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Archive for March, 2010

Straw in the wind and reading tea leaves

The current Great Recession is forcing Europe to rethink many of its assumptions and move out of its comfort zone.

After a Nobel .. a grateful Obama was the least that Europe expected ...

After a Nobel .. a grateful Obama was the least that Europe expected …

Coming to terms

After much hand-wringing, chest thumping, indignation, there is the ‘the truth dawns’ moment.

Long used to effortless Anglo-Saxon collaboration with the US, Britain is lost in trying to define and prepare itself for this change.

stepping into a Blockbuster video shop, I found myself walking past aisle after aisle of Hollywood movies. Then I came across a tiny section labelled “foreign”, which contained about a dozen European films. Either Hollywood’s hegemony was such that the US was no longer perceived as another country, or Blockbuster had adopted the US definition of foreign and imported it 4,000 miles into the UK. The same confusion governs this country’s defence policy. The other side of the Channel is forrin. The other side of the Atlantic isn’t. (via Only America can end Britain’s Trident folly).

The change in calculus

Instinctively, and habitually, Britain rejected the French offer to share costs, control, benefits of its nuclear patrol – turning down benefits of a US$ ‘x’ billions.

Last week the government slapped down a French offer to reduce the costs of our submarine patrols by taking turns to prowl the same seas rather than duplicating the effort and occasionally crashing into each other. This proposal, it said, would cause “outrage”, on the grounds that it’s an unacceptable erosion of sovereignty. Using a system leased from the United States, on the other hand, presents no such difficulty. When the government says our sovereignty is threatened, it means that another nation might disrupt the orders it receives from Washington.

At Copenhagen, the British and the Euro-zone were in for a rude shock. The US ploy of Obama+BASIC meeting, ensured that the “only breakthrough was the political coup for China and India in concluding the anodyne communiqué with the United States behind closed doors, with Brazil and South Africa allowed in the room and Europe left to languish in the cold outside.”

At Pittsburgh G-20 Summit, it was reported that Barack Obama refused a meeting with Gordon Brown, five times. The worst for the US-Britain ‘special relationship’ was the day when Paris Hilton made Gordon Ramsay the British Prime Minister. Long smarting under the label of US poodles, British MPs reacted. With so much happening, a report from a group of British MPs followed. It called for a review of ‘special relationship’ with the USA.

There is an excruciating ritual that dates back at least to Thatcher: lobby journalists accompanying her on a trip to Washington would ask the president of the day or his officials about the “special relationship”. Briefed in advance by the British embassy or US state department about this peculiar cultural tic, the Americans would happily confirm it was still in place. It did not cost them anything. To this day, any deviation is treated by the British media as a snub.

Fluid world, unprepared Europe

Fluid world, unprepared Europe

Europeans in general themselves seem to have a high regard for Barack Obama.

U.S. President Barack Obama is so beloved in Europe that he was nominated for a Nobel Peace Prize (which he later won) just 12 days after taking office for his “extraordinary efforts to strengthen international diplomacy and co-operation between peoples.” A Pew survey this summer found that 93 percent of Germans, 91 percent of French people, and 86 percent of Brits believed Obama “will do the right thing in world affairs,” a stunning turnaround from their views on the last administration. Yet, this perception belies the reality that Obama has done much less for Europe than his predecessor.

The Wall Street Journal had some interesting anecdotes about Obama’s approach to Europe and Britain.

It is alleged that his paternal grandfather, Hussein Onyango Obama, was tortured by the British during the Mau Mau rebellion in Kenya in the 1950s, when it was controlled by Britain.

Soon after his inauguration, he sent back to the U.K. a bust of Sir Winston Churchill that had been loaned to President George W. Bush after the 9/11 attacks. The sculpture had enjoyed pride of place in the Oval Office.

There is also an important ideological reason that Britain’s leading policy makers find themselves increasingly shunned by the U.S. Key foreign-policy advisers to Mr. Obama are keen advocates of a federal Europe, one in which the European Commission based in Brussels is the main center of power and influence, rather than the individual capitals, such as London, Paris and Berlin. In this context, Britain’s dogged attachment to a “special relationship” with America is regarded as an embarrassing relic of a previous era.

Before taking office Mr. Gordon wrote that America should “support the European project” and warned that Britain’s historic resistance to closer European integration could seriously damage London’s standing in Washington. “Fully in Europe, Britain has every chance to remain America’s preferred and privileged partner,” he said. “Marginalized from the EU [European Union], Britain could find itself less influential in Washington as well.”

