recession. As Rajiv Dogra points out, on the opposite side of the world,
The timing suited Obama well. It had long been speculated that Osama would be killed around the time Obama’s re-election campaign kicked off.
Predictably, the US made a song-and-dance about the annual aid of US$3 billion that they dole out to Pakistan. Compared to the US$3 trillion that the US Department of Defence is unable to account for, this talk of US$3 billion makes for poor form.
On a lighter – and logical side
Famous for the song केम छे ‘kem che, kem che’ from the film जिस देश में गंगा रहता है Jis Desh Mein Ganga Rahta Hain, a Bollywood songwriter confidently predicted, soon after 9/11, that Bin Laden would be found near the White House or Islamabad!
Coming to India
Memories dimmed, history forgotten, India draws wrong conclusions from these Western adventures in our neighbourhood.
After WWII, as British, French and Dutch colonialists were being thrown out of Asia, in country after country, the West was in real danger of losing markets and raw material sources.
A new power, fueled by a growing migrant population, USA, took the place of tired, old powers – Britain, France and the Dutch. Instead of the openly exploitative system of European powers directly running colonial governments in these Asian countries, the US installed an opaque system – which is equally exploitative. To impose its writ on the newly independent Asian countries, the US simply destroyed their economies by war. The USA, then instituted the innovative USCAP Program and ‘helped’ these countries. These countries (Taiwan, Singapore, Japan, South Korea, Indonesia, Malaysia, et al) were now ruled by overtly independent regimes – but covertly, client states of the USA.
US multinationals and home-grown oligarchs (keiretsus, chaebols, etc.) took over the economy – and sidelined British, French and Dutch companies. To impose this economic model, US armies, using nearly 1 million troops, killed 50 lakh Asians. The takeover of European colonial possessions by the USA was handled over 3 regimes of Eisenhower-Kennedy-Johnson seamlessly.
Between a rampant USA, behind biggest terror spots of the world, and a nuclear-armed, imploding Pakistan, India’s choices are difficult – and reactive policies inadequate.
Once more, Osama’s death and Obama’s antics bring out India’s policy inadequacy in sharp relief.
- Cable: Pakistan military learn anti-Americanism (cbsnews.com)
- Bin Laden’s Pakistan villa: Tourist destination? (cbsnews.com)
- Osama bin Laden dead: Pakistan returns helicopter wreckage (telegraph.co.uk)
- You: Drones hurting national integrity (nation.com.pk)
- Churchill’s Secret War, By Madhusree Mukerjee (independent.co.uk)
- Not his finest hour: The dark side of Winston Churchill (independent.co.uk)
- Not his finest hour: As a young man, Churchill’s views on race and democracy beggared belief (independent.co.uk)
- Churchill’s Cherwell and the 1943 Famines (flyingpenguin.com)
- You: INDIA: CHURCHILL DENIED RELIEF TO BENGAL FAMINE VICTIMS, BOOK SAYS (menafn.com)
- Getting Tough (behind2ndlook.wordpress.com)
- ‘British Raj was not a vampire empire’ (quicktake.wordpress.com)
- Exposing the Celebrated Mass Murderers (lewrockwell.com)
- Desi Nostalgia For British Raj (quicktake.wordpress.com)
- WWII Propaganda: 70 years later (quicktake.wordpress.com)
- A Point of View: Churchill, chance and the ‘black dog’ (bbc.co.uk)
- Snapshot of Bengal Partition (quicktake.wordpress.com)
- The British Salt Tax. How Damaging? (quicktake.wordpress.com)
Resource-scarce economies, such as China, India, Japan and South Korea, have long been heavily dependent on oil from the Middle East, giving producers there the upper hand in pricing. The surcharge, known as the “Asian premium,” has averaged about $1.20 a barrel since 1988.
Now, the tables are turning, handing an advantage to the region’s fast-growing countries in the form of relatively less expensive energy.
In March, Saudi Arabia, the world’s largest oil exporter, sold its Arab Light crude to Asia for $6.37 less per barrel than it charged European buyers … Kuwait and Iraq also followed suit … though official statistics aren’t yet available.
The latest flip in prices has led many analysts to conclude that fundamental changes in the global oil trade will soon eliminate the Asian premium for good, eliminating a drag on the region’s economy. In 2008, for example, Asian customers bought about 14 million barrels of oil a day from the Middle East, according to BP Statistical Review of World Energy. The premium averaged $8.08 a barrel that year, amounting to about $41 billion. (via Economic Clout Earns Asia an Oil Discount – WSJ.com).
One by one, each Asian country has been able to pull itself out colonial cess-pit that seemed bottomless at one point of time. Barring a few like Pakistan, Bangladesh, Afghanistan, some Central Asian republics, Asia is truly on its way out of the 20th century misery.
There are two economic miracles. One we have seen.
It is a miracle that Asia has been able to come out of its poverty pit, where it found itself in the 20th century – especially after WW2.
The greater miracle will be when Europe and Middle East find a way to rebuild their economic model – without the Asian premium!
And that is the miracle we may not see!
