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Shopping With Iraq’s $1.2 Trillion – What It Can Buy For The US

September 18, 2011 Leave a comment
Iraq was for US; Libya is for Europe. Spoils of War (Cartoon by Dave Brown; publication date - 26 August 2011; source - independent.co.uk). Click for larger image.

Iraq was for US; Libya is for Europe. Spoils of War (Cartoon by Dave Brown; publication date - 26 August 2011; source - independent.co.uk). Click for larger image.

Whatever number you use for the war’s total cost, it will tower over costs that normally seem prohibitive. Right now, including everything, the war is costing about $200 billion a year.

Treating heart disease and diabetes, by contrast, would probably cost about $50 billion a year. The remaining 9/11 Commission recommendations — held up in Congress partly because of their cost — might cost somewhat less. Universal preschool would be $35 billion. In Afghanistan, $10 billion could make a real difference. At the National Cancer Institute, annual budget is about $6 billion.

“This war has skewed our thinking about resources,” said Mr. Wallsten, a senior fellow at the Progress and Freedom Foundation, a conservative-leaning research group. “In the context of the war, $20 billion is nothing.”

As it happens, $20 billion is not a bad ballpark estimate for the added cost of Mr. Bush’s planned surge in troops. By itself, of course, that price tag doesn’t mean the surge is a bad idea. If it offers the best chance to stabilize Iraq, then it may well be the right option.

But the standard shouldn’t simply be whether a surge is better than the most popular alternative — a far-less-expensive political strategy that includes getting tough with the Iraqi government. The standard should be whether the surge would be better than the political strategy plus whatever else might be accomplished with the $20 billion.

This time, it would be nice to have that discussion before the troops reach Iraq. (via What $1.2 Trillion Can Buy – NYTimes.com).

Talk is not cheap

Discussion with whom, David?

I presume, not with the invadee nation? In this case, the Iraqi people. You are justifying discussions in the US Congress, between US political parties, by US bureaucrats, with the US President …

Right?

About the future of other people. People who have nothing to do with the US. In this case the Iraqi people.

Grave robbers

Coming to cost of this war. The primary education, the higher education, the medical research that you want funds for, will come from the graves of the Iraqi people. Like the Nordhaus report that you refer to, says,

Iraq’s oil resources could satisfy current U.S. oil imports for almost a century.

So, this money you want for primary or higher education, for medical research will come directly as a result of the nearly 1 million undocumented and estimated Iraqis dead or the documented 100,000 Iraqis dead. The number does not matter, because they are both huge numbers.

Or is it that Iraqis don’t count?

Altar of bones

I do hope that this education and this medical research benefits Americans. Otherwise, what would you tell those Iraqis who died? That they died in vain? That no one befitted from their death?

We cant have that, can we?

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MF Husain was Hindu

July 3, 2011 3 comments
M. F. Hussain gets Qatar nationality announces the editor of Hindu - N. Ram (Image courtesy - hindu.com). Click for larger image

M. F. Hussain gets Qatar nationality announces the editor of Hindu - N. Ram (Image courtesy - hindu.com). Click for larger image

Says Pritish Nandy

Maqbool Fida Hussain never said ‘I am a ‘Hindu”. Yet, Pritish Nandy insists on claiming Hussain for ‘Hinduism’. But then, Pritish Nandy for one is not a ‘Hindu’ – in mind, spirit or thought.

Not, if he cannot understand, that what Pritish Nandy calls ‘Hinduism’ does not require everyone to go by One book, belong to One Faith, worship One god or believe in any One thing. ‘Hinduism’ would have been absolutely comfortable with MF Hussain being a Muslim. And everyone includes Maqbool Fida Hussain also.

‘Hinduism’ does not believe or accept that it  is ‘superior’ or ‘inferior’ to any other body of belief. The only one thing that ‘Hinduism’ does not accept is अधर्म adharma. Injustice to any man.

Everything else goes.

‘Hinduism’ is public property

At this point here, Farrukh Dhondy joins the debate. Dhondy implies ‘Hinduism’ is public property. MF Hussain has a perfect right to do whatever he wants with ‘Hinduism’ – believes our Mr.Dhondy.

When Mother Teresa became an object of media-adulation, Hussain turned to Moter Teresa. (Image courtesy - indiatimes.com.) Click for larger image.

