Wednesday, April 28, 2010

IMF proposes two new taxes on all banks and financial services companies

In view of the "too big to fail" syndrome, whether taxes are really the right way to organise the financial sector is a different question, but I will comment on one aspect of the IMF's proposal (two global taxes on financial institutions: a financial-stability contribution on bank LIABILITIES (except deposits, which come under the purview of deposit insurance schemes and are already taxed) in addition to a levy on bank EQUITY).

The IMF has proposed that the tax might be charged initially at a flat rate, changing over time to a charge according to the riskiness and size of the institution concerned.

The flat rate will either be so small as to bother no institution or, more likely, will bother smaller organisations (and therefore disproportionately institutions in smaller countries) more than larger ones.

Conversely, whenever the IMF wants to change the system to a variable rate, the larger organisations are more likely to protest and to seek to obstruct the move to a variable rate.

So the flat tax may be a political calculation that if the wedge is very thin right now, no one is going to protest too much, and the contributions can be ramped up over time.

The contribution should be looked at as a sort of insurance fee. Though in my view it would be much better to leave the job entirely to insurance or reinsurance companies (with insurance and reinsurance companies insuring each other), I recognise that it is the State which is the insurer of last resort and so it is right for the insurance fee to go to the State, provided the State keeps the money in a separate fund, with the adequacy of the contribution being evaluated from time to time either by a quango or by outside advisers.

The good thing is that the IMF wants the taxes to apply to the entire financial sector so as to avoid tempting organisations to change legal form in order to escape the net. Sphere: Related Content

Tuesday, April 27, 2010

Western Centres for Islam and Democracy

I am most puzzled to find one Center for the Study of Islam and Democracy included in a list of organisations that stand for Democratic Capitalism.

"Islamic democracy" is of course an oxymoron but this is not understood in the West, and Western individuals, organisations and govrnments unfortunately do not merely tolerate but actually promote and even finance such organisations!

Islam cannot accommodate democracy, since it has always been and will always be a theocracy modelled by the Prophet Mohammad and controlled by the Ulema (religious scholars). No real Muslim will accept the principles of democracy since that would allow a Kaffir (unbeliever) to hold political power - an anathema to Islam.

A "liberal muslim" is by definition not a "real muslim" since s/he rejects the model provided by the Prophet Mohammad as well as the essential teaching that Islam makes no distinction between the State and the "Church" of Islam.

The objective of Islam is always to take control of politics in order to re-arrange society in accordance with Islamic precepts including the lower level assigned to women and the even lower level assigned to unbelievers (e.g. not being able to serve in the defence forces or in high civil, business or political office) as well as having to pay a special tax.

As I am from the second-largest Muslim country in the world (India), I am well acquainted with "very good Muslims" who are caught between their desire to be "very good Muslims" and seeing the way their minority is treated in a more truly secular democracy (India) versus the way that Islamic societies conduct themselves as a whole as well as the way that minorities are treated in Islamic societies.

I am not saying that India treats Muslims and other minorities perfectly, merely that inspite of its inadequacies India makes a better job of treating its minorities according to its ideals and that, if India did treat minorities fully in accordance with democratic capitalist ideals, no one would have anything to complain about; whereas the more that Muslim societies treat minorities according to Islamic principles, the more genuine democratic capitalists will be offended and shout for the removal of those principles.

However, I should say that the same criticism applies, though perhaps nowadays not quite as strongly, to the Roman Catholic Church, since that is in principle also theocratic, because Roman Catholicism was at least as deeply shaped by Islam ss it was by the some of the teachings of Jesus: the Pope is like the Caliph, and the equivalent of the Ulema is the College of Bishops - though the political sway of Roman Catholicism extends only to the Vatican while the political sway of Islam reaches to many countries (that is compensated of course by the religious influence of Romanism which reaches many more people, even though Roman Catholics may not realise that Romanism has never repudiated its right to have an army, for instance). In Romanism, as in Islam, there is plenty of contradiction between the ideals that are professed for public consumption versus the principles on which the religion is really run - and therefore the realities of the religion.

Nazism was, in its structure, quite like the Roman and Islamic religions - and many modern Hindu and Buddhist organisations are, regretfully, developing towards similar structures.

The alternative remains truly democratic and secular societies - which are threatened by the sort of debased capitalism that we have seen in the last 30 years. Sphere: Related Content

Why people of faith should stay away from the "Christian Equity Index"

First what the Index is, and then my comments on it.

There are many financial indexes of this sort, some claiming to be ethical, some claiming to be Islamic, this one claiming to be Christian, and so on.

Are such indexes having an impact? Yes, though perhaps not yet as much of an impact as the originators of these indexes hope. But it is early days yet. The first major such indexes started only in the 90s, though there is an older tradition of them, going back at least to the days of apartheid.

Most such indexes take the top-performing companies and subject them to some sort of "screen" in order to eliminate those deemed unsuitable on the basis of certain criteria, for example: pornography, weapons, tobacco, gambling, usury and/ or environmental damage. In other words, only the most profitable of the largest companies avoiding these sorts of things are allowed to be included in the Index.
So investors are saved the trouble of having to screen each company themselves. They simply decide which of the above criteria are important for them, find which of the indexes shares their criteria, then investors can simply lean on the the work done by the screeners who produce that particular index.

However, there is a danger in leaning too heavily on such Indexes: one needs to be vigilant regarding whether the criteria are in fact being followed. For example, most so-called "Islamic" companies do not really eschew usury, they simply find one way or another around it. In the case of the so-called "Stoxx Europe Christian Index", its major difference from the criteria mentioned above is that it adds birth control to the list. In view of that, it is astonishing to find GlaxoSmithKline on the list of companies approved by what is really a Roman Catholic Index, given that GlaxoSmithKline Lamictal, Elogen, Yaz and perhaps other birth control pills.

But why do I say that "people of faith should stay away" from this Index, whether it is Christian or Roman Catholic? Because the Index claims that it includes only those companies whose revenues derive from sources approved "according to the values and principles of the Christian religion".

Leaving aside what is meant by "the" Christian religion (there is no such thing, as Eastern Orthodox, the Roman Catholic, Jehovah's Witnesses, Christian Science, Mormons, and various others all claim to represent "the" Christian religion), there is the question of what the "values and principles" of the religion are, and whether these are adequately represented by the criteria of this particular Index.

In my view, the "Christian Index" is a trivialisation and a travesty, because it leaves out what the Bible calls "the larger matters" of social justice and environmental care.

Most important of all, in typical Roman Catholic fashion, the Index simply "baptizes" the existing economic order and financial system, without any clear standard on the basis of which the system as a whole can be evaluated. For example, the Index bypasses the requirement of relationships which, if nothing else, is central to the teaching of the Bible from the very first chapters of Genesis right to the end of Revelations.

For a much more Biblical approach to the matter of investing, see resources from the Jubilee Foundation, for example "Beyond Capitalism: Towards a Relational economy" See also: and

I conclude that an Index that can reliably be used by people of faith has yet to be invented.

Meanwhile, the best thing to do is to investigate the many businesses that you know personally which are being run by people of faith, and invest in those of them that do meet, in your view, whatever criteria you deem appropriate for an ethical business. Sphere: Related Content

Saturday, April 24, 2010

My twins' novels now in Dutch (Nederlands)

My 21-year old twins' series of three fantasy novels, set in their created world called Calaspia, has been translated from the original English and is now being published in Dutch (or Nederlands, as the language is called) by Wereldbibliotheek.

The first volume, DE SAMENZWERING VAN CALASPIA, should be available from next week (see below). The 2nd novel should be available in Dutch in about six months, and then the 3rd.

The first novel is available also in German and Italin; volume 2 is already available in German, vol 3 will be published in German in the Autumn.

Other translations are being considered/ sought.

