Archive for May, 2010

The dangerous case of the Chinese stumper

The dollar and euro need to be devalued by 25%-50% which means yuan must appreciate another 20%-35% from it record high (update on 26th August, 2011)

Let us call this the Chinese Stumper! (Hambone by Mike Flanagan; Cartoon courtesy - Business Standard; from issue dated 19th May 2010; Copyright - Graphic Syndication, England).

Let us call this the Chinese Stumper! (Hambone by Mike Flanagan; Cartoon courtesy - Business Standard; from issue dated 19th May 2010; Copyright - Graphic Syndication, England).

Siamese’ triplets

The Great Recession is like a case of conjoined triplets.

One is the USA – who has used their Bretton Woods licence to print dollars and flood the world market with excess liquidity. The US has also used their ‘dollar power’ to gain loyalty by favouring their allies, satellites and client states with low exchange rates that boost exports. Europe, Japan, Asian Tigers, (and now) China have all been favored with a ‘beneficial’ exchange rate in the past. At an ‘appropriate’ time, this ‘benefit’ was taken away. The US gained by ‘recruiting’ low-cost labour of these economies.

The US 'out-thunk' the Euro-zone on the Euro-currency strategy!

The US 'out-thunk' the Euro-zone on the Euro-currency strategy!

US imports, were underwritten by an increasing volume of IOUs, denominated in depreciating dollars. By paying for imports with IOU notes, the US could subsidize their high-cost exports, to these ‘semi-captive’ markets.

With dollar IOUs and dollar liquidity, US funded hi-tech R&D, overseas acquisitions (of companies, raw materials, allies), commercialize new technologies and standards (internet, software) space and defense, et al. Last forty-year estimates, show that US obtained funding equal to one full year’s US GDP. At nil cost!

All this due to the US dollar’s reserve currency status!

Can Europe be far behind

The Euro unwinds!

The Euro unwinds!

Post-Plaza Accord, Europe decided to get into ‘reserve-currency’ game, with the launch of the Euro currency in Jan 2002. As an incentive to TT-Note holders, the ECB ‘allowed’ the Euro to appreciate – vis-à-vis the dollar. This gave windfall gains to countries holding Euro as a reserve currency.

From dollar parity in 2002, the EU appreciated by more than 60%. After the introduction of Euro, in the first six years, Euro-bond holders hit a gusher. Anyone who held Euro bonds from January 2002 upto Decemeber 2007, would have made some 80% return during this six years. A return of 15% per annum. Close to junk bond returns.

After the ECB took the bait, the US played a waiting game. After running with the overvaluation bait, for 8 years, the Euro- fish is now tired. It is not able to break free of the over-valuation hook. The US is now reeling in the fish.

With a ‘strong’ currency, the option for Euro-zone is massive and painful deflation. Wages, pensions, prices, welfare state benefits will need to come down – and drastically. Do they have the steel or the hunger to do this. Used to a gold-plated Welfare State, Euro-zone does not have the moral resolve to go on a cold turkey diet of frugality.

500 years ago, a poor and marginal Europe could take the risk – and inflict genocide, slaughter, war, crime on a hapless world. Today’s geriatric Europe, effete and crumbling, cannot repeat their run of ‘success’, confronted as it is, by a militarily prepared Asia. Modern Europe’s problem is compounded by the lack of availability of victims.

Which brings us to China.

Change in US Govt securities by China - which has ranged between 30%-60% of total reserves. (Image source and courtesy - Click for larger image.

Change in US Govt securities by China - which has ranged between 30%-60% of total reserves. (Image source and courtesy - Click for larger image.

Doing business with bankrupt customers

China’s currency reserves of some US$2.5 trillion, (Update – US$ 3.2 trillion August 2011) in rapidly depreciating Euros and dollars with manufacturing overcapacity, exports-growth economic model is building into a complicated pressure head. Waiting to blow up. Already under US pressure for a yuan revaluation, add complications like

  1. Empty building blocks combined with inflated real-estate prices
  2. Bloated banks loan ledgers with ballooning bad debts
  3. Low entrepreneurial levels with foreign ownership of Chinese businesses
  4. Aging population with a dominant public sector
  5. Increasing foreign exchange reserves of depreciating currencies

and the Chinese Growth story begins to sputter.

As for the Rest of the world

The real challenge for the rest of the world, will be, one, wealth protection. Easily done. Buy gold.