When Mother Teresa became an object of media-adulation, Hussain turned to Moter Teresa. (Image courtesy - indiatimes.com.) Click for larger image.

The Hindus don’t have a single book and certainly not one that sanctions attacks for depicting one or the other goddess and using an imaginary or live model’s form and features to do it. Those who hounded MF were barking up the wrong walking stick.

It has happened before. Raja Ravi Verma was castigated, mobbed and prosecuted for using his mistress as a model for paintings of Hindu goddesses and heroines from the epics. Ketan Mehta’s film may shed some light on how and why a notion of heresy invaded the beliefs of Hinduism.  Hinduism, should be free from such an idea.

The demolition of the temple of Somnath may be seen as insults and affronts to the communities that built them and worshipped there but not in any sense is it heresy. Breaking icons is certainly insulting. But surely MF Husain was making them? (via Indian idol maker – Hindustan Times; parts excised for brevity).

Logically, Dhondy must understand that all idol-breaking or form-distortion can happen only at ‘Hindu’ sufferance – or tolerance, if you wish. ‘Hindu’ intellectual capital is available – at no cost.

To subscribers only.

23-May After Mamata Banerjee’s victory in West Bengal assembly elections, MF Hussain sent a sketch to Hindustan Times. (Image courtesy - hindustantimes.com). Click for larger image.

23-May After Mamata Banerjee’s victory in West Bengal assembly elections, MF Hussain sent a sketch to Hindustan Times. (Image courtesy - hindustantimes.com). Click for larger image.

No ‘free’ lunch at ‘Hindu’ expense

I don’t subscribe to FT.com. I don’t talk-up, talk-down, talk-about FT.com. FT.com does not want me. Separate ways. Good for both of us.

Same thing with ‘Hinduism’, I thought.

Without being a subscriber to ‘Hinduism’, others can use, accept ‘Hindu’ ideas, concepts, standards, clearly at ‘Hindu’ sufferance. Especially if an ‘artist’ wishes to make commercial profit by using ‘Hindu’ capital. Maqbool Fida Hussain wants to combine ‘Hindu’ sufferance, (or tolerance, maybe broad-mindedness), with Islāmic sensitivity (blasphemy, no idols and portraits), for his personal gain.

Hussain painted freely and frankly – nude goddesses, dark monks, rib-lined horses, elephants playing veenas, nations in distress – in canvases executed with style and showmanship, spreading artistic excitement across society.

But never an Islāmic theme – unless you want to count Meenaxi as an Islāmic theme! Why?

Now, Maqbool Fida Hussain used and adopted Islāmic standards, when it came to Islām. He should have stayed with Islāmic standards. Don’t portray any gods and goddesses.

MF Hussain sketches Madhuri Dixit from the film - Dil to Pagal Hai.

MF Hussain sketches Madhuri Dixit from the film - Dil to Pagal Hai.

Even Maqbool Fida Hussain cannot be chalk and cheese.

Everything to everyone

Maqbool Fida Hussain rode on the coat tails of  every media-star to gain publicity for himself. Vijay Tendulkar to Madhuri Dixit, Anushka Sharma to Mother Teresa. From Prabhu Deva to MS Subbalakshmi. He quickly made out a silly painting of Mamta Banerji’s election victory in Bengal – to keep himself in media-focus.

Maqbool Fida Hussain has always blown in whichever direction, the wind blows. He tried to be an admirer of playwright Tendulkar (and Sakharam Binder) when Vijay Tendulkar was bigger than Sachin Tendulkar – and supported Indira Gandhi’s Emergency when she was in power. Nandyभाई, Maqbool Fida Hussain cannot be ‘Hindu’ in spirit – and admire Mother Teresa’s blatant superior ‘Christian conversion’ therapy for  inferior ‘Hindus’.

Year - 2006; Bharatmata (Mother India) as a nude woman displayed at an exhibition by Nafisa Ali - an actress-turned-social-worker. (Image courtesy - indiatimes.com). Click for larger image.

Year - 2006; Bharatmata (Mother India) as a nude woman displayed at an exhibition by Nafisa Ali - an actress-turned-social-worker. (Image courtesy - indiatimes.com). Click for larger image.

Did I miss MF Hussain standing up for artistic freedom of the Prophet Mohammed cartoonist – or oppose Sarkozy’s hijab ban? Not a word in support of Salman Rushdie? Or why his ‘voluntary’ restraint from subjects that Islam forbids – which was Maqbool Fida Hussain’s own religion?