Wobbling orbit

Across the world, there is yet another ripple. Was the Euro a bad idea? Paul Krugman, a weather-vane of US status-quo thinking says,

Long before the euro came into being, economists warned that Europe wasn’t ready for a single currency. But these warnings were ignored, and the crisis came.

Now what? A breakup of the euro is very nearly unthinkable, as a sheer matter of practicality. As Berkeley’s Barry Eichengreen puts it, an attempt to reintroduce a national currency would trigger “the mother of all financial crises.” So the only way out is forward: to make the euro work, Europe needs to move much further toward political union, so that European nations start to function more like American states.

But that’s not going to happen anytime soon. What we’ll probably see over the next few years is a painful process of muddling through: bailouts accompanied by demands for savage austerity, all against a background of very high unemployment, perpetuated by the grinding deflation I already mentioned.

It’s an ugly picture. But it’s important to understand the nature of Europe’s fatal flaw. Yes, some governments were irresponsible; but the fundamental problem was hubris, the arrogant belief that Europe could make a single currency work despite strong reasons to believe that it wasn’t ready.

Real politik

Reluctant Euro-media starts on anti-Obama campaign  |  2009 Cartoon by William Warren

Reluctant Euro-media starts on anti-Obama campaign | 2009 Cartoon by William Warren

For the next 2-3 decades, international equations are likely to be fluid. There is no room for congratulations, surrender or gloating. Symbiotic relationships will be the new model – and exploitative-confrontationist models may no longer be possible or feasible.

The US change in attitude towards Europe, can be said to be permanent, if the next US President were to continue the cold-shoulder.

Till then, play it by the year. Keeping your ears to the ground may also help.


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Indian Women – Entitlement and prejudice

March 28, 2010 5 comments

100 years after Suffragette Emily Wilding Davison died for the cause for woman’s vote, have things changed? FEMEN activists 100 years later have to go topless, to make a point?

https://i1.wp.com/bangalore.citizenmatters.in/pics/0000/3676/cartoons-iic-gallery1.jpg

FEW Urban Women are completely disconnected

Nearly a century ago, one Emily Wilding Davison unfurled the purple, white and green colours of the Suffragette flag and then threw herself under the galloping hooves of the King’s horse at the Epsom Derby. She died of her injuries four days later without recovering consciousness. The jockey, Herbert Jones, who suffered concussion and shoulder injuries in the collision, saw his career go downhill from there on. He committed suicide in 1951, having said several times that he had always been haunted by Davison’s face. (via Kanika Datta: Entitlement and prejudice).

When Emily Wilding Davison came under the hooves of horses  |  Click for image.

When Emily Wilding Davison came under the hooves of horses | Click for image.

How about?

Q. Who are the wealthiest women on Earth? A.Indian women, who own more than 20,000 tons of gold.

Q. What did Indian women have to do, to get the right to vote in the largest democracy in the world? A.Nothing special. They got the right to vote the same way, at the same time that the rest of Indians got the right to vote. Unlike the ‘advanced’ West.

Q. Which region in the world has selected the most number of women as heads of state? A.The Indian subcontinent. Sri Lanka, Bangladesh, India, Pakistan have all had women as heads of State.

Q. How many women have served as the President of United States in the more than 200 years of US democracy? A.Nil.

Q. How many women candidates have been selected as candidates for the US presidential election? A.Nil. No nominees. Neither by the Republican nor the Democratic parties.

Q. Which society settles a woman’s inheritance in family wealth at the time of marriage? A.Indian society, where a woman is given considerable dowry at the time of her marriage – which is her share of inheritance.

Q. Which is the only culture, in the world, where the two most widely celebrated festivals are dedicated to women goddesses? A.India – Diwali and Dussera.

Q. Which is the only culture in the world with unisex clothing for the last 5000 years? A.India. The sari /dhoti is a unisex garment. And popular all over India today. Unisex clothing, saris and dhotis dominated the Indian plains, and the salwars, in the North West mountain regions of India. The Indo-Scythians used leather leggings – which were helpful in long marches on horse backs.

Unlike other parts of the world, where women were forced to conform to a male standards and prescriptions of dressing, Indian women were free and dressed like their men did (Feminists note – Indian men were forced to dress, like their women did).

100 years after the death of Suffragette Emily Wilding Davison, in 1913, you can still see FEMEN activists preparing for a protest - if not death and battle |  Image courtesy: rt.com; source: Reuters / Osman Orsal  |  Click for image.

100 years after the death of Suffragette Emily Wilding Davison, in 1913, you can still see FEMEN activists preparing for a protest - if not death and battle | Image courtesy: rt.com; source: Reuters / Osman Orsal | Click for image.

FEW Urban Indians

I am sure that for each of these answers, the FEW (Fragile Egos of Westernized) Urban Indians will find some qualifications and answers … They will come back with a BUT!

All these arrivistesawaiting the bra-burning, West-denominated women’s lib, as signs of arrival and the true coming. They could take a 2ndlook at what real feminism is. Or, at least, how the oldest feminist civilization looks at the feminine. After all, 1.2 million Indian women, elected to positions of power, is something significant!

For them, regardless of evidence, West is the Best.

I wonder, why is it that for every little idea in their tiny heads, they need to be led by their noses, held firmly by Western hands. Kanika Dutta, the writer of the above linked post, makes this very promising beginning  – and then goes the way of the FEW Urban Indians.

Sadly!


China and U.S. soften tone on yuan

The poor will pay a price ... as usual.

The poor will pay a price ... as usual.

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!

Rousing 'macho' WASP voters!

Rousing 'macho' WASP voters!

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:-

  1. Act tough
  2. Behave in a morally outraged and indignant manner
  3. 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: –

  1. Hold up China an nation-exemplar
  2. Write books analysing on China. Such books will start pour out of our ears
  3. Make movies and novels about the ‘dominant’ Chinese in the US
  4. 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.

A certainty

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?

Economic mayhem?

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?

Naxalites, Maoists! Branding does not help.

March 27, 2010 2 comments
India's industrial base needs to be smart - and not BIG!

India

Violence suffuses life in rural India, some latent, a lot of it structural and quite a lot more, murderously bloody. When the forest department declares an entire village as illegal, because it allegedly stands on forest land, evicts the inhabitants, and then, a year later, renotifies the land as revenue land, fit for habitation, and proceeds to parcel out the land to cronies of the local political and bureaucratic elite, how do we describe the treatment meted out to the original inhabitants of the village, dispossessed by the state in the name of the law? Tender loving care? If these villagers resort to violence, they will become law-breakers, and put behind bars. If they petition the higher authorities, these higher authorities will ask for a hefty bribe and do little. If they go to court, the case will come up for hearing after most of the petitioners have lived out their lifespan. Into this vacuum of viable choices, the Maoists saunter in. Every Maoist advance is a tombstone over a fatal failing of democracy. (via Maoists as part of the solution :Cursor:TK Arun’s blog-The Economic Times).

State as a land-grabber

The State as a land-grabber!

The State as a land-grabber! (Copyright and courtesy - Times of India, Ajit Ninan).

These same tribals, (being branded as Maoists, Naxalites), organized themselves into many armies and fought British armies for more than a 100 years. For the same reasons. Land grabbing by the State. The Indian State would do well to learn from the British experience. Probably, the modern Indian State does not know its own history – and believes in its own propaganda.

Official history, strangely, does not tell us that between 1800-1947, apart from the Anglo-Indian War of 1857, there were more than 75 battles, skirmishes, revolts, mutinies, involving thousands, up to lakhs of Indians, across India. And more than double that many conspiracies, hold-ups, explosions, bombings, which were not organized. These more than 200 violent actions have been completely glossed over by post-colonial India’s historians. Obviously, more than 200 incidents of violent opposition to British misrule over 150 years (1800-1947) deserves better treatment by official historians. Especially, the people who fought most of these battles.

The tribals.

Guha welcomes Raghu Ramachandra

The Indian State would also do well to remember that Raghu Ramachandra respected the rights of the tribals. He entered into the forest, on his way to exile, only after being welcomed into the forest by Guha, the forest king, hunter king of the Nishada tribe – the ruler of the forests. Please note the importance of the word – tath – thereupon. Important word that.

tataH niSaada adhipatim dR^iSTvaa duuraat avasthitam |
saha saumitriNaa raamaH samaagacchad guhena saH || 2-50-35

35. dR^ishhTvaa= seeing; duuraat= from the distance; nishhaadaadhipatim= the king of Nishada; upasthitam= coming; saH raamaH= that Rama; soumitriNaa saha= along with Lakshmana; tataH= thereupon; samaagachchhat= went forth to meet; guhena= Guha.

Seeing from a distance the king of Nishada coming, Rama along with Lakshmana thereupon went forth to meet Guha.

Such centuries of tradition are being trampled by the Indian State – which continues with some colonial practices.

Bad idea. This land-grabbing.

Was Spielberg’s ET based on a Satyajit Ray Script?

March 27, 2010 6 comments
Satyajit Ray  |  Image source & courtesy - indianexpress.com  |  Click for source image.

Satyajit Ray | Image source & courtesy – indianexpress.com | Click for source image.

Spielberg has denied plagiarizing Ray’s script. “I was a kid in high school when his script was circulating in Hollywood…” [Link]

This post here from Ultrabrown lays out the linkage between Satyajit Ray’s script and Spielberg’s ET.

Another case of Cultural Dacoity?

Spielberg & his ET. “Originality is the art of concealing your sources” - Benjamin Franklin

Spielberg & his ET. “Originality is the art of concealing your sources” – Benjamin Franklin

Oz cops under scanner over porn, racist emails – Rest of World – World – The Times of India

Truth hurts, huh? This Indian cartoon got Australian goat!

Truth hurts, huh? This Indian cartoon got Australian goat!

About 100 Australian police are being investigated for circulating racist and pornographic emails via the internal police email system, and one officer involved in the scandal has committed suicide, a top official said on Thursday.

The probe in Victoria state follows an independent citizens group report last week … accusing the department of having a “culture of racism.”

Police Chief Commissioner Simon Overland acknowledged at the time that some officers were racist but said they were a small minority … the material involved a variety of offensive themes, including pornographic and sexist material … none of it was illegal but that all of it was offensive and in breach of department policy.

He would not confirm whether any of the racist material referred to Africans or Indians … the target of violence in Victoria state and have criticized police conduct in recent months. The Age newspaper reported that the investigation centered on a graphic image of a non-Caucasian man being tortured.

Overland confirmed that a police officer who committed suicide earlier this week … Tony Vangorp, 47, tendered his resignation on Friday and returned to the police station Monday night and shot himself. Overland said Vangorp had not been responsible for any racist emails. (via Oz cops under scanner over porn, racist emails – Rest of World – World – The Times of India).

Stand up and take the responsibility

It is a tragic that a low-level police officer, Tony Vangorp paid with his life – for essentially, criminal neglect and attitudes of the authorities. Tony Vangorp is possibly a modern-day version of Breaker Morant.

CNC Machines to Soviet Union

1982, Height of the US-USSR rivalry, under President Ronald Reagan. Japan was predicted to replace USA as the economic power. Toshiba, of Japan and Kongsberg Vapenfabrikk, Norway’s largest defense contractor, sold some multi-axis CNC machines to Russia – banned under COCOM rules, to which Japan was a signatory.

Details of this sale became known in 1987. Toshiba, President Sugiichiro Watari and Toshiba Chairman Shoichi Saba resigned soon after the affair became public. ”We have a big responsibility as the parent company,” the departing chairman said. ”We feel responsible for having troubled society.” reported the New York Times. Saba said, “must take personal responsibility for not creating an atmosphere throughout the Toshiba group that would make such activity unthinkable, even in an independently run subsidiary.”

Not some junior level clerk.

Shastri and Indian Railways

Lal Bahadur Shastri

Lal Bahadur Shastri

Post-colonial Railways system in India was the biggest scrap heap in India. Accidents were a regular feature – but naturally. The colonial practice was to blame the lower most employee, and tar the native workers as being lazy and slip-shod. The Brown Sahibs, continued with this practice, even after the British departed. Till, one day, one man stood up and said I am responsible. That man happened to be Lal Bahadur Shastri. From that day, the Indian Railways started improving – to become a low-cost, high safety transport system in the world.

Australian authorities have been consistently covered up the incidents, fudged and hid data, minimized the problem – and went into ritualistic denial.

To what end?

The Great Recession – Outlines of Round 2

March 26, 2010 1 comment

Is the global economy staring at a double-dip? Round-II of the Great Recession coming your way?

Gross Indebtedness - Some sample countries  |  Image source & courtesy - livemint.com  |  Click for image.

Gross Indebtedness - Some sample countries | Image source & courtesy - livemint.com | Click for image.

The next tsunami

Gross debt (government, private, corporate) of the Greece, Hungary, Ireland, Italy, Portugal, Spain, UK, US are all above 200% – going up to more than 1000% in case of Ireland.

These leaves the governments with a tough choice.