The three crucial broadcasts were made not by Churchill but by an actor hired to impersonate him. Norman Shelley, who played Winnie-the-Pooh for the BBC’s Children’s Hour, ventriloquized Churchill for history and fooled millions of listeners. Perhaps Churchill was too much incapacitated by drink to deliver the speeches himself. (via The New York Times > Books > First Chapters > First Chapter: ‘Love, Poverty, and War’).
To use an actor to deliver a speech, in the middle of WW2. To fool the British public itself, calls for a certain brazenness.
Whatever one may fault the British for, at propaganda they are the best. To drown facts under a tidal wave of falsities, shows British mastery over the ‘science’ of propaganda. I am sure that propaganda is what Indian ancients referred to as माया maya. There are some other gems also in this post – about British propaganda, which persist even today. Worth a read!
Why am I not surprised by British acknowledgment of Goebbels as a ‘better at propaganda.’
There are two types of European state visitors in the United States capital. One seeks to underscore his or her closeness to Washington. The other likes to emphasize how independent Europe really is. But French President Nicolas Sarkozy, who is visiting American Senators and US President Barack Obama, would like to be both at the same time.
Sarkozy also wants to remind the Americans that, as a European, he can defy them. In a speech given in New York on Monday, the Frenchman repeated his demand for better regulation of the global economy. “We can no longer accept a capitalist system without rules or order,” Sarkozy said. “The world economic regulations cannot go on as they are,” Sarkozy said. “A system in which the most money is earned through speculating instead of producing, I don’t want to live in such a system.”
Of course, Sarkozy needs to score points back at home, too. Only last weekend, he was punished in regional elections in France. In an interview, Sarkozy’s own father advised his son not to run for re-election. Given his electoral setback, it makes sense for Sarkozy to bang the drum for French and European interests in Washington. Obama, on the other hand, is feeling reinvigorated following the passage of his healthcare reform through Congress and the new arms treaty with Moscow.
When the US president traveled to Paris last year, he preferred to dine with his wife Michelle rather than Sarkozy. “The hoped-for partnership never materialized,” the French daily Le Figaro wrote. Sarkozy hasn’t forgiven his American colleague for it, either. He has complained to those close to him that Obama is ill-prepared to govern, noting that he didn’t even hold a cabinet-level position before taking office.
The Americans are disappointed that, even after the ratification of the Lisbon Treaty — which was meant to give the European Union’s common foreign policy more clout — the individual European countries are continuing to pursue their own interests abroad. The question, former senior US diplomat and current Harvard professor Nicholas Burnsin an interview with the New York Times, is whether Europe can “develop a collective European idea of global power? They talk about it a lot, but they don’t do it.” The Washington Post has even criticized Obama for this, noting that in contrast to his predecessors, he hasn’t established close ties to a single European leader.
John Podesta, the leader of Obama’s transition team that helped prepare the newly elected president for the White House in 2009, told SPIEGEL: “His style is certainly different from George W. Bush who wanted to be liked and really developed deep personal relationships.”"But if you have the wrong foreign policy and good personal relations, you end up with bad results,” he added. “And if you have the right foreign policy, a strong team to implement it, and thinner personal relations, you’re more likely to have very good results.”(via L’Americain in Washington: Sarkozy Searches for Friendship with Obama that Has Eluded Him – SPIEGEL ONLINE – News – International).
Between Europe and racism
While 2ndlook was analyzing the new calculus between USA and Europe, a worried European press (for instance, Der Spiegel) was looking at Franco-American relations through a German prism.
For Europe, the experience of dealing with Obama has been different – and difficult. Europeans would like to pretend that Obama’s race does not make a difference – but it took Berlusconi to spell out the European ‘superiority’! That probably rankles with Obama.
Franco-American relations – a perspective
In the 1960s, the USA was bleeding gold. Most of the world was buying gold at an artificially low price US$35 – under the Bretton Woods Agreement. USA was printing dollars and dumping it in world markets. Calls for devaluation of the dollar price was resisted by the US, as that “would reward the speculators and be a special windfall for two gold producing countries that have few friends in the Congress, namely Russia (which usually sells at least $400 of gold a year) and South Africa (which sells about $1 billion).”
The French team of Charles de Gaulle and his economic advisor, Jacques Rueff did some quick maths. It was clear this मेला mela (a ‘fun-fair’) would not last long. Based on huge dollar outflows from the US, the French decided to call the bluff. The French started redeeming gold for their dollar earnings – and for this ‘perfidy’ the US had not forgiven France.
The French, unhappy with a “monetary system of gold, dollars and pounds” redeemed their dollar holdings (1958 onwards), sent the French navy (in 1965) to take delivery of gold from USA and bring it to Banque de France. The French raised gold reserves and dumped dollars. Time magazine called this “an open assault on the monetary power of a friendly nation” – dutifully, echoing American Government’s feeling. Banque De France finally, by 1968, increased its gold reserve to 92% (as a percentage of total foreign currency /monetary reserves). This was much like the pre-WW2 French methodology devaluation, new peg, of old debt for new gold routine got the US hackles up.
Many decades have passed since these redemptions by France. The new French President, Sarkozy believes it is now possible to renew US-French relations.
If wishes were horses!
