KARL MUST NOW BE WORRIED....!!!!

The argument about the $700 Billion package and actions taken by the Central Banks all over Europe might heat up further. Capitalist countries and its citizens might not find this easy to gulp, forget to digest. The media is so powerful here that you need deeper studies into all these issues, its happenings, its effects and remedies to the problems.

Meanwhile, it is very important for me that all those who visit this blog and express themselves., must continue doing that despite their disagreement with my views . I am thankful to all those who visit this blog at the same time they write up their invaluable comments. And as my basic principle to publish their related comments unedited. (As I acknowledge the basic human right to express themselves freely.)

I have not been a very strong supporter for Bush Administration for what they have been doing after the sub prime crisis got few good banks. There may be great arguments over some part or the other parts of the package itself or the complexities involved into issues of an economy as huge as that of USA. There may be thousands of ifs and buts. There may have been many deep routed and inter connected complexities. But THE BASICS REMAINS THE SAME.

And what I think is from the basic. The basic of human nature, basic of trading, earning profit, sometimes legally and most of the time illegally, basic of all the systems that are working around us, almost work in tandem with each other. And once into the crisis mode, even the Government as stubborn as that of Mr. Bush, must turn to basics and set the things right from the basic.

One must try to understand these basics. Bush Administration was allowing the things to happen and then ran for the solutions, when it was too late. It waited till the smoke caught fire and became inferno, that is what happens whether it is USA or India or any other democracy. It was too late when the Lehman Brothers collapsed.

The sub-prime crisis was just going to happen sooner or later and it happened now. The money supply to the US economy increased when the DOTCOM bubble burst in year 2000. The money supplied to the US economy needed to be absorbed in all different manners. One of them was lending for house property. The banks were lending to those who had no capacity to pay back. They did not lend to eligible borrowers. or perhaps they were little bothered to check their financial anecdotes.

Everything was fine till the capacity to pay these loan was there with the borrower. But as soon as job creation in US economy stopped or say slowed down considerably, the paying capacity of the business to people got the maximum hit and consequently who were given loans started to default. This all was very badly got into the other big banks who had re-lent the loans to smaller banks. No body woke up till the time the Lehman Brothers filed for bankruptcy. Which has created a crisis of TRUST amongst the investors and those who have funds and their funds could be of great help to stabilize.

Well, coming back to the solutions now. Its all done and over, now the salvation and recovery part must begin. We cannot wait till all the people of this world become bankrupt. As one must understand that the destiny of single man on this earth is connected to that of USA. It could be complete chaos, if now the things were allowed to happen, which the Bush Administration did for the last two and half years. It is important to arrest the downfall. It is important that no banks further register for bankruptcy. Because more the banks register, more the money of investors in these banks would go bad. Which could be utter chaotic conditions.

To understand it further lets have a hypothetical example. We are just understanding the basic.

Suppose Mr. A has deposited $100 in the bank. And there are say million who have also saved their money into the bank. Bank after receiving these deposits, invested these funds in properties and other business which would give them better returns. Now due to some reasons bank loose on the value of few assets i.e., say due to recession the value of assets went down, bank would incur huge loss, on the news of bank going bad, depositor A, would go to withdraw his money back. Like him, millions of people who have money in the bank, would also rush for the same.

Since Banks do not keep the deposits to themselves, like that of received from Mr. A in the bank itself, in case of these depositors ask their money back at once, bank would not be in position to give them their money back. They would try to arrange for liquidity from all the sources available and even sell their investments (what these FIIs are doing in India at the moment. They are selling heavily and causing the market to collapse here.) The banks would be in terrific fix, as their investments are fetching less, they have t0 pay higher rate of interest to ward off liquidity crisis and they have no liquidity left as depositors like Mr. A are withdrawing from the bank. These depositors would even accept and settle for lesser amount than what he had deposited, thinking that whatever he got was his luck. Hence the loss is all around.

It is at this stage that the Govt requires to step in to create and support the atmosphere of trust. It would do all the things to support the banks from failing in their undertaking. Banks would be supported by providing them cheap short or long term funds, depending upon the requirements of these banks, it wold also buy few of the assets of the banks which are now low in their values etc. These steps would help banks to steer clear of the crisis in liquidity. The depositors/investors could ask their money back, but if they get their money back on time, they would come again to the would again invest with the bank and sort of trust would be created.

