ECONOLITICS>>>>>>>>PART 2

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Continued....Part 2

        If the entire gamut of the events are checked and if they are tried to be understood, it can be summarized in the shortest possible terms as childish mismanagement of the country. The country is in the hands of those who are neither ready for the rule nor have basic inclination of serving the society and working for the people's welfare. Their first and the foremost task is to amass the wealth for themselves and their nears and dear ones, since they are not sure of coming back to power or hold the same post of power they are holding right now. The reason is obvious and they themselves know it very well.

                     The Indian National Congress as established under the vivid leaders, like Gandhiji, Nehru, Sardar Patel, Maulan Azaad and many leaders who dreamed Indian independence and these leaders always advocated the self-reliance. The Indian freedom struggle is side stepped now. The history if not repeating itself then at least we are watching the same events which led to slavery are developing slowly. Manmohan Singh will not be forgot and even forgiven for what he is doing to the economic fiber of this country. His Government is perhaps breaking everything which is built over years of hard work under socialism. The gem of Public Sector units are being sold of under the disguise of disinvestment.

A systematic ploy is developed by few, to grab these units at a cheaper prices than they are and the benefits goes to those traitors, who have the power to sell these units off at a cheaper prices to big corporate houses. The matter does not end there. These corporate houses are bigger cheaters, as they sell their stake into these once a public sector gems to some foreign corporates after slicing off their profits. So the big units made with the money of the government under the idea to help Indian masses, go into the foreign hands without much fuss about it. The bigger problem is that Indian common man looks at these unfolding of events helplessly. Because he has right to vote just for once every five years and those elected go merry for 5 years, without bothering about who voted for him and why was he entrusted to represent him in the Parliament.

The INC, which fought British capitalism is more than eager to bring the same big profit hungry, monsters from foreign countries. So the actual profit which should be of Indian will be siphoned off by these foreign corporates.

Under the FDI the same government is trying to bring these types of corporates.This is perhaps bigger cheating and bigger crime than even a mass murder carried out by Ajmal Kasab during Mumbai attack in November 2008.

Do we really need foreign investments? Do really need FDI ? Is the FDI the only way out of the need for Capital investments?

It is an open challenge to any economic expert from the government seeking to push for FDI for further economic development of the country.  Which can be put forward in utmost simple words that the capital can be generated locally with little foresight and national pride. The government can gain billions of rupees from its own people. the largest part of the savings which people used to make remains untapped.


Why interest on savings rates are so less?

If the government raises interest rates on the savings, people will be more than interested in saving their surplus money. These funds can be lend by banks to invested in huge infrastructure projects by genuine government agency, or even some reputed corporate houses, like L & T, Tata, etc., which works as the bridge between banks who have funds and the infrastructure projects executors which require liquidity.

One complete these projects will earn back the money they have borrowed from the Banks and Banks will give good return on the savings attracting more excess funds floating in the money market. Lowering of Cash Reserve Ratio will ease the liquidity crunch in the liquidity market, easing off the financial crisis faced by the corporate houses for starting new business ventures. The Reserve Bank, worried about the inflationary pressure due to increased liquidity supply in the money market can direct the Banks to more vigilant in the projects in which the banks are lending excess funds, received from increased savings and eased cash reserve ratio.

The UPA Government has set all national priorities wrong. People do not need car to travel as the standard of roads is too bad at the same time,  public transport is well placed, only needs some fine tuning here and there. Boosting car sale and related policies have adverse impact on the oil import bill. Finance Minister, P.C., needs to update his knowledge that when he thinks putting ban on import of gold, as it becomes a dead investment, why to allow so many car manufactures in the country, where we cannot afford to import petroleum products.

People now has access to more than one SIM card for their mobile phones and now they prefer multi-SIM card phones. But they find it hard to eat vegetables in their meals and fruits once a day. Electronics items like LED TVs are launched simultaneously with that the markets of South Korea and Japan and even USA, but do have the similar health facilities and social security facilities of these countries here in India? Opinions may differ but the point is are we really ready to be there when plenty of ground work remains to be done before reaching there!