The twins are now at work on their SECOND SERIES, which will be based in India, and their Agent is looking for the main publisher for that, we hope in the UK and/or USA.

The twins' website is:

---------- Forwarded message ----------

Today the Dutch edition of CONSPIRACY OF CALASPIA has arrived at our publishing house! The books are beautiful, we will send you two copies a.s.a.p.

We are also finishing our website. We hope you like it!

The book looks even better in "real time", because the "yellow" letters are actually gold and shiny.

DE SAMENZWERING VAN CALASPIA will be in the book stores by next week.

All the best & have a nice weekend!

Eveline & all the other collegues at Wereldbibliotheek Sphere: Related Content

Thursday, April 22, 2010

Lecture in Dubai, 5th of May, "The Global Economic Crisis: Is it Past? And what of the Future?"

I argue that the crisis is not past; it is simply that a floor has been put under it by the extraordinary measures that were undertaken. The floor itself comes under threat, and then further measures have to be taken. Meanwhile, the very existence of the floor builds up its own pressures. The future is uncertain, and will feature even greater uncertainty from Europe and the USA right around to China. However, it is still possible to put sensible solutions in place that will produce a global framework for finance and industra, for ecology and humane development. And I put forward key proposals for discussion.

From 7.30 pm to 9.30 pm, at Traders Hotel, on the corner of Abu Baker, Al Siddique & Salah Al Din Road

The event is kindly sponsored by The International Indian magazine/ Expat Media International, and is therefore free of charge. However, you need a (free) ticket to get in. Please ring 265 9888. Sphere: Related Content

Saturday, April 17, 2010

The Milesa nd More Frequent Traveller Programme of the Star Alliance Airlines Group

I suggested to Miles and More that it was unnecessary, and embarrassing for members of their frequent flyer programme, to have the experience of being turned away, as I was, at the SAS Lounge in Copenhagen, because of differences in the rules applied by Lounges belonging to different members of the Star Alliance. In other words, according to the rules, I am to be admitted to Lounges run by Austrian, Lufthansa, and Swiss but I am NOT to be admitted to Lounges run by other members of the same Star Alliance, such as SAS.

The following is the response that I received:

Dear Professor Guptara,

Thank you for your email.

As a Miles & More Frequent Traveller card holder you have access to the Lufthansa Business Lounges on production of a valid boarding pass issued on Lufthansa, a Star Alliance partner or a Lufthansa airline partner for the same date and airport of departure.

For SWISS Business Class Lounges and Austrian Airways Business Lounges you need to produce a valid boarding pass issued by our Star Alliance partners for the same date and airport of departure.

However, please understand that we have no influence on the rules and regulations set by other airlines, e.g Scandinavian Airlines, regarding the access to their lounges.

The latest information concerning the benefits of the Miles & More Frequent Traveller status can be found on our website > The programme > Status and Privileges > Miles & More status levels > The main benefits in brief.

Your Miles & More Service Team

Here is the response that I have sent to them:

Dear Members of the Miles and More Service Team

Many thanks for your message.

However, I had not asked for information regarding the rules for the use of Lufthansa and Swiss Business Lounges.

What I asked was that you take action to harmonise the different rules and regulations set by your so-called "Partner Airlines", as these differences lead to embarrassment to your passengers. If you have no influence on the rules and regulations set by "other" airlines, why do you have them as Partners in the Star Alliance system? Clearly, the "Alli ance" is meaningless if everyone is free to set their own rules, regulations and standards!

I understand that the Miles and More Service feels unable to do anything about this because this is a matter that is beyond the competence of the Service Team.

However, it is not beyond the competence of the Service Team to raise this matter with the top management of the Alliance.

So my question is: have you, as the Service Team, raised this matter with the top management of the Star Alliance?

Yours sincerely

Prabhu Guptara Sphere: Related Content

Thursday, April 15, 2010

Obama fails to soften derivatives reform opposition

That's the headline in today's FT ( regarding President Obama's meeting with Republican leaders to discuss financial regulatory reform.

