Prunes and Prisms
It has been quite a year for blood, betrayal, lies and crime. Sometimes, when the cascading bad news turns into an avalanche, we, the educated but ordinary, the informed but powerless, may look for solace. We can suckle comfort out of love if we have it, or from literature, unfazed by the passage of time, even making up a wad satisfying enough to chew the cud with. We can mine it, going deeper to the mother lode of dead languages, from whence it came.
Of course, there’s always the high road and the low road. And sometimes the low road doesn’t do half badly. Notwithstanding the high-brow British Admiralty Officer, gold braid gleaming across the Naval Whites, Britannia did rule the restless waves, for a full century after Trafalgar. And this, without losing even a single battle! Britannia did so, using formulaic quantities of the fabled “Rum, Sodomy and the Lash”.
But as Annus Horribilis 2008 grinds towards a close, we may need to remind ourselves of certain fundamentals that seem to have eluded the mighty. This even as the world’s ordinary people huddle, like beasts sheltering from a storm, cringing under the whip arm of inimical fortune, hoping for betterment in 2009.
Many, here and around the globe, are facing calibrations of financial pressure, losing homes, jobs, contracts, feeling suicidal, and even slipping off the mortal coil altogether.
Alongside this financial purgatory, this crushing destruction of self-worth, we have had to endure terrorist threat, insecurity, fear for loved ones vulnerable to senseless attack, contemplate the spectre of sudden death.
But even as we cast about for rescue, flailing for stability, hoping; we are met with unrelenting, inexhaustible, political chicanery, chaotic governance, insensitivity and animalistic opportunism. It must be admitted, however that “there is narcissism about insecurity,” as Lauren Laverne, a BBC presenter put it. We the members of the Indian public, protected by the scantiest ratio (1.45:1000) of police personnel per thousand, less than half the global average, are yet, no doubt, narcissistic about our personal safety. But how much more intensely must the self-love run amongst our amply protected politicians?
Yes, it has been quite a year for blood, betrayal, lies and crime. Hundreds, perhaps thousands, of White Collar Criminals have made off with hard-earned investments, placed in their fiduciary trust, Bernie Madoff fashion.
Bernard Madoff was a trusted money-man for forty years, investing billions from European and Swiss Banks, from American Charities and Celebrities. He is 70 now, and facing twenty years of prison time. He has fraudulently lost 50 billion dollars in a grand Ponzi Scheme. But this man was considered one of the very best. Till recently, he was Chairman of NASDAQ and adviser to the Government of America on, ironically, how to deal with financial scams.
But we are no longer surprised. Madoff is just the latest in a long line of appalling developments. We are bracing for more. Newsweek has put it at four trillion American Dollars, or 7 per cent of the world’s GDP, needed to make the global season of bailouts effective. And all this money needs to be found, pledged, and spent now and within two years.
But this is already about the cure, and we haven’t quite finished discussing the disease. There is a drought of integrity in high places. It has become hard to believe anybody. How is it that Integrity came to be side-lined so comprehensively? Did the Movers and Shakers really imagine they could render it obsolete? Is this what the Age of Click and Mouse has come to?
Yes it’s truly been a landmark year for grand larceny and reckless brigandage; a year of pirates and desperadoes, of system failures and chaos. And there is no clear answer to that age old posit: “who will protect us from the protectors”. You can vary the question: ergo, “who will watch the watchers/who will guard the guards/ Quis custodiet ipsos custodies”; but don’t expect an actual answer. If there was a viable, incorruptible answer, we wouldn’t still be asking. So what if Roman poet/satirist Juvenal put it down in the first century A.D.
As for comfort, it might be appropriate to take heart from a great writer whose soul was humiliated and lacerated by early want, but not so much that he failed to extract wry humour and touching emotion from adversity, penury, bleakness and blight. All this in the smoggy twilight of a full-blown Victorian Industrial Revolution.
Charles Dickens was only 12 when his father, mother and siblings were whisked off to Debtor’s Prison. It was 1824, and they went to the infamous Marshalsea. Charles himself was assigned to work off some of the debt at Warren’s Blacking Factory. Charles’ father John, a clerk at The Naval Pay Office, and his family, were released when his finances improved a little. And Charles was able to go back to school. But this experience marked and informed all that Dickens wrote over a long and illustrious career.
Some of it, was not about the inequity, or tragic circumstance. It was about helplessness and perhaps, the whimsy of amusing oneself as best as one could under the circumstances. In Little Dorrit, set in a Debtor’s Prison, Dickens writes: “Papa. Potatoes, poultry, prunes and prism, are all very good words for the lips: especially prunes and prism.” It makes you purse and stretch your lips over the words as you read them and benefit from a simple amusement for paupers.
But Dickens wrote about money quite directly too. To wit, putting this in Mr. Micawber’s mouth: “Annual income twenty pounds, annual expenditure nineteen six, result happiness”. It sounds idyllic in this season of savage de-leveraging and erstwhile bumper profits using borrowed money, but it must be remembered Mr. Micawber, from David Copperfield, was, in fact, sent to prison for his debts.
Or, this little primer for today’s Wall Street: “A person who can't pay gets another person who can't pay to guarantee that he can pay. Like a person with two wooden legs getting another person with two wooden legs to guarantee that he has got two natural legs. It don't make either of them able to do a walking-match”.
What else? Perhaps, just this one from his A Christmas Carol. ... “A happy New Year to all the world! Hallo here! Whoop! Hallo!"
(1,055 words)
December 19th, 2008
Gautam Mukherjee
Published in The Pioneer on 30th December 2008 as "Good riddance to 2008" and online at www.dailypioneer.com and also archived there under Columnists.
Friday, December 19, 2008
Monday, December 15, 2008
Jannat & Jahannum
Jannat and Jahannum
Pondering the Cosmos is weighty stuff at any time. But sometimes it is complicated further by the same words conveying different meanings to different people. The Pakistani jihadi connotation of the Urdu for Heaven and Hell, namely Jannat and Jahannum are such words.
But understanding the Pakistani jihadi take on Heaven and Hell could hold the key to their fantabulous thinking. It can explain the ghastly and savage use of 13 year-old suicide bombers in Afghanistan, for example. And it may also shed light on the missing purity of intent behind another much abused Urdu word: Shaheed.
These are special, revered, mystic words. They are understood differently by those who follow the inclusive Sufi tradition, as do the vast majority of Muslims in India, and those, across the border, who get their vengeful perspective from Saudi-financed Wahhabi Madrasas and hard-line theological Ulooms.
Almost every Islamic terrorist grouping, including the Taliban and the Al Qaeda are spawned, trained or supported by persons with this mindset. It is this blood-thirsty, “Infidel” murdering version of Jannat and Jahannum that is universally understood and subscribed to in the Pakistani Armed Forces and the ISI.
So fine as the words are, they need to be understood just as men on Lahore streets do. But words, as we know, often mutate in transmission, let alone translation. They wing across languages and races, cross oceans and continents, picking up sights, smells, angers, hurts, defining memories, and inevitably, the winds of change. They can also be deliberately twisted to suit political or ideological purposes.
Thus it is, that an indoctrination and radicalisation process has been maturing and marinating for over two decades already. Because, it was about then that Pakistan began recruiting its rank and file from the Madrasas--ever since the late President Zia Ul Haq’s drive towards a more focussed and calculable Islamism with the tacit backing of Saudi Arabia.
The Islamisation was instituted, ostensibly, as backlash, after Pakistan’s earlier experiments with democracy; even if it did profess Socialist, Nationalist and anti-Indian sentiments. But this democratic interlude ended because it dared to lean less than expected on the Armed Forces, and even less on support from the Maulvis and Ulemas.
When Prime Minister Zulfikar Ali Bhutto was eventually overthrown, not only did the Army take over once again, but his rule was characterised as deviant and louche. He was called corrupt, apostate (ridda), and was thought to be altogether deserving of meeting his end on the gallows.
The jihadi notion of Jannat, that is attracting so many young followers, is more than Heaven, that spacious “Mansions in the sky” home of a Christian heavenly father. Jannat here means a hedonistic Paradise, where all austerities and sacrifices on Earth are eternally compensated. It has great physical beauty and tangible perfection. It is green and well watered. It contains an inexhaustible chorus line of nubile and well-endowed nymphets, wiggling with welcome and promise.
This Jannat then surely has the greater power to lure the credulous than the flat Biblical vision of Heaven with its lyre-playing angels in curls and hoary retainers with white eyebrows. Besides, the afterlife in Christianity is daunting, with the very real prospect of Judgement Day looming large.
As for Hell, the Anglo-Saxon Latinate conception of Hell was also formidable once, backed by an Inquisition and torture-laden Witch-Hunts. It terrified the ignorant and unlettered. But today, its intolerance and barbarism is gone. But gone also is its retributive artillery. It stands emasculated by Science, Logic, Mockery, Modernity, and most of all, by a general abandonment.
Hindu Hell? Hard to tell what and where it is, especially when you put it in context of a religion based on reincarnation. And Hindu Heaven? Perhaps it is closest to an Open Forum of Gods and Goddesses, major and minor, demi-gods, Devlok, Demons, Apsaras. It is, without doubt, the greatest do-it-yourself karmic opportunity in the Cosmos.
But if Hindu Heaven is an obscure and under-signposted Parlok , and its Hell is determined by your own thoughts and deeds, there is no such vagueness in the Pakistani lexicon.
The jihadi idiomatic meaning of Jahannum is not just Hell but hell-fire and Perdition. But, the key point is that you don’t go to Jahannum for murdering the Infidel. In fact Jahannum is specifically lying in wait for “disbelievers”. So you go to jihadi Hell, however virtuous you may seem, only if you are Apostate.
So, to the simple-minded and rough hewn, the jihadi Jannat and Jahannum shooting match may well appear to have far greater spark. Particularly if one is very poor and turning terrorist looks like a viable career option. After all, it offers guts and glory, respect, money, guns, women. It cossets flotsam and jetsam. It imbues the neglected with meaning and purpose. It paints gaudy visions of Martyrdom and Paradise.
But nobody in Pakistan’s jihadi circles, identified as the “epicentre of terrorism” seems to notice the deeply anachronistic and medieval nature of a religious war in the “free choice” ambience of the 21st century. If they did, they would be moving fast to prevent their inevitable descent into the very bottomless Jahannum they seem hell bent on prescribing for others.
But then, theirs is an unhinged fanaticism, as bizarre as Hitler’s manic vision, and it too has world domination as its goal. And here again, would be martyrs to this “grand cause” are standing in line. They are eager for battle because they are convinced that a world dominated by Western values has become effete and too decadent to defend itself.
But the worrisome part is that this kind of thinking is not the wild and woolly fantasy of an illiterate frontier tribesman. On the contrary, it is the brain-washed and covertly defended assessment of senior state actors in the Government, Army and its instruments. This, despite all Pakistan’s red herring sophistry, designed only to mislead and bamboozle.
It is a mad gambit, but like other mad gambits, quite convinced in itself. Otherwise, Pakistan and its terrorist hordes would be aware of the looming threat of certain annihilation as the world hardens its stance. But the Jihadis, like all fanatics, will not be reasoned with. To them, it is a confrontation they expect to win against the odds. That they won’t, is mere Infidel talk, and at complete variance with what their religious conviction tells them.
(1,058 words)
15th December 2008
Gautam Mukherjee
Also published in The Pioneer as "The terrorist's faith" on Wednesday, 17th December 2008 and online at www.dailypioneer.com. Also archived at www.dailypioneer.com under Columnists.
Pondering the Cosmos is weighty stuff at any time. But sometimes it is complicated further by the same words conveying different meanings to different people. The Pakistani jihadi connotation of the Urdu for Heaven and Hell, namely Jannat and Jahannum are such words.
But understanding the Pakistani jihadi take on Heaven and Hell could hold the key to their fantabulous thinking. It can explain the ghastly and savage use of 13 year-old suicide bombers in Afghanistan, for example. And it may also shed light on the missing purity of intent behind another much abused Urdu word: Shaheed.