Two, how do we let events unfold – safely. Insulating ourselves from the cycle of calamity, catastrophe, chaos, confrontation, confusion, crises – and then finally a crash.

A cycle that a 86-year young, mentally active, Gujju stock-broker, in Mumbai, shivering with Parkinson’s, explained to me, a few days ago.

Sadanand Dhume botches up history

US is significantly responsible for Pakistani mess

US is significantly responsible for Pakistani mess

Pakistan was carved out of the Muslim-majority areas of British India in 1947, the world’s first modern nation based solely on Islam. The country’s name means “Land of the Pure.” The capital city is Islamabad. The national flag carries the Islamic crescent and star. The cricket team wears green.

From the start, the new country was touched by the messianic zeal of pan-Islamism. The Quranic scholar Muhammad Asad—an Austrian Jew born Leopold Weiss—became an early Pakistani ambassador to the United Nations. The Egyptian Said Ramadan, son-in-law of Muslim Brotherhood founder Hassan al-Banna, made Pakistan a second home of sorts and collaborated with Pakistan’s leading Islamist ideologue, the Jamaat-e-Islami’s Abul Ala Maududi. In 1949, Pakistan established the world’s first transnational Islamic organization, the World Muslim Congress. Mohammad Amin al-Husayni, the virulently anti-Semitic grand mufti of Jerusalem, was appointed president.

Through alternating periods of civilian and military rule, one thing about Pakistan has remained constant—the central place of Islam in national life. (via Sadanand Dhume: Why Pakistan Produces Jihadists –

Half lies

Britain midwifed a baby with birth defect, faulty DNA and missing gene sequences

Britain midwifed a baby with birth defect, faulty DNA and missing gene sequences

If Sadanand Dhume has known all these little Pakistani factoids (used by androids, rhymes with haemorrhoids) I am sure he also knows how the US has bankrolled Pakistan’s state policy. Deliberately and consciously! Earlier to checkmate India, a nation friendly with USSR-Russia. Now for geopolitical reasons.

While Sadanand Dhume brings out some interesting details about Pakistan, I wish he would not join in, with so much relish, the bandwagon of Islamic Demonization.

Pakistan is half guilty

The practice of a cynical foreign policy, by the US does not absolve the Pakistani State of its fair share of blame. But then, does it give you a licence, Shri Dhume to bludgeon Pakistan in this manner! To completely ignore US accountability?

As a ‘benign’ Superpower, which the US wishes to portray itself, such a cynical foreign policy has no place in the world. Especially, if the US is going to practice that policy against a fragile non-nation like Pakistan.

It may not be out of place to mention that all the global terror hotspots, were or are, all frontline nations, as US allies, and targets of ‘benign’ US intervention! Afghanistan, Iran, Iraq. All of them! Apart from Pakistan, that is!

Something surely is rotten in the State of US!

It wuz Britain earlier

From a peaceful neighbourhood to the most volatile

From a peaceful neighbourhood to the most volatile

I will not even go into details of how Allama Iqbal converted to the cause of Pakistan after his travels to Britain in 1906. Or how the new State of Pakistan was inveigled into the Kashmir misadventure by British Generals of the Pakistani Army – as India also was!

And as a person of Indian extract, one would expect Sadanand Dhume to know this and write about this.

And not bang his head so hard at Western altars. Much like his cohorts Krittivas and Anand Giridharidas!

Now that India is the flavour of the season, Dhume has become a part of a cabal of mercenary journalists, of Indian extract, who are using their Indian names for some rather dubious goals.

2ndlooks and Quicktakes on Pakistan

Pakistan – a nation in fidayeen mode?

What should India’s counter terrorism plan look like …

Mumbai Massacre – The real blame and real culprits

India’s Pakistan Fixation

Terrorists And Counterfeit Indian Currency

For More Than 60 Years …

Indo Pak Relations – What Will It Take

India Lowers Guard

New Empire Builders – Neo-Cons Sneaking In

The Carving Of The Middle East

British Empire & The Anglo Saxon Bloc

Behind The Web Of Terror

How the Greeks learnt about emeralds!

The Mogul Emerald - only known emerald of the Mogul Period; dated near 1695; 10cm tall; weighs 217.8 carats; with intricate floral design including a rosette with poppies and foliage on one side; an Islamic prayer on the other; sold at an auction in London for $2.2 million (US).

The Mogul Emerald - only known emerald of the Mogul Period; dated near 1695; 10cm tall; weighs 217.8 carats; with intricate floral design including a rosette with poppies and foliage on one side; an Islamic prayer on the other; sold at an auction in London for $2.2 million (US).

Original Greek Word: σμάραγδος
Transliteration: smaragdos
Phonetic Spelling: smar’-ag-dos
Short Definition: emerald

via Strong’s Greek Dictionary: 4665. smaragdos.

From smaragdos, to esmeralde to emerald. The Greek word smaragdos, seems to be derived from Sanskrit word smarak-dosh.

Emerald is something that supposedly cures poor memory – a curative for smarak-dosh! Interesting that Indian astrology, gemmology and ayurvedic ideas affected Greece so deeply!

A ‘caring’ state is a ‘foolish’ mistake

The 'development' paradigm

The 'development' paradigm

The state government caught flak for using words such as “rustic” to describe tribal girls in official documents … Minister, Padmakar Walvi, apologised on behalf of the government …

… 95 adivasi girls had undergone a year-long training in Pune (for) the aviation hospitality sector … Legislators had taken on the government, saying it had “embarrassed these girls” by failing to get them placed. “The government encouraged these girls to become air hostess, but couldn’t provide them with jobs.”

Walvi informed … that the government has so far assisted 37 adivasi girls—who were denied jobs as air hostess—in getting placements in the tourism and hospitality industry. Six of them have been absorbed in airline companies, he added. “The remaining are likely to be recruited in various government departments if they do not get jobs of their choice,” he added. (via State says sorry for calling tribal girls ‘rustic’).

In Mumbai

In 2007, with surging liquidity, with no signs of The Great Recession, the Government of Maharashtra, decided that the fruits of the ‘sunshine’ sectors should also go to the ‘adivasis‘ and ‘dalits‘. So, they decided to spend Rs.1.crore. Said, Dr Vijay Gavit, state tribal development minister to TOI,

“Under the Centre’s welfare scheme for education of tribals, we (the state tribal development department) proposed that our boys and girls be trained in the sunshine sectors. Our proposal for air hostess and pilot training were readily sanctioned by them,’’

Girls from the backward pockets of Nandurbar, Thane and Nagpur are already undergoing the training programme at the privately-run Air Hostess Academy in Pune. The Centre is bearing over Rs 1 crore for the programme.

Presently the Centre pays Rs 1 lakh towards the one year air hostess course which includes tuition fees, hostel and uniform costs.

The minister said it was essential to keep up with the changing times so as to bring the socially and economically backward tribal community with the mainstream. Instead of making the tribal students go through some course which have lost all relevance in present times, we decided that they be trained to meet challenges in the modern era.

Is this the ‘development’, the ‘modern’ careers, that the ‘caring’ Government wishes on the ‘Adivasis‘!

In New Delhi

Two years after Mumbai, the next great ‘revolution’ in Indian economy after the BPO ‘thing’ was ushered by the ILO and GoD (Government of Delhi) under Chief Minister, Sheila Dikshit. ILO-GoD are going to train domestics and ‘upgrade their skills. With this ‘revolution’ India’ can become the global source for ‘true’ coolie labour – a source for domestics, for any country in the world. The New Delhi State Government

launched the programme for skill development of domestic workers, a programme to turn out trained housemaids for the rich and the burgeoning middle class. And in this endeavour, it had impressive sponsors: the International Labour Organisation (ILO) no less, the Union Ministry of Labour and Employment and the Delhi government, all under the umbrella of the high-sounding National Skill Development Programme. (via Latha Jishnu: The commons and the classes).

‘Caring’ Governments … ‘foolish mistakes’

I forgot to charge my cell phone! Foolish mistake, right? Everyday mistakes are usually foolish! And to believe that Governments can be caring, is a ‘foolish’ mistake! Apparently, colonialism never died. We now seem to just have Brown masters instead of White masters!

What a waste!

Of course, like Latha Jishnu (the author) of the article points out, no one is really interested in ensuring that all Indians go to equally good and high quality schools. Because then where will and “how would one get the endless flow of domestic helpers”. A dubious policy by the Government that cynically feeds on a trusting (gullible?) population!

To become domestics and air hostesses.

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