Tuesday, December 30, 2008

Iran is already raising the temperature

TBO News Breaking - http://www2.tbo.com/content/list/news/breaking/

expect more of this sort of thing, for the reasons already mentioned. Sphere: Related Content

The distant political masters of Hamas and their relationship with the oil price

The reason for Hamas's discontinuation of the peace deal with Israel is finally so clear even to me that I am appalled.

Hamas's distant political masters, entirely because of the needs of their domestic economies, have an interest in raising the price of oil.

So on Monday alone, incompetent Hamas fired 60 rockets into Israeli towns (with the "devastating" result that a total of four Israelis have been killed so far). However, Hamas knows very well that, however incompetently and ineffectively delivered, the rockets would have the effect of provoking Israel to retaliate.

The result is that some 360 Palestinians have died so far - and what is it all for? Does Hamas really think that it will "destroy Israel" when the combined might of all the Arab countries attacking Israel by surprise from every direction during the Six Day War in 1967 (closely paralleld by the Egyptian-Syrian attack during the Yom Kippur holiday in 1973) ended in an ingnominiuos defeat for the Arabs?

No, this time the attack against Israel has entirely to do with raising the oil price.

What is going to happen is fairly clear: no government is going to blame Hamas for either declining the extension of the truce or for firing rockets into Israel. All the Arab countries and Iran will jointly condemn Israel, probably also Russia (and possibly also China, though its interest is not a higher oil price at all, rather China's interest is in keeping on the right side of the Arab nations and Iran). Europe will keep mumbling and bumbling about humanitarian aid to Palestine.

Israel will refuse to bow to the international pressure, and the war may even widen with other countries being drawn in. Watch out. Though hardly any of the media have picked up this story, it will have huge consequences.

As if the pointless sacrifice of 360 Palestinian lives this week was not enough. Sphere: Related Content

Thursday, December 25, 2008

Russia's leadership of the new "Forum of Gas Exporting Countries"

Though this newly-constituted group will not be able to flex its muscles properly for a decade or so, it is being led by Russia while being headquartered in Doha (Qatar).

Why will the new Forum be unable to flex its muscles properly for a decade or so? Because its ability to fix prices and influence production is limited by the long-term supply contracts that are usual in the gas industry. Moreover, in comparison to oil, the transportation possibilities are relatively limited.

What is the significance of its being led by Russia but being headquartered in Doha? It indicates that Russia intends this new bloc to help build its interest in the Muslim middle east.

The stage is being set for Russia's public policy stance against Israel to be strengthened - preparing the way for what the book of Revelations indicates will be the situation at the end of human history as we know it.

That does not mean that the end of human history is around the corner! Though it could be... there are still several things in Revelations that need to be fulfilled, but they *could* start happening quite quickly.

In any case, history ends for us human beings with death and, even though we don't like to think about it at all, let alone as inevitable, we don't know if we will live another day, another hour or even another minute.

Better to live thankfully and as well as one can each day, in spite of the circumstances, than worry one's head too much about a future that one may not live to see. What we will certainly see is a performance evaluation by a CEO who knows everything and from whom nothing can be hidden, and who is able (unlike most CEOs) to reward absolutely everyone appropriately. Sphere: Related Content

Wednesday, December 24, 2008

German politican has an idea similar to mine, so ...

it might be useful to distinguish between his idea and mine - and to outline the pros and cons of each idea.

Torsten Schäfer-Gümbel, the Social Democrat candidate for governor of the western German state of Hesse (the election is scheduled for January 18), has come up with an interesting idea to raise €50 billion to help fight the looming recession in Germany.

Rich people, he says, should be forced to invest two percent of their wealth in 15-year government bonds paying a maximum interest of 2.5 percent. For us Indians, as for many others, that may not seem like a particularly high interest rate, but interest rates have always tended to be low on the European Continent, and of course rates are low everywhere at present, so that is not a particular problem. However, his idea seems even less likely to gain favour than my idea, even though his idea has attracted a lot of media attention:

His definition of a "rich person" is someone with cash and real estate assets exceeding €750,000 ($1.04 million). The bond would be used for funding energy-saving buses and trains for public transport, new research projects and energy savings technologies.

Buses and trains, where they are publicly owned - of course. But it is entirely unclear to me why the state would be able to make intelligent decisions regarding where to invest in new research and energy-saving technologies.

To ensure that you recollect my idea accurately: only a defined number (say 100 in a region) of the richest families would be required to put their money into micro-investments for businesses owned by the poorest in society.

My plan has the advantage that there is no politician arbitrarily defining what "wealth" is.

Also, my plan requires the relevant people to INVEST not loan to any government. Investors are of course entirely free to invest in whatever they like (within the criteria set).

Further, the investments directly help the poorest, who can of course come up also with research or industrial among other business plans themselves.

Finally, by putting the profits (eventually) in the hands of the poorest businesspeople, my plan more or less guarantees that that the profits will actually be spent or invested (the poorest usually have little ability to save) - and that will provide a direct and immediate fillip to the economy, whereas profits going to richer individuals may (or, more likely, may not) find their way into the economy in the current climate.

Oh, and we shouldn't forget that many if not most governments are bankrupt anyway - do you really want a bond from a government at this time? Sphere: Related Content

To all my readers: Happy Hanuka, Happy Christmas...

It is Hanuka, it is Christmas Eve - and I can't recollect what else it is but, to all my readers, I wish the very best!

Even though it is the worst that this time of year has seen since 1873, we are reminded that when it seems darkest is when we are closest to the possibility of light.

As you know, I do not speak of economic light (though Obama's actions, I hope, bring us at least temporary relief immediately following the Inauguration).

I speak of spiritual light, psychological light, light in our relationships... and in all the areas that really matter.

This world is passing away each moment, as are our own lives.

Only what is eternal will remain. And we all know who and what that is. Sphere: Related Content

Monday, December 22, 2008

Coming next: "forcing" banks to lend (also known as "government-led resource allocation" - or national planning - in other words, socialism)

It is now widely recognised that traditional means of responding to the current sort of crisis have been exhausted: interest rates are near zero in nominal terms, but below zero in real terms if you take inflation into account; moreover, the world is flooded with paper money from every conceivable and inconceivable country.

Professor Tim Besley, an External Member of the Bank of England's Monetary Policy Committee, has acknowledged that monetary policy is not enough to bring Britain's flagging economy back to life. What he has said publicly is no doubt being thought privately by many others - and not only in England.

Sir John Gieve, Deputy Governor of the Bank of England, has gone further and said that what is needed is some form of new policy tool beyond the "blunt instrument" of interest rates. "We need to develop some new instruments, which sit somewhere between interest rates, which affect the whole economy ... and individual supervision and regulation of individual banks," Gieve told the BBC.

Apparently, he would not elaborate. No wonder. Tools which sit "somewhere beteen interest rates... and individual supervision and regulation of individual banks" are well known - in countries such as China and Russia. Before 1979, they were known throughout the world except for the West. Now it seems, the authorities are considering bringing such instruments in even in the West.

Welcome to a new socialist world. Now we know what we have to fight against. We can choose captivity or we can continue the struggle for freedom - for ourselves as well as for the generations who come after us. Sphere: Related Content

The future of Nepal

Will Nepal's new Maoist elite commit itself to genuine grass-roots development of the country or will the the new Maoist elite simply become the new "Rajas" (kings) of Nepal?

Will Nepal generate its own policies, or will it become a mere satellite of China?

At the moment, there are worrying indications on both the above concerns.

See the report of the attacks on the press, tolerated if not sanctioned by the rulers: "World press body condemns attack on Nepalese publication" at http://www.euasianews.com/ Sphere: Related Content

So Belarus is to offer Russia recognition of Abkhazia and South Ossetia in return for moderate gas price deal

Sounds as if Belarus and Russia have reached a deal on this, and are testing international opinion: Belarus is willing to recognize Georgia's rebel regions of South Ossetia and Abkhazia as independent nations in return for moderate prices for Russian gas supplies. The question is: how will the USA respond to this (the EU will as usual be pretty spineless or at least divided).

Breakaway Kosovo's independence has been internationally recognised (though it remains to be seen how long that will last, given Russia's rise while the US declines). Transnistria will probably be next. No doubt, among others the following will be encouraged: Kashmir, Mizoram, Nagaland, Tamil Nadu ....

Perhaps we should offer the US a military base in return for recognising the independence of Tibet?

We have to think what to do, considering that China now has us surrounded by nations more influenced by it than by us (Bhutan, Myanmar, Sri Lanka, Pakistan... and Nepal has of course gone fully Maoist...).

http://www.reuters.com/article/GCA-Oil/idUSTRE4BL0L420081222 Sphere: Related Content

how long has it taken the global crisis to spread from the US to Asia`?

The figures just in from Japan show that exports to the United States plummeted a record 33.8 percent in November. That was the 15th straight month of year-on-year declines. That is not particularly news, for it was clear that exports to the US started falling say one quarter after the crisis started there.

However, Japan's s trade balance as a whole (that is, including exports to parts of Asia such as China where the Japanese do a lot of their manufacturing) slipped into a deficit in August. We can take that as one indication that it took the US crisis more or less 5 quarters to hit Japan. BTW that was Japan's first trade deficit in 26 years.....Exports to Asia fell 26.7 percent (the biggest since 1986), while exports specifically to China declined 24.5 percent, the biggest fall since 1995. On the basis of at least this one key indicator, we could say that the global crisis began to hit China too more or less 5 quarters after the crisis started in the US.

On the basis of the above, we can form some estimate of the length of time it is going to take for future global crises originating in the USA to start hitting Japan, China and Asia as a whole.