Government is actually slowly taking its hands off you and me and the entire population. By bringing in FDI in retail sector, aviation sector and insurance sector at one go and selling its share in Public Sector Units, government is pulling its hand and leaving everything to market forces. It has done so in many sectors. Perhaps few of them required such an action but does the same pill can be useful in different deceases. This is bankruptcy of policy imaginations.  It thinks the market will decide everything in the free economic conditions. How it will do if billions of Rupees are siphoned off by the public servants, ministers. 

It is really interesting to understand that the inflation will come under control with the rise in foreign currency reserves and drop in dollar prices, due to FDI. As with Rupee will be in demand and dollar will be thrown to purchase Rupee to invest in local markets, could make dollar cheaper and consequently it may bring the oil bill down a bit besides other imports, but that can not be sustained in the long run. Any rise in prices in international markets can push oil prices up and negating the benefits of increased dollar supply and reduced cost of imports, mainly oil in the Indian market, pushing up inflation once again. 

This was the case when the investment was allowed through the participatory notes in Indian Share Market. Markets boomed, leading to high profit earned by the shareholders of many companies. They earned huge profit by selling their shares to Foreign Institutional Investors (FIIs). This profit was diverted into local estate market and brought one of the greatest ever boom in estate and construction industry. Those who entered the market and booked their profit by exiting after some time, earned huge profits. Who stayed there for longer were losers as the economic recession in USA and Europe required funds there, which were parked in India. 

What these so-called experts needs to understand is the basic needs of the farmers to satisfy and to help them increase their produce and not the market to sell their products. What will they sell if they have nothing to grow. Will the Walmart build dams, canals produce fertilizers at a price which is affordable?

There are many questions and lesser answers. The economic reforms in India have failed and for past 22 years people of India has not experienced any improvement in their life. Never expect to improve either, as whenever WB, IMF and are involved in economic recovery, people suffer and rich becomes richer. IT IS THEIR BASIC FORM OF REFORMS EVERY WHERE IN THE WORLD. EVERYBODY EXCEPT P.M. MANMOHAN SINGH, F.M. P. CHIDAMBARAM, P.C. CHIEF MONTEKSINGH, KNOW THIS FACT.

F.D.I. Implications...ECONOLITICS....PART I

                              This is perhaps the most serious issue facing this country and the people, who should be the makers of their own destiny. The one after one steps declared by the Manmohan Singh Govt. could take the nation towards chaos and anarchy. The price-rise in diesel and domestic gas cylinders and yet another price rise in electricity charges will leave the common man gasping for life in this westernized Indian Union. Perhaps the Govt thinks that the people do not understand its sudden move to liberalize the Indian economy is actually a move to divert the attention of the people of this country from  Coal gate scandal, directly implicating PM, Dr. Manmohan Singh. Such steps of utter important should have been taken after taking the opposition into confidence.

People of this country are perhaps largely unaware about the actual implications of the Foreign Direct Investments (FDI) in several sectors including that of retail, aviation & insurance. Such opening up will bring in foreign investors into India. With increased capital inflow, business could flourish. New employment may be generated. Employment means more income in the hands of the people. This will give them more buying power. Manufacturing units will be needed to increase their production due to increased demand, and subsequently more men power will be required to meet production schedule.  Overall prosperity can be expected out of such FDI.

 One of the other benefit, which this Govt is eying on, is, increased foreign currency pumped into the Indian economy. This fund will increase the demand for rupee in the international markets. Here the simple rule of demand & supply will work. Increased demand for Rupee will raise Rupee value and decrease the exchange rate in international financial markets. Subsequently due to cheaper dollar to Rupee ratio, imports will be cheaper. The main benefit of such move can result in reduced international oil import bill.

If the oil bill is controlled, Government thinks that it can lead to reduced inflation rate. If the inflation rate goes down, the Reserve Bank Of India can reduce the interest rates. This will make cost of finance cheaper and hence reduce cost of production, as the manufacturing sectors will get finance at cheaper rates. Hence a reverse cycle that of inflation could bring in cheers and joy for the people of this country.