Analysts are already pointing to a policy dilemma: If these countries cut back on government borrowing, growth will suffer. But if they don’t prune their deficits, the bond market, spooked by the higher borrowing, will push up interest rates, which, in turn, will impact growth.

For the banks, much depends on what happens to the housing sector. US analyst Meredith Whitney has said the US is sure to see a double dip in housing, which will force credit writedowns in banks and impair capital. Bank lending in the US has still not picked up, which means that the US consumer is wary of taking on more debt. That is not difficult to understand, given the job losses and the fact that household debt to GDP ratios are still very high.

Societe Generale SA economist Albert Edwards, admittedly an unabashed bear, points out: “Household leverage has returned to 94% of GDP from its peak of 96% in both 2007 and 2008. But consider this: At the peak of the Nasdaq bubble, household leverage was just shy of 70%. There is a very, very long way to go.” (via Round 2 of crisis in developed world to mar global recovery – Economy and Politics – livemint.com).

The lure of a welfare state

The lure of a welfare state

So, what happens if a borrower(s) default on repayment? There is insurance for non-repayment.

Going insurance rates for repayment risk, knowwn as credit default swap (CDS) are indicative of the market perception. What exactly do CDS rates signal?

Explains a journalist,

Higher spreads on credit-defaults swaps indicate sellers have raised the price of guaranteeing protection because they perceive the likelihood of a default as higher. A spread of 97 means it would cost about $97,000 to buy protection on $10 million in U.S. government debt. (from U.S. sovereign-credit spreads rise sevenfold in year, By Laura Mandaro, MarketWatch, San Francisco).

The ratings game

The second patch of quicksand in money-markets is the ratings business.

Ratings game is a very curious business. India, a US$1 trillion economy, growing at 7%, with a gross debt of 129%, has a rating of BBB-. Look at Ireland, where accordingto the most recent World Bank data, Ireland’s number stands at a staggering 1,267%” – has a rating of AA-, after a recent rating downgrade in November 2009.

Brazil, India, Russia and South Africa are missing  |  Image & courtesy - paul.kedrosky.com  |  Click for image.

Brazil, India, Russia and South Africa are missing | Image & courtesy - paul.kedrosky.com | Click for image.

Or a situation where,

China swaps cost 66 basis points, down from 297 on Oct. 24. That’s cheaper than Greece and Ireland and within 9 points of Austria, Italy and Spain.

Obviously, such artificial pricing and manipulation can only be ‘sustained’ for short bouts.

And when does that short bout end?

It is obviously true that market perceptions of sovereign default risk in the eurozone (as reflected in CDS rates) are rising across the board and are now very high indeed by historical standards.  According to Markit, on 12 January 2009, Germany’s 5-year  CDS rate was 44 basis points, France’s 51 basis points, Italy’s  155 basis points and Greece’s 221 basis points.  The same is true, of course, for the US, with a CDS rate of 55 basis points and and for the UK, with a 103 basis points CDS rate.  Sovereign CDS markets may not be particularly good aggregators and measures of default risk perceptions because issuance is patchy and trading is often light, but the numbers make sense.

Engines of growth

EU’s economy is contracting now for the last 18 months. The burden of the Welfare State is not reducing. EU’s populations are not scaling down their expectations. Who will pay for these gold-plated services, that Europeans consider is their birthright.

The Chinese+ASEAN economies depend on exports to US and European markets for growth. With these bankrupt economies as customers, the outlook for China+ASEAN is questionable. Middle East depends on US+EU for security, banking, monetary and fiscal management.

That leaves the global economy with Brazil, Africa India and Russia as engines for growth

Debt-GDP Ratio's - Major economies  |  Image source & courtesy - visualeconomics.com  |  Click for source image.

Debt-GDP Ratio's - Major economies | Image source & courtesy - visualeconomics.com | Click for source image.

The Russian conundrum

After decades of boycott, machinations and confrontation, the Russian Government is in  a strong position of being low on debt.

With the lowest levels of Government and private debt, it is the Russian corporate sector which is the main debtor. Russia is in a league of its own, with debt levels ranging between 2%-20%.

Russian crisis and default are ‘artificial’ and opportunistic creations of Western bankers, trying to squeeze a recalcitrant country. Russia managed the “budget deficit to hit 6.8% of GDP this year and wants to lower that to around 3% by 2012.”

Never have so many depended on so few – for economic growth. Thin gruel to go round.

arch 10, 2009, 7:19 p.m. EDT · Recommend (31) ·


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