One must not forget that the Great Depression of 1929, which lasted for 10 long years, was not understood at that time. But the situation is greatly different now. The top experts on economy and financial services are being hired by almost all countries and they know the solutions to the problem. US citizens might question the Administration's act of $700 Billion package, and may cry foul as they are worried about why the Govt should pay tax payers' money for those who did the wrong by defaulting the loan repayment . But one not forget that the entire country or entire world for that reason can not not be punished for the wrong which they have not committed. The wrong was committed but that was due to the failure of system prevent there. This is an act of socialism, which the capitalist mindset would take longer to understand and adjust.

You must have noted that almost all the Central Banks, across the globe, irrespective of their ideology, have declared packages for their banks who might have been caught in the sub-prime and subsequent world economic crisis.

The first step in building TRUST. The downfall in the trust , once arrested , Govt has to use all the tools to control the consequent effects of such steps by any federal government. With passage of time, say 3 months, the situation would become normal and trust might have been back.

The support for the Bush Administration proposed $700 Billion package stems out of this fact. Not only the Bush Administration, even the Governments of Europe are also taking similar steps, which would restore the confidence of the people around the globe.

After this the most important part will begin, of making people to spend their money by spending on goods and material and to save and invest their excess money. Though they might have money, they would prefer to save those money for future contingencies., but not with banks and other financial institutions. If they are assured that their future is safe and they can safely either invest or spend in the market, both the ways will enhance the liquidity crunch in the market. It will boost production activity as demand for product is created and with the investment coming back to market, capital will not remain scarce.

Well, with regard to the market sliding all over the world, one must understand, that it is very sensitive to any news and sentiments could get affected. It is a panic selling in all the markets all over the world. With the trust restored and people readily spending their money or investing their money, markets could see a very strong surge within the next 6 months or so. REMEMBER the Govt all over world would not allow the depression to set in. They will take all the steps to see that recession stays away. It is the right time for the real investor to invest at this moment of time.

The Bush -Package may have its inherent discrepancies, but at the moment it is only the solution, the Bush Administration and so is the case with all those Western capitalist Economies. KARL will stay worried till the TRUST is restored.

NANO'S GUJARAT CONNEKTION...

Finally the curtain has fallen on the suspense on where the NANO plant will shift to, after Singur nightmare, as unleashed by Mamta Banerjee. She ensured that the TATAs were left with no choice but to leave West Bengal (WB). The Budhdhadeo Govt in Kolkata, might have done enough to ward of crisis with the local farmers, but did not worked. Not many were surprised when the Nano's prestigious plant went to Sanand, near Amdavad, Gujarat, as presently the Modi Govt. in Gujarat is doing extremely well in the State. The people in Gujarat are happy that the political stability is paying off. The NAMO (Narendra Modi) factor has worked for the better. The best part of the entire story on Gujarat's success story is that at last Gujarat has got a CM (he calls himself Common Man), who can deliver.

Singur will always be sorry for what they did to TATA. The big industrial house's project might have had created thousands of job in WB, but Mamta Banerjee had some good plans for herself in the WB state. It was a fight between the individuals. It is really pity that the entire state of WB will suffer due to this personal fights between the communists and TMC. the sad story is the people of WB could perhaps do really little in this particular case.

The swiftness as show by Govt in this western state of India is really commendable. It was able to convince the top brass of the TATA to come to Gujarat, was something really appreciable. Politics has defeated the progress. Ms. Banerjee will repent for what she has done to the State of West Bengal. In fact the petty political gimmicks and meaningless one-upmanship has taken toll on the progress of the State. The Congress party is equally responsible for the sad departure of one of the most prestigeous plant of modern India. As without the powerful support of any one very powerful, can not withstand the brand name TATA alone.

It is really pity that the people of this country can be taken for a ride so easily by these politicians, who claim to be serving this country. The farmers can easily provoked in Singur for the price of the land TATA had acquired. I really wonder how they could not have tried to talk to TATA directly. without the politicians being involved in their problems? Look what the J & K Hindus did while agitating for the Amarnath Shrine land. It even kept the BJP, Bajrang Dal & all such Hindu outfits. Perhaps that was the reason for their win in the fight for their casue.

Politicians have their own agenda. Mamta wanted a revenge on Left Front Govt. and so was the congress who lost the support at centre on the ground of Nuclear deal with the USA. So the congress and Trinamul Congress of Mamata, were settling their scores with the left front Government. However the major loosers were the people of West Bengal and to an extent TATA Motors. The businessman is very wll versed with earning profit or loss, but what will happen to those people of Singur, who were envisaging a good business in their town and what will happen to other ancilliary industries which might have had come, had there been this plant established as planned. People around the Singur, might have lost an opportunity of their life time just due to the ego of the politicians of this country. (read Mamta Banerjee, Sonia Gandhi, Manmohan Singh, Prakash Kharat)

The similar mistake is in the pipeline in Maharashtra. Maharashtra Navnirman Sena (MNS) chief Raj Thackaray. He is institing on the Marathi culture, Marathi Language as common language of Mumbai and jobs to Marathi people. His ire over the North Indians has made him popular over night. This gimmick seems to have been working for the moment. He has awakened the Marathi Manus(Marathi Man) and he has started behaving as that the Mumbai is his ancetral property and everything in Mumbai belongs to him. Remember, his uncle, Bal Thackaray had committed the same mistake. It was in 1980s this gentle man led the same agitation, and had reached the Maharashtra Assembly. They ruled the State for almost one decade. God only knows what the betterment they did for Maharashtrain people, which they used to claim when they were out of power. The only difference it made to Thakaray family, that they become rich in all resources during this period. Even the maharshtrains had to pay the bribe during their rule. Remember this line that a day will come and he will try to show that he is taking all the people in cofidence around.

Raj Thackaray is doing the same thing. He is not having power right now. His worries for Marathi Manus was dormant, while he was in power. It is really not understood how this people remember plight of farmers of Singur or that of Marathi Manus, while they are out of power. While in the power they are interested just in making their resources strong.

But Raj must not forget that due to the policies of Bal Thackray, many business houses shifted their business, plants, manufactuiring units in Gujarat, Karanataka. These states became rich in industrial base and created jobs for thousands. Loosers here were the Maharashtra people. Business goes where there is peace, security and profitablity.

This time around the time is different. Mumbai has not remained the only port of entry for North India.We have heard mant people say the business in the olden days used to be brisk. Nor does it have one of the best infrastructure available to the business. Some time it seems that the planners of this city are totally confused and do not understand from where to start and what to start. If it does start. the political outfits are out to gain the maximum advantage by either supporting or blocking the projects. Corruption is rampant. Everybody from top to bottom want money. Even after paying bribe you are not confident that the work has been accomplished.

Several ports have been developed in Gujarat and they have oneof the best infrastructure in Gujarat. The roads are superb and administration very friendly to the business community. One can not recognize the fae of city BHUJ in Kutch district which was hit by one of the most devastating earth quake on 26th Jnauary 2001. Development has been a top priority for the present State Govt.

Raj must worry about why the locals have been left behind. Despite the best educational set up, top technicians and officials are not the locals. Why the people from North are preferred over the local people. He must find out why this is happening when the Mumbai and Maharastra has stayed on top as prosperous and fast developing State for a long period of time. Why these locals have not learned to work hard like the people who come from other States. It has been discussed many times with many people that people from North India are ready to work at your conditions and not the other way round. Are you going to give a job just because he is local and going to accept all his conditions relating to work environment?

(He was heard targeting the Chief Minister for not being able to fetch Tata's Nano Project to Maharashtra - He needed to stop the violence in Maharashtra against the cheap labour coming from North India and assure the TATAs or such a industrialists that there will not be any disturbance from his side.)

You might do it your way, Mr. Raj, but by the time you become Chief Minister, you might have been responsible of having scared away the top business houses out of Maharashtra. Are you going to set up your own business houses here? As said earlier, business brings in Capital. Capital comes only when there is stability, peace and profitability. If the business man does not earn or make profit he will not come Maharashtra. (The Reliance SEZ is emboiled in politics near New Bombay).

The Maharastrian people must think over all these issues. A introspection is must at this juncture and the solution as put forward by Mr. Raj is utterly against the business logic. Business atmosphere will bring in Capital, create job and bring in prosperity. If a State has to retain the number one position Raj must acknowledge what he has been doing is wrong. He needs to be creative. Just boasting that Marathi culture and speaking or sign boards in Marathi will not stop farmers in Vidarbh and Marathawada from committing suicide. Nor will it help locals in increasing their competitiveness globally. He might win good number of seats, beating his uncle, but can he stay there with hatred in his mind. He might, of course win few seats, but not the elections. He will have to come down from where he is now. Will the Marathi people will accept his this political tantrum, like what his uncle did? remember, what you saw, you get. Uncle saw hatred, nephew is fetching fo rhis uncle in the same manner. Raj, must receive the same, what he is sawing right now.

People must understand that they need not be very emotional on everytime this family arouses the Marathi pride. (WHile Mr. Raj's ward who has selected French in collge over Marathi language, as French is scoring language and not Marathi and has international importance.) It really pity that despite understanding what Mr. Raj or Ms. Mamta, are doing, people tend to suppot these people and then lament that the political system in India has failed. It is not political system which had failed, but it is the failure of our understanding of issues and taking corrective measures as and when required. We have to learn to dump those politicians who are against the development and hence against people's prosperity, the faces might change, but their agenda remains the same. POWER.....!!!!!!

KARL IS SMILING......part 2

It is important to understand the basic fibre of these capitalist countries. The US and the entire European Union has its roots in the Capitalist ideology. It is a system wherein Govt only deals with basic State function. They neither take part in the planning for a economy to develop nor they have any rules or regulation in place for the developing an all round development of economy. Market, is their mirror. Everything in these economies will depend upon the market and every market depends upon the buyer. Market will be non-existent without the buyer and that's the reason why the buyer is the king here. He decides what he will buy and what should then be produced.

It is here that to attract the buyer, credit system comes into the dealings and the entire US economy was booming due to the credit made available to Americans. The market forces decided what was to be produced and to what an extent, besides the credit facilities stabilized the demands for these products.

Now, the Republicans are the most stubborn supporters of these capitalist policies. The most of Republican party has top leaders of businesses, who are top CEO of top Multinationals, as their members. While the democrats have little flexible approach to these issues.

The problem here now is the Economic Package of $700 Billion, is stuck. The Republicans will not support it as it is against their ideology, while the Democrats will support it, but they are out of the power centre at the moment. Hence the Bush Package will face tremendous opposition and even if the Bill passes in both the Houses, Republicans could work hard to fail such a bail out plan from nearing success. They might put forward arguments like the misuse of tax payers' money, but where these tax payers' money and concern for it goes when the question arises regarding the banks going bankrupt. What about the safety for investors? Why were no precasutions were taken when the sub prime scandle was detected ? Why were tax benefits were allowed in the first place to those MNCs who were exporting jobs outside the America ?

The issue of tax payers money has no role to play in widely hypocritic country like USA, in which when you say something, the meaning is something else, while the target audience is somewhere else and benefits some where else. USA democracy is no different from Indian mobocracy. Though we Indians will accept it, while if you say this to any American he will show you how arrogant he is and to what extent he could go to refute you. But for once it is assumed that it is not the case then why fewer and fewer people benefit from Govt policies and why large number of people still work for their bread. The scenario is not different from India.

Bush Administration is working hard to avoid the repeat of what had happened in the great depression of 1930, where the Govt. at that time just allowed all the banks to register their bankruptcy and such banks crossed into thousands. These bank had no liquidity and that caused the great depression to go on for 9 long years. Had there been a solution as mooted by Bush, in place, banks could have been helped to avoid the liquidity crisis and there might have been chances that the great depression might have had ended earlier than the beginning of the second world war.

It finished every American and destroyed every American Dream. Thanks to Adolf Hitler who initiated war against the Europe and in particular the UK and became to casue the starting of second world war, US economy started to role during the second world war as Americans had emerged as the largest suppliers of Arms and Ammunition to allied forces. The war fuelled the depressed economy into one of the most vibrant economies of the world at that time and it remained so for nearly six decades.

Is it Iran this time ? Or Pakistan ? or North Korea ?


There may be few takers for the Bush Administration plan for $700 Billion package but that's what perhaps he was expected to do. Remember that Bush Administration had little choice except this bail out plan. And also remember he is a Republican and Republicans are most conservative about the identity of USA as the parent country following the capitalist form of Govt and prospering. They have been supporting this country to be absolutely CAPITALISTS. The Democrats have a little different ideology. They are of the view that they need not be that stubborn on any of the issues relating to the national interests. That is perhaps the reason for the Republicans to oppose the Bush package and inversely the democrats are supporting what Republicans should have been doing.

The seriousness of the crisis in which the USA is at the moment can be gauged from the fact that the most Conservative party, headed by Mr. Bush has mooted a $700 Billion package. As written in the previous write up, it is perhaps for the first time that such a move which could be termed as the direct Govt interference in the USA economy.

The package is directly and indirectly pump the said money into the US economy. It may be buying of assets of those bankrupt investment banks as well as allowing tax concessions to those affected or many other ways which will be asked to Administration of Mr.Bush. But considering all those consequences as analysed in my previous write ups, this package is an improvement over mistake committed by the US administration in 1930, when it had become silent spectator and left the entire US economy and economies of world in suspended animation for another 9 years. Bush is perhaps trying to avoid the same scene happening in 2008.

But how can you refuse to agree with me that the fall in wall street had made Karl Marx happy. he must have been telling to himself that he had envisaged such an outrage world over and had warned the humankind for such events happening in future. But like the products which they sell comes along with attractive packagiing materials, Capitalism mesmerized the world with the development and prosperity to all. All the gains and positive sides were very cleverly highlighted.

For all these years it had been an open policy to call communist countries an Evil Empire, especially the then USSR. One can not forget that famous speech of Mr. Ronald Reagan, when he was advocating his ambitious Star Wars programme. But as far as it is known to the world, that when the USSR fell, no common men on the streets of New York lost their money in stock market or real estate or anything that was connected with bread and butter of a man in Mumbai to Hawaii to Perth to Dubai. There was no share market collapse, not a single investor had lost money the way the people have lost their money now. The world Governments are doing overtime to find ways to tide over this crisis. The most conservative Governments of Europe are readying to start interfering with the economic activities, presumed to be one of most unholiestic act of any capitalist country. European Govt have already pledged huge sum of money for their Banks, whether commercial or investment, to steer off from this crisis.

Today the scene is that everybody on this earth has lost something due to the American recession. It was not enough for the corporates to loot the gullible American citizens, they under the agies of globalization had started looting the world population as a whole. They had reached a stage where they can not further loot the people and then fell.

Imagine, the dollar should have become weak due to recession in America, the world over. Even with the Bush Administration going gunge ho, about the $700 Billion salvage package, the Rupee has been seeing a new low everyday and not the dollar. Money for the sub-prime loss has already been recovered with the large scale oil price speculation. Large funds from all over the world had already been swept by the speculators who are managing this show. Not satisfied with the already on the knees the investors world over, this new drama of investment banking bankruptcy has started. We as Indians will have to be silent spectators, while all our cloths from our body are taken away.

The rising dollar, despite the sub-prime crisis and consequent American rescue act, creates a doubt of utter market manipulation. This is not free market economy. With rising dollar, the demand for oil will go down further the world over. This will make the Americans to buy oil at cheaper rate. Understanding this nitty-gritty requires in depth knowledge and information and also the source as to who is handling this and in perfect co-ordination with the US interest.


In short the capitalist system has failed as that of communist system. Both the systems had chances of failure, which were overlooked by its over-zealous followers. There is one more such system which is waiting to be in line of the two ! The Chinese mix of capitalism, communism or dictatorship. Oh ! what a confusion ! It will continue till the citizens find its benefits and are not exploited the way other two systems exploited its own civilians and failed. Dishonesty and misuse of power by those who had it, crossed all levels and such a scenario was always in making.
With every passing day, Karl Marx smile is widening and perhaps after years of wait, finally his soul would be happy.

Considering the Indian side of this crisis perhaps our Finance Minister has no idea about the extent to which the Indian economy is dependent on Global markets and how far the India Inc. could get affected due to this meltdown in USA, as at the time of booming share market he was not letting any opportunity go to claim the credit for making the country's economy vibrant, is not accessible these days. Perhaps sitting with our home minister Mr. Shivraj Patil, who is trouble following Delhi serial blasts.

It is urgently required that Indian Government implement the policy of creating and building national base for capital, required for the development. We must forget the old days of cheaper capital coming to our country at all. Govt must pool all its resources and support the India Inc. to get cheaper capital and if required should bear the cost difference in rates. This should give momentum to slowed down developmental work. It is highly expected that the developmental work including the infrastructure will require huge capital.

One thing we are assured of so far is, our banks have not gone kaput, like that of American and European banks. We need to consolidate with this from now onwards. RBI should reduce the CRR further to make available the idle cash for the developmental area. Mr. Finance Minister and the team of so called economists with this Govt must ensure that the funds so made available by RBI by cutting CRR and other such measures reach the infrastructure projects or such huge projects such as electricity or dams. This will fuel the domestic market and a powerful shock absorbers can be created within the country to guard against tremors coming from the west.

If and when the US economy picks up steam, Indian economy will be ready to accept the investments coming from US a7 Europe.

This is not as simple as it seems to be and the way I have written. Economies have many complex issues to tackle and contentious issues to sort out. But the bottom lines always remain the same. The solution to our problem always lies with us and not the neighbour. Same way Indian economic woes could worsen, if the our Finance Minister waits for the US treasury to announce similar package to salvage Indian economy. HE must realize that Capitalist ideology has failed and he must adopt something a mixture of everything....like the Chinese are doing. They themselves, perhaps do not know what ideology they are following....except for the communists in India, who still follow communist ideology of 19Th century......KARL IS STILL SMILING.....!!!!!!


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