The story reports that "the meeting did nothing to improve the tone of an increasingly bitter debate".

Does President Obama really expect turkeys to vote for Christmas? Sphere: Related Content

Wednesday, April 14, 2010

Swiss Efficiency

The family is in the middle of buying a car (not my favourite activity!).

My son, who has organised everything, told me that we needed to go to the Office which issues the licence plate for the car.

We went this morning and, as I had certain other things to do, wanted to be in and out as early as possible.

The office was supposed to open at 8.00 a.m.

We arrived at 7.55 a.m.

Only to find that, this being Switzerland, SIX other people were ahead of us in the queue!

We had to go to one window to hand in papers et al, and then to another window to actually collect the licence plates.

However, we were out of the office at 8.02 a.m., licence plates in hand.

Long live Swiss efficiency! Sphere: Related Content

China and Oil...

First, I must make clear that I like Chinese and Iranians as people (in fact, I find it difficult to dislike almost any person!). However, I find some of the policies of these (and other) governments not designed to produce freedom and prosperity for their own peoples - let alone for the world as a whole.

So, while I can comprehend the politics at,
I can't see how China can really have 850,000 barrels superfluous to its own requirements!

What is really going on?

I am enquiring - and, if I come up with an answer, will write again. Sphere: Related Content

Pluralism, Inclusivism, Exclusivism - and Roman Catholicism

A friend sends me a thoughtful piece on Pluralism, Inclusivism, and Exclusivism and asks my view also of Vatican II.

Here is my response:

The piece you attached is a good one, though it focuses on relgions.

So far as I can see, all religions are essentially institutions that work and even fight for their own power, riches and glory (they may do a certain amount of good and a certain amount of harm on the way, but that is incidental).

Vatican II was an interesting experiment for the Roman Church but, as with Chairman Mao's "Let a thousand flowers bloom and a thousand schools of thought contend", it was overtaken by events and by later orthodoxies - in the case of China, by the new orthodoxy of the market and, in the case of the Roman Church, by the old orthodoxy which was brought back by Pope John Paul II.

The current focus of the world on the question of child sexual abuse by Roman Catholic priests and the way that matter is handled will prove much more significant than Vatican II for the future of the Roman Church.

What makes the Roman Church different from other Churches is its claim to be the final arbiter of what is or is not acceptable to God, with the Pope as "Christ's Vicar on earth", and therefore able to determine definitively all matters of faith when he speaks in council ("ex cathedra").

So far as I can see, Jesus the Lord came to earth precisely because of the absolutism, impropriety, inadequacy and corruption of religion - but some who claimed to be his followers made a religion out of what should be a simple matter of a direct relationship with him without reference to priests, popes, churches and the rest. Sphere: Related Content

Monday, April 12, 2010

The latest on Black Money

Guess the three jurisdictions holding the largest non-resident deposits in the world?: The United States holds over $2 trillion, while the United Kingdom, and the Cayman Islands each hold over US$1.5 trillion in private, foreign deposits.

That's according to the latest paper from Global Financial Integrity (, titled "Privately Held, Non-Resident Deposits in Secrecy Jurisdictions".

Written by Ann Hollingshead, the paper finds that these deposits have been increasing markedly since meaningful data collection efforts began in the 1990s, with current totals standing just under US$10 trillion.

That is, over half of the world's "private, foreign deposits" is, from the smallest to the largest of the three top "secrecy locations", in the Cayman Islands, the UK and the USA.

So who's going to be the first to go after the USA? Sphere: Related Content

Thursday, April 08, 2010

The revolution in Kyrgysztan

Kyrgyzstan has less than 6 million people and a per capita income of something like USD 1000. Surprisingly, the differential between rich and poor is "moderate" (latest Gini available (2003) is 30.3). "Only" a third of the population lives below the poverty line.

On all three counts (population, income and Gini) that is a better situation than many other countries in the world.

As Kyrgyzstan was less intolerably governed compared to some other countries, it will not be surprising to see other countries erupt. Sphere: Related Content