Did I see a single painting by Maqbool Fida Hussain on Muslim themes – maybe a Battle of Karbala, or Prophet Mohammed’s return to Mecca? Why is it that he wanted all his ‘freedom’ to caricature भारत माता Bharat-mata (Mother India) and ‘teen-deviyaan’?

In India, against ‘Hindus’?

In Qatar he found freedom

Maqbool Fida Hussain, in the same breath, cannot admire भारत माता Bharat-mata, take Qatari citizenship, and in death prefer to be buried in London (actually just outside London). By these actions, Maqbool Fida Hussain proved that all his claims of ‘artistic’ integrity and ‘artistic’ freedom were that much hot air. India lost nothing. It was for Maqbool Fida Hussian to decide if he was losing anything, by going away from भारत माता Bharat-mata.

Maqbool Fida Hussain choice of Qatar as his new country of residence, would not have given him more freedom. Qatar (pop. 3,00,000 lakhs approx.) is slightly larger than Maqbool Fida Hussain’s hometown of Pandharpur (pop. 1,00,000 approx.) but has a GDP which is 10% of India’s GDP – anchored to oil earnings. Did he raise his voice against Qatar’s support to Saudi Arabian troops sent to crush dissent in Bahrain? Or against the forced deportation by Qatar, of Libyan dissident, Eman al-Obeidi – back to Benghazi, Libya?

Picasso’s Art & Practices

Picasso’s (1881-1973) greatest skill was in his self publicity and the way the prices for his paintings were managed. This publicity and price manipulation operation was initially managed by promoters like André Level of the La Peau de l’Ours Art Club (Skin of the Bear group) – for a 20% cut to the artist. Picasso dealt with a number of agents initially – but mainly, Clovis Sagot, Ambroise Vollard, Wilhelm Uhde and Daniel-Henry Kahnweiler.

Later this promotions were managed by Picasso himself and Paul Rosenberg, his chief agent and a close cabal of people who used media effectively. First among 20th century artists, ‘Picasso was a gifted self-publicist who knew the rules of media manipulation. He openly encouraged a few hand-picked photographers to inhabit the house and studio.’

Family of Saltimbanques |  Pablo Picasso  |  1905 |  Chester Dale Collection 1963.10.190   | Image courtesy - Copyright © 2011 National Gallery of Art, Washington, DC  | Click for larger image.

Family of Saltimbanques | Pablo Picasso | 1905 | Chester Dale Collection 1963.10.190 | Image courtesy - Copyright © 2011 National Gallery of Art, Washington, DC | Click for larger image.

He fairly flattened journalists by the display of his wealth and connections. Nearly forty years later, Christian Zervos, an art historian and writer, recalls Picasso’s wealth, kept in the vaults of Banque de France. After the Great Depression, when many great fortunes in Europe and USA, had been wiped out, Picassos wealth was in ‘packages, piled one atop another to the height, say, of Picasso . . . And do you know what there was inside? Banknotes! Yes, sir, banknotes, the largest denomination that existed in France then, which was enormous.’

Picasso was an ‘extremely rich and famous man who came pretty near to doing whatever he wanted. The Picasso of the 1920s could charm the king of Spain, mesmerise Proust, shrug off Hemingway. He was news wherever he appeared.’ He could switch between various styles – and painted in ‘Neoclassical styles’ to attract “the patronage of aristocratic circles he encountered through his friendships with two impresarios, the poet Jean Cocteau and Eugenia Errazuriz, a woman of great taste and social prestige.’

Not above making compromises between cubism and surrealism, as his buyers and patrons wanted, he rarely gave press conferences. Instead he plied impresarios, journalists with his socializing, and with his ‘uncanny party trick of drawing a portrait upside-down while sitting opposite its subject so that, as the drawing unfolded, it would appear right-side-up to his inevitably amused subject.’ Hundreds of these Picasso drawings and sketches are scattered across Europe and USA, which he gave way for free.

Femme aux cheveux jaunes, December 1931 | From the Estate of Pablo Picasso/Artists Rights Society, New York/Gagosian Gallery | Image courtesy - online.wsj.com | Click for larger image.

Femme aux cheveux jaunes, December 1931 | From the Estate of Pablo Picasso/Artists Rights Society, New York/Gagosian Gallery | Image courtesy - online.wsj.com | Click for larger image.