Hence the idea of opposing FDI into Indian economy is not entirely prudent.


However, this type of situation can only exist in theory and in books. If the experts in Governments believe this could be the outcome of FDI in several sectors, they perhaps live in Utopian world.

While Mamta Banerjee in West Bengal, is against the FDI in retails sectors, others are in favour of it. But the common man does not understand the whole logic behind the FDI and opening up of the economy and selling the Government share in Public sector units.

They are perhaps taking FDI in retail sector to go against the retailers at the street corner shop of one's city. They argue that Govt is closing down one of the avenue for the people to earn employment. Such a small businessman will be left with no choice other than to seek employment with those big stores like Wal Mart.

The Manmohan Government has one solution to all problems and that is to privatize everything that comes in the way of the economic development. His team has only one solution to kick start the economic development activity and that is FOREIGN CAPITAL INFLOW. Always this has been the primary button, pushed if the TEAM MANHOHAN SINGH finds itself in trouble.

                       It has been very well in public domain that the India shining was actually the best period in the history of the country and India did achieve something which could not have been imagined. But with the demise of the BJP Government and installation of Manmohan Singh Government at centre changed everything. The decade of development and economic boom perished into the recession due to corruption and absolute mismanagement. 

The Congress Government always thought that the recession, which hit USA and Europe will come to India. In fact their actions never were to save the Indian economy from that chaos, but to push the Indian economy into recession. Finally Team Manmohan Singh did it, with supreme efforts under the very closely watched IMF bosses, Indian economy has prepared for a giant plunge into recession. During all these happenings, ine fails to understand whay Indian economy managers waited for the recession to come to India and hit us for no fault of ours. What kind of golbalization is this, where you are punished for no fault of yours and these bunch of idiots, including Manmohan Singh & Montek Singh Ahulwalia, who have no experience in handling village based economy. They are the manipulators appointed by IMF & WB.

                        As everybody is aware that whatever is happening is under the watchful eyes of IMF and WB, who encourage self-centered policies of capitalist policies,  which obviously suits them and make their countries huge profit out of everything.

We have failed once again. We failed to check the drain of money from our hands to the hands of those capitalist countries who are very carefully managing the whole show. The idea is not that we do not need capital and we should oppose the change taking place at the policy at highest level of the country. But there are several parameters, which needs to be adhered to and followed to. The national interest has to be supreme.

                 The recession in USA and Europe was detected in around 2005-06, but India waited for another 4 years for it to come to India. This was policy bankruptcy of learned economists of this country. In fact the tragedy is that these economic experts were the people who were in power at that time. They should have learned from US & European economic disaster.  We needed to learn why they have reached this particular flash point where the entire world economy is under severe threat.  Instead of learning from their mistakes, we have been walking the same foot-steps. These so-called financial experts must be on the pay-roll of IMF & WB.

  The only problem with these experts economists was that they had no connection with the culture and ground realities of Indian polity.They are absolutely unconnected to the reality and causes of the price rise.

Governing-wise they have failed the people and country. They have never ever thought about the simple and the most important facts of project price escalations. They have not considered the causes of why they should levy higher rates of taxes and look for different means and names for the taxes.

Liberalizing is not the ONLY step they should have thought for the revival of Indian Economy. There are several other steps and policy decisions which can elevate faltering Indian economy.  Several years ago from this platform only I had suggested that the US Government will require to support the defaulting banks by deficit budgeting, which is called Federal support to bring the US economy to life. Europe has different problem and they have complicated it by floating Euro.

                But Indian problem is not that complicated yet. The government must listen to demands of farmers. Continue providing them important subsidies and exclude rich farmers, who are actually the entire political class doing business in agricultural farm products.

They should make the public infrastructure project delays as non-bailable offense. This will reduce cost of projects and hence surplus amount can be utilized in some other upcoming projects.
Instead of bringing in Wal Mart, they should try to form and encourage co-operatives, which can do wonders. The present government is not serious about the interests of farmers and subsequently common man. Amul, is the greatest example of farmers' cooperative movement spearheaded by Late Mr. Kurian.

 We do not need Wal Mart. We need Govt. supported co-operatives. These co-operatives have done wonders, if handled by like of Mr. Kurian and not by Sharad Pawars. The FDIs will bring foreign managers to India, who will watch us working. They will ask us to be in discipline. Why you want to put your self in discipline in front of the foreign bosses, when we can decide to be disciplined, ourselves.

However, policy paralyzed UPA II government has made up its mind on importing policies of those world economies, which are themselves are in soup and IMF & WB must answer for their failure. Remember, it not only the Communism has failed, it is also the Capitalist ideology on gas.

Continued ........ Part 2

THE ECONOMIC RECOVERY PART I

Almost all economies around the world are just after recession and all the problems related to it. All most all the governments all over the world are trying to put their economy back on track, which is in trouble following the crisis in the US economy. The USA is the main country which is affected a lot at this moment of time. Obama will have to release one more package said to be around $800 Billion, could help the confidence level to improve in US and around the world.

Yesterday someone had written an article in the newspaper, saying that the economic experts are caught in to quagmire of the confusion, which way an average man on this earth should go about. Whether he should be advised to go Ghandhian way of little spendings or to advise him to go for consumerism.

As said ealier the Government interference in the Capitalist economies all over world was necessaited due to the crisis faced in world over. The present crisis is of trust. People do have money, but they neither want to invest in the market nor they want to spend on the products. This is perhaps the worst situation for the Capitalist economies to survive. They neither get money for further investments, nor they get market demand to infuse Capital into the economy and increase or even sustain the production lines for the goods.

The economies world over has taken a beating and people have started staying off the market(to buy consumables) This is perhaps is the major challange before economic experts all over the world. But one solution that has betrayed everyone here in india or there in USA or UK, and that is the innovation.

It is very simple that the people in US first ran after the Y2K and then the DOTCOM. The later got busted into the another hype, housing and construction, which busted in 2006 and for 2 years theer was nothing for the economists at the Capitalist powerhouse to begin with. And so we are at where we are now !!!

But if considered little seriously and analysed little deeply the Y2K, so created and very widely publicised in the media that everything which has a micro or any other chip inside an equipment, would faulter on the night at 12.00, on 31st December 1999, when the year would change to 2000. This made the all the software giants and other varous giants, to run after the solution, as people feared that their life could at perils of systems failure. My wife was sceptical about her mixer-grinder and it worried that what would happen to her 9 years old Godrej refrigerator. People using elevator in Empire State Building, USA, feared that, their elevators were old and were installed before decades, could ditch them suddenly as the chip inside was prgrammed till 1999 and on the D Day, it would read 2000 as "00".

Billions of dollars were poured into the software industries where almost everything was re-written on one or the other pretext. People involved spent money to secure their computers. New hardwares were introduced, people purchased it, even if they had little connection with actual Y2K proof hadwares. That led people to change for the softwares which were Y2K proof. People spent money even if they were not supposed to spend on the matter of computer.

The software firms were created, software engineers and programers became a very HOT word and profession. Employers were ready to pay them anything they wanted. The Dotcom bubble was the off-shoot of this Y2K hype. That followed the Housing hype. The world righ now needs a hype like that. But this time the people around the world must be convinced that the hype created will help and benefit them. This around the citizen all overs the world shall be more active and more watchful.


To Be continued.......

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.

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.....!!!!!!


(Completed)

KARL IS SMILING....!!!!!

Karl Marx who wrote the world famous book DAS KAPITAL, where in he had visualized a society in which everything would be owned by the Government of that country and such Government will work for the betterment of the society. He envisaged an ideal condition wherein all the people will be treated equally and there will be no classification of society based on economic class.

When the red army captured Moscow and then formation of Union Of Soviet Socialist Republic, his dream of a society having all people as its equal citizen started to materialize. But with Stalin in power, the first signs of the crack in the systems appeared. While taking over the land of millions of farmer under the plan to centralize the agriculture, many were brutally killed. That was the first sign of failure of Communism. The atrocities of KGB on innocent civilians that followed for decades just to achieve what Marx had envisaged on paper. The iron curtain was so feared that nobody dared to talk about the Government, their problems, their complains. Communism was to fail as it was not as per the aspiration of Karl Marx. It had become a utterly authoritarian government.

I remember I was very young when Mr. Gorbochev was elected as the Chairman of Communist Party of USSR. He was termed as one of the most progressive leaders in USSR at that time. He introduced GLASNOST, meaning openness and PERESTROIKA meaning reforms. The Soviets started to respond, fear about the Government started to come down. Gorbochev was seen mingling with workers of factory and discussing relevant issues with these workers.

The Soviet people felt a sigh of relief and hoped that the years of repression and exploitation by the Communist Party in the name of the rights of labourers and equal distribution of wealth for many decades. People had no basic facilities and no one was willing to work hard. Even if he was to work hard, he will get the same amount of remuneration as any other worker. This reduced their inclination to work.

Gorbochev was a very wise leader and he forced years of repression to end. But when this process was going on, people of Russia, thought that they had all the resources and the most powerful amongst the other Republican States, why should they share their prosperity with other States of USSR. That caused split of USSR forever.

The Communist ideology failed because it had reached a stage of no return and at a point where no correction either was possible or never ever thought of applying one on hand. Gorbochev did tried to do that, but resulted in the breaking up of a super power.

Gorbochev could have had used military force to keep the USSR together, but I wonder even he was not interested in the independent Russian State. Perhaps he liked what Boris Yeltsin did in Moscow rally when Yeltsin climbed up on a military tank and challenged USSR authority.

One can doubt that it was his support for breaking up of USSR in disguise, he could only himself answer this question. May be as other ordinary Russian he thought that other States of USSR, were burden on the Russian Economy, so he allowed Boris to even humiliate him in the Russian Parliament.

Communists were born out of the extreme exploitation by the capitalist ideology in other Western countries in late part of 19th Century and in the beginning of the 20th Century. History is full with the atrocities committed by the top industrialists in the western powers. Such an exploitation was necessary to sustain Industrial revolution. Industrial prosperity of developed countries is founded on blood and exploitation of their nationals. Though they are now acting as the guardians of Human Rights all over the world, is part of their hypocrisy, in which they are unbeatable.

Karl Marx, who wrote Das Kapital, sitting in the library of London, fuelled one of the greatest revolution across the Globe against the Capitalism. The communist ideology hated capitalism and for more than 80 years it fought a ideological war with the other Capitalist countries like USA, UK, Germany, France, etc.

But it collapsed as it was not acceptable to people of USSR. It had not considered the basic human nature of competition and aspiration to lead a better life. Communist ideology was just like a four side wall. Nothing can come in, nothing can go out. It failed to bring prosperity to all citizens, but instead it assured poorness to all of its citizens. This was common sight, except for the people who were close to power. They prospered unabashed. USSR collapsed because it had reached a stage of extreme exploitation in the name of interest of labour and utter hatred for Capitalism. It disregarded the basic human instincts to own property, a basic inclination to work and work harder.

Remembering Communism as inspired by Karl Marx was important in the light of recent collapse of pillars in wall street. The economic earth quake hit Lehman Brothers, Meryle Lynch and A.I.G., all of them were top Investment Banking multi nationals, brought tremors in the world markets and can have potential of hurting economies world over. The hit it has taken on the confidence of investors all over the world is worst than the 9/11 attack on WTC.

Investors has lost money which can not be imagined and the time it could take to bring back the confidence of gullible investors. This is the worst ever hit on the Capitalist form of economic arrangements and society after The Great depression of 1930. If one remembers those days, 9000 banks all over USA had gone bankrupt within 6 months. The crisis had its roots in the Share Market. People took the loan and invested in shares and in 1929 US treasury increased the lending rates, which triggered one of the biggest ever fall of market leading to major loan takers failing to pay back their loans and banks failing to honour their obligation for lack of liquidity, resulting in banks going bankrupt.

Here in this case it is sub-prime lending and loan takers have started to fail in repaying these loans, leading to all those financial institutions who directly or indirectly were involved in sub-prime lending. There may be many causes and the American experts will go deeper into it, but this issue was discussed long back with one friend, about the sub prime problem.

The Americans were not that alert in handling the scenario. The sub-prime happened due to many reasons and one of it was the job out sourcing to countries like India. The logic can be explained like this, that if the USA was allowing the jobs to be out sourced to other countries like India, Pakistan and even China, the purchasing power of the natives would get reduced and could result in the lesser buying, lesser demand and lesser production and lesser jobs . Whic h will fuel the bad loans as people do not have money to eat how they will think of paying back the loans they had purchased.

Increased loan repayment schedules, forced many to sell their homes, meaning more houses were put in the market for sale, while there were no or fewer buyers, this agonized the house onwers as they had paid more to buy these houses, they can not sell them as these houses would not fetch them the right price nor they can stay with it as they had no repaying potential , as he had competitors in form of Indians, Chinese, Sri Lankans etc., who took away their jobs for cheap. The multinationals had a practise to shift their jobs overseas for cheap and increase their profits. Here the intention was good as more profits will make these firms to invest more and create more jobs. This did happen but the jobs were created outside USA.

It was wondered that how this could have been allowed ! Was the economic interest and making profits was so important and above national interest that it was overlooked for such a long time. All the MNCs were busy making more profits by transferring jobs to India like countries .The Govts there supported this move of exporting jobs and also allowed tax concessions to these companies. The sub-primery crisis was going to happen.

Let me be very clear, that there may be many more complex reasons and explanations, this is all logical explanations and conclusions. You might do several complex calculations but the basic remains plus, minus multiply and division. Like wise USA may have the most complex financial structures, but the fact said above can not be refuted either.

Anyway, third world countries did benefit from this lapse on part of Bush Administration for sometime. But when the America is in danger, rest of world can not stay away from the US economic meltdown. All markets all over the world have shown down ward trend. All markets are collapsing. FIIs are pulling their money back from all the world markets and are booking profit, to hedge against the possible loss at home in sub-prime lendings.

In both above cases of Communism and Capitalism, extreme points in both the systems have failed. The President Bush is perhaps right in declaring a $ 700 Billion package for the Banks in USA, he is perhaps little late in taking corrective measures. He should have been quick enough to control out going jobs from Americans in the first place.

Congress has hesitated to approve such a package as it amounts to simply printing of fresh dollars and pumping the same into the American Economy, this could increase the inflation in US economy and could result in decrease in the value of dollar at international level, which could trigger the crude price upward and collapse the stock markets further. American nightmare will hurt all economies of the world. But above all Govt interference with the economy is against the capitalist practise. So it could hurt their ego. How they could go the USSR way of helping the economy with Govt interference when required. That is the real casue of concern for Congress.

It may happen other way round also that the money so pumped will boost the liquiidty with the American Banks, which could help them to tide over the liquididty crunch and they start fresh lending. Such lending could start a positive cycle of demand and supply and creation of new jobs and increased purchasing power in the Americans. The world markets could boom again.

Remember the economic systems, may it be Capitalism or Communism are devised with intention of something good hapening to mankind. But inherent quality of dishonesty, misappropriation and exploitation by powerful , of those who are less able, will never make either of these systems workable.

Mind you these qualities are and will always remain on paper and they can not be expected from the people who are and who can make difference. You may perhaps change the systems form Capitalist to Communist, but what about the human mind, which has unlimited greed for money and lust for power !

(Continued........)

Future Scenario

The present situation in the world is being blamed to economic development of India & China by some of the developed countries. President Bush and Secretary Ms. Rice have openly said so. Consumption of Oil by these two economies no where near the consumption of United States of America and Europe. But these facts will be refuted by the developed nations. It is always the blame game. This is perhaps the gap between developed and under developed world.

The situation in the world is going to get bad and deteriorate further with every passing day. Everybody is witnessing this happening. The oil prices will zoom further, which will lead to more and more money going towards the Middle East and they becoming richer and richer. The M.E. countries now have more choices than they had in 1970s & 1980s for investments. The money will come back as Petro Dollars.

These Petro Dollars were invested in US economy in the last century, but now the returns are more attractive, if invested in India & China. Hence the increased consumption in USA and Europe, will bring more dollars to India & China. Here India & China have some competitors coming up in form of Brazil & Russia.

Considering these facts, is this the beginning of an end to US super power status. It will depend upon how the new Administration handles the new situation. It is very important that the US and all other Governments think over this aspect. It is in their interest that they control the speculation in oil. They are making money at the moment, but they will have to pay higher prices to middle east, who might not be as interested as before to invest in USA, as they might did in the previous century. This is perhaps the drain of their wealth to middle east and sort of redistribution of wealth to other parts of the world.

What is said is a long term positive scenario. USA and its allies might not allow this to happen as scripted above and they might go in for a unnecessary war. They entered into a conflict with the Iraq and then wanted all other nations to be part of its obnoxious campaign to contain Saddam Hussein, which most of the people in the world see as personal vendetta between Former President George Bush and Saddam Hussein.

This time it could be Iran. US is deeply embroiled in Iraq. It can neither swallow nor vomit, sort situation in Iraq. Perhaps the same fear of reprisals as it is facing in Afghanistan & Iraq, it has stayed away from Iran. Perhaps it is wise to not to open another front for its defense forces.

With respect to India, despite some of the studies are showing that the Outsourcing to India has worked in favour of the US companies and they have become richer, let it be that way. The Americans are enemies of themselves only. With Jobs shifting to India & China might have played some role in the sub prime crisis in American economy. It is ridiculous and beyond my understanding of the situation, where in corporates in America are becoming richer by reducing the cost of the product with outsourcing, their native Americans are becoming insolvent due to loss of their jobs.

The banks & other investment houses are taking the burns.

Again this is redistribution of wealth. If the intent is not honest, you will though succeed, but you have to pay with all that you have. This what I have learned over the years.

OIL PRICES

The Oil prices all over the world will not come down for a time being. The prices of Oil are rising due to many factors. But one of the major factor which has been underscored by many and is no where mentioned and discussed is the FORWARD TRADING IN OIL STOCKS.

In this Trading big MNCs are investing and buying stocks at the hir eprices and there is no limit to this stock buying. The stocks are sold when the prices go up by this they square off and losses they might have incurred againt the purchasing of oil at higher prices. So once they buy oil stock (not actually storing oil) they will wait for the oil prices to go up and they fuel such an oil rise at any costs, as their stock prices will also rise and consequently they will make huge profits.

Hence they buty the stocks when the rpices are low, fuel the price rise and make profits. Many MNCs with top political links are involved in this scandle. They have nothing to loose. They do not have limited salaried income and home budget contraints. It is a speculation game, where they grab hard earned money from every earthlings all over the world.

The scenario where in this speculation game collapsing is not far away. Many economits are fearing a globle slow down. If this happens the oil prices could take a nosedive. Many MNCs could loose their fortunes. But again such loss will come on the head of normal earthlings like you and me, as you are expriencing the pinch of Sub-Prime issue. Oil prices collaps will see collapsing of major companies and economies of few countries in Middle east, potentially dangerous region in the world.

So, at the momet what we can do is just stay away from buying avaoidable goods, controlling our urge to buy goods which we can dispense with. This will help in reducing inflationary pressure at the moment, though very megre. Little slow down will put those speculative community in pressure and they will start squarring off their positions.

Another factor is OPEC. Which is a cartel created by the nations to fund their econimic growth. Nothing is right. Today Singapore suggested creation of cartel for rice. Tomorrow it will be something else by some other country. This is in retaliation to OPEC.

Plead to GOD that this does not end up in breaking out of regional wars and such wars do not end in starting a third world war.