However, a recovery will not take as long, because it takes quite some time for a full logistical pipeline to empty in the face of decreased demand, but increasing demand, faced by an empty pipeline, results in production starting again relatively quickly. Naturally, the time it takes for Asia to start a recovery will depend on how strong and long the recovery is in the USA, even though it is European spending that has acted (and probably is still acting) as a brake on the world economy going down too quickly. Sphere: Related Content

Sunday, December 21, 2008

What's ahead for Russia?

For those seeking to understand what is ahead for Russia, the following is not a bad place to start:

However, please note that I cannot track down the website Paul Goble mentions as "taiga.info" Sphere: Related Content

China bans the New York Times website?

James Fallows, who writes for The Atlantic magazine, reports that China has imposed, as it appears, a nationwide ban on the New York Times's website, though he says that he "cannot be absolutely certain that this is a purposeful, country-wide blackout. Conceivably there is some other technological or accidental explanation. I consider this extremely unlikely....But logically, we cannot exclude the possibility that it's all an accident".

In an earlier issue, he argued that "China's official PR machinery often succeeds mainly in making the country seem far more closed-off, impenetrable, defensive, and difficult to deal with than it actually is most places most of the time"

Now he asks: "By that logic, what exactly will China gain through this episode?... how confident, open-minded, rules-abiding, modern and so on will the episode make the Chinese government look in other countries' eyes? Governments everywhere are annoyed by the press, but a mark of being in the big leagues is viewing press criticism as a necessary annoyance. This just is strange."

Clearly, Mr Fallows may be IN China, but he does not understand what is going on.

It is simply another sign of China beginning to turn in on itself. Sphere: Related Content

Putin and Mevedev trying to take Russia back to being a police state

I will be surprised if the Russian parliament turns down the government's bid to introduce much more stringent laws which take the country back into being a police state.

If the economic situation deteriorates in any country, the intelligent thing to do is always to open the country to further reform - if one wants to benefit the people.

However, if an elite wants rather to consolidate its hold on power, then there are only three possibilities:
- first, clamp down on internal dissent;
- second, raise the rhetoric against "external enemies";
(the above two are essential; if they don't work sufficiently, then it is always possible to turn to the third alternative which is disastrous not only for the country in question, but also for the country or countries chosen as the "enemy").
What is the third possibility? War.
Of course that needs to be suitably disguised as "response to aggression by the enemy").

Anyway, for this story regarding Russia, see: http://www.dallasnews.com/sharedcontent/dws/news/world/stories/DN-treason_21int.ART.State.Edition1.4ab4969.html Sphere: Related Content

Saturday, December 20, 2008

Daily volatility in the global economy is now roughly the same as used to be seen in a year!

Witness the Pound going from USD 1.63 to 1.52 and back to 1.59 in 24 hours on 24th October this year.

The above (interesting) factoid is provided on his excellent Blog by John Wisbey, Chairman and CEO of Lombard Risk Management plc, the second largest global provider of regulatory compliance software and award-winning provider of risk management solutions to over 300 financial businesses and large corporations. The company's clients include over 20 of the world's top 50 banks, as well as many industry leading investment firms, asset managers, hedge funds, fund administrators, and global corporations.

There is one principal point on which I disagree with his analysis of why we are in the present crisis, and that is where he asserts that the authorities "either failed to compile appropriate data to aggregate what was happening or, if they did, failed to interpret it properly to see the increasing systemic risk that this property bubble and efficient securitization presented".

I have often quoted the 2004 findings of the Joint Committee, set up by the three global associations that are responsible for all aspects of the world financial system. Assigned the job of calculating how much risk there was in the global system and who held it, the Joint Committee was quite open about its interpretations and conclusions. I was not the only one who has been drawing attention to those findings, and I am hardly the only one who has been going on and on for years about systemic risk.

Anyway, though I do not agree with Jim on everything, he writes perceptively. So I commend his Blog, which will give you the view of someone whose entire business is focused on providing tools for the management of financial risk worldwide. Sphere: Related Content

Russia is to Ukraine as Turkey is to Armenia

Why has Russia more or less vetoed the the Ukraine-initiated UN resolution about genocide ("Holodomor") in the Soviet Union in early 1930s? Simple: Russia argues that this was a mere natural disaster, while Ukraine claims it was an artificial famine aimed at genocide of Ukrainians.

Even though the following comes down firmly on the Ukrainian side of the story, the respective arguments are well set out here: http://gatesofvienna.blogspot.com/2008/12/russia-balks-at-g-word.html Sphere: Related Content

Update on how to build a temple in India

A friend of mine has sent me the following information. So, you will now be properly briefed if you are looking for a new line of work: starting a temple may not be the riskiest profession at present :)

"1. Anyone, who owns some land, can build a temple - legally, caste and gender are no bar - but he/she has to establish a trust first, which has to be registered with the governemnt. The trust runs the affairs of the temple. In villages the panvchayat gives the permission.

"2. The design is considered these days according to the 'New Age' ideas of auspicious directions of doors and windows!!

"3. The architect has to submit the plans to the local authorities for approval first. In villages the democratically elected panvchayat gives the permission.

"4. The date for laying down the foundation and opening of the temple is set by astrologers. "

Many thanks to my kind friend for providing this information.

BTW it is well known that if one set of astrologers gives you an inconvenient date, another set of astrologers can usually be found for a small fee to provide a more convenient date.

It would be most interesting to know how many temples are run by such registered trusts in our country. And what happens in forests and in areas just outside the legal jurisdiction of towns and villages.

And no doubt readers interested in setting up temples would find it most useful to know the scale of bribes that is required in different parts of the country for registering such a trust. Sphere: Related Content

Unbelievable: The Taj Tower to reopen tomorrow, just 3 weeks after the terrorist attacks

Reopening the Taj Mahal Palace and Tower Hotel would take months, I thought, after the terrorist attacks were brought to an end on November 29!

Astonishingly, the opening is announced for 7.00 p.m. tomorrow - December 21!

Though life cannot be the same again, warmest congratulations and best wishes to everyone who must have worked extremely hard, in spite of the trauma of the attacks, to bring this return to some sort of normalcy. Sphere: Related Content

How to create interests before defending them: Lessons on international best practice for India from our very good and ancient friend, Russia

I had not realised till recently that Russia has been able to get away with creating breakaway territories (South Ossetia, Abkhazia) from Georgia on the basis of "defending Russian citizens" primarily because of the following trick: it GAVE AWAY Russian passports to Georgian citizens from these areas first!

Last month French Foreign Minister Bernard Kouchner broke the news that Russia is now distributing Russian passports in Ukraine's Crimea, so guess what comes next....

India is not usually slow in learning international best practice. So we should immediately start issuing Indian passports to everyone in Xinjiang and other Muslim-dominated areas of China. This will endear us to all Muslim countries (not to mention the U.S.) and enable to us to send our forces in support of the Muslim areas struggling for autonomy or independence from China, if China pushes us on its recent claims to Arunachal and its earlier claims to other areas.

Come to think of it: might not be a bad idea to offer Indian passports to all Tibetans too.... Sphere: Related Content

Trojan horses and Chinese Pandas

The Chinese government had promised in 2005 to send two pandas as a goodwill gesture to Taiwan

They actually began their journey to Taiwan this weeek: http://www.nytimes.com/2008/12/20/world/asia/20briefs-PANDASTOBESE_BRF.html?_r=1&ref=world

Taiwan’s president, Mr Ma Ying-jeou, said when he took office this year that he would accept the pandas as part of efforts to improve relations with the mainland.

But Taiwanese pro-independence politicians don't want Taiwan to accept the pandas.

Guess why: the pandas are called Tuan Tuan and Yuan Yuan, whose names together mean “reunion.” Sphere: Related Content

Friday, December 19, 2008

Question by "kroy" regarding temples and priests in Hindu religions

As you probably recollect, I do not publish anonymous comments and questions on my Blog. So I should really ignore the following question, from someone who identifies herself or himself only as "kroy". However, as the question indicates that I have not made my position clear, I should try to do so.

The comment relates to my post "Poor ex-priests of the Lower Himalayas". "kroy" wonders if my argument is that priests (pujarees) should be selected and appointed by the government? Or elected? Or what?

Dear "kroy", no my argument is nothing of that sort. I do not know if you are aware of how temples get created in our country and tradition: at some point, remote or contemporary, a priest set up at least one idol and consecrated the space around that, possibly with some shelter over the consecrated spot. The "temple" therefore ALWAYS belongs to the priest or priests who "establish" the temple. Over time, temples attract or fail to attract devotees. Some temples grow big and rich and successful. Others fall into disuse. That is why we have so many temples in our country which are abandoned. At least that is how I understand the situation and, our country being so diverse, it is possible that this is not the only situation.

That WAS the tradition: Nowadays, there are other ways in which "temples" get established. For example, someone has a dream or vision, and that could be the beginning of the story, even if the person is not from a pujari family - or is not even a brahmin. I am told that there was a case of siamese twins who were supposed to resemble a god or goddess and, when they died, a temple was created in their memory. However, for such "temples" to take off, there has to be some supernatural element - healings or some such. Mere say-so isn't enough.

My point is that, in traditional temple-building, it was the "authority" of the priest that was the main issue. In modern temple-building, if there is no priest who establishes the temple, some supernatural sign(s) are essential to that particular temple gaining adherents. In any case, the "temple" belongs to the individual and family establishing the temple. The adherents merely come and offer invocations and make donations and go away. Adherents have no role beyond that in any Hindu tradition - at least as far as I am aware.

One of the reasons that faith is so vigorous in India is that we have a free market in religions - even within Hindu traditions. This is very similar to the USA which also has a free market in religions. Contrast that with Europe, where faith is rather feeble - and one explanation is that Europe has till recently not had a free market in religions, which has meant that religions have relied on tradition to keep themselves going whereas, in the USA and India, religions have to "market" themselves against competition from other denominations, and that has led to motivation, energy, innovation and adaptation.

When I say the above, my position should not be misunderstood as trying to justify free market capitalism on religious grounds! I am merely trying to describe the facts as I see them.

To answer "kroy"'s question: NO! I do not believe in government interference in religious matters, and I think we have too much government involvement in religion as it is!

I would have nothing against communities appointing their own priests and having their own temples owned by the community. But that is a (Radical Protestant) tradition, rather than our tradition.

Which does not mean that we should not have community-owned temples among Hindus. We do innovate in other areas of religion.

But my point was that the poor priests who "owned" these Himalayan temples had been forcefully ejected from their property and livelihood by Hindutva groups who wanted to capture these temples in order to make them centres for propagating their own (modern and anti-traditional) views by putting "their own" men in as pujaris.

It remains to be seen whether such a strategy will lead to real religious revival among the masses, or only the continued patronage of the rich Hindutvans who want to increase their influence in these regions - primarily because they want to increase their control over indigegnous populations, and hope to continue reaping increasing financial rewards by looting the resources of such areas. Sphere: Related Content

India's Homegrown Swastika Terrorism

I have just read this rather informative article, and the author, Vishal Arora, has kindly given me permission to publish the piece in full:

Swastika Terrorism
The Indian government is ignoring the surge of Hindutva terrorism at its own risk
(The Caravan, a journal of politics and culture, December 16 to 31, 2008)

Vishal Arora

Before break of dawn on April 6, 2006, with one of the most inflamed summers in India around the corner, a loud blast convulsed through the tony Patbandhare Nagar locality of Nanded town in Nashik district, Maharashtra. Stepping into the epicentre of the explosion was a house atop which fluttered a saffron-coloured flag. Here, the police found two bodies lying in a mangled mess in the living room and three youngsters groaning in pain. The deceased were identified as Naresh Rajkuntwar, son of house owner, Laxman Gundayya Rajkuntwar, an activist in the Rightwing Rashtriya Swayamsevak Sangh (RSS), and his friend, Himanshu Venkatrao Panse.

The first information report (FIR) lodged at the area’s Bhagyanagar police station said that Rajkuntwar was a dealer in firecrackers whose leftover stock of pyrotechnic material, kept in his house, had accidentally caught fire. The post-FIR initial investigation into the explosion, however, revealed a different story. In his statement before Nanded’s judicial magistrate (2nd court) on April 9, 2006, the investigating officer, RD Bhurewar, said that “the explosion is not of crackers but it is a bomb explosion”, adding that another live bomb and “suspicious type of maps” had been found in the house. Furthermore, the plea statement (seeking a fortnight’s custodial extension of the accused) added that both the injured and the deceased were “active members” of the Bajrang Dal, the highly combative youth wing of the Vishwa Hindu Parishad, and were possibly making bombs to “take lives” with the intention of creating communal tumult.

The statement also said the police wanted to investigate the source of the men’s knowledge and training, how they procured explosive material, the conspiracy they were hatching, and whether or not they were part of a coherent terrorist group. According to the confessions of the arrestees, Himanshu Venkatrao Panse, one of the deceased, had planned all the terrorist attacks in the desperately poor and communally heterogeneous Marathwada region, including in Jalna (where a bomb had exploded at the Kadria Masjid on August 27, 2004) and Parbhani (where a mosque was bombed on November 21, 2003). The police had also reportedly found Muslim taqiyahs (skullcaps) and fake beards in Rajkuntwar’s house.

With impeccable timing, before the Nanded incident could snowball into the major controversy that it deserved to become, the media’s customary deficit attention was deflected by an alleged police shootout with terrorists in a neighbouring town. Dr Suresh Khairnar, president of the Maharashtra unit of the All India Secular Forum, believes that the encounter was designed to divert the spotlight from the Nanded blast. Referring to the supposed foiling of a terror attack by a Pakistan-based terrorist group’s fedayeen on the RSS headquarters in Nagpur on June 1, 2006, Khairnar says that it was a “fake encounter”. He bases his allegation on glaring discrepancies in the police version of the shootout, in which three alleged terrorists were killed.

The police said that they had spotted a white Ambassador car with red VIP beacon lights moving towards the RSS office at 4.15 am. When a constable sitting in a Tata Sumo MUV questioned them, the youngsters in the Ambassador started shooting and the police struck back. “How could the constable have made the inquiry from a distance, and if he went close to the vehicle, how did he escape the bullets?” asks Khairnar, who was a member of independent fact-finding teams that went to both Nanded and Nagpur after the incidents. “Besides, there was no eyewitness. The bodies of the alleged terrorists had been removed when the press reached the spot at 5 am. Local residents saw the police rehearsing the shootout a few days before the incident.”

The report on the Nagpur incident, released on June 16, 2006 by the fact-finding team, which included activists from the People’s Union of Civil Liberties (PUCL), found many other incongruities. “The exchange of fire took place for 20 minutes, it was reported. Can anyone explain how the police disabled the terrorists from using the dozen hand grenades and the 360 rounds of bullets? That the terrorists had 12 hand grenades, 360 rounds of bullets, 5.6 kg of highly explosive material which was later stated to be RDX, and they battled for 20 minutes ‘hopelessly’ not using any of them, is a narration that fails to convince common sense… The terrorists were reported to have fired from AK-M automatic guns… the blue Tata Sumo of the police bore bullet marks that are all single shot marks,” the report said.

Not surprisingly, the state governments of Maharashtra and Gujarat announced a ‘reward’ of one million rupees for each Nagpur policeman for ‘valour’ exhibited. Maharashtra’s Anti-Terrorist Squad (ATS), which probed the incident along with the local police, arrested 26 people, including Rajkuntwar, for planning to plant a bomb in a mosque in Aurangabad city, 200 kilometres from Nanded. But the Central Bureau of Investigation (CBI), which took over the case in 2007, inexplicably rescinded criminal conspiracy charges against 11 of the accused, including Rajkuntwar, in February 2008. Dr Ram Puniyani, social activist, former professor at the Indian Institute of Technology, Mumbai, and recipient of the national government’s National Communal Harmony Award for 2007, suspects that the CBI “deliberately diluted” the case.

Ram Madhav, an RSS spokesperson, obviously differs with the civil society groups’ version of the two incidents. “It was the Congress-led government in Maharashtra at the time of both incidents, and investigating agencies never pursued the matters. We have always seen such mere allegations as malicious intensions. There is no question of our involvement in any bomb-making or bomb explosion incident; let the government investigate. We do not support terrorism,” he says, adding that the RSS leaders came to know of the Nagpur encounter through the media.

Three months after the Nanded episode, Maharashtra’s investigating agencies had another ‘encounter’, with unambiguous leads on the possible terrorist agenda of Hindutva extremists. On September 8, 2006, on the occasion of Shab-e-Barat (the Night of Fortune, when Muslims hold all-night celebrations complete with fireworks and fairy lights), four bombs exploded in the Muslim-majority town of Malegaon, a communal powder keg located roughly 280 kilometres northeast of Mumbai. There were three blasts in a mosque-cum-graveyard, Hamidiya Masjid and Bada Kabristan, and another in the crowded Mushawart Chowk. The explosions killed 31 people, most of them Muslim, and injured 312.

Not that the bombings worked to sidetrack the state government’s mind from the Nanded blast. Maharashtra’s Director General of Police (DGP) PS Pasricha told reporters on the day of the Malegaon explosions that it was “too early” yet to link the incident with previous attacks, including the one in Nanded. But it is intriguing that the investigating agencies seemed prepared to sideline two indicators: the fact that the blasts were undoubtedly targeted at Muslims in a town that had suffered incendiary communal riots in 2001, and numerous clues to the involvement of Hindutva groups.

Inquilab, an Urdu language daily published from Mumbai, reported that a 37-year-old tailor, Aqeel Ahmed, from Islampura in Malegaon had removed the body of a man who was wearing a fake beard from a blast site. Ahmad was moving the badly mutilated body, which was missing its legs, into an ambulance when his (fake) beard came off. Later, an Inquilab correspondent visited the mortuary along with Ahmed, but the body had disappeared. After speaking to the medical officer of the Malegaon Municipal Hospital, who said that none of the 30 bodies at Wadia Hospital and the one at Dholia Hospital had its legs amputated by the blasts, the daily suggested that the body with fake beard could be linked to the explosion at Nanded, where fake beards had been found at Laxman Gundayya Rajkuntwar’s house. The daily went on to point its fingers at the investigators for covering up the possible role of Hindutva extremists in Malegaon.

A scrutiny of the investigation into the Malegaon blasts is like tracking a wandering spoor with an agenda. Police and state home ministry officials shot off numerous statements during the first week of the investigations, but without divulging any details. “We have concrete clues and the course of investigation is on the right track” was their chorus; the effusiveness was followed by a three-week lull when knee-jerk revelations were given a rest. Initially, the police had detained for interrogation both Hindus and Muslims, but only the latter were formally arrested. On October 8, 2006, then deputy chief minister R.R. Patil – who rather reluctantly relinquished his seat after the recent Mumbai terrorist attacks – announced that the investigation had reached its final stage. But a fortnight later, DGP Pasricha summarily transferred the case, still in its “final stage”, to the Mumbai ATS. On November 27, Pasricha informed the media that the case had finally been “solved”; he said that two Pakistani nationals were involved in the explosions, which were carried out by the banned – without evidence – Students Islamic Movement of India (SIMI).

The tables soon turned, however. While appearing before a magistrate on December 6, two of the accused, Shaikh Mohammed Ali and Asif Khan alias Junaid, retracted the statements they had made before the deputy commissioner of police earlier that day. They insisted that their disclosure had not been voluntary. In yet another twist on December 8, the Maharashtra state government announced that the case would now be transferred again, this time to the CBI. Before handing over charge to the CBI, on December 21 the ATS hurriedly filed a chargesheet against the nine accused in a special court under the Maharashtra Control of Organised Crime Act.

Anis Suhrawardy, a Supreme Court lawyer who moved the apex court on behalf of the Islamic organisation, the Jamiat Ulama-i-Hind, on November 17 this year seeking the release of those accused in the Malegaon 2006 blasts, says that the police arrested the Muslim youth without any evidence. “The Maharashtra police started arresting people indiscriminately without any events and simply on the basis that they [police] had information from some informers. No details were released at any point of time,” he says, adding that the “young and highly educated” Muslim youth were brutally tortured by the local police. The retraction of statements by two of the accused gives credence to this allegation. “Though some links were clearly showing involvement of some Hindu elements, the police did not go into those aspects,” says Suhrawardy.

The arrests made by the ATS were on dubious grounds. In a letter submitted to the CBI’s inquiry office on September 17, 2007, the Jamiat Ulama-i-Malegaon, a local organisation, pointed out that Shabbir Masiullah, the main accused in the Malegaon 2006 blasts case, had been in police custody since August 3, 2006. Another accused, Noorul Samsudoha, had first been arrested in 2001 for providing a meal to a terrorist but was later cleared of all charges. In the five years prior, the police had summoned Samsudoha 50 times. Two more accused, Dr. Salman Farsi and Dr. Farogh Iqbal Ahmed, had once been arrested for distributing inflammatory leaflets but were acquitted. They, too, were summoned frequently by the police. “How did they hatch a conspiracy right under police’s nose?” the Islamic group asked.

Malegaon’s Superintendent of Police, Nikhil Gupta, chooses to remain uncommunicative about the allegation that the police had arrested Muslim youth without prima facie evidence. His take on the probe is that the police had investigated the matter initially, but the case was later delivered out of their hands to the ATS and then to the CBI. Calling the case “very sensitive,” he says, “I cannot comment a word.”

Amid the Maharashtra government’s apparently deliberate ignorance of not just the possibility but even the growth of Hindutva terrorism, bomb-making thrived. On November 27, 2006, a retired army officer, Madan Mohan Shinde, and his brother, Jagannath Shinde, died while making a bomb in their residence in village Kanjal Gaon in the Mahad district near Mumbai. This was two years before the recent arrest of Lt Col Prasad Purohit for being logistically involved in this year’s bomb blast in Malegaon, which is being projected as the first case where army personnel have been suspected of using their skills for other than military purposes.

In its editorial on January 12, 2007, the Urdu daily Rashtriya Sahara had questioned the Maharashtra government and the ATS’ continuing guardedness and pointed to the impunity with which non-Muslim bomb-makers were functioning in the state. On February 10, less than a month after the paper voiced its bemusement, another explosion took place in a biscuit factory unit, again in Nanded, killing two people. The police declared it a ‘fire’ accident. However, an independent mission by the civil society group, Concerned Citizen Inquiry, which was conducted by activists Teesta Setalvad, Justice BG Kolse-Patil and Arvind Deshmukh, said that it might have been an accident involving explosives. “The Central government should keep a close watch and monitor the increasing low intensity terror generating activities being conducted by political outfits that are misusing Hindu religion,” warned their report on February 22 that year.

Close on the heels of these bomb-making incidents came the explosions on February 18 on the Samjhauta Express train (which connects India and Pakistan) near Panipat in Haryana. Two days later, Setalvad hinted that Hindutva terrorist groups could be behind the bombings. The Daily News & Analysis newspaper reported Setalvad as alleging that investigating agencies were protecting these groups and that acts of terrorism perpetrated by Hindu fundamentalist groups were not being properly examined. “In some cases, investigations were abandoned midway while in some others the investigating agencies just preferred to turn a blind eye to the existing state of affairs. The need of the hour is to instil a sense of neutrality and purpose in our police agencies and the way they are marshalled by their political masters,” the daily quoted her as saying.

Even as the Maharashtra government chose to be oblivious to the Hindutva terrorist organisations, two men died in yet another explosion. This time, it was in a hostel room in the Kalyanpur area of Kanpur city in Uttar Pradesh on August 24, 2008 – the very day that the Vishwa Hindu Parishad the Bajrang Dal launched a spate of attacks of unprecedented ferocity and scale on Christians and their properties in Orissa’s Kandhamal district. The deceased, Rajiv alias Piyush Mishra and Bhupinder Singh, were identified as Bajrang Dal core members. Police found 11 live bombs, enough material to make nine more bombs, seven timer devices, batteries, ammonium nitrate and potassium nitrate.

A little more than a month later, on September 29, six people were killed and 80 injured as bombs exploded again in Malegaon, and also in Modasa town in Gujarat’s Banaskantha district. True to form, the police arrested a Muslim man, Abdul Rehman Salem Chaus, on October 4 for alleged involvement with the blast. Initially, Chaus was held on charges of being involved in the violence that ensued following the blast and for expropriating the firearm belonging to the bodyguard of Additional Superintendent of Police Sanjay Patil. Later, the police ramped up the charges and declared him an accused in the blast.

But it took only a few days for the ATS to “stumble upon” Hindutva terrorist links that finally led to the arrest of several Hindutva supporters such as Sadhvi Pragya Singh Thakur and self-styled godman Dayanand Pande, and serving army officers like Lt Col Prasad Purohit and Major Prabhakar Kulkarni. In retrospect, even the CBI saw a probable link between the 2008 explosions in Malegaon and Modasa and the 2006 Nanded blast. Investigating agencies might soon begin to notice a ligature between these and the 2006 Malegaon blasts.

Why is there such a deleterious delay on part of investigative agencies in Maharashtra and the Central government to probe Hindutva extremist groups? Why were the machinations of Rightwing extremists not foiled in April 2006, which might have helped to pre-empt the numerous other blasts that followed?

Congress spokesperson Abhishek Manu Singhvi, usually never at a loss for words, is tight-lipped about the dilatoriness of the probe on Hindutva terrorism under his party’s leadership both at the Centre and in Maharashtra. “I would not like to comment on this,” is as much as he is prepared to say. In the absence of any self-exculpation from the Congress party, the only sane explanation seems to be this: The option of taking the bull by the horn seemed to be politically more beneficial for the Congress in October 2008, when assembly elections were awaited in the BJP-ruled states of Rajasthan, Madhya Pradesh and Chhattisgarh, as well as in Delhi, where after two consecutive rollercoaster terms of the Congress, the BJP was hopeful of victory. Above all, the next general elections were around the corner. But there is no post-election clarity: even after the results in early December showed the Congress retaining Delhi, and the BJP losing Rajasthan but keeping its hold on Madhya Pradesh and Chhattisgarh, the Central government’s terrorism-tackling strategy – particularly that of the Hindutva brand – is anyone’s guess.

On the other hand, the political scene in April 2006 – when the first signs of Hindutva terrorism reared its head – was different, as the BJP was not expected to be a strong contender in any of the assembly elections, in Assam, Kerala, Pondicherry, Tamil Nadu and West Bengal, at the time. And the national elections were still a non-threatening, dim outline three years away.

Dr. John Dayal, member of the National Integration Council, believes that it’s not only the Congress that is in denial but the BJP, too. “The BJP is in a state of absolute denial that terrorism really has no religion,” he says. “Terrorism has no religion; its victims come from all regions and religions.”

“I recall Obama’s statement that national security is a bipartisan matter,” he furthers. “In India, it is politicised in terms of electoral posturing.”

That ugly posturing was evident after the recent terrorist mauling of Mumbai, in which about 200 people died and hundreds more were injured. Even as people were riveted to live telecasts on every news channel of the most audacious terrorist attack on India, the cameras suddenly tilted down, changing the text. From focussing on the burning top floor of the Taj Mahal hotel, the cameras dipped to grant primetime to opposition leader Lal Krishna Advani, who, clad in his trademark kurta-pajama, began filibustering from ground zero. Even as the BJP’s prime ministerial candidate was single-mindedly excoriating the Congress-led United Progressive Alliance (UPA) government at the Centre for having failed to insulate the country from terrorism, ticker tapes running across television screens highlighted more immediate matters, such as the multispeciality St George Hospital in the bloodied and brutalised Chhatrapati Shivaji Terminus (earlier, Victoria Terminus) having received 57 unidentified, possibly charred or mutilated, bodies.

Before the suspected Pakistani terrorists stormed India’s financial capital, Advani seemed to be on the defensive end of the stick of India’s war against terrorism, courtesy the investigating agencies probing not ‘Islamic’ terrorism but the possible involvement of Hindutva extremists in the Malegaon and Modasa bombings. Barely a week before the attacks on Mumbai, the octogenarian uber demagogue had lashed out at Maharashtra’s ATS for arresting Hindutva proponents. ATS chief Hemant Karkare, who was shot and killed by terrorists on November 26, the first day of the terrorist attack, was the prime target of Advani’s vitriol. Karkare died disheartened by the fierce vituperation that had come his way for trying to fight terrorism divested of its religious and ideological affiliations or underpinnings.

Following the denunciation of the UPA by Advani, whose website shamelessly tom-tommed his ‘timely’ visit to Mumbai, the Congress party accused the BJP of hauling political mileage from the still-smoking debris of the gruesome attacks. The Congress’ gripe wasn’t amiss – just misplaced: it was trying to highlight a speck of sawdust in its opponent’s eye while trying to hide the plank in its own. And that plank seems to have rendered it blind to the surge of Hindutva terrorism in the country.

Vishal Arorawww.vishalarora.co.in
New Delhi: +91-9313346210 Sphere: Related Content

China's treatment of Hong Kong

Those who remember my lecture-presentations from the time that the UK spinelessly handed Hong Kong to China, will recollect the following story that I used to tell.

In order to appreciate the point of the story, you need to know that that there are two kinds of "old" teapots. First, those that have merely stood the test of time, and, second, those that have not only stood the test of time but have also never been scoured inside - due to the trace deposits of old tea that accummulate, the tea that comes from such pots is considered particularly fine.

A businessman, who loved to collect old teapots, happened to be travelling in a remote part of China when, due to unforeseen circumstances, he was forced to spend the night in a little village where there was no hotel or inn. An elderly lady took him in for the night and, as is usual, offered him tea with his food. He noticed that the excellent tea came from a fine old teapot, and he realised that the pot had not been scoured for a long time - perhaps never. He was full of praise for the tea and the teapot. The old lady was non-plussed as she considered her tea rather ordinary and the teapot quite valueless - as valueless as all the other things in her little home. She mentioned that her children had emigrated to the city and would probably never come back, so no one would be interested in any of the valueless old things she had in her home, and he could have the teapot when he went in the morning if he liked it so much. The businessman asked how much money she wanted for the pot. She hesitated and demurred, and eventually ventured to ask for a trifle - but the businessman pressed her to accept a sum a few times more than she had asked for. The deal agreed to mutual satisfaction, the businessman went off to sleep. In the morning, after a quick wash, he handed over some money to the old lady for his board and lodging, along with the agreed sum for the teapot. In turn, she handed ove a very nicely wrapped package, saying: "As you liked the tea pot so much, I packed it as safely as possible, having scoured and cleaned it as thoroughly as I could".

Just as the old lady did not know the value of the tea-pot, let alone knowing in what the value of the pot lay, so China has always regarded Hong Kong as the "imperialist pimple on China's back-side". I predicted as long ago as 1996, if I recollect aright, that China would systematically seek to promote the traditional city of Shanghai against Hong Kong, and that Shanghai would not only soon outstrip Hong Kong, but that the Chinese would destroy Hong Kong because they have no idea of its value and no idea of wherein that value lies.

It is some tweelve years since the time I used to tell that story. China has already taken many steps to fulfilling that story. Now see the final steps beginning to unfold:
http://uk.reuters.com/article/gc06/idUKTRE4BI2TP20081219 Sphere: Related Content

The fundamental lie on which the US relationship with China is based

An interesting report on the complexities of the US-China relationship is at:

The piece reminds us that the Republican party swallowed the lie, which was also later swallowed by the Democrats, that political freedoms follow economic prosperity.

This has never been the case throughout history, from the time of the earliest recorded empires in Chaldea and Babylon, to the present day.

Rather, political freedoms come at the cost of enormous sacrifice by a people when they value such freedom more than they value material prosperity, and indeed when they have been willing to suffer and even to be killed for the sake of getting such freedom for their peers and for succeeding generations.

This view is summed up in the phrase: "Give me freedom or give me death". A phrase that is true but uncomfortable, and therefore is not heard in our day which rather emphasises political correctness.

Why does our age deify political correctness? For the same reason that both the American political parties were willing to swallow the lie - because swallowing the lie make it possible to still one's conscience for the sake of material benefit. Its a case of "Don't talk about freedom and truth and other such messy things, let's just make money".

The problem is that the one certainty that will arrive at each of our doors is death. At that moment we will be faced with the question of what legacy WE leave for those who remain and those who come. And we will be faced with the question of the basis on which we face whatever comes after death. Sphere: Related Content

Highs and lows

A friend of mine, in his Christmas message to all his friends, writes:

"2008 was a year with more "Lows" than "Highs" for many....But let us always remeber that the world has more "Highs" than "Lows"....I have as an example attached a picture of one of the world's "Highs" and wonders: The eternal man-made Machupicchu in Peru, which my wife and I visited".

This is a some of kind of "very nice sentiment" but is UNtrue topographically, economically, psychologically - and indeed from every other conceivable point of view.

However, the whole point of the story that is celebrated at Christmas is the following:
Someone stooped lower than it is possible for any mere human to abandon herself or himself; therefore that Someone can make it possible for us to live "high" even in the middle of the lowest of lows.

God rest you merry, my friends, colleagues, acquaintances and readers! This Christmas, LET nothing dismay you! That is, do not ALLOW yourself to be dismayed by anything. The One whose birth is celebrated at this time, died - and then rose from death, in order to give us hope. If you do not know how to receive hope from Him, drop a line or call me - or anyone else who knows Him.

Genuine hope cannot be built merely on very nice sentiments.

Genuine hope can only be built on truth. Sphere: Related Content

Thursday, December 18, 2008

Is India ready for micro-drones? Is the world ready for micro-drones

Iran has now made public news of its unmanned micro-drones. However, it does not say whether these are any smaller than the ones that are available commercially, for example from Germany and the UK.

Assuming that the Iranian micro-drones are very much smaller:

As far as I know, Iran has no particular policy on proliferation of such devices, so it will sell to whoever it can, as it wishes.

So, if anyone does not already have these, they can now be obtained from Iran.

It is one thing to posses these. It is quite another to have these sent over your territory by an enemy - or by a terrorist group. The question is: are we ready to counter their deployment?

http://www.thememriblog.org/iran/blog_personal/en/12212.htm Sphere: Related Content

For those from any country who want to help build up democracy in their own countries

If you are interested in democracy, I am sure you know about the International Institute for Democracy and Electoral Assistance (International IDEA).

However, you may not know about International IDEA's new State of Democracy Network Website.

The following is a most helpful introduction to how you can use the website to nurture democracy in your own country:
http://www.opendemocracy.net/article/idea/taking-stock-of-democracy Sphere: Related Content

China-Taiwan talks: the sound of chatter is better than the sound of gunfire, but...

We must always be delighted when governments (or anyone else for that matter) talks rather than fires.

However, I can't help feeling ambiguous about the fact that Taiwan and China are talking about greater links in business and banking: http://www.bloomberg.com/apps/news?pid=20601080&sid=aDGQ4ohKBK28&refer=asia

As the Chinese economy goes down due to the current crisis, naturally, China is very keen to gain access to Taiwan's wealth.

Taiwan's nominal GDP per capita (i.e. wealth per head of the population) in 2007 was estimated to be $16.590 - making it the 40th most rich country in the world - in spite of the political isolation it has faced because of the rise of China - which, meanwhile, has a GDP per capita in 2007 of only $2,034 - making it only the 109th country in the world. In other words, the average Taiwanese is more than eight times as rich as the average Chinese.

The question is: as China goes down because of the current crisis, does Taiwan want to go down with it? Is it merely setting itself up for an invasion that it will be less and less able to resist, the more and more it gets economically entangled with China? Though China has been much more successful in politics because of its sheer size, Taiwan has been much more successful economically - till now!

Morever, as long as Taiwan considers itself "the real government of China" and as long as China considers Taiwan a breakaway province, the divide is unbridgeable. One of them will have to give up their political status for any final reconciliation.

China is still ruled by a Party which, however un-communist it may have become, is still a Party - that is a small group of people who lord it over the rest. In fact, the rule of the Party is, with capitalism, even more to the Party's advantage than was communism. That is, of course, why they have stopped being communist.

As the country goes down, watch the Party become merely dictatorial, without the ideals and and the conscience that made communism at least admirable as an idea, however flawed it was in practice because of its superficial understanding of human nature.

Taiwan, for all its faults, is still a free society. The temptation to give up human freedoms for less economic success is a strange one. But the thought that linking more closely with China will give Taiwan greater economic success is a powerful illusion.

It is idiotic that the USA is pushing Taiwan in this direction. Sphere: Related Content

Wednesday, December 17, 2008

Saxo Bank's analyses - versus mine

As Saxo Bank's reported analyses have some overlap with those that I have expressed in this Blog, I thought I ought to make it clear where there is some overlap and where there is none.

For the analyses in Saxo Bank's own words, see: http://www.saxobank.ch/en/node/761265

1. Iranian Social Unrest?
Certainly, says Saxo Bank (SB). As you know from my Blog, I agree. One interpretation of SB's position is that there will be a revolution. Possible, say I. More likely, the Iranian regime will launch an official external adventure (i.e. beyond simply stirring up trouble by covert means, as for the last several years). If it does happen, a revolution might in turn be rather a mixed blessing. It may help relieve the pressure in Afghanistan, Iraq, Lebanon and other countries. But will a revolution in Iran presage revolutions in Arab and other Muslim countries as well? And a revolution in what direction? Greater freedom or greater tyranny?

2. Crude Oil to $25?
According to SB, the current crisis will continue to reduce oil demand throughout next year, resulting in prices down to $25 a barrel. My view is that production cuts will start hampering falls in price. SB's view is that OPEC production cuts will be rendered ineffective by internal disagreement and subversion of any agreements to cut production. SB is right in drawing attention to disagreements in OPEC, as well as to the historical fact that OPEC members have several times agreed one thing but, in reality, done the opposite. However, we must not forget that the two major oil shocks were, in fact, caused by concerted action, and that concerted action as been sufficiently in evidence to maintain oil price levels through most of the period since the first oil shock. Verdict: yes, oil may for brief periods dip below $40 but, in spite of all the factors cited by SB, I still see $40 as the point of natural balance at present, not $25.

3. S&P 500 to 500?
SB's view is that such a fall will happen in 2009 for three reasons: corporate earnings declining because of less credit being available and because of consumers spending less; over-inflated house prices will continue to decline for obvious reasons; and, in the future, companies will have to pay more to borrow in order to invest. My view: the S&P may well fall to 500, but it won't be primarily because of these three reasons. If the S&P does fall to anything like that level, it will be primarily because investors continue to pull out. Why will investors continue to pull out in spite of historically low interest rates and low corporate valuations? Because no one know how much is hidden away by which company in which off-balance-sheet Special Purpose Vehicle, and because no one can compute the ways in which decreased consumer and corporate spending is going to play out in the corporate landscape. Again, see my caveat in the last para (below).

4. Could Italy Drop the Euro?
Yes, says SB. Yes, say I. But I also say that if Italy drops out, there will be pressure for at least Spain and Greece to drop out, and possibly certain Eastern European and even Northern European countries to drop out. Could Benelux drop out? In such an extreme scenario, the Euro will effectively be dead - or at least become the currency primarily of Germany and France.

5. Will the Australian Dollar Slump vs the Yen?
Rather precisely, the SB view is that the Australian dollar will sink to 40 Japanese yen due to next year’s continued slump in commodities. I rather doubt this, but I don't follow the Aussie dollar closely enough, I'm afraid. The Yen's own fortunes are tangled with so many things that it is dificult to say this sort of thing with any degree of confidence - at least on my part.

6. Will the US Dollar Outstrip the Euro?
SB thinks that the euro will fall to 0.95 cents versus the dollar in the New Year, before gradually rising to 1.30 cents. My view is that the fortunes of the Euro are not in the hands of the Eurozone.

7. Will Chinese GDP Growth collapse to 0% because of the seizing up of exports and the souring of comm0dities?
SB believes so. I think that China is much more likely to have a revolution (or collapse - or launch an external adventure) if the growth rate falls to anything like 5%, let alone zero. Concomitantly, SB thinks that Japan will not actually sink into recession, despite GDP growth of zero. Frankly, I don't understand what SB means, so I will leave that one with no comment.

8. Will Eastern European Forex Pegs Fail?
SB thinks so. I think so, with the caveat indicate in the last para below.

9. Will Commodities Plunge Even Further?
SB thinks commodities prices will drop 30 percent when taken across the board. Commodity prices will decline, say I, but not by this much. Ten per cent? Fifteen per cent?

10. Yen to Become Currency Peg
SB believes that Asian countries could drop dollar pegs next year, and peg instead to the Chinese yen. Forget it, say I. And if so, more fools they.

All the above analyses (including mine) leave out of consideration the one really major factor - and that is the actions of the Obama administration starting in less than a month, as well as market reactions to those actions.

Given the kind of economic team that Obama has appointed, I must say that I am not sanguine. Are these not exactly the sorts of people who have led us into the present crisis? "Ah", says a friend with whom I share this view, "but what if these folk have learnt the lessons provided by this crisis?". Regretfully, I don't see any evidence so far that any of the folk in power have learnt the key lessons that need to be learnt - though they show some evidence of having learnt some lessons, which is of course very good.

Anyway, let's hope that my friend is right. Let's hope that it is just that the evidence is not being shown at present (or it is simply my blindness that I am not seeing it). Let's hope that Obama's team does go beyond providing liquidity, guarantees, tax cuts and offers to buy up sour assets. Let's hope that there is a move on the leveraged betting that has been the proximate cause of the crisis (sub-prime was only the pin prick that cause the whole balloon to burst). Let us hope that not just one or two but a whole range of anti-cyclical measures will be set in place. Let's hope that the key decison-makers see the cultural, psychological and spiritual roots of the crisis and take steps to address those too. Because that is the only way we are going to get sustainable change. Can we do it? Can we change? Obama said we could. Let us see if he actually leads us in that direction. Because that is still the challenge. Sphere: Related Content

Why is China re-starting censorship of news and of websites?

For those who considered that China was making some progress towards encouraging a freer press, it is now absolutely clear that the "progress" was a mirage.

China had merely freed up the international press so as to ensure that the international media did not boycott the Olympics.

Now, that the Olympics are safely over, China has re-imposed the old-fashioned censorship, as many of us argued was going to happen - see today's: www.gmanews.tv

You might also want to see the statement, on the above matter, from the Committee to Protect Journalists (http://cpj.org).

Now watch out for rhetoric beginning to mount from China, against Taiwan, Tibet, Korea, Japan, India, or any other country .... IF rhetoric does begin to mount, consider it a danger signal - heightened rhetoric is always the first step to violence (though it may stop short of that, it may also NOT stop short). Sphere: Related Content

Being back in the Cold War (Continued)

This post is a sort of continuation of the post of 13dec08, in which I recognised that we are now back in a Cold War between the USSR and the USA (see: http://prabhuguptara.blogspot.com/2008/12/so-we-are-now-formally-back-to-days-of.html)

Having torn up the the Conventional Forces in Europe (CFE) arms treaty, which was a key step towards the end of the Cold War, it is not at all surprising that Russia wants to continue with the 1991 Strategic Arms Reduction Treaty (SART) which expires in December 2009: http://www.google.com/hostednews/ap/article/ALeqM5i0xBv8YQwWSZqAQgjd42RCvU1uEAD954H7M81

WHY is Russia so keen on continuing with SART? Because, given its preponderance in conventional forces, Russia does not want the US's nuclear lead to increase....

Should the US continue with SART? Not if Russia does not continue with CFE...

The two treaties are in fact two sides of the same issue, which is arms reduction (including nuclear arms reduction) and military personnel reduction - worldwide. Sphere: Related Content

Tuesday, December 16, 2008

The coming fortunes of the Euro

Readers will recollect my drawing attention to the fragility of the Euro in a recent post.

The Euro has been increasingly popular since its launch nearly ten years ago - but particularly popular since the dollar started declining, and even more wildly popular since the start of the current crisis.

However, since I wrote about it (but I am sure not for that reason!) there has been a dramatic increase in yield spreads if you compare German government bonds to Greek and Italian government bonds.

The current financial and economic crisis will soon spread to Spain. Then watch that spread in yields widen.

Watch also calls for more unified regulation and supervision, and indeed economic and political cohesion in the Eurozone.

The Eurozone will then either then fall apart, or it will move much closer together. However, the latter course of action will be against the popular will in Europe, and it will cause increasing discomfort to Southern, Eastern and perhaps even some parts of northern Europe. Further, the Eurozone will then face the challenge of compensating the suffering of the south, east and possibly north - and of course the compensation will have to do be done by parts of the EU that are richer. In fact, however, these "richer" parts of the Eurozone are not as rich as they used to be. So a move to greater cohesion may enable the Euro to survive but, if the Euro survives, it will do so at the cost of a greatly weakened Euro. Sphere: Related Content

Monday, December 15, 2008

Momsueir Trichet does NOT repent

It is disingenuous of Monsieur Jean-Claude Trichet to continue to argue, as he first did at the WEF in Davos 2007, and as he did the other day in an interview to Financial Times, that the issue is mis-pricing of risk. Indeed, he hinted that the mispricing of risk may be over.

My response is the following: we can price risk correctly for 99.9% of the time. The difficulty is knowing when the 0.01% is upon us.

And the most important thing to remember about that 0.01% is that while the consequences of the 99.9% are manageable, the consequences of the 0.01% are more or less UNmanageable (as we are finding out since the Summer of 2007).

The problem is that it is impossibly costly to ensure against the 0.01% whose timing, scale and consequences cannot be determined. Monsieur Trichet argues that the solution is to keep to rules - in Europe, where we have rules; and, in the rest of the world, where we do not have sensible rules, to create a co-ordinated set of rules.

This may be fine in theory. But the difficulty is to agree a set of rules that suit everyone (clearly they will "suit" some people less than others), and then to agree a mechanism that implements the rules with global reach and impartiality but maintains human freedoms.

Monsier Trichet also acknowledged that many of the "dampeners" in the system have disappeared - by which he means mechanisms that acted as a brake on the booms and busts created by the kind of financial and economic system we have around the world at present.

He seems to think that anti-cyclical provisioning for banks (such as has been practiced in Spain - with some success in averting the impact of the crisis so far) may be adequate, when complemented by anti-cyclical provisioning and tax policies at country and global level.

Anti-cyclical provisioning is elementary good housekeeping. That is what the whole notion of reserves is about - and has been since the time of the Jewish forefather Joseph in Egypt (see the story in first book of the Bible, "Genesis", chapter 41).

But the notion of reserves, highly sensible as it is, is independent of the kind of economic system one has.

I invite Monsieur Trichet to come to the conclusion that, while we do need global rules, these have no chance of succeeding without the inclusion of complementary currencies which act as what I might call "natural system dampeners" for what everyone now acknowledges are the pro-cyclical effects of the current system.

The key issue is whether it is possible to have a stable global system rather than a cyclical global system.

The answer, I have argued against the overwheming consensus, is "YES!". The key lies in working at two levels:

(a) moving our culture away from greed and fear, towards contentment and hope - which is an educational, political, psychological and ultimately spiritual matter; and

(b) moving our economy away from being overwhelmingly debt-based towards becoming overwhelmingly investment-based.

Though tax and regulation can mitigat the effects somewhat, as long as the global economy is debt-based it will certainly be cyclical.

But there is no reason to have a cyclical debt-based global economy (well, actually, there is one reason, and only one reason - human greed and fear - which is what has condemned most of the world through most of history to high growth followed by collapse).

While the world was not so interconnected, the growth and collapse happened at the level of kingdoms and nations. In an interconnected world now, the growth and collapse happens on an increasingly global basis.

So the world has only two other choices: go back to much less globalisation (which will result in either in regional wars of varying intensity, or in another world war), or go on with incrasing globalisation - but on the basis of increased regulation of a debt-based system.

The third alternative (which I promote - that of rejecting a debt-based global system for an investment-based global system) is much the most free and human of all.

We were already told about this in the Bible, in the Koran, and so on.

Some old wives tales are merely tales. But some tales have have truth to them.

Rejecting truth is simply arrogant. And, sooner or later, arrogance leads to disaster Sphere: Related Content

International regulation: so I wasn't "naive" after all

When I first expressed the view, several years ago, that we need a system of global regulation (a "global level playing field"), I was called naive, an utopian, and worse.

Now, though there is nothing yet like unanimity even among the decision-makers, at least opinion is beginning to swing around. See: http://www.ft.com/cms/s/0/19def442-cad6-11dd-87d7-000077b07658.html

The danger, however, is that the pendulum will swing too far by the time decision-makers do achieve consensus on the matter. There are already calls for "regulation with teeth".

Yes, we do need regulation with teeth (otherwise, as was demonstrated by the USA during the last 20 and more years, it is worse than having no regulation at all).

However, we need the sort of regulation that preserves freedom in financial innovation, trade and civil society.

As momentum builds FOR regulation, that balance will be difficult to maintain .

It is, paradoxically, now up to civil society to ensure that regulations do not strangle, and that freedoms are maintained.

I have already suggested that one key is multiplicity in the exchanges on which hedge funds, derivatives and the like must register and on which they can trade.

And I continue to worry, that most of the world's decision-makers are still fixated on addressing the results of the crisis (liquidity, inter-bank lending, inflation/ deflation, and so on), rather than the causes of the crisis.

As I have argued elsewhere, the fundamental cause of the crisis is the turn away from Biblical principles (which are what led to the rise of the West since the 16th century). The resulting cultural. political and legislative entrenchment of greed (which I have charted in some detail - though perhaps not enough!) is what has led to the crisis.

The most obvious result was the unchecked and unregulated rise of hedge funds and derivatives - in spite of the collapse of LTCM !!! - and the proximate cause of the crisis was NOT the defaults on sub-prime housing, but the fact of those defaults being magnified because of the leveraged bets taken on sub-prime housing and associated instruments, AND the fact that the related risks were so widely dispersed through the system because everyone wanted to play the game of ever-higher rewards for apparently low risk. Sphere: Related Content

Saturday, December 13, 2008

Prabhu's latest broadcast on NPR

Discussing the origins of the current crisis, what should be done about it - and how you can keep yourself mentally at peace in the middle of all that is going on:


That's roughly 14 minutes, so make yourself a drink and enjoy that while listening to the talk on the internet - better still, why not invite a friend or family member to listen to it with you and discuss the following questions:

1. According to Prabhu, what were the few key things that created the current crisis?

2. According to him, what should be done about that?

3. What can I (or we) do as citizens and as members of our local, religious, family or friendship networks to help others understand what is going on and what could and should be done?

4. What is Prabhu's way of holding on to what is good/ beautiful/ true/ helpful, right in the middle of the current crisis? Am I (are we) simply burying our heads in the sand? What resources can we call upon to eye the crisis but still have peace in our hearts so that we can act humanly and humanely? Sphere: Related Content

"Shared Economic Growth" - for whom?

A friend draws my attention to: http://www.sharedeconomicgrowth.org/. The view there has been helpfully summarised as follows:

"President elect Obama has promised to reverse the current tax incentives that lead corporations to move jobs off shore, and to reward companies that place operations in America. The web site http://www.sharedeconomicgrowth.org/ outlines a simple, feasible, revenue neutral and progressive proposal that would enable him to fulfill that promise in a meaningful way, while also allowing hundreds of billions of dollars of cash to flow home and recapitalize our economy.

* Reverses the current incentive to locate high value jobs off shore. Today net profit can be increased 54% purely by having operations outside of the U.S. Reversing this incentive will increase the demand for American workers and drive up wages.
* Eliminates the incentive to hold cash off shore. Today there is a penalty of up to 35% for bringing cash into the U.S. economy. Corporations accumulate hundreds of billions off shore each year to avoid this penalty. Removing that penalty would add liquidity to our economy as those hundreds of billions flow home.
* Eliminates the incentive to over-leverage corporations by putting debt and equity on an equal tax footing. Corporations borrow too much today, reducing their stability, because they have a tax motive to do so.
* Increases the equity returns to hard-hit IRAs, 401(k)s, and other retirement savings by up to 54%, restoring the value of savings and rewarding responsible middle class people who live within their means and save for the future.
* Unlike the current bail-outs that are subsidizing operations that have failed, it provides incentive to place high profit winning operations in the U.S., revitalizing our economy. We should build our economy on stars, not on dogs.
* Shuts down tax abuses.
* Best of all, Shared Economic Growth does all of this without adding a dollar to the deficit and while improving the fairness of our income tax structure."

So much for the benefits. What is the actual proposal and the rationale for it?

"1) Starting back in the 70s American employees started to lose market value as productivity improvements combined with international competition to reduce demand. For low margin operations, this waas pure wage competition - an operation paying $10 an hour to U.S. workers had trouble competing with an operation paying $2 an hour to Mexican workers. For high margin operations - basically high technology and other desireable products - it was driven by tax policy. If you put a plant in the U.S. the income is taxed at 35%, but if you put it abroad it could be taxed at zero, resulting in 54% more profit. For high margin products this is much more important than labor cost. In the 70s it was hard to find enough skilled labor in low tax places, but over time it has become easier to do so. Thus, low skilled employees had their average pay flat-line in real terms in the 70s, and the phenomenon gradually moved up the education scale so that most college graduates flat-lined in the past decade.
2) Thus, consumer purchasing power stopped growing. Productivity gains concentrated in the hands of an elite few with more money than they could spend. Since America's economy is 70% consumer driven, we lost our engine for natural growth. The government thus became desperate for artifical stimulus.
3) The crazy financial policies developed and grew in this retirement. I have had conversations with people in all walks of life for years where they have commented that the policies of lending to people who clearly lacked real ability to pay made no sense and would have to crash. But the government continued to encourage this system, because it stimulated artifical consumer demand without obviously increasing the deficit.
4) Now that gimmick has crashed. What is the government response? Explicitly and implicitly deficit funded artificial spending. That cannot last.
5) But if we changed tax policy to collect the same money at the shareholder level, rather than the corporate level, corporations would suffer no tax by placing their operations in the U.S. High value operations would thus be placed here preferentially, increasing demand for workers, which in turn would increase worker market power and wages. This would increase natural, sustainable consumer demand, replacing the ponzi scheme with organic growth. Absent this, R&D and new products and operations will continue to flee, and we will continue to develop dysfunctional schemes to obscure our economic disease. "

Here is my view: The tax-change proposed by "Shared Economic Growth" would incentivise all NEW factories to be located in the US, yes - but it would not close down existing factories in the rest of the world - which is where most factories NOW exist!

It is essential to distinguish discussion of new factories and what should be done about those, from discussion of existing factories and what should be done about those.

It is not clear how many new factories are going to be built over the next say 5-10 years, depending on how long the current crisis lasts.

If they do want existing factories to be relocated back to the US, that will cause certainly China to collapse, as well as possibly Vietnam and some other countries....which will not be in anyone's interest!

So the better way to go, for both existing and new factories, is to entirely stop playing this global game of tax incentives and subsidies (abolish all subsidies and move to simple flat-rate taxes), and create a genuine global "level playing field" in terms of health and safety, holidays, pensions, and environmental regulation. Any country that does not belong to the level playing field should be banned from trading with other countries that do belong to the level playing field - and I mean a TOTAL ban in all trade - financial services as well as all other trades, manufactures and agricultural products.

Naturally, some countries need to be given time to get their countries up to the required level, so trade needs to be phased in as countries do progressively and increasingly belong to the "club" according to an agreed timetable.

China and Russia are startlingly clear cases of countries that HAVE the wealth and the organisational resources to move their countriest to a level playing field but refuse to do so, maintaining poor environmental conditions, zero pensions, very few holidays, and extremely dangerous standards in health and safety - principally in order to continue offering Western companies the possibility of manufacturing cheaply there....

So, my main problem with "Shared Economic Growth" is that the vision of these folk extends simply to sharing economic growth WITHIN the USA. They do not have a global perspective. That is what they need to have in today's world which, in spite of the current crisis (or as the current crisis so clearly shows!) is still very much a global economy.

Whenever the global community starts taking steps back to protectionism (as Russia and China have now started to do), there will be danger of moving to war - particularly if the USA also starts taking protectionist measures.

I had hoped that we would have clear signals regarding this from the recent inter-governmental conference on the crisis, organised by President Bush, but nothing clear emerged (beyond saying that they were going to WORK on something clear!).

That is why nothing substantial can be said or done till we have a clear signal from the new Obama administration. That is why the global economy will continue dribbling along the current level (barring a disaster or two, when of course it will fall even further) till the Obama administration makes some clear statements. And then, of course, it depends on what those statements are - and on how the market likes those statements as well as the timetable for implementing them.

What is happening at present is that "hundreds of billions of dollars" ARE flowing "back home" (to the USA) - which is partly what is creating a crisis in China, Russia, India and other "demerging" countries (as I now call them).

What the USA *can* get back are the "liquid" dollars that sit in accounts. What the USA *cannot* get back (easily!) are the dollars sunk in actual buildings and equipment. My argument is that the US should not even *want* to get those back. The future of the USA as well as the future of the world, lies in increased trade (not less trade) - but trade built on proper human and ethical foundations - not the sort of unethical and inhuman trade regime we have at present. Sphere: Related Content

So we are now formally back to the days of the Cold War

Russia has just killed the Conventional Forces in Europe (CFE) arms treaty, which was a key step towards the end of the Cold War.

Though no one wants to recognise this new reality (or return of the old reality), the result is that we are now in fact back to the situation as it was in the days of the Cold War.

http://www.thefinancialexpress-bd.com/search_index.php?page=detail_news&news_id=19828 Sphere: Related Content

Thursday, December 11, 2008

Is Iran building nuclear weapons - or ...?

NOT, according to Dr. Thomas Fingar, who stepped down a few days ago from the post of Deputy Director of national intelligence and Chairman of the National Intelligence Council.

For the basics of the story, see: http://www.tehrantimes.com/index_View.asp?code=184537

But, if Iran is not building nuclear weapons, WHY is it refusing to co-operate with the International Atomic Energy Agency?

Is this simply Middle Eastern bravado such as was displayed by Saddam Hussein and his henchmen who promised "the mother of all battles" even though they had, as far as has been discovered so far, practically nothing in terms of nuclear, biological, chemical or other "weapons of mass destruction"?

The trouble with this kind of bravado is that it is self-destroying. First, no one knows when you are telling the truth and when you are just telling tall tales. Second, everyone must of course take a worst-case scenario into account - which itself ups the tension. And third, no one knows whethere or when or how far they can trust you.

Everyone is possibly likely to tell a lie some time or under some circumstances. But where a culture makes a habit of lying or a tradition of lying or even takes pride in its ability to lie, it becomes very difficult to deal with it. Sphere: Related Content

Wednesday, December 10, 2008

Regulating Derivatives

A friend from Hong Kong has just reminded me that I had organised and hosted a meeting six years ago, led by Dr Michael Ramsden of Oxford, on the need to (and approaches for) regulating derivatives.

No one took any notice in 2002, or in 2003, or in...

Not entirely surprising, then, that the bursting of that bubble has had results are unfolding so tragically....

Even though a friend tells me that the derivatives bubble has not deflated more than 8% from its maximum some months ago - so there is still a long way to go, unless proper regulation can be set in place - and no one in authority seems inclined to go for that

However, I am reliably informed that there is now talk of establishing ONE exchange for derivatives - on a purely voluntary basis

Of course there is no reason why anyone should be forced to trade in derivatives, but if someone does trade in anything, it must be according to sensible rules! It is the absence of such rules which has led to the current crash.

And only ONE exchange for derivatives when there are ... how many exchanges for the real-world economy?

Do let's keep in mind that derivatives are, at present, something like 20 times the value of the entire real-world economy.

So the enormous human suffering around the world will continue, and indeed increase ... because a few rich and powerful people do not wish to slim their outsize bellies. Sphere: Related Content

Islamism and Communism

The parallels between Islamism and Communism are fascinating: you have to be a member of the "party" to get on in life, abandonment of the "party" can result in your being targeted for imprisonment/ psychiatric attack/ murder and, if you refuse to be a member, you are denied access to jobs and indeed education:
http://www.iranpresswatch.org/2008/12/denial-of-education-an-appeal-by-an-academic/ Sphere: Related Content

What sorts of things can and should be done now to prevent tendencies to national violence?

Here is an example from the Middle East: http://www.foxnews.com/story/0,2933,464684,00.html

I am also reminded that the terrorists struck Mumbai immediately after Pakistan had offered a free trade treaty to India - for the first time.

Has the possibility of a free trade treaty with Pakistan died with the terrorist attack? I hope not.

India should pursue the free trade option and not focus only on the question of banning the parties responsible for the attack.

The best counter to terrorism is economic progress. That can come from free trade. Let us pursue that and peace as aggressively as possible. Sphere: Related Content

It is easy to make pleasant noises when things are going well, but watch what people do when the going gets tough

Here is an example: "Amid corruption scandals and stagnating reform, Turkish Prime Minister Recep Tayyip Erdogan, praised in Europe as a modernizer, is seeking refuge in nationalist rhetoric, adopting a tougher stance on the Kurds and moving closer to the country's military leaders...": http://www.spiegel.de/international/world/0,1518,595430,00.html Sphere: Related Content

The limits of free speech

Open societies always have to struggle with the question of the limits to free speech.

Should individuals, groups or nations be allowed to call for genocide?

Not according to the latest initiative from an international group of lawyers: http://www.jpost.com/servlet/Satellite?pagename=JPost/JPArticle/ShowFull&cid=1228728129889 Sphere: Related Content

Watching a crisis unfold - NOT the economic one....

The economic earthquake is now well and truly over, and what we have are experiencing are the aftershocks and the continuing slow collapse as structures slowly bend under the immense weight that has been placed on them.

But the consequences of the economic earthquake include the social and the political.

I don't know if you have ever been in an accident where you could see that it was GOING to happen, and where you could actually even see it TAKING PLACE, but couldn't do anything to stop it.

That is how I feel on the 60th anniversary of the UN Declaration of Human Rights which has been one of the most important contributions to humanity and civilisation in the last 100 years.

But exactly at this time, the signs from China continue to be negative:

What has the UN Declaration of Human Rights to do with the political crisis now beginning to be unleashed?

The suppression of internal dissent is essential for corrupt elites to keep themselves in power. But this is not going to be enough in the days ahead.

So far, we have not seen increased rhetoric and bad mouthing of other countries from either Russia or China, and Iran merely continues in its usual way.

Watch for such increased rhetoric as the sign of which country or countries will take to external violence as the way of keeping their elites in power. Sphere: Related Content

Tuesday, December 09, 2008

What is Poznan? And why is it important?

Poznan is the location, in Poland, of UN-sponsored talks which commence today.

Following the rather limited success of the Kyoto Protocol, the UN hopes that the talks in Poznan will build on the start made at last year's conference in Bali and will, in turn, lay a good foundation for the talks planned for Copenhagen in December next year, which should conclude a new global treaty to replace the Kyoto Agreement. Yvo De Boer, the executive director of the UNFCCC (United Nations Framework Convention on Climate Change), is reported to have said that what is going is “one of the most complicated negotiating processes the international community has ever seen.”

The UNFCCC will circulate at Poznan the first draft of a new global agreement, which will no doubt be argued over and modified in the coming year, before, one hopes, being submitted to the Copenhagen conference for finalisation. The general feeling is that rich nations are now willing to take on greater emissions cuts if developing countries that some on as well. The latter is more challenging at present than the former. In order to sweeten the pill, the UN is proposing a global adaptation fund to help poorer countries already feeling the impacts of climate change. The fund will draw revenues from a levy on the global emissions scheme, called the Clean Development Mechanism - and that will lead to no doubt acrimonious debate regarding how best to finance low-carbon development and facilitate the transfer of clean technologies. Other substantial issues on the table include reducing emissions from deforestation and forest degradation. On the other hand, several contentious issues, such as that of how to make emissions reductions measurable, reportable and verifiable, will not be tackled until the Copenhagen meeting.

The EU has been the most vigorous and generous promoter of everything to do with emissions reduction. Under President Bush, the USA was the most recalcitrant, and it remains to be seen what positions the Obama administration will really take. China and India, the most important developing nations, have sometimes worked at cross purposes and sometimes together. What positions will they take, in view of the global economic crisis and its differential impact in these two giant countries? Apparently, China is looking for significant technological assistance as well as financial support as part of a new global deal, in which developed nations are expected to agree to contribute 1% of their GDP for transferring clean energy technologies to developing nations. However, as China already possesses most of the relevant technology and expertise, most observers feel that its calls for further assistance are a delaying tactic to dodge taking on radical commitment to emissions reductions. It is also a bit ridiculous for China to be looking for economic assistance when it has among the largest foreign exchange reserves in the world.

The most realistic statement of what is actually needed has come from UN secretary general Ban Ki-Moon, in a joint statement with the leaders of Indonesia, Poland and Denmark: “when it comes to two of the most serious (issues faced by the world) -- the financial crisis and climate change -- that answer is the green economy.” (parentheses mine)

Sadly, I greatly doubt that anything like the green economy is likely to emerge from Poznan. But if something like a global framework for emissions reductions does emerge, that could be a significant step in that direction. Sphere: Related Content

So Israel's President agrees with me :)

It looks as if someone has drawn my last Blog on Iran to the attention of Shimon Peres, Israel's President :)

http://news.xinhuanet.com/english/2008-12/09/content_10479980.htm Sphere: Related Content

Monday, December 08, 2008

Expect increasing tension from China around trade


this is just an early sign

there will be plenty more of this sort of thing - relating to everything from the exchange value of the chinese yuan to explicitly protectionist measures

the more of this we see, the greater the chances of conflict

the other thing to watch is the rate at which China's foreign exchange reserves are being used up - $2 Trillion sounds like a lot, till you focus on the fact that it is for a nation of 1.6 billion people. Sphere: Related Content

And which way is Russia headed?

Did you notice the report, the other day, of a raid by armed police on the St.Petersburg headquarters of the prestigious human rights organisation, Memorial, which was founded in 1989?

There is an anguished debate taking place regarding what this portends for Russia. Was the action a result of misplaced zeal by particular individuals, or does it signals the start of a new and dangerous chapter in the precarious life of Russia's NGOs?

Nikolai Mitrokhin, who is at the Centre for the E.European Studies at Bremen University, and used to work for Memorial, is reported to have said: ‘We can only hope this is a stupid mistake.... It is a strange development, as in recent years Memorial has had quite good relations with the regime. Although Memorial has been harshly critical of the actions of the Russian government in Chechnya and SouthOssetia, in general Memorial has been a regarded as a very prestigious NGO, one which the government has been prepared to do business."

We will soon see which way the wind is really blowing.

But let us not forget that increased internal repression can be for its own sake, or it can be a prelude to external adventures. Sphere: Related Content