In this he was ably assisted by the presence of his ballerina wife, Olga Khokhlova, a pretty ballerina from St Petersburg, with Diaghlieff’s ballet company, and his agent Paul Rosenberg.

Paul Rosenburg (also an agent of Georges Braque and Henri Matisse) left behind a huge fortune in paintings. Even after losing a vast number of these paintings to the Nazis. Through his son, Alexandre, Paul Rosenberg is the grandfather-in-law of one-time IMF chief, Dominique Strauss Kahn. Picasso’s other significant agents were Ambroise Vollard, Daniel-Henry Kahnweiler, Leonce Rosenberg, and Georges Wildenstein.

Picasso’s mistress of eight years, Marie-Thérèse Walter (who he met at a Paris Metro station) and his wife were also the subject of his many paintings. In recent times, Picasso has even been compared to Princess Diana for his self-publicity. The many women in Picasso’s life added a patina of glamour that many of his competitors lacked.

The French artist Fernande Olivier, as model and muse, bridged Picasso’s Rose Period to Cubism. Miss Khokhlova, in the 1920s, stirred his return to Neo-classicism. The photographer Dora Maar documented and inspired Picasso’s involvement with the Spanish Civil War, including “Guernica” (1937). And the painter and author Françoise Gilot was his chief consort during his postwar period. From 1953 until Picasso’s death, at age 92 in 1973, Jacqueline Roque attended the artist during his ferocious, erotic and peace-loving late phase, in which “Hippie” Picasso, anticipating 1980s Neo-Expressionism, reimagined the Old Masters.

Now, as for paying off the critics, do it. Yes, as much as some critics pretend to not be on the take, they are — in some way or another. The best art critics accepted gifts: Clement Greenberg, Harold Rosenberg. Artists frequently offer me a gift after I’ve written them up. I just take it. I feel I’d insult them or be condescending and inhuman if I said something like, “It’s my policy not to accept gifts.” Lighten up. We’re all in the family.

So be generous in giving gifts, but beware of the greedy opportunists who expect a gift without having the intention of reciprocating, like people attending your openings who ask for a “quick sketch” instead of just an autograph. If you do one, they’ll all line up expecting a freebie. With other artists, it’s best to do straightforward trades instead of gifts. And with friends outside the art world, wait for their birthday or Christmas. (via artnet.com Magazine Features – Ask Mark Kostabi).

Leave alone Prophet Mohammed’s portrait, could he have done a Battle of Karbala painting in Qatar?

Money made him contemptuous of India – and Indians

Maqbool Fida Hussain’s disregard of Indian judicial norms antagonized the courts. His refusal to acknowledge his ‘unwarranted’ liberties with ‘Hinduism’, precipitated matters. A simple statement that he will ‘explore’ ‘Hindu’ themes within norms would have been enough. His arrogant and rough shod dismissal of ‘Hindu’ sentiment, gave an opening to right-wing ‘Hindu’ sentiment.

No double-standards. The simple point that the ‘Hindu’ Brigade wanted. Usually this hunting with hounds and running with hares is called hypocrisy.

Though no one ever accused MF Hussain of being a hypocrite.

Gobbling publicity like Pac-man

Maqbool Fida Hussain never evolved from being a hoardings painter. Except when it came to publicity. His dual standards, his blatant contradictions would have easily made him an object of ridicule. Instead he managed respect and consideration. To manage this amount of media attention, Government attention – even international attention, surely, is some evolution. For one single man.

Maqbool Fida Hussain was finally a gargantuan machine that consumed huge amounts of media attention. His ‘artistic’ talents were surely hugely surpassed by his media management. This publicity and MF Hussain strutting his commercial exploitation of ‘Hindu’ constructs provoked the ‘Hindu’ Brigade’s backlash. His cars, or the striptease that he organized on his birthday (some 25 years ago), reeked of ostentation. Private displays of wealth in India will not arouse reaction. But such ceaseless publicity-seeking …

No wonder people called him India’s Picasso.

Reaction on Ground Zero

Indian Muslims have ignored this issue of ‘artistic freedom’ for ‘Muslims’ at ‘Hindu’ expense. But Indian liberal-progressives, steeped in Western polity, see confrontation and conflict as the answer to such ‘artistic’ restrictions.

Negotiated ‘freedom’ as in भारत-तंत्र Bharat-tantra, is seen as a cop-out.

Related articles

Karl Marx on the opium trade

June 7, 2011 1 comment
Faced with a labour crisis after slave revolts, Europe (specially England) needed alternatives for a new 'slavery' model. A fugitive theorist - Karl Marx. Capitalists and capitalist nations of Europe loved – especially the USA.. Click for bigger image.

Faced with a labour crisis after slave revolts, Europe (specially England) needed alternatives for a new 'slavery' model. A fugitive theorist - Karl Marx gave a model for 'slavery'. Capitalists and capitalist nations of Europe loved – especially the USA.. Click for bigger image.

Marx on the Opium trade

Some 150 years later, Karl Marx’s commentary on the opium trade remains relevant.

Much loved by the capitalists of his time, Karl Marx analyzed opium trade well.

Nurtured by the East India Company, vainly combated by the Central Government at Pekin, the opium trade gradually assumed larger proportions, until it absorbed about $2,500,000 in 1816. The throwing open in that year of the Indian commerce gave a new and powerful stimulus to the operations of the English contrabandists.

In 1820, the number of chests smuggled into China increased to 5,147; in 1821 to 7,000, and in 1824 to 12,639. Meanwhile, the Chinese Government, at the same time addressed threatening remonstrances to the foreign merchants, punished the Hong Kong merchants, (with) more stringent measures. The final result, like that in 1794, was to drive the opium depots from a precarious to a more convenient basis of operations.

The trade shifted hands, and passed to a lower class of men, prepared to carry it on at all hazards and by whatever means. Thanks to the greater facilities thus afforded, the opium trade increased during the ten years from 1824 to 1834 from 12,639 to 21,785 chests.

The year 1834 marks an epoch in opium trade. The East India Company lost its privilege of trading (and) had to discontinue and abstain from all commercial business whatever. It being thus transformed from a mercantile into a merely government establishment, the trade to China became completely thrown open to English private enterprise which pushed on with such vigour that, in 1837, 39,000 chests of opium, valued at $25,000,000, were successfully smuggled into China, despite the desperate resistance of the Celestial Government.

We cannot leave without singling one flagrant self-contradiction of the Christianity-canting and civilization-mongering British Government. In its imperial capacity it affects to be a thorough stranger to the contraband opium trade, and even to enter into treaties proscribing it.

Yet, in its Indian capacity, it forces the opium cultivation upon Bengal, to the great damage of the productive resources of that country; compels one part of the Indian ryots to engage in the poppy culture; entices another part into the same by dint of money advances; keeps the wholesale manufacture of the deleterious drug a close monopoly in its hands; watches by a whole army of official spies its growth, its delivery at appointed places, its inspissation and preparation for the taste of the Chinese consumers, its formation into packages especially adapted to the conveniency of smuggling, and finally its conveyance to Calcutta, where it is put up at auction at the Government sales, and made over by the State officers to the speculators, thence to pass into the hands of the contrabandists who land it in China.

The chest costing the British Government about 250 rupees is sold at the Calcutta auction mart at a price ranging from 1,210 to 1,600 rupees. But, not yet satisfied with this matter-of-fact complicity, the same Government, to this hour, enters into express profit and loss accounts with the merchants and shippers, who embark in the hazardous operation of poisoning an empire.

The Indian finances of the British Government have, in fact, been made to depend not only on the opium trade with China, but on the contraband character of that trade. Were the Chinese Government to legalize the opium trade simultaneously with tolerating the cultivation of the poppy in China, the Anglo-Indian exchequer would experience a serious catastrophe. While openly preaching free trade in poison. it secretly defends the monopoly of its manufacture. Whenever we look closely into the nature of British free trade, monopoly is pretty generally found to lie at the bottom of its “freedom.” (via Karl Marx in New York Daily Tribune Articles On China, 1853-1860 Free Trade and Monopoly; linking text in parentheses supplied; parts excised for brevity and relevance).

‘Opium financed British rule in India’

Elephants in the room. (from the Non Sequitur series of cartoons by Wiley Miller). Click for larger image.

Elephants in the room. (from the Non Sequitur series of cartoons by Wiley Miller). Click for larger image.

Under the British Raj, an enormous amount of opium was being exported out of India until the 1920s.

Before the British came, India was one of the world’s great economies. For 200 years India dwindled and dwindled into almost nothing.

Once I started researching into it, it was kind of inescapable – all the roads led back to opium.

I was looking into it as I began writing the book about five years ago. Like most Indians, I had very little idea about opium.

It is not a coincidence that 20 years after the opium trade stopped, the Raj more or less packed up its bags and left. India was not a paying proposition any longer. (via BBC NEWS | South Asia | ‘Opium financed British rule in India’).

Poor Indy Joe

Amitav Ghosh, a trained anthropologist and historian with a doctorate from Oxford University, did not know about the opium trade by the British Raj. The West has done a great job of hiding elephants in the room.

Does the average Indy Joe have a chance?

Birth of a new religion

But there is any layer to this problem. A new religion. It is called Westernization. ‘Modern’ Indians can be satisfied with perception and propaganda. Easier to digest, I presume.

At this rate, India will become another case of ‘forget-nothing-learn-nothing’. So enamored with the new religion of ‘Westernization’ are we, that no criticism will be accepted or tolerated.

Many ‘educated’ Indians have come to believe that the West is a friend of India – or has answers or solutions for India. Forget about India.

Does West have an answer to their own problems.

Global Health Survey – Ghost In The Machine

June 5, 2011 1 comment
Map of international healthcare attitudes - LSE-BUPA 12 country study

Map of international healthcare attitudes - LSE-BUPA 12 country study

Around 84 per cent of Britons are drinkers – way ahead of the lowest nation, India, where just 27 per cent ever have a tipple – compared with the international average of 71 per cent. (via Why we are the world’s booziest nation: Britons drink more regularly than any other country | Mail Online).

This report by Daily Mail was widely distributed in the Indian print and online media. The Daily Mail report was itself based on a survey of 12 countries, conducted by London School of Economics (LSE), for BUPA, an insurance corporation – with India coverage also.

What happens when more than 500 million have close to zero family life.

What happens when more than 500 million have close to zero family life.

Data before doubt

Since this report came from IANS, further verification was required.

There are a few obvious areas where discrepancies can possibly come into in this survey. For instance, survey possibly measured consumption trends of Western alcoholic beverages.

After all traditional Indian alcoholic beverages are produced in every town and village. In Indian society, orthodox restrictions on consumption of alcoholic beverages apply to less than 30%-35% of the population (Brahmins, Vaishyas and Muslims).

For the balance 65%-70% of the population restrictions on consumption of alcoholic beverages don’t apply. Additionally, there are traditional home-brews that are not possibly reported, measured or estimated. Home brews made like tharra (from sugarcane juice), tadi, arakh (from palm tree sap), daaru (from mahua flowers, hadia, chuak, sonti, (rice-based), chhaang (grain based-barley, millet or rice) pheni (from kaju fruit), grapes, are common all over the country.

Substance use and addiction research in India by Pratima Murthy et al. Click to download PDF file.

Substance use and addiction research in India by Pratima Murthy et al. Click to download PDF file.

But going by some independent studies, this figure seems to hold up. A study which uses a wide data-set, reports 21.4% alcohol usage across India.

Previous posts on tobacco consumption and narcotics have examined this issue from historical basis.

Apparently, the Indian family structure does a better job than the State – in crime control despite a huge illegal gun population and a small police force. Low tobacco consumption in spite of being a large tobacco producer.

Most narcotic drugs were discovered in India – yet drug abuse remains low in India.  During the 1960-1990 period, when gold trade was severely affected, the drugs-transshipment-for-gold pipeline sparked a global crime wave. India became the conduit for drugs from the Golden Triangle and the Golden Crescent. Yet drug consumption remained a minor problem. Or the huge commercial sex and pornography industry in the West. But, then the Desert Bloc needs people to be ‘single – and far from home’.

Unlike भारत-तंत्र Bharat-tantra.

Gold grand prix – The Chinese challenge

Total Gold demand - Top world markets (Image courtesy 0 ft.com). Click for a larger copy.

Total Gold demand - Top world markets (Image courtesy - ft.com). Click for a larger copy.

Golden ambitions

Western media has breathlessly announced that India’s leadership of many centuries as the largest buyer of gold has been broken by the Chinese. What does this mean for India and China? Not to forget the rest of the world. In the last few months,

India and China combined to contribute 63 percent of the total gold jewelry demand in the world in the first quarter.

Investment demand has grown (in China) by an average 14 percent a year since deregulation of the market in 2001, “a trend that has continued with the strong growth momentum witnessed in the first quarter,” it said. China’s investment demand jumped 123 percent to 90.9 tons in the first three months, compared with an 8 percent rise to 85.6 tons for India.

The country’s total (investment + jewelry)  gold demand in the first quarter jumped 47 percent from a year ago to 233.8 tons, the council said. That still lags behind Indian consumption of 291.8 tons, according to the council. (emphasised text in brackets supplied.)

Gold-to-silver ratios in the past few decades. Image courtesy - wsj.com. Click for larger image.

Gold-to-silver ratios in the past few decades. Image courtesy - wsj.com. Click for larger image.

Law abiding citizens

International regulatory damping of gold demand – especially in USA, India and China eased from 1975 onwards – from December 31st, 1974, with Executive Order 11825 by Gerald Ford.

Unlike India, which was well serviced and supplied with gold by the Indian underworld, China and the USA were deprived of gold supplies during this regulatory blackout of nearly 50 years. Current growth in demand for gold in China is building on a

low base which means that the investment demand and demand for an inflation hedge from 1.3 billion increasingly wealthy Chinese people is more than sustainable.

The not realized important fact that the people of China were banned from owning gold bullion from 1950 to 2003, means that the per capita consumption of over 1.3 billion people is rising from a tiny base. Gold ownership by the Chinese public remains minuscule. Especially when compared to other Asian countries such as Vietnam and India.

Should the Chinese economy crash as some predict, demand could fall. However, sharp declines in Chinese equity and property markets and a depreciation of the yuan would likely lead to significant safe haven demand for gold. Chinese demand alone likely puts a floor under the gold market at $1,450/oz.

It is worth noting that the People’s Bank of China’s gold reserves are very small when compared to those of the U.S. and indebted European nations. China appears to be quietly accumulating gold bullion reserves. As was the case previously, they will not announce their gold purchases in order to ensure they accumulate sizeable reserves at more competitive prices.

China – Biggest gold producer and consumer

China is already the world’s largest producer of gold from 2007, for four years now. China has captured the top position from

South Africa, which was producing as much as 1,000 tons of gold in 1970, (but) has seen its mining production decline for five straight years.

Accelerating a drop in output last year, the country’s mining authorities started a crackdown on unsafe mines after 3,200 workers were trapped at Harmony Gold Mining Ltd.’s Eldestrand mine in October.

Following an order by President Thabo Mbeki, the mining commission in the last three months started to requiring gold mines that suffer a fatal accident to suspend operations while a safety audit takes place. (emphasised text in brackets supplied.)

In 2010 Chinese gold production was

340.88 tonnes of gold in 2010, retaining the position of the world’s largest producer of the precious metal, the China Gold Association said. The number of domestic gold producers shrank to around 700 at the end of 2010, from 1,200 in 2002, through mergers and acquisitions

Further recently, the Chinese Government, through public sector companies, bought South African gold mines from the Australian owner.

Citic Group, China’s biggest state- owned investment company, and partners agreed to buy Gold One International Ltd. (GDO) for about A$444 million ($469 million), gaining gold assets in South Africa.  China Development Bank Corp. and Long March Capital Group are the other members of the bidding group, which is seeking as much as a 75 percent stake and plans to keep the company trading in Australia and South Africa, with a potential listing in Hong Kong. Citic is bidding through its Baiyin Non-Ferrous Group Co. unit and China Development Bank through its China-Africa Development Fund.

Gold One operates the Modder East mine in South Africa and also has projects in Mozambique and Namibia.

A frothing-at-the-mouth FT.com found many reasons to critique the deal.

China and silver

The other big story is silver. Why this sudden spurt in prices? How sustainable is price increase in silver?

Silver is down nearly 30% this month in volatile trading. Such a move in the Dow Jones Industrial Average would equate to an eye-popping drop of more than 3,700 points. Tony Crescenzi of Pacific Investment Management Co. called silver’s parabolic rise and subsequent skid a “tulip mania-style move.”

Silver backers counter that even with its recent drop, the lesser precious metal has retained a nearly 80% gain over the past year.

While gold supply is well understood, silver bulls and bears argue about just how much silver is out there. Some analysts make the case that silver in batteries and photographic film is “recycled” back into the market, reducing scarcity. Silver bulls, of course, think that’s a bunch of poppycock.

More important, the gold-silver price ratio has gotten out of whack. During most of the past 10 years, the ratio hovered around 60, meaning gold was 60 times more expensive than silver. Silver’s incredible surge over the past year has pushed the ratio down to 43, a level not seen since silver’s last crazed phase in the early 1980s. At its peak, back on April 29, the ratio narrowed to 31, a level not seen in three decades.

Silver bulls will argue that the gold-silver price ratio should reflect the 15.5 level authorized by France in 1803, or the 15 level outlined in the U.S. Coinage Act of 1792. It’s more likely that the ratio will revert to modern-era norms rather than race back to the Napoleonic era. And that means that gold, more than silver, looks like the solid store of value today.

Behind this huge spike in silver prices

The Chinese.

As 2ndlook has pointed out earlier, Chinese love silver – and Indians love gold. Most of Chinese consumption of gold is by a few well-heeled elites with guanxi.

But only look at the Chinese trading frenzy in silver.

Chinese speculators have emerged as a big driver of silver’s spectacular rally and subsequent crash with trading in the metal in Shanghai soaring nearly 30-fold since the start of the year.

The commodity, nicknamed “the devil’s metal” for its wild price swings, surged 175 per cent from August to a peak of almost $50 a troy ounce two weeks ago. Since then, it has plummeted 35 per cent, hitting a low of $32.33 on Thursday.

At the same time, silver turnover on the Shanghai Gold Exchange, China’s main precious metals trading hub spiked, rising 2,837 per cent from the start of this year to a peak of 70m ounces on April 26, according to exchange data.

The number of contracts outstanding, an indicator of investor exposure, doubled over the same period.

Silver trading in Shanghai remains below the levels in London and New York, the two main global hubs, but its rapid growth means its has become increasingly significant in driving prices.  “I’m pretty certain it’s the Chinese retail [investment] that is driving this move,” one senior precious metals banker said. “There’s an enormous amount of speculation going on out there, they’ve got the bit between their teeth.”

The Chinese gorilla

Looking at the reports of the market and commodities, it is plain that the Chinese Government is an interested player in gold acquisition – something that 2ndlook projected nearly 4 years ago. And the Chinese consumer is behind the rise in silver prices.

Since China is anyway the world’s largest producer of gold, disruption in gold supplies has not highly marked. If other Governments follow the Chinese example, gold prices could explode. If Chinese buying gets very aggressive, again, prices could spike.

The only cloud on the horizon could be some kind of consensus to bring some undeclared quantities of gold into the market – like the Central Banks Gold Agreement (CBGA). Is that likely? The only such seller could be EU members? With the Euro-zone and the Euro-currency itself in such trouble,  would ECB members dare to sell gold?

Especially, if the Chinese Government is ready to buy?

Top national central bank gold holdings. (Image courtesy - FT.com.). Click for larger copy.

Top national central bank gold holdings. (Image courtesy - FT.com.). Click for larger copy.

Of Mice and Men – 2015 Gold Outlook

USA, EU traderelationships with oil producers. The European hands-on, micro-management issue of trade balance seems to be delivering? Some may question, what it is delivering, though.

USA, EU trade relationships with oil producers. The European hands-on, micro-management issue of trade balance seems to be delivering? Some may question, what it is delivering, though.

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.

In such a scenario, China believes that it has a winning hand. Even though, the Chinese exports juggernaut has been slowed by a yuan, trading at 17 year-highs. March 2011 reports indicate

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.

The US is betting that a weak dollar will reignite economic growth – much like what happened after the Japanese Yen strengthened due to Plaza Accord (1985).

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,

Increasingly, everyone is a victim - except the powerful 0.5% elite that rules the world. Break their power. Buy gold. (Cartoonist - Ted Rall; courtesy - http://charlesgoyette.com). Click for larger image.

Increasingly, everyone is a victim - except the powerful 0.5% elite that rules the world. Break their power. Buy gold. (Cartoonist - Ted Rall; courtesy - http://charlesgoyette.com). Click for larger image.

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 …?

While George Soros talks of gold being the ultimate bubble, his companies are quietly buying gold.

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.

In this game of musical chairs, when the music stops, everyone who does not own gold is out. (Cartoon by David Horsey; Courtesy - http://politicalhumor.about.com). Click for larger image.

In this game of musical chairs, when the music stops, everyone who does not own gold is out. (Cartoon by David Horsey; Courtesy - http://politicalhumor.about.com). Click for larger image.

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.”

Some 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?”

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