It was at Copenhagen, that for the first time, Europe realized that they no longer have the inside track with the USA. At least, in Obama’s administration. The ‘special relationship’ that swells the British chest, has been under some strain. For some time now. The US engagement with Asia makes some sense – as it is Asia, which has extended some US$3-4 trillion in credit, growth opportunities to the US. Europe increasingly seems more like a liability – and a truculent competitor.
The US presumably knows which side of their bread is buttered.
More than three-quarters of young black men aged between 18 and 35 are on the system, the report said. Set up in 1995, the database contains the DNA profiles of five million citizens, eight percent of the population, making it the world’s biggest in proportion to population size. “Parliament has never formally debated the establishment of the National DNA Database and safeguards around it,” commission chairman Professor Jonathan Montgomery said in a statement.
“It has developed through amendments to laws designed to regulate the taking of fingerprints and physical evidence before DNA profiling was developed.
“It is not clear how far holding DNA profiles on a central database improves police investigations.” (via U.K. cops arrest people ‘just for the DNA’ – Europe- msnbc.com).
Big brother is definitely here
As post-WW2 European society was taking shape, one man warned the world – Big Brother Is Watching You!
George Orwell’s 1984, a simple, dark and melancholic book warned the world of the specter of a looming police state looming. The book was portrayed as warning against the ‘impending’ threat of Communism. George Orwell himself joined the British Government in its propaganda effort, against the Germans during WW2.
Would George Orwell, a confused imperialist, have imagined that Britain, the citadel of freedom, itself would becoming the Mother Of Big Brother societies – with the largest number surveillance cameras and DNA data bank and a back-breaking prison population.
In the land of the free
The US prison population at more than 20 lakhs (2 million) is travesty of justice and humanity. The US competes with China and the erstwhile USSR, (the largest totalitarian regimes) in the world, with its rate of incarceration.
USA, with a population of 30 crores (300 million), has a criminal population of 70 lakhs (7 million) – behind bars, on probation or on parole. US Government estimates a figure of 20 lakhs (2 million) people serving prison sentences.
A concerned editorial in New York Times newspaper summed up the situation.
More than 1 in 100 American adults are behind bars. One in nine black men, ages 20 to 34, are serving time, as are 1 in 36 adult Hispanic men. Nationwide, the prison population … (of the US) surpasses all other countries for which there are reliable figures. The 50 states last year spent about $44 billion in tax dollars on corrections, up from nearly $11 billion in 1987. Vermont, Connecticut, Delaware, Michigan and Oregon devote as much money or more to corrections as they do to higher education.
Persuading public officials to adopt a more rational, cost-effective approach to prison policy is a daunting prospect, however, not least because building and running jailhouses has become a major industry.
… the relationship between imprisonment and crime control is murky. States that lagged behind the national average in rising incarceration rates during the 1990’s actually experienced a steeper decline in crime rates than states above the national average … (ellipsis and bracketed text mine).
Across the pond
Some time back there was another report, on the state of prisons in UK.
There are almost 10,000 Muslims in Britain’s jails— with 90 of them serving time for terror offences … they fear more and more young lags are being converted and radicalised in prison. A … source said: “You are talking about rootless young men at the bottom of society. They’re in jail and someone gives them some purpose. ”
In top-security jails such as Whitemoor, Cambs, 35 per cent of inmates are Muslim—and they have converted numerous other prisoners to Islam. (via MI5 spy chiefs are putting undercover officers into Britain’s jails | News Of The World).
Slice and dice …
Britain has an estimated 1.6 million Muslims – a 2.8% of the British population. Of this a 10,000 are in prison – which means about 0.6% of the British Muslim population is in prison. India has 16 crore Muslims – which a 100 times higher population.
What if …
The British policy of imprisonment, if India were to follow, Indian Muslims inside prisons would be in 10 lakhs (or 1 million). India’s total prison population ranges between 2.5 lakhs to 3.5 lakhs – of all peoples, of all religions, races, crimes etc.
Of course, Indian society handles crime vastly differently. Technically, India could create a legal system which would ease the ability of the police to imprison people, or better still hang them – and hide its social problems.
Freedom, imprisonment, racism, development, genocide
What is the difference between a ‘banana republic’ where people disappear – and in the Anglo-Saxon Bloc which has the world largest prison population? Maybe, my being from a backward country, stops me from understanding this great ‘progress’ that these countries seemed to have made!
The sight of the West, strutting as a protector of freedom on the global stage 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.
What is assimilation and integration
The West speaks of protecting individual freedom, whereas the calls for ‘assimilation’ integration are nothing but refurbished implementation of the ‘settled’ principle in the Desert Bloc of Cuius regio, eius religio’ (meaning whose land, his religion; CRER) – the ruler decided his people’s religion.
The West can speak from both sides of the mouth. Nicholas Sarkozy can tell Indians (i.e.Manmohan Singh) to respect foreign missionaries, who want to convert Indians to their religion – while the West can continue with this demonization of Islam. Would Sarkozy like to mention any other country where such a large minority Muslim population, has greater freedom and opportunity, than in India? Would you like to suggest France instead?
This is freedom – from both sides. For the West.