These are special, revered, mystic words. They are understood differently by those who follow the inclusive Sufi tradition, as do the vast majority of Muslims in India, and those, across the border, who get their vengeful perspective from Saudi-financed Wahhabi Madrasas and hard-line theological Ulooms.
Almost every Islamic terrorist grouping, including the Taliban and the Al Qaeda are spawned, trained or supported by persons with this mindset. It is this blood-thirsty, “Infidel” murdering version of Jannat and Jahannum that is universally understood and subscribed to in the Pakistani Armed Forces and the ISI.
So fine as the words are, they need to be understood just as men on Lahore streets do. But words, as we know, often mutate in transmission, let alone translation. They wing across languages and races, cross oceans and continents, picking up sights, smells, angers, hurts, defining memories, and inevitably, the winds of change. They can also be deliberately twisted to suit political or ideological purposes.
Thus it is, that an indoctrination and radicalisation process has been maturing and marinating for over two decades already. Because, it was about then that Pakistan began recruiting its rank and file from the Madrasas--ever since the late President Zia Ul Haq’s drive towards a more focussed and calculable Islamism with the tacit backing of Saudi Arabia.
The Islamisation was instituted, ostensibly, as backlash, after Pakistan’s earlier experiments with democracy; even if it did profess Socialist, Nationalist and anti-Indian sentiments. But this democratic interlude ended because it dared to lean less than expected on the Armed Forces, and even less on support from the Maulvis and Ulemas.
When Prime Minister Zulfikar Ali Bhutto was eventually overthrown, not only did the Army take over once again, but his rule was characterised as deviant and louche. He was called corrupt, apostate (ridda), and was thought to be altogether deserving of meeting his end on the gallows.
The jihadi notion of Jannat, that is attracting so many young followers, is more than Heaven, that spacious “Mansions in the sky” home of a Christian heavenly father. Jannat here means a hedonistic Paradise, where all austerities and sacrifices on Earth are eternally compensated. It has great physical beauty and tangible perfection. It is green and well watered. It contains an inexhaustible chorus line of nubile and well-endowed nymphets, wiggling with welcome and promise.
This Jannat then surely has the greater power to lure the credulous than the flat Biblical vision of Heaven with its lyre-playing angels in curls and hoary retainers with white eyebrows. Besides, the afterlife in Christianity is daunting, with the very real prospect of Judgement Day looming large.
As for Hell, the Anglo-Saxon Latinate conception of Hell was also formidable once, backed by an Inquisition and torture-laden Witch-Hunts. It terrified the ignorant and unlettered. But today, its intolerance and barbarism is gone. But gone also is its retributive artillery. It stands emasculated by Science, Logic, Mockery, Modernity, and most of all, by a general abandonment.
Hindu Hell? Hard to tell what and where it is, especially when you put it in context of a religion based on reincarnation. And Hindu Heaven? Perhaps it is closest to an Open Forum of Gods and Goddesses, major and minor, demi-gods, Devlok, Demons, Apsaras. It is, without doubt, the greatest do-it-yourself karmic opportunity in the Cosmos.
But if Hindu Heaven is an obscure and under-signposted Parlok , and its Hell is determined by your own thoughts and deeds, there is no such vagueness in the Pakistani lexicon.
The jihadi idiomatic meaning of Jahannum is not just Hell but hell-fire and Perdition. But, the key point is that you don’t go to Jahannum for murdering the Infidel. In fact Jahannum is specifically lying in wait for “disbelievers”. So you go to jihadi Hell, however virtuous you may seem, only if you are Apostate.
So, to the simple-minded and rough hewn, the jihadi Jannat and Jahannum shooting match may well appear to have far greater spark. Particularly if one is very poor and turning terrorist looks like a viable career option. After all, it offers guts and glory, respect, money, guns, women. It cossets flotsam and jetsam. It imbues the neglected with meaning and purpose. It paints gaudy visions of Martyrdom and Paradise.
But nobody in Pakistan’s jihadi circles, identified as the “epicentre of terrorism” seems to notice the deeply anachronistic and medieval nature of a religious war in the “free choice” ambience of the 21st century. If they did, they would be moving fast to prevent their inevitable descent into the very bottomless Jahannum they seem hell bent on prescribing for others.
But then, theirs is an unhinged fanaticism, as bizarre as Hitler’s manic vision, and it too has world domination as its goal. And here again, would be martyrs to this “grand cause” are standing in line. They are eager for battle because they are convinced that a world dominated by Western values has become effete and too decadent to defend itself.
But the worrisome part is that this kind of thinking is not the wild and woolly fantasy of an illiterate frontier tribesman. On the contrary, it is the brain-washed and covertly defended assessment of senior state actors in the Government, Army and its instruments. This, despite all Pakistan’s red herring sophistry, designed only to mislead and bamboozle.
It is a mad gambit, but like other mad gambits, quite convinced in itself. Otherwise, Pakistan and its terrorist hordes would be aware of the looming threat of certain annihilation as the world hardens its stance. But the Jihadis, like all fanatics, will not be reasoned with. To them, it is a confrontation they expect to win against the odds. That they won’t, is mere Infidel talk, and at complete variance with what their religious conviction tells them.
(1,058 words)
15th December 2008
Gautam Mukherjee
Also published in The Pioneer as "The terrorist's faith" on Wednesday, 17th December 2008 and online at www.dailypioneer.com. Also archived at www.dailypioneer.com under Columnists.
Friday, December 5, 2008
Universal Exports
Universal Exports
The way Ian Fleming wrote it, “James Bond (007)”, the fictional British MI-6 spy with a “licence to kill”, pretended, on occasion, to be a dapper travelling salesman from “Universal Exports”, selling, one knows not what.
Now if JB, fast forwarding from the Cold War to present times, was called Hafiz Mohamed Sayeed instead, and was working for the ISI/LeT/Jamaat/Pak Army/Civilian leadership/Al Quaeda, and used a similar Universal Exports card, because it did sort of describe his outgoing nature and was broadly descriptive of what he did; he wouldn’t be able to say what his company really sold either.
Of course, Fleming’s laconic “Export” subterfuge was never enthusiastically defended, and was always something of a see-through fig-leaf, for all, except the likes of comical East European Customs officials who have no English, and were expected to be satisfied with the moniker, provided “James” didn’t start leaping over the conveyor belts firing his Walther PPK.
But enjoyable as the Bond series still is, standing in for comfortable thrills and spills in an uncertain world, one doesn’t really want to endure the “B Movie” version playing out in real life.
This one comes with moustachioed and bearded villains, uniformed oil-can Harrys, shifty-eyed heavies in suits, swearing and oath-taking militia with rotted middle teeth and yellowed fangs, pathan-suit and woolly hat clad sarkari journos with aquiline noses, other commentators in banker’s pin-stripes, all reasonably intoning orchestrated lies in Oxonian accents, nicely laced with menace.
Pakistan loves calling “Hindustan” names. Some are rather inventive, like the hybrid “Saffron Zionists”, updated after the latest Mumbai attacks. They comment derisively on our incompetence and suggest we are trying to shift the blame for home-grown troubles across their green and pure borders.
A substantial section of the Pakistani media is put out with Indian “belligerence”. It is amazed that we dare summon their ISI Chief or that we demand the extradition of Indian criminals and terrorist warlords nestled in their midst. In short, the Pakistani intelligentsia can’t understand why they are being accused at all, and quite a few analysts are convinced we have staged the Mumbai terrorist attack ourselves in order to malign Pakistan.
But then, such fantasy-mongering seems to be an uniquely Islamic phenomenon. It is often so outrageous that it would give Joseph Goebbels, the club-footed sex maniac who was Hitler’s Propaganda Minister, an inferiority complex.
When Iraq was being demolished during the Second Gulf War, their Minister of Information, Muhammad Al Sahhaf, dubbed “Comical Ali” by the World Press, regaled satellite TV with unsinkable but hilarious hyperbole on the supposedly grand successes of the Iraqi Armed Forces. And President Ahmenidajad of Iran, never threatens in twenty-first century terms. No, for him it’s always about dismemberments and beheadings.
Some of us will recall listening to Gamal Abdel Nasser’s feverish ranting in 1967, claiming the invasion of Israel during the Six Day War. In reality, the Egyptian Army abandoned 400 brand new tanks on the Golan Heights along with the Heights themselves, and ran away. They did the same with Gaza, abandoned it, but you wouldn’t know it if you listened to dear old Nasser’s broadcasts.
Ignominy and defeat never seems to stop Islamic fantasists. In Pakistan, true to form, the counter propaganda is in full flow. Hafiz Mohammed Sayeed, Head of the banned LeT, responsible for the attack on Indian Parliament, on the Red Fort, on the Mumbai local trains, and now, the hotels, station, hospital, streets, and Chabad House; is protesting his innocence.
Mr. Sayeed is flooding the airwaves with denial. He says he cannot understand why his good name is being besmirched. The Jamaat ud Daawa, where he sits these days, is engaged only in social work, and all of Pakistan knows it.
President Zardari is doing his bit too. He says he doubts that the terrorists are Pakistani at all and muses they may be “stateless people”. He says he might have to abandon the fight against the Taliban and the Al Quaeda and concentrate his troops on the inexplicably angry Indians instead. He says this to the visiting Condoleeza Rice, to put her off her stroke. And Prime Minister Yousuf Raza Gilani chimes in with an offer of the “fullest cooperation and assistance to bring the perpetrators to justice”. It doesn’t hurt to make promises, and Gilani knows it.
Everyone in the Pakistani Government has an insatiable appetite for “evidence” and “proof” though. You’d think they were sticklers for the law if you didn’t know better. Still, it doesn’t stop them scoffing at any and all evidence and proof submitted. They always find fault with its probity, efficacy, veracity, accuracy and anything else they can think of to trash it. This, from what the US Congressional Committee on the Prevention of Terrorism calls the “intersection of terrorism and nuclear threat” is not as funny as it may seem.
And Pakistan’s idea of democracy is a number of mutually secretive power centres. The civilian government’s influence, now threatened by military coup already, is limited to sections of Islamabad. Most of the rest of the country is parcelled out between bands of marauding terrorists and the Armed Forces/ ISI. There are also tribal areas and other bits and pieces which are only Pakistan on paper.
But perhaps this time America will not be looking for a certificate of veracity from Pakistan. They may be working towards a relentless end game even as the Pakistani establishment are falling about wheezing over their latest caper.
If they stop to think, they might realise they won’t get away with it this time. Perhaps it will occur to them that the outgoing US administration, with barely 50 days to go in office, is not going to be the one to deliver the comeuppance. But the new President could well have other plans.
One Mr. Robert Kagan from the Carnegie Endowment for International Peace, Washington, might be reading the Crystal Ball for Pakistan. In a recent Op-Ed piece in The New York Times he says, “perhaps they need a further incentive-like the prospect of seeing parts of their country placed in an international receivership”.
Ah but what parts would that be? The bits with the nuclear facilities in it one hopes. Because, if it’s Al Quaeda, Taliban and other assorted terrorists America is after, they might just have to occupy the whole country!
(1,056 words)
December 5th, 2008
Gautam Mukherjee
The way Ian Fleming wrote it, “James Bond (007)”, the fictional British MI-6 spy with a “licence to kill”, pretended, on occasion, to be a dapper travelling salesman from “Universal Exports”, selling, one knows not what.
Now if JB, fast forwarding from the Cold War to present times, was called Hafiz Mohamed Sayeed instead, and was working for the ISI/LeT/Jamaat/Pak Army/Civilian leadership/Al Quaeda, and used a similar Universal Exports card, because it did sort of describe his outgoing nature and was broadly descriptive of what he did; he wouldn’t be able to say what his company really sold either.
Of course, Fleming’s laconic “Export” subterfuge was never enthusiastically defended, and was always something of a see-through fig-leaf, for all, except the likes of comical East European Customs officials who have no English, and were expected to be satisfied with the moniker, provided “James” didn’t start leaping over the conveyor belts firing his Walther PPK.
But enjoyable as the Bond series still is, standing in for comfortable thrills and spills in an uncertain world, one doesn’t really want to endure the “B Movie” version playing out in real life.
This one comes with moustachioed and bearded villains, uniformed oil-can Harrys, shifty-eyed heavies in suits, swearing and oath-taking militia with rotted middle teeth and yellowed fangs, pathan-suit and woolly hat clad sarkari journos with aquiline noses, other commentators in banker’s pin-stripes, all reasonably intoning orchestrated lies in Oxonian accents, nicely laced with menace.
Pakistan loves calling “Hindustan” names. Some are rather inventive, like the hybrid “Saffron Zionists”, updated after the latest Mumbai attacks. They comment derisively on our incompetence and suggest we are trying to shift the blame for home-grown troubles across their green and pure borders.
A substantial section of the Pakistani media is put out with Indian “belligerence”. It is amazed that we dare summon their ISI Chief or that we demand the extradition of Indian criminals and terrorist warlords nestled in their midst. In short, the Pakistani intelligentsia can’t understand why they are being accused at all, and quite a few analysts are convinced we have staged the Mumbai terrorist attack ourselves in order to malign Pakistan.
But then, such fantasy-mongering seems to be an uniquely Islamic phenomenon. It is often so outrageous that it would give Joseph Goebbels, the club-footed sex maniac who was Hitler’s Propaganda Minister, an inferiority complex.
When Iraq was being demolished during the Second Gulf War, their Minister of Information, Muhammad Al Sahhaf, dubbed “Comical Ali” by the World Press, regaled satellite TV with unsinkable but hilarious hyperbole on the supposedly grand successes of the Iraqi Armed Forces. And President Ahmenidajad of Iran, never threatens in twenty-first century terms. No, for him it’s always about dismemberments and beheadings.
Some of us will recall listening to Gamal Abdel Nasser’s feverish ranting in 1967, claiming the invasion of Israel during the Six Day War. In reality, the Egyptian Army abandoned 400 brand new tanks on the Golan Heights along with the Heights themselves, and ran away. They did the same with Gaza, abandoned it, but you wouldn’t know it if you listened to dear old Nasser’s broadcasts.
Ignominy and defeat never seems to stop Islamic fantasists. In Pakistan, true to form, the counter propaganda is in full flow. Hafiz Mohammed Sayeed, Head of the banned LeT, responsible for the attack on Indian Parliament, on the Red Fort, on the Mumbai local trains, and now, the hotels, station, hospital, streets, and Chabad House; is protesting his innocence.
Mr. Sayeed is flooding the airwaves with denial. He says he cannot understand why his good name is being besmirched. The Jamaat ud Daawa, where he sits these days, is engaged only in social work, and all of Pakistan knows it.
President Zardari is doing his bit too. He says he doubts that the terrorists are Pakistani at all and muses they may be “stateless people”. He says he might have to abandon the fight against the Taliban and the Al Quaeda and concentrate his troops on the inexplicably angry Indians instead. He says this to the visiting Condoleeza Rice, to put her off her stroke. And Prime Minister Yousuf Raza Gilani chimes in with an offer of the “fullest cooperation and assistance to bring the perpetrators to justice”. It doesn’t hurt to make promises, and Gilani knows it.
Everyone in the Pakistani Government has an insatiable appetite for “evidence” and “proof” though. You’d think they were sticklers for the law if you didn’t know better. Still, it doesn’t stop them scoffing at any and all evidence and proof submitted. They always find fault with its probity, efficacy, veracity, accuracy and anything else they can think of to trash it. This, from what the US Congressional Committee on the Prevention of Terrorism calls the “intersection of terrorism and nuclear threat” is not as funny as it may seem.
And Pakistan’s idea of democracy is a number of mutually secretive power centres. The civilian government’s influence, now threatened by military coup already, is limited to sections of Islamabad. Most of the rest of the country is parcelled out between bands of marauding terrorists and the Armed Forces/ ISI. There are also tribal areas and other bits and pieces which are only Pakistan on paper.
But perhaps this time America will not be looking for a certificate of veracity from Pakistan. They may be working towards a relentless end game even as the Pakistani establishment are falling about wheezing over their latest caper.
If they stop to think, they might realise they won’t get away with it this time. Perhaps it will occur to them that the outgoing US administration, with barely 50 days to go in office, is not going to be the one to deliver the comeuppance. But the new President could well have other plans.
One Mr. Robert Kagan from the Carnegie Endowment for International Peace, Washington, might be reading the Crystal Ball for Pakistan. In a recent Op-Ed piece in The New York Times he says, “perhaps they need a further incentive-like the prospect of seeing parts of their country placed in an international receivership”.
Ah but what parts would that be? The bits with the nuclear facilities in it one hopes. Because, if it’s Al Quaeda, Taliban and other assorted terrorists America is after, they might just have to occupy the whole country!
(1,056 words)
December 5th, 2008
Gautam Mukherjee
Wednesday, December 3, 2008
Accountability...
Accountability…
We are being told now that actionable and reasonably precise intelligence on the recent Mumbai terror attacks came from various sources, for up to a month before the outrage. This suggests not only that the Indian state is soft but also that it is compromised, perhaps deliberately so, and suffers from lack of accountability. But the shortcomings of the Indians are like a Teddy Bear’s Picnic compared to the rogue accomplishments of Pakistan and the global threat it poses.
Yes, India was tipped off about the impending attacks by the US government, the state government of Gujarat, the Gujarat and Mumbai based Fishermen’s Associations, and home-grown intelligence agencies RAW and IB. And the information from the US specified some of the targets, the identity and origin of the attackers, their sea-borne method of entry, coordinates of their ship, and even the date of the expected attack.
Everyone knew in advance--the Government of India, the Maharashtra Government, the attacked hotels, the Indian Navy and Coast Guard, the State Police and its Anti-terror Squad.
But not only did they nobody act, but several precautionary security measures set up in response to the warnings were withdrawn a day or two before the attacks actually came. Inferential conjectures point towards a local and highly efficient fifth column, with reach in high places. It has the signature style of the Mumbai underworld, long rumoured to be hand in glove with certain influential Mumbai politicians. It is this same shadowy force that appears to have organised the detailed and professional reconnaissance. They also obtained route maps, detailed floor plans of the hotels, helped to cache the arms, ammunition, grenades, rocket launchers, RDX, obtain fake identification, real cash and credit cards.
This will be difficult to prove, despite the best efforts of not only the Indians, but also the American FBI, the British Scotland Yard and Shin Bet from Israel, all working on the case now. But, much valuable intelligence is often a matter of inference, and Pakistan knows it won’t stand up in a court of law.
And so India, even after gathering high quality intelligence from the sole terrorist taken alive, is getting nowhere in its efforts to bring the perpetrators to justice. Pakistan has shrugged off reports of the POK-based Lashkar-i-Tayeba being responsible, despite its established links to Al Quaeda and the Taliban. They can’t see how this makes the State of Pakistan culpable in any way.
It has trotted out its time-tested alibi of plausible deniability, but this time with a Jeffrey Archerish twist in the tail. Pakistan has threatened to move 100,000 of its troops to the Eastern border with India if pressed too hard, moving them from the Islamic militant infested Afghanistan border!
But then, why should India be surprised? After all, Pakistan has had this device of plausible deniability in place since 1946. It was then that their provisional government put in Army regulars in tribal-style Pathan Suits to occupy half of Kashmir.
They did it again, during General Pervez Musharraf’s misadventure in Kargil. Once again, India found itself killing Pakistan Army regulars in battle, but wearing Mujahideen disguises. What these Mujahideen were doing this time with Pakistan Army identity papers on them, is just another matter of inconvenient detail.
Pakistan has already fought three unsuccessful conventional wars with India, the last being over Kargil, before switching track very sharply towards the war “of a thousand cuts”. This same surreptitious technique has also served Pakistan well in its efforts to pressurise the West, right from the days when it was inducted by America to train and support the Afghan Mujahideen that successfully sent the Soviets packing.
Over the last decade however, Pakistan has gone into wholesale business for itself and emerged as the world’s most successful terror factory, recently characterised as an “international migraine” by former US Secretary of State Madeleine Albright. Pakistan is now a past-master at using proxies, irregulars and disguised armed forces to effect governmental distance and plausible deniability. They are also very good at brazening it out under diplomatic pressure as demonstrated after 9/11, extracting more money and arms from America, even as it kept its terror network intact.
President Musharraf, a consummate ex-commando, adopted a raft of techniques that included consorting with offshore radical Islamic and criminal groups, aiding the radicalisation of Muslim youth globally and the creation of sleeper cells. He also successfully internationalised the demographics, so that Pakistani nationals are not the only ones who turn up in the terror-net worldwide.
Pakistan now hosts a veritable Jehadi International, that includes ethnic Pakistani-British, Talibanised Afghans, Chechens, Pakistan’s lawless NWFP denizens, Bangladeshis- both free-lancers and the official collaborators, malcontents from Kashmir, from India’s North East, turned Muslims from other parts of India, those from Sudan, Somalia, Indonesia, Malaysia, even Muslim insurgents from China. And let us not forget Pakistan continues to host Osama Bin Laden.
To strengthen the doctrine of plausible deniability further, the Pakistan Government also collaborates with the international “Bhai” network. This underworld connection has worked to fund terrorism and insurgency with proceeds from forgery, currency counterfeiting, money-laundering, extortion, intimidation, blackmail, drug-running, prostitution and smuggling.
Other proven State run techniques include proliferation of nuclear and missile technology. This self-help laundry list complements the shameless cap-in-hand forays to the oil rich Gulf and the over-the-barrel West. The latter are also persuaded to supply arms to “fight” the very terrorism that Pakistan has turned into its most effective international calling card.
But the global worry today is not how well Pakistan has been playing the Artful Dodger, or how effectively it runs circles around a weak Indian government, but the very real threat that the radical Islamists, once ready to do the Pakistan Army and ISI’s bidding, are poised to swallow up the State itself, and seize its nuclear arsenal. One might even see a concordat emerge between the radicals and the Pakistani establishment as hinted at by Pakistan Army Chief Kiyani.
That would end Pakistan’s era of plausible deniability, but the world would then be looking at a Talibanised nuclear power. This then, is the nightmare rogue state with the very real WMD threat. The window of opportunity to stop this inevitability has to begin with neutralising Pakistan’s nuclear arsenal. Otherwise, the very definition of international diplomacy and accountability may have to be rewritten.
(1,051 words)
December 3rd, 2008
Gautam Mukherjee
Published in The Pioneer on December 8th,2008 as "It's Pakistan silly!" and online at www.dailypioneer.com where it is also archived under Columnists.
We are being told now that actionable and reasonably precise intelligence on the recent Mumbai terror attacks came from various sources, for up to a month before the outrage. This suggests not only that the Indian state is soft but also that it is compromised, perhaps deliberately so, and suffers from lack of accountability. But the shortcomings of the Indians are like a Teddy Bear’s Picnic compared to the rogue accomplishments of Pakistan and the global threat it poses.
Yes, India was tipped off about the impending attacks by the US government, the state government of Gujarat, the Gujarat and Mumbai based Fishermen’s Associations, and home-grown intelligence agencies RAW and IB. And the information from the US specified some of the targets, the identity and origin of the attackers, their sea-borne method of entry, coordinates of their ship, and even the date of the expected attack.
Everyone knew in advance--the Government of India, the Maharashtra Government, the attacked hotels, the Indian Navy and Coast Guard, the State Police and its Anti-terror Squad.
But not only did they nobody act, but several precautionary security measures set up in response to the warnings were withdrawn a day or two before the attacks actually came. Inferential conjectures point towards a local and highly efficient fifth column, with reach in high places. It has the signature style of the Mumbai underworld, long rumoured to be hand in glove with certain influential Mumbai politicians. It is this same shadowy force that appears to have organised the detailed and professional reconnaissance. They also obtained route maps, detailed floor plans of the hotels, helped to cache the arms, ammunition, grenades, rocket launchers, RDX, obtain fake identification, real cash and credit cards.
This will be difficult to prove, despite the best efforts of not only the Indians, but also the American FBI, the British Scotland Yard and Shin Bet from Israel, all working on the case now. But, much valuable intelligence is often a matter of inference, and Pakistan knows it won’t stand up in a court of law.
And so India, even after gathering high quality intelligence from the sole terrorist taken alive, is getting nowhere in its efforts to bring the perpetrators to justice. Pakistan has shrugged off reports of the POK-based Lashkar-i-Tayeba being responsible, despite its established links to Al Quaeda and the Taliban. They can’t see how this makes the State of Pakistan culpable in any way.
It has trotted out its time-tested alibi of plausible deniability, but this time with a Jeffrey Archerish twist in the tail. Pakistan has threatened to move 100,000 of its troops to the Eastern border with India if pressed too hard, moving them from the Islamic militant infested Afghanistan border!
But then, why should India be surprised? After all, Pakistan has had this device of plausible deniability in place since 1946. It was then that their provisional government put in Army regulars in tribal-style Pathan Suits to occupy half of Kashmir.
They did it again, during General Pervez Musharraf’s misadventure in Kargil. Once again, India found itself killing Pakistan Army regulars in battle, but wearing Mujahideen disguises. What these Mujahideen were doing this time with Pakistan Army identity papers on them, is just another matter of inconvenient detail.
Pakistan has already fought three unsuccessful conventional wars with India, the last being over Kargil, before switching track very sharply towards the war “of a thousand cuts”. This same surreptitious technique has also served Pakistan well in its efforts to pressurise the West, right from the days when it was inducted by America to train and support the Afghan Mujahideen that successfully sent the Soviets packing.
Over the last decade however, Pakistan has gone into wholesale business for itself and emerged as the world’s most successful terror factory, recently characterised as an “international migraine” by former US Secretary of State Madeleine Albright. Pakistan is now a past-master at using proxies, irregulars and disguised armed forces to effect governmental distance and plausible deniability. They are also very good at brazening it out under diplomatic pressure as demonstrated after 9/11, extracting more money and arms from America, even as it kept its terror network intact.
President Musharraf, a consummate ex-commando, adopted a raft of techniques that included consorting with offshore radical Islamic and criminal groups, aiding the radicalisation of Muslim youth globally and the creation of sleeper cells. He also successfully internationalised the demographics, so that Pakistani nationals are not the only ones who turn up in the terror-net worldwide.
Pakistan now hosts a veritable Jehadi International, that includes ethnic Pakistani-British, Talibanised Afghans, Chechens, Pakistan’s lawless NWFP denizens, Bangladeshis- both free-lancers and the official collaborators, malcontents from Kashmir, from India’s North East, turned Muslims from other parts of India, those from Sudan, Somalia, Indonesia, Malaysia, even Muslim insurgents from China. And let us not forget Pakistan continues to host Osama Bin Laden.
To strengthen the doctrine of plausible deniability further, the Pakistan Government also collaborates with the international “Bhai” network. This underworld connection has worked to fund terrorism and insurgency with proceeds from forgery, currency counterfeiting, money-laundering, extortion, intimidation, blackmail, drug-running, prostitution and smuggling.
Other proven State run techniques include proliferation of nuclear and missile technology. This self-help laundry list complements the shameless cap-in-hand forays to the oil rich Gulf and the over-the-barrel West. The latter are also persuaded to supply arms to “fight” the very terrorism that Pakistan has turned into its most effective international calling card.
But the global worry today is not how well Pakistan has been playing the Artful Dodger, or how effectively it runs circles around a weak Indian government, but the very real threat that the radical Islamists, once ready to do the Pakistan Army and ISI’s bidding, are poised to swallow up the State itself, and seize its nuclear arsenal. One might even see a concordat emerge between the radicals and the Pakistani establishment as hinted at by Pakistan Army Chief Kiyani.
That would end Pakistan’s era of plausible deniability, but the world would then be looking at a Talibanised nuclear power. This then, is the nightmare rogue state with the very real WMD threat. The window of opportunity to stop this inevitability has to begin with neutralising Pakistan’s nuclear arsenal. Otherwise, the very definition of international diplomacy and accountability may have to be rewritten.
(1,051 words)
December 3rd, 2008
Gautam Mukherjee
Published in The Pioneer on December 8th,2008 as "It's Pakistan silly!" and online at www.dailypioneer.com where it is also archived under Columnists.
Sunday, November 30, 2008
Cannon-Fodder Raj
Cannon-Fodder Raj: The Treason of the Learned
In the outpouring of anguish and anger, now that Islamic terrorists have struck at the iconic and internationally interesting five-star restaurants, lounges and bedrooms of the powerful; a significant dogma of the Liberal and the Left has still been left intact.
This is not surprising, because the same dogma has been promoted relentlessly, and been taken advantage of, by, among others, Pakistani and Bangladeshi terrorist organisations and their local supporters over nearly five bloody years of UPA rule.
When Osama Bin Laden, the global Grand Master of terrorism, declared that
But the key reason for this disgraceful vulnerability is not gross intelligence failure, sluggish response, logistical inadequacy, ill-equipped constabulary or a less than high-tech armed force, but that same debilitating dogma that saps our political will. And in a functioning democracy, political will is of paramount importance. It is political will and firm direction that has kept terrorist strikes in the singular-and-never-again category in the
That dogma is the notion that the porous national security situation is a fair consequence of a bungled “heart and minds” matter at the root. Therefore, Islamic terror is, understandably, its natural consequence. Ergo, Islamic terror cannot rightfully end until the hearts and minds of brazen and perverse killers, ignorant, near illiterate adherents of medieval madrassa-fed shibboleths, and their supporters, as well as the much-deprived community they belong to; is assuaged.
Thus, implies this particular Lib-Left dogma, if we, the rest of the Indian people, want to live in peace, we must appease and satisfy our tormentors. And the preferences shown and affirmative actions taken are no more than reparations for the original stack of sins of design, omission and commission.
And, say this dogma’s adherents, similar wrong-doings need to be made good by the international community too. That is why they have been specifically targeted in this latest instance. That is why Israelis, British, Americans, other Europeans, the Japanese, Australians were killed and maimed for drawing closer to
But the West is not sentimental at the expense of its security. For it, one attack is more than enough. It is not confused about the difference between ordinary, law-abiding Muslims and the Islamic Jihadi, who must, of course, be neutralised. And to make this distinction between wheat and chaff, it does not hesitate to suspend certain civil liberties, including very strong preventive detention and interrogation practices. It does not consider aggressive monitoring of all affairs Islamic intrusive, and swiftly applies the fullest penal rigours of its laws where necessary.
But
Nevertheless, this must be why Prime Minister Manmohan Singh announced with ringing clarity that India’s largest minority had the first right to the nation’s developmental resources. He did not see the irony or the unfairness in his pronouncement even if most Indian Muslims are both poor and uneducated, because, naturally, there are others too. And that must also be why the Lib-Left intelligentsia that supports the UPA alliance, conveniently expects, quite without basis, the new African-American president-elect of the
The UPA version of twisted reality demands all Indians to shoulder their responsibility towards this permanently aggrieved minority community, even as it harbours, aids, abets and cheers terrorism in mosque, chaupal and home alike. We should simply mop up the blood of innocents, bury and cremate the dead, mouth platitudes for those martyred in our defence, used up like so much cannon-fodder, and then return to normality without demur. And wait for the next round of retribution from justifiably angry Jihadis.
This kind of apologist thinking is what the French call “la trahison des clercs” or the treason of the learned. It is a dangerous conceit that has positioned this country on the edge of the precipice. It threatens to destroy the morale of the bureaucracy and a unified military, para-military and police force. It divides us with its injustices and political calculations. We are so ill-governed that we can be roiled by less than a score of well indoctrinated and trained teenagers on the ground and their controllers in
In the aftermath, scapegoats in the form of the Home Minister, the National Security Adviser and the Maharashtra Chief Minister are in the process of being offered up in this current season of ongoing Assembly and forthcoming General Elections. Their successors, such as they are, can hardly do worse.
But as for getting tough with
But we may have to lose our innocence after all. The oft quoted “secular” narrative, said to be at the core of the very idea of
It is time to end this Cannon-fodder Raj that uses up its heroes to no purpose. It is time to hit back hard with the requisite political will. And if the UPA does not have a stomach for this fight, it might have to be replaced by those who do.
(1,050 words)
30th November 2008
Gautam Mukherjee
Published in The Pioneer as "Treason of the learned" on the OP-ED Page on Tuesday, December 2,2008 and online at www.dailypioneer.com. Also archived at www.dailypioneer.com under Columnists.
Friday, November 21, 2008
Of Free Lunches and Dutch Uncles
Of Free Lunches and Dutch Uncles
On Indian television recently, the venerable Mr. Henry Kissinger was asked if he saw the possibility of America ceding power to Asia in deciding matters of global finance. The News Channel interviewing Kissinger alluded to the manner in which old Europe ceded substantial decision-making power to America after World War II. Kissinger blandly replied that if India, or China, or indeed all of Asia, are able to do for America what America did for Europe during and after the War, then the answer would be yes.
But, as the saying goes, there are no free lunches. Even if there are indeed times you really can’t pay for lunch. So what if the meals cost rather more in the end? Dire straights give you a ferocious focus on essentials. Particularly, when even going Dutch is a no-can-do. And tough, advice-giving Dutch Uncles smoking Meerschaum pipes are anyway hard to come by. But thankfully, they’ve metamorphosed, like Kafka’s spider, into paternalistic governments instead.
Governments are today’s institutionally constituted mater and pater familias. They can feed you for sustained periods with their inexhaustible pantries and indefatigable kitchens. They have their social securities, doles, free medical schemes, subsidies, and occasionally, loan waivers too. And the full-bellied you can go about minus that squirmy sense of obligation or guilt. After all, it has generally been the other way around. The Government fed off you. You paid your taxes, direct and indirect, but it was the Hukumat that gave the orders, and you did the obeying. So now if it takes care of a mountain of your bills gone bad, why worry?
As things unfold home and abroad, it is evident that it will take trillions and trillions of US dollars to take up the slack from a stack of financial and real economies de-leveraging from multiples of forty and even seventy. This puts this money game outside the scope of private players. You need the ability to lend and issue credits against sovereign guarantees, the ability to grow your deficits as necessary, and the keys to the country’s legitimate currency presses, to deal with this.
And if this fever is to break, we all have to set to. All governments must pump-prime every enterprise and institution in need of funds. The action cannot falter or grow weary. But still, there is no need to feel cheated. The governments don’t have to give anything away to floundering corporations, mountebanking banks and swindling insurance companies. They can requisition, take-over and nationalise instead. They can kick out failed managements to the general applause of the humble. They can nurse what they’ve bought on-the-cheap back to health. They can use altogether different sets of honest drivers. Later, when all is well, they can sell off the fattened calves to new owners at a substantial profit.
President-elect Obama has already said he will do “whatever it takes” for the economy. It is fortunate, given the circumstances, that Mr. Obama is a Democrat. And with a Democratic Party majority in Congress and a near majority in the Senate, and an aggressive Chief of Staff in Mr. Rahm Emmanuel, Mr. Obama should indeed be able to move swiftly and surely after his inauguration on January 20th 2009.
But the real restructuring will take much more time. Take for instance the fact that General Motors already has USD 48 billion in debt even as it asked for a USD 25 billion bailout. It is widely known that without radical surgery and brutal changes, General Motors cannot survive anyway. That they have been sent packing to rework their pitch is entirely to the Bush government’s credit.
Meanwhile, China, has smartly announced a fiscal stimulus of about USD 600 billion. All of it to be spent on its domestic infrastructure in the next two years to hold the economy steady at 8 per cent growth, in place of the erstwhile double digits. India too hopes to grow its economy at between 6 and 8 per cent in this fiscal and the next, the projections based overwhelmingly on its domestic consumption and on the strength of its infrastructure building. That is what makes them realistic on the one hand. But India, on its own, does not have the resources for its infrastructure build-up, estimated at a minimum of USD 500 billion, and is staring at substantial back-sliding, without outside financing.
In any case, India and China cannot, as Mr. Kissinger pointed out, rescue America, Europe, Japan and the others from their recessions. But in a world of economies posting minus growth figures, they do stand out, and can be of help. Brazil and Russia, the other major emerging nations, could also make a contribution. David Rothkof, a visiting scholar at the Carnegie Endowment, says a full 75 per cent of growth in 2009 will come from the BRIC countries.
India and China can make their infrastructure development plans inclusive and open their doors to imports of infrastructure-building materials and machinery. India could, in addition, accelerate its civilian nuclear programme and its defence purchases, thereby boosting American, European, Israeli, Australian, Japanese and even Russian exports, while securing much tied credit and finance via US influence at the World Bank and the IMF and those of the Japanese and others at other lending agencies.
India could also encourage urgent foreign direct investment in its road, power, port, petroleum exploration, space programme development, climate control initiatives, and even railway modernisation and development; but without the red tape and suspicion that have always marked our dealings with others.
Note that we could put the Arabs also in as partners, because, notwithstanding their well capitalised Sovereign Funds looking for lucrative investments, they have money going forward too. Because, even at USD 50 per barrel of crude oil says McKinsey, The Gulf will collectively earn USD 4.7 trillion every year from now till 2020.
Bottom-line: we have a chance, as the second largest growth story in the world after China, to make a difference both to ourselves and others at this time. If we take it, we might truly earn a bigger say on the Boards of the IMF and the World Bank and even get ourselves a Security Council Seat at the UN. And all of this while truly growing at the 9 and 10 per cent per annum that we routinely dream about these days.
(1,055 words)
21st November 2008
Gautam Mukherjee
Published in The Pioneer as "Bailing out the rich" on Tuesday, November 25th, 2008 on the OP-Ed Page and online at www.dailypioneer.com. Also archived under Columnists at www.dailypioneer.com
Wednesday, November 12, 2008
Wish I had his money
Wish I had his money
There’s a 21st century trendiness to this latest economic crisis that all the reams of analysis seems to have ignored. It is about the preference for the fashionably chimerical presence of the straw house that one can actually huff and puff and blow right down. It is also known as a financial economy, divorced from demand and supply economics, grown globally to be many times the size of the real one. In America, it was a holographic forty times the size of the real economy till recently, puffed up on borrowed money.
It makes the solidity of the old brick and mortar real construct look positively prehistoric on a good day when it is delivering bumper returns, even though such a day may now be a long time coming.
John Lennon, during the eight, largely private years in New York, living in the very solid, very Gothic Dakota Building, used to take his young son Sean out on walks. They would go to the park and play-ground, to eat ice cream, to the shops, just like any other regular father and son. If anybody recognised the ex-Beatle, telling him he looked like John Lennon, he would always reply, “I wish I had his money”, garnishing the remark with a suitable leer.
There’s universality in that thought, like a lot of Lennon’s thoughts, and transference too. But it is an old fashioned, working class, everyman-must-work-for-his-pay notion from a more innocent world that has been given a go by for some time now.
In the 21st century, and more so lately, the financial wizards have shown the world that you don’t really need to have money to spend money. You merely borrow it. And in case being spendthrift is not your pleasure, you can build assets with borrowed money too. But it’s not “Go West Young Man” or East, or to The Gulf, or Bollywood, to “make your fortune”, as one did in the 20th C. It’s learn “leverage” instead. The basic point being that you don’t have to hold back your ambitions and their gratification just because you can’t afford them.
When individuals borrow, they sign papers labelled “credit” or “loan” or “mortgage”. When banks do it and take risky bets with the proceeds, it’s called “investment banking”. When companies do it, and apply it to expansion of capacity or to buy another company, it’s called “growth”, both “organic” and “inorganic”, and there are experts in mergers, acquisitions, bridge-financing, long-term financing, initial public offerings, private equity and so on, to help them do it. And when countries do it, using the proceeds on anything the politicians deem fit, but hopefully spending at least some of it on public works, it’s called “deficit financing”.
But, all of it predicates on the earnings of the morrow in advance, and is conjoined at the hip in a daisy chain of debt. So the individual borrower and the sovereign are connected in their owing, often reckoned and trotted out on digital tickertape that announces the national debt per every individual in the nation in a minute to minute fashion.
And the tickertape tab doesn’t even include the individual’s personal debt, nor the global interfaces of debt in a shrinking world. But real experts, worth their mounds of considerable salt, count their expertise in the sheer amounts of borrowed money they can generate.
And the inevitably sad fact of it is, not everyone who borrows has the resources to pay the instalments due, let alone the entire sum borrowed. In hindsight it becomes clear that neither should such people borrow, nor should they be lent to. But, whom do you blame and how does the blame game help you make recoveries when it comes down to it?
So inevitably, some profligate individuals go under, financially speaking, insolvent but largely unrepentant, because insolvency is essentially sympathised with, at the individual level, and not treated as that much of an offence, let alone a crime. Witness the court restraints on debt recovery agent bullying.
But the mood changes to outrage when viewing the institutional level because the problem does not stop at the collective, only becomes very much bigger. Highly trusted and respectable banks and mortgage companies also default on their debts. But more often than not, they qualify for rescue and are often deemed too big to “fail”.
And sometimes, incredibly, it applies also to little fishing and farming countries like Iceland, population 300,000, gone wild in a multiple year orgy of borrow and spend, before going bankrupt.
Such current economic horror stories from around the world may not be India’s fate but they have exposed our woeful lack of room to manoeuvre because India too is struggling with a huge current account and fiscal deficit hovering at the 10 per cent of GDP mark from years of refusing to balance its books. So, if we weren’t growing, we’d be sunk.
It makes it all the more ironic because till the other day this present government was doing everything it could to curb this very growth in an attempt to rein in the runaway inflation, brought on, not by our growth but imported via high oil prices of a few months ago.
But as we slow down, with companies sacking staff and staggering production, we have very little money to throw at our problems. And, the frantic loosening of our monetary stays will take some months before they show favourable results. We cannot use the stock markets either because, in the global mayhem and sharp FII withdrawal of resources, our financial markets have shrunk to half as big as our real economy.
China is using her considerable reserves of over a trillion US dollars to stimulate its domestic economy by building up its infrastructure. They are throwing half of it into the fray. India’s rulers are contenting themselves with reassurances that they will do “the needful as and when needed” with their usual flair for inanity. But what might that be? Do we use our 250 billion US dollar reserves to prop up our imports or to provide fiscal stimulus to infrastructure? Like John Lennon masquerading as a man in a street, our powers that be must be wishing that that they had Hu’s money- that’s President Hu Jintao to you, and please don’t go writing him a letter like Aravind Adiga.
(1,055 words)
12th November 2008
Gautam Mukherjee
Published in The Pioneer on Monday, November 17th, 2008 as "You don't need money" on the OP-ED Page and online at www.dailypioneer.com. Also archived online under Columnists.
Wednesday, November 5, 2008
Lone Star in the rear-view mirror
Lone Star in the rear-view mirror
Barack Obama, just days before his landslide victory, said: “I’m trying to do this in an environment where the media narrative is already set up in a certain way. So it is hard not to be dropped into a box.” In the end, Barack Obama managed to get out of that restrictive box to become the 44th president of the United States.
Calling the outgoing President George W Bush facile neocon names would also be such unfortunate pigeonholing. It is unfair to a man who had the courage to take bold decisions and take the flak for them. So let’s see him another way. It is George W Bush, looking shy, with a ploughshare over his right shoulder in classic ryot/rakhal fashion. It was taken at an Andhra Agricultural University when he visited in March 2006. Why the newspaper put it in, next to one of actor Josh Brolin, as the about-to-be-released “W”, is something to ponder.
Perhaps it is for the reader to sift fact from biopic. Or maybe it is to underline the glamorisation that a Brolin, looking tanned, tantalising and sinuously Hollywood, can bring to “W”. It is the story of George W Bush, the East Coast patrician camouflaged as an aw shucks Texan, who made so good that he stormed the citadel!
Brolin has an actor’s glamour and wears his Brioni with an élan that is unburdened by the cares of office. That kind of load might make a man a little stiff, put wrinkles on his forehead and snow on his roof. It would also probably have him wearing American, not Italian, for political correctness.
Which brings me once more to that blue-shirted picture of the original. It is similar to another blue- shirted picture, of Clinton, from his own presidential visit, with a tilak on his head, dancing with village women. Nothing came of that visit except goodwill atmospherics. Did he set the stage for the Bush tilt towards India? Very unlikely, because most American presidents can’t break away from orthodoxies of policy even though they have the most powerful job in the world. And it goes badly for them personally, if they do.
In Bush’s blue-shirted India smiley picture, maybe he’s thinking of all the seeds Americans can sell to our farmers. He is wearing a belt with a horse-shoe shaped buckle with a single star on it. It is from Texas, that belt, because Texas is known as the Lone Star State. But maybe that lone star describes Bush very well.
Oliver Stone, who directed the masterfully investigative JFK (1991), did not ask Bush before making “W”. Because, he too marches to his own drummer, much like his new subject. In JFK, he suggested a grand conspiracy, trashing the lone gunman acting alone conclusions of the Warren Commission and earned his share of controversy, but also a couple of Oscars.
And now, from all preview accounts, “W”, the film, is a sympathetic portrayal of a hard-Right President, intriguingly made by a Liberal, Left-leaning American Director. It is unusual also that Stone picked out his subject, a two-term president, still in office, albeit with less than a 100 days to go.
But then, “Dubya” is an unusual man. He started out as an East Coast “Yaley” and also earned an MBA at Harvard, irrefutable evidence that he is not dim. He was born into an illustrious political family in July 1946. His father, George Herbert Walker Bush, was CIA Chief, Vice-president under Ronald Reagan for his two terms, and then President on his own, for one.
But the early Dubya was famously unpromising. He failed as an Oil Man in Texas and was, at the time, a hard-boozing party animal. The turning point came when he went on to marry a quietly determined Librarian in 1978.Then began the transformation of George. He fathered twin daughters, found God as a born-again Christian, became a teetotaller, saved his teetering marriage, took to regular and strenuous exercise, and firmly turned the page on his life. He was about forty years of age. After that, he never looked back. He ran successfully for political office, becoming Governor of Texas for five years in 1995, and then President of the United States, for eight.
And as President, he wrote his own rules. It has been instructive to witness Dubya’s Wyatt Earp style. It is very much that of the Sheriff, wearing his star on his belt, but just as determined to rid “Dodge City” of all its “varmints”. He has been unilateral, pre-emptive, even imperial - unafraid to take the big decisions that cost him his popularity. But fortunately, he has no difficulty going it alone, even in the face of withering criticism. In time, Bush the Younger will go down in history for his “War on Terror”. And for his historic tilt towards India, which may turn out to be as significant as Nixon’s tilt towards China.
But Dubya seems immune to both 90 per cent domestic approval ratings (the highest ever), that he received at one point of his presidency, and 24 per cent (the lowest ever), at another. Undaunted, he speaks of “spending” his political capital to do what he feels he must. And he felt compelled to try and destroy Islamic militancy. He has certainly not succeeded in full measure, but he has set a security agenda that no successor can afford to ignore.
India, on its part, freely acknowledges its collective debt of gratitude for the exceptionalism of the civilian nuclear deal. We have recently given Dubya an approval rating of 66 per cent, and had our prime minister professing love for him in front of the world’s news cameras.
But soon it will be time for Bush to go. Dubya didn’t come to Washington from his beloved sage and brush farm at Crawford those eight years ago. He came from the Governor’s Mansion at Austin. But now, it is to Crawford he will go, and get on with his brush clearing, pond digging and his dirt-bike riding.
Sheriffs either die in gun battles on Main Street or ride off into the sunset. So, playing second fiddle at Charity or Commerce, or begging history for a favourable verdict wouldn’t do it for this Lone Star. But a little private time communing with his soul just might.
(1,054 words)
5th November 2008
Gautam Mukherjee
Published in The Pioneer as "Lone Ranger who did India well" as EDIT Page Leader on November 6th, 2008 and online at www.dailypioneer.com. Also archived there under "Columnists".
Barack Obama, just days before his landslide victory, said: “I’m trying to do this in an environment where the media narrative is already set up in a certain way. So it is hard not to be dropped into a box.” In the end, Barack Obama managed to get out of that restrictive box to become the 44th president of the United States.
Calling the outgoing President George W Bush facile neocon names would also be such unfortunate pigeonholing. It is unfair to a man who had the courage to take bold decisions and take the flak for them. So let’s see him another way. It is George W Bush, looking shy, with a ploughshare over his right shoulder in classic ryot/rakhal fashion. It was taken at an Andhra Agricultural University when he visited in March 2006. Why the newspaper put it in, next to one of actor Josh Brolin, as the about-to-be-released “W”, is something to ponder.
Perhaps it is for the reader to sift fact from biopic. Or maybe it is to underline the glamorisation that a Brolin, looking tanned, tantalising and sinuously Hollywood, can bring to “W”. It is the story of George W Bush, the East Coast patrician camouflaged as an aw shucks Texan, who made so good that he stormed the citadel!
Brolin has an actor’s glamour and wears his Brioni with an élan that is unburdened by the cares of office. That kind of load might make a man a little stiff, put wrinkles on his forehead and snow on his roof. It would also probably have him wearing American, not Italian, for political correctness.
Which brings me once more to that blue-shirted picture of the original. It is similar to another blue- shirted picture, of Clinton, from his own presidential visit, with a tilak on his head, dancing with village women. Nothing came of that visit except goodwill atmospherics. Did he set the stage for the Bush tilt towards India? Very unlikely, because most American presidents can’t break away from orthodoxies of policy even though they have the most powerful job in the world. And it goes badly for them personally, if they do.
In Bush’s blue-shirted India smiley picture, maybe he’s thinking of all the seeds Americans can sell to our farmers. He is wearing a belt with a horse-shoe shaped buckle with a single star on it. It is from Texas, that belt, because Texas is known as the Lone Star State. But maybe that lone star describes Bush very well.
Oliver Stone, who directed the masterfully investigative JFK (1991), did not ask Bush before making “W”. Because, he too marches to his own drummer, much like his new subject. In JFK, he suggested a grand conspiracy, trashing the lone gunman acting alone conclusions of the Warren Commission and earned his share of controversy, but also a couple of Oscars.
And now, from all preview accounts, “W”, the film, is a sympathetic portrayal of a hard-Right President, intriguingly made by a Liberal, Left-leaning American Director. It is unusual also that Stone picked out his subject, a two-term president, still in office, albeit with less than a 100 days to go.
But then, “Dubya” is an unusual man. He started out as an East Coast “Yaley” and also earned an MBA at Harvard, irrefutable evidence that he is not dim. He was born into an illustrious political family in July 1946. His father, George Herbert Walker Bush, was CIA Chief, Vice-president under Ronald Reagan for his two terms, and then President on his own, for one.
But the early Dubya was famously unpromising. He failed as an Oil Man in Texas and was, at the time, a hard-boozing party animal. The turning point came when he went on to marry a quietly determined Librarian in 1978.Then began the transformation of George. He fathered twin daughters, found God as a born-again Christian, became a teetotaller, saved his teetering marriage, took to regular and strenuous exercise, and firmly turned the page on his life. He was about forty years of age. After that, he never looked back. He ran successfully for political office, becoming Governor of Texas for five years in 1995, and then President of the United States, for eight.
And as President, he wrote his own rules. It has been instructive to witness Dubya’s Wyatt Earp style. It is very much that of the Sheriff, wearing his star on his belt, but just as determined to rid “Dodge City” of all its “varmints”. He has been unilateral, pre-emptive, even imperial - unafraid to take the big decisions that cost him his popularity. But fortunately, he has no difficulty going it alone, even in the face of withering criticism. In time, Bush the Younger will go down in history for his “War on Terror”. And for his historic tilt towards India, which may turn out to be as significant as Nixon’s tilt towards China.
But Dubya seems immune to both 90 per cent domestic approval ratings (the highest ever), that he received at one point of his presidency, and 24 per cent (the lowest ever), at another. Undaunted, he speaks of “spending” his political capital to do what he feels he must. And he felt compelled to try and destroy Islamic militancy. He has certainly not succeeded in full measure, but he has set a security agenda that no successor can afford to ignore.
India, on its part, freely acknowledges its collective debt of gratitude for the exceptionalism of the civilian nuclear deal. We have recently given Dubya an approval rating of 66 per cent, and had our prime minister professing love for him in front of the world’s news cameras.
But soon it will be time for Bush to go. Dubya didn’t come to Washington from his beloved sage and brush farm at Crawford those eight years ago. He came from the Governor’s Mansion at Austin. But now, it is to Crawford he will go, and get on with his brush clearing, pond digging and his dirt-bike riding.
Sheriffs either die in gun battles on Main Street or ride off into the sunset. So, playing second fiddle at Charity or Commerce, or begging history for a favourable verdict wouldn’t do it for this Lone Star. But a little private time communing with his soul just might.
(1,054 words)
5th November 2008
Gautam Mukherjee
Published in The Pioneer as "Lone Ranger who did India well" as EDIT Page Leader on November 6th, 2008 and online at www.dailypioneer.com. Also archived there under "Columnists".
Friday, October 31, 2008
Confidence itself is only a trick!
Confidence itself is only a trick!
Influential, if somewhat oracular newspaper editor Shekhar Gupta, recently quoted the late General Sundarji , about what keeps a soldier going in an assault. One group turns tail because their lead man does. Another, alongside, charges forward to avenge the dauntless courage and sudden sacrifice of their front-man. Both groups are trying to take the same difficult hill but the behavior of the first soldier is crucial. Panic is contagious. So is courage. And who dares, wins.
Mr.Gupta used the military metaphor to suggest India has no reason to import a panic not of its own making. He likened the Indian financial crisis to a deficit of jawanly courage, brought on by fickle, mistaken, and damaged sentiment.
I think Mr. Gupta has a solid point. As we watch the global financial crisis unfold, it is remarkable how the bullish voices in India have all but died out. Any that persist are muted, embarrassed, and preface their remarks with caveats and conclude them with codicils.
The prevailing, if turn-coat wisdom, is that all is lost. It is turn-coat because the same people will be singing hosannas of optimism once we climb another 5,000 points on the Sensex. But, right now, they say we are headed towards a certain abyss, a pit, with the pendulum swinging ever closer, hurtling towards point zero and certain destruction. That we are dug into a hole so deep that it will take us years to emerge.
This is ridiculous. Where is the perspective in all this? Why are we treated to jatra-strength breast-beating that refuses to look at reprieve despite a slowing but still growing economy? The utter lack of balance does not worry these pundits, or the editors of the financial papers and TV channels who let them prattle on. It must be difficult, I will admit, to find anybody willing to emit a ray of sunshine amongst all the dark clouds though.
It reminds me of a recent Newsweek cover story on “Temperament”. In it, Nancy Gibbs writes, “Temperament is a special subcommittee of character: it is less intellect than instinct, more about music than lyrics.” So the music our “experts” on the stock market hear at present must be a discordant and hellish cacophony without end.
It seems possible, if you’re anything of a sociologist, that the Indian economic and stock market analyst suffers, along with most of his countrymen, from a deep seated inferiority complex. He does not really believe the much-touted “India story” and goes along with it as long as the foreign investor appears to do so.
He is just the product and result of being a poor little post-colonial player, the babufied “Macaulay’s Child”, burdened by undigested learning, destroyed by adversity: in short Rudyard Kipling’s “hot-house plant”, a “native” unable to run his own affairs, and willing to destroy 65 per cent of his net worth on someone else’s say so.
He cannot see, like Warren Buffett, the proven long-term player, the honest-to-goodness “Oracle of Omaha”, that the US is currently experiencing a “fire sale” and that it is time to “buy”. This, in a country where there really are serious financial failures being dealt with. Mr. Buffett knows there may be momentum left in the so-called “falling knife”, but he also recognises a good deal here and now, with US stocks indiscriminately down some 40 per cent, and is not bothered about timing the absolute “bottom”.
Our market men too, those who vote with their money instead of their opinions, must share the blame for this disgraceful chaos of capitulation. They have allowed the owners of 10% of market share, in the form of the FIIs and other foreign investors such as the currently hard pressed Hedge Funds, to control the market, lock, stock, and barrel.
Their problems have been adopted as the problems of the other 90%. This means not the usually skittish and shallow-bottomed retail investor but also our domestic institutional players, our insurance sector investors, the mutual funds and the high-net worth players. The foreign investor’s views are, alas, also our views. Their approval makes for our self-esteem. When they say things are not so good, we think likewise, and do likewise, like lemmings. When they buy we buy. When they sell, we sell too and/or stand aside and let the market crash from depth to depth. It is pathetic but true.
And so, the funereal air refuses to lift, with each learned and expert commentator trying to out do the other with the force of his pessimism. And unfortunately, we have no rallying point from the real economy either, unless you count Mr. Chidambaram’s patronising and slow motion remarks for the mentally retarded.
AA Gill from The Sunday Times in England made the interesting point that there seem to be no proper orators left amongst the British politicians, capable of lifting people’s spirits during the crisis that is shrinking Britain to a real, and not imagined, recession, as in India.
The present ones in charge of the UK, such as British Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling, stand around wringing their Leftist hands and making everyone feel decidedly worse. Gill has a point too.
There is certainly no Winston Churchill intoning courage into British ears, his sonorous voice and inspiring words refusing to be drowned out by the whistle, crash and burn of Nazi bombs.
But if we in India insist on being led by the nose, let us take heart from the facts as they unfold in the US. The US National Debt presently is at 38 per cent of their GDP, well below its 1990’s peak of 49 per cent, even if a lot of it is borrowed from China. All the bail-outs in America, even if they inflate to USD 1 trillion, will account for just 7 per cent of their GDP this fiscal, the highest level since 1986, not 1929!
The American economy will certainly revive, sooner, rather than later, in a year, or two, tops, and Mr. Buffett recognises this. Europe, Japan and the rest will follow suit, because they are, in effect, like branch offices of the US.
India will average 6.3 per cent growth in GDP per annum going forward to 2030. So when do we stop whining and start counting our blessings?
(1,051 words)
Friday 31st October 2008
Gautam Mukherjee
Influential, if somewhat oracular newspaper editor Shekhar Gupta, recently quoted the late General Sundarji , about what keeps a soldier going in an assault. One group turns tail because their lead man does. Another, alongside, charges forward to avenge the dauntless courage and sudden sacrifice of their front-man. Both groups are trying to take the same difficult hill but the behavior of the first soldier is crucial. Panic is contagious. So is courage. And who dares, wins.
Mr.Gupta used the military metaphor to suggest India has no reason to import a panic not of its own making. He likened the Indian financial crisis to a deficit of jawanly courage, brought on by fickle, mistaken, and damaged sentiment.
I think Mr. Gupta has a solid point. As we watch the global financial crisis unfold, it is remarkable how the bullish voices in India have all but died out. Any that persist are muted, embarrassed, and preface their remarks with caveats and conclude them with codicils.
The prevailing, if turn-coat wisdom, is that all is lost. It is turn-coat because the same people will be singing hosannas of optimism once we climb another 5,000 points on the Sensex. But, right now, they say we are headed towards a certain abyss, a pit, with the pendulum swinging ever closer, hurtling towards point zero and certain destruction. That we are dug into a hole so deep that it will take us years to emerge.
This is ridiculous. Where is the perspective in all this? Why are we treated to jatra-strength breast-beating that refuses to look at reprieve despite a slowing but still growing economy? The utter lack of balance does not worry these pundits, or the editors of the financial papers and TV channels who let them prattle on. It must be difficult, I will admit, to find anybody willing to emit a ray of sunshine amongst all the dark clouds though.
It reminds me of a recent Newsweek cover story on “Temperament”. In it, Nancy Gibbs writes, “Temperament is a special subcommittee of character: it is less intellect than instinct, more about music than lyrics.” So the music our “experts” on the stock market hear at present must be a discordant and hellish cacophony without end.
It seems possible, if you’re anything of a sociologist, that the Indian economic and stock market analyst suffers, along with most of his countrymen, from a deep seated inferiority complex. He does not really believe the much-touted “India story” and goes along with it as long as the foreign investor appears to do so.
He is just the product and result of being a poor little post-colonial player, the babufied “Macaulay’s Child”, burdened by undigested learning, destroyed by adversity: in short Rudyard Kipling’s “hot-house plant”, a “native” unable to run his own affairs, and willing to destroy 65 per cent of his net worth on someone else’s say so.
He cannot see, like Warren Buffett, the proven long-term player, the honest-to-goodness “Oracle of Omaha”, that the US is currently experiencing a “fire sale” and that it is time to “buy”. This, in a country where there really are serious financial failures being dealt with. Mr. Buffett knows there may be momentum left in the so-called “falling knife”, but he also recognises a good deal here and now, with US stocks indiscriminately down some 40 per cent, and is not bothered about timing the absolute “bottom”.
Our market men too, those who vote with their money instead of their opinions, must share the blame for this disgraceful chaos of capitulation. They have allowed the owners of 10% of market share, in the form of the FIIs and other foreign investors such as the currently hard pressed Hedge Funds, to control the market, lock, stock, and barrel.
Their problems have been adopted as the problems of the other 90%. This means not the usually skittish and shallow-bottomed retail investor but also our domestic institutional players, our insurance sector investors, the mutual funds and the high-net worth players. The foreign investor’s views are, alas, also our views. Their approval makes for our self-esteem. When they say things are not so good, we think likewise, and do likewise, like lemmings. When they buy we buy. When they sell, we sell too and/or stand aside and let the market crash from depth to depth. It is pathetic but true.
And so, the funereal air refuses to lift, with each learned and expert commentator trying to out do the other with the force of his pessimism. And unfortunately, we have no rallying point from the real economy either, unless you count Mr. Chidambaram’s patronising and slow motion remarks for the mentally retarded.
AA Gill from The Sunday Times in England made the interesting point that there seem to be no proper orators left amongst the British politicians, capable of lifting people’s spirits during the crisis that is shrinking Britain to a real, and not imagined, recession, as in India.
The present ones in charge of the UK, such as British Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling, stand around wringing their Leftist hands and making everyone feel decidedly worse. Gill has a point too.
There is certainly no Winston Churchill intoning courage into British ears, his sonorous voice and inspiring words refusing to be drowned out by the whistle, crash and burn of Nazi bombs.
But if we in India insist on being led by the nose, let us take heart from the facts as they unfold in the US. The US National Debt presently is at 38 per cent of their GDP, well below its 1990’s peak of 49 per cent, even if a lot of it is borrowed from China. All the bail-outs in America, even if they inflate to USD 1 trillion, will account for just 7 per cent of their GDP this fiscal, the highest level since 1986, not 1929!
The American economy will certainly revive, sooner, rather than later, in a year, or two, tops, and Mr. Buffett recognises this. Europe, Japan and the rest will follow suit, because they are, in effect, like branch offices of the US.
India will average 6.3 per cent growth in GDP per annum going forward to 2030. So when do we stop whining and start counting our blessings?
(1,051 words)
Friday 31st October 2008
Gautam Mukherjee
Tuesday, October 21, 2008
The Paradox of Thrift
The Paradox of Thrift
In recessionary times, the natural inclination of every individual is to cut back on unnecessary expenses, pay back debt, postpone non-essential purchasing. This seems like virtuous belt-tightening, but if enough people join this particular bandwagon, the economy as a whole begins to tank. John Maynard Keynes called this phenomenon, “the paradox of thrift”. That is why George W Bush advised people to do their patriotic duty after 9/11 and told them to go out and shop!
But what is afoot in India is not the consequence of domestic thrift leading to a significant slow-down, but a mugging of growth owing to a national economic bungling on the grand scale.
Our economic deceleration is because of a wilful miscalculation on the part of the UPA Government. And it may never have come to light, except for the global economy collapsing. As Warren Buffett said, “Only when the tide goes out do you discover who’s been swimming naked”.
But since there is never a cloud without a silver lining, what we are now witnessing is a scramble to reverse gear and cut every conceivable interest rate and cautionary reserve in sight, in a bid to resuscitate a faltering economy.
What is even better for India Inc. and the Indian public is that both the UPA and the Opposition NDA are in competition to devise ways and means to revive growth. But before we go to the presumed glories of the future, let’s take a look at how we came to be at this pass.
Flying in the face of all sage advice and commentary barely a year ago, Finance Minister P Chidambaram and former Reserve Bank of India Governor YV Reddy, relentlessly tightened interest rates, raised cash reserve ratios, put curbs on participatory notes, raised statutory liquidity ratios, reduced rates on NRI deposits, curbed external commercial borrowing, intervened in the currency markets to weaken the rupee, and did all else in their power to suck out liquidity, strangle growth, and barricade India against dollar inflows.
In their wisdom, the UPA wanted a weaker rupee to ostensibly aid exports, even though we have a huge infrastructure led and modernisation-based import bill, not to mention a 70 per cent dependency on oil imports. Side by side, the UPA was also announcing large expenditures such as the farm loan waiver, and other largesse aimed at targeted voters in rural India. The Government was also subsidising the rocketing petroleum prices, not with a hit on the current year’s budgetary books, but with sleight-of-hand Oil Bonds, to be paid for by future generations.
All these policies collectively resulted in growth strangulation, juxtaposed with sharply raised expenditure, leading to vast increases in current account and fiscal deficits, stoking the very inflation the government was trying to curb! When they wrote “Pop goes the Weasel” in the 17th century, they must have had personages like the current UPA money-managers in mind.
The irony is this fixing-things-that-weren’t-broken policy, was unleashed, when we were thriving. Business and Industry were reporting good results. The stock market was booming. India Inc. was busy going international with mergers and acquisitions, and even agriculture was doing far better than the year before. The Indian economy, as a whole was growing at a projected 9 per cent for fiscal 2008.
Growth decompression, said the government, affects only India Inc. And our inflation, they said, was due to runaway, speculative demand in the domestic economy; whereas it was mostly the sharply spiking price of oil, over which, India, doing nothing to curb its demand, had no control.
Oil prices have now halved, thanks to the global financial meltdown and subsequent fall in demand, and ergo, our WPI inflation rates have been tending downwards over the last five weeks.
But by now, our GDP growth estimates are at 7 per cent for 2008. We have a recession in the Real Estate segment. There are grave threats of consumer defaults on home, car, and credit card loans/debt.
Business and Industry too are forced to borrow at 14 per cent and above, if they manage to borrow at all, particularly in the medium to small sectors, impacting their margins, and forcing the postponement of modernisation and expansion.
Infrastructure projects, always grappling with the twin problems of long execution and payback periods, have been unable to raise money in the distressed global markets, and can’t get any money from the tight local credit markets either. They are all at a standstill. And, let us realise, when it comes to infrastructure, this impacts not just fiscal 2008 or ‘09 or ’10, but casts a shadow on projected GDP growth well into the future!
The BJP economic think tank, comprised of former finance ministers Jaswant Singh and Yashwant Sinha and former disinvestment minister Arun Shourie, have called for a raft of urgent measures, some old, some new, to get things going. They want drastic action, beyond the stage-by-stage 250 points CRR cuts and somewhat tentative 100 bps Repo rate cut, announced by the Government so far.
The BJP has called for Repo interest rates to be cut by a further 200 basis points to a much healthier 6 per cent by March 2009. And by way of a brand new suggestion, they have called for a strengthening of our public sector banks with a USD 10 billion rights issue to augment their USD 40 billion footprint collectively. This is intended to boost their lending power to domestic business and industry.
The BJP has also aired some protectionist ideas, such as a banning of short-selling and PN notes with regard to the stock market, and accounting calls to acknowledge off-budget debt on the books. The BJP also wants a Sovereign Wealth Fund created with our foreign exchange reserves and the money put to fund our infrastructure development, instead of languishing in US Treasury Bonds.
In any event, the two major political groupings seem to be pointing in the same direction for once, coming down once again in favour of growth. But, no one has a magic wand, and all need to bear in mind that monetary measures always work their effects after a time lag.
So perhaps, the next time around, no Indian Government will be so casual about killing the golden goose of growth, and eschew their periodic urge to bite the very hand that feeds.
(1,053 words)
October 21st, 2008
Gautam Mukherjee
Published in The Pioneer on Wednesday,October 22,2008 as "The wages of misplaced thrift" and online at www.dailypioneer.com. Also see it archived under "Columnists" at www.dailypioneer.com
In recessionary times, the natural inclination of every individual is to cut back on unnecessary expenses, pay back debt, postpone non-essential purchasing. This seems like virtuous belt-tightening, but if enough people join this particular bandwagon, the economy as a whole begins to tank. John Maynard Keynes called this phenomenon, “the paradox of thrift”. That is why George W Bush advised people to do their patriotic duty after 9/11 and told them to go out and shop!
But what is afoot in India is not the consequence of domestic thrift leading to a significant slow-down, but a mugging of growth owing to a national economic bungling on the grand scale.
Our economic deceleration is because of a wilful miscalculation on the part of the UPA Government. And it may never have come to light, except for the global economy collapsing. As Warren Buffett said, “Only when the tide goes out do you discover who’s been swimming naked”.
But since there is never a cloud without a silver lining, what we are now witnessing is a scramble to reverse gear and cut every conceivable interest rate and cautionary reserve in sight, in a bid to resuscitate a faltering economy.
What is even better for India Inc. and the Indian public is that both the UPA and the Opposition NDA are in competition to devise ways and means to revive growth. But before we go to the presumed glories of the future, let’s take a look at how we came to be at this pass.
Flying in the face of all sage advice and commentary barely a year ago, Finance Minister P Chidambaram and former Reserve Bank of India Governor YV Reddy, relentlessly tightened interest rates, raised cash reserve ratios, put curbs on participatory notes, raised statutory liquidity ratios, reduced rates on NRI deposits, curbed external commercial borrowing, intervened in the currency markets to weaken the rupee, and did all else in their power to suck out liquidity, strangle growth, and barricade India against dollar inflows.
In their wisdom, the UPA wanted a weaker rupee to ostensibly aid exports, even though we have a huge infrastructure led and modernisation-based import bill, not to mention a 70 per cent dependency on oil imports. Side by side, the UPA was also announcing large expenditures such as the farm loan waiver, and other largesse aimed at targeted voters in rural India. The Government was also subsidising the rocketing petroleum prices, not with a hit on the current year’s budgetary books, but with sleight-of-hand Oil Bonds, to be paid for by future generations.
All these policies collectively resulted in growth strangulation, juxtaposed with sharply raised expenditure, leading to vast increases in current account and fiscal deficits, stoking the very inflation the government was trying to curb! When they wrote “Pop goes the Weasel” in the 17th century, they must have had personages like the current UPA money-managers in mind.
The irony is this fixing-things-that-weren’t-broken policy, was unleashed, when we were thriving. Business and Industry were reporting good results. The stock market was booming. India Inc. was busy going international with mergers and acquisitions, and even agriculture was doing far better than the year before. The Indian economy, as a whole was growing at a projected 9 per cent for fiscal 2008.
Growth decompression, said the government, affects only India Inc. And our inflation, they said, was due to runaway, speculative demand in the domestic economy; whereas it was mostly the sharply spiking price of oil, over which, India, doing nothing to curb its demand, had no control.
Oil prices have now halved, thanks to the global financial meltdown and subsequent fall in demand, and ergo, our WPI inflation rates have been tending downwards over the last five weeks.
But by now, our GDP growth estimates are at 7 per cent for 2008. We have a recession in the Real Estate segment. There are grave threats of consumer defaults on home, car, and credit card loans/debt.
Business and Industry too are forced to borrow at 14 per cent and above, if they manage to borrow at all, particularly in the medium to small sectors, impacting their margins, and forcing the postponement of modernisation and expansion.
Infrastructure projects, always grappling with the twin problems of long execution and payback periods, have been unable to raise money in the distressed global markets, and can’t get any money from the tight local credit markets either. They are all at a standstill. And, let us realise, when it comes to infrastructure, this impacts not just fiscal 2008 or ‘09 or ’10, but casts a shadow on projected GDP growth well into the future!
The BJP economic think tank, comprised of former finance ministers Jaswant Singh and Yashwant Sinha and former disinvestment minister Arun Shourie, have called for a raft of urgent measures, some old, some new, to get things going. They want drastic action, beyond the stage-by-stage 250 points CRR cuts and somewhat tentative 100 bps Repo rate cut, announced by the Government so far.
The BJP has called for Repo interest rates to be cut by a further 200 basis points to a much healthier 6 per cent by March 2009. And by way of a brand new suggestion, they have called for a strengthening of our public sector banks with a USD 10 billion rights issue to augment their USD 40 billion footprint collectively. This is intended to boost their lending power to domestic business and industry.
The BJP has also aired some protectionist ideas, such as a banning of short-selling and PN notes with regard to the stock market, and accounting calls to acknowledge off-budget debt on the books. The BJP also wants a Sovereign Wealth Fund created with our foreign exchange reserves and the money put to fund our infrastructure development, instead of languishing in US Treasury Bonds.
In any event, the two major political groupings seem to be pointing in the same direction for once, coming down once again in favour of growth. But, no one has a magic wand, and all need to bear in mind that monetary measures always work their effects after a time lag.
So perhaps, the next time around, no Indian Government will be so casual about killing the golden goose of growth, and eschew their periodic urge to bite the very hand that feeds.
(1,053 words)
October 21st, 2008
Gautam Mukherjee
Published in The Pioneer on Wednesday,October 22,2008 as "The wages of misplaced thrift" and online at www.dailypioneer.com. Also see it archived under "Columnists" at www.dailypioneer.com
Monday, October 20, 2008
Game Changers
Game Changers
Portnoy’s Complaint author Philip Roth once said, “memories of the past are not memories of facts, but memories of your imaginings of the facts”. That is why no two people quite agree on an eye-witness account.
And, that, at best, is how the world goes forward, believing in facsimiles and fantasies, because it is the belief itself, and not the factual about it, that makes everything real.
Then again, maybe it is a fusion of fact and fantasy that makes for the United States going into their presidential election on November 4th. We can clearly see a charismatic front-runner candidate, all but elected, except for the notorious “Bradley Effect” or because of an Act of God.
The Bradley Effect is named after long-term Black Los Angeles Mayor Tom Bradley. It alludes to White voters who ultimately do not vote for a Black candidate, even though they say they will.
But Barack Obama, even if he is denied the presidency, has already made history. He is the first African-American presidential candidate. He is also the most successful US presidential fundraiser; with the best primary season organisation of all time.
Obama is an eloquent visionary and change agent. And he is resolutely inclusive at the same time. There are echoes of an uncanny amalgam about him. We can hear reverberations of the messianic “I have a dream” persona of Martin Luther King Jr. speaking at the Lincoln Memorial in 1963. And also, we hear a voice from another time, that flat Boston-accented Harvard privilege shining through. We can hear the “idealistic realism,” of an “ask not what your country can do for you…” John Fitzgerald Kennedy.
With Philip Roth to guide us, we can see JFK morphing into Obama, a similar poetry inspiring our souls afresh, during another cold 20th January 2009 Washington inauguration.
Having said this, there is, of course, no nostalgic recourse, no place, or time, or indeed, patience, in 2008, to replay the Sixties.
But still, a mantle, skipping backwards some 45 years, ignoring the Clinton and Carter years in between, clearly has been passed on to a man who walks and talks legacy. Perhaps this is because Obama talks change also, using his merit and hard earned privilege to promise a return to governance for the people and not just the rich.
Barack Obama walks purposefully, with the spring of youth in his step, like a man on his way to redeem a very Nehruvian pledge. A redemption that is, yes, also faintly Socialist, but in America today, that means Centrist. It is a Centrism that will also come, ironically, after being preceded, in the last days of George W Bush’s Republican administration, with nationalisations and bail-outs that no Left Wing government could have faulted.
But Obama’s mission as a Black man will be to redeem a pledge, made not just by King and JFK as they gave wings to the Civil Rights Movement. It is also to fulfil the dream of Abraham Lincoln, and the blood of thousands who died in the American Civil War.
Barack Obama is a “transformational figure” on his way to deliver on a promise that will ignite a Future calling out to be advanced, if not perfected. It is a Future of a young nation reaching maturity. If he succeeds, Obama will not only transform the face of America, but that of its friends and enemies, in sum, the potential and destiny of a much globalised world grown “small”.
And for us, in India, never given an inch by any Democrat President since JFK, it is nevertheless time to applaud the success of a man that will be good for America, healing its rifts, and putting it back on its economic feet. Because only then, it is plain to see, can the rest of us, in turn, realise our own hopes and dreams.
We should understand all the more because India too is crying out for a Game Changer. The old, oft trotted out rhetoric of a faked secularism has played out its course. It is now riddled with contradictions, corroded by anger, and shamed by betrayal.
But the rescue does not lie in a hundred regional aspirations contending in a morass of chaos, or the pornographic feeding upon “minority grievance”. Or, even, on the spewings of Liberal intellectuals that delight in sedition in the name of equity and justice.
And, as is often the case, the solution is here and in plain sight. But, in an evolutionary context, it will have to play out; in not One, but Two Acts; just as it did in America between the Sixties Civil Rights movement and today.
Our First Act is already over a decade old, and featured a pioneering Mr.LK Advani who exposed the face of “pseudo-secularism” with his Ram Rath Yatra and its aftermath. He catapulted his party to power, putting the nuts and bolts numbers at the disposal of his friend and senior, Shri Atal Bihari Vajpayee.
It needs to be said, now, before the dust of electoral battle obscures such markers, that it was mainly the vision of Shri Lal Krishna Advani which dragged the Indian Right, kicking and screaming in embarrassment, owing to a kind of Bradley Effect of our own, outing us, from the margins of history to which we had been relegated. It was Advani who established, and gave respectability to, the Saffron Flag and the Lotus symbol in the national consciousness.
Perhaps Mr. Advani’s time has finally come and he will be rewarded with his own turn to lead this country, fed up, as it is, with a lax security regime. But, while poor security, and our stalled, unnecessarily bound and gagged economic growth, may well place the NDA in power again, the true historical significance of Mr. Advani’s long innings in national politics goes much deeper.
Mr. Advani has been instrumental in reinstating Hindutva, and the unapologetically militarist and free-market legacies, of great men, nearly forgotten, like Shri Syama Prasad Mookerjee, Shri C Rajagopalachari, and the greatly neglected, even maligned, Shri Subhash Chandra Bose.
But the Second Act is clearly yet to come. Mr. Advani’s natural successor in spirit Narendra Modi, is not prime minister yet. But he is already a third term chief minister. He is phenomenally successful and undeniably runs the most business-friendly administration of any state of the Indian Union. He is tough on terrorism and committed to promoting prosperity. Is this then the correct template for India going forward? And even if it is, do we need some more time, and alas, more blood on the streets, to admit it to ourselves first?
We will, of course, see for ourselves when Act Two actually opens. Meanwhile, it is enough to realise what makes for a Game Changer. It is certainly more than mere leadership. It is something grander, something epochal, and needs some people to pave the way; and yet others to stand aside.
(1,050 words)
October 20th 2008
Gautam Mukherjee
Published in The Pioneer on November 1, 2008 as "India needs a game changer" and online at www.dailypioneer.com and archived there under "columnists".
Portnoy’s Complaint author Philip Roth once said, “memories of the past are not memories of facts, but memories of your imaginings of the facts”. That is why no two people quite agree on an eye-witness account.
And, that, at best, is how the world goes forward, believing in facsimiles and fantasies, because it is the belief itself, and not the factual about it, that makes everything real.
Then again, maybe it is a fusion of fact and fantasy that makes for the United States going into their presidential election on November 4th. We can clearly see a charismatic front-runner candidate, all but elected, except for the notorious “Bradley Effect” or because of an Act of God.
The Bradley Effect is named after long-term Black Los Angeles Mayor Tom Bradley. It alludes to White voters who ultimately do not vote for a Black candidate, even though they say they will.
But Barack Obama, even if he is denied the presidency, has already made history. He is the first African-American presidential candidate. He is also the most successful US presidential fundraiser; with the best primary season organisation of all time.
Obama is an eloquent visionary and change agent. And he is resolutely inclusive at the same time. There are echoes of an uncanny amalgam about him. We can hear reverberations of the messianic “I have a dream” persona of Martin Luther King Jr. speaking at the Lincoln Memorial in 1963. And also, we hear a voice from another time, that flat Boston-accented Harvard privilege shining through. We can hear the “idealistic realism,” of an “ask not what your country can do for you…” John Fitzgerald Kennedy.
With Philip Roth to guide us, we can see JFK morphing into Obama, a similar poetry inspiring our souls afresh, during another cold 20th January 2009 Washington inauguration.
Having said this, there is, of course, no nostalgic recourse, no place, or time, or indeed, patience, in 2008, to replay the Sixties.
But still, a mantle, skipping backwards some 45 years, ignoring the Clinton and Carter years in between, clearly has been passed on to a man who walks and talks legacy. Perhaps this is because Obama talks change also, using his merit and hard earned privilege to promise a return to governance for the people and not just the rich.
Barack Obama walks purposefully, with the spring of youth in his step, like a man on his way to redeem a very Nehruvian pledge. A redemption that is, yes, also faintly Socialist, but in America today, that means Centrist. It is a Centrism that will also come, ironically, after being preceded, in the last days of George W Bush’s Republican administration, with nationalisations and bail-outs that no Left Wing government could have faulted.
But Obama’s mission as a Black man will be to redeem a pledge, made not just by King and JFK as they gave wings to the Civil Rights Movement. It is also to fulfil the dream of Abraham Lincoln, and the blood of thousands who died in the American Civil War.
Barack Obama is a “transformational figure” on his way to deliver on a promise that will ignite a Future calling out to be advanced, if not perfected. It is a Future of a young nation reaching maturity. If he succeeds, Obama will not only transform the face of America, but that of its friends and enemies, in sum, the potential and destiny of a much globalised world grown “small”.
And for us, in India, never given an inch by any Democrat President since JFK, it is nevertheless time to applaud the success of a man that will be good for America, healing its rifts, and putting it back on its economic feet. Because only then, it is plain to see, can the rest of us, in turn, realise our own hopes and dreams.
We should understand all the more because India too is crying out for a Game Changer. The old, oft trotted out rhetoric of a faked secularism has played out its course. It is now riddled with contradictions, corroded by anger, and shamed by betrayal.
But the rescue does not lie in a hundred regional aspirations contending in a morass of chaos, or the pornographic feeding upon “minority grievance”. Or, even, on the spewings of Liberal intellectuals that delight in sedition in the name of equity and justice.
And, as is often the case, the solution is here and in plain sight. But, in an evolutionary context, it will have to play out; in not One, but Two Acts; just as it did in America between the Sixties Civil Rights movement and today.
Our First Act is already over a decade old, and featured a pioneering Mr.LK Advani who exposed the face of “pseudo-secularism” with his Ram Rath Yatra and its aftermath. He catapulted his party to power, putting the nuts and bolts numbers at the disposal of his friend and senior, Shri Atal Bihari Vajpayee.
It needs to be said, now, before the dust of electoral battle obscures such markers, that it was mainly the vision of Shri Lal Krishna Advani which dragged the Indian Right, kicking and screaming in embarrassment, owing to a kind of Bradley Effect of our own, outing us, from the margins of history to which we had been relegated. It was Advani who established, and gave respectability to, the Saffron Flag and the Lotus symbol in the national consciousness.
Perhaps Mr. Advani’s time has finally come and he will be rewarded with his own turn to lead this country, fed up, as it is, with a lax security regime. But, while poor security, and our stalled, unnecessarily bound and gagged economic growth, may well place the NDA in power again, the true historical significance of Mr. Advani’s long innings in national politics goes much deeper.
Mr. Advani has been instrumental in reinstating Hindutva, and the unapologetically militarist and free-market legacies, of great men, nearly forgotten, like Shri Syama Prasad Mookerjee, Shri C Rajagopalachari, and the greatly neglected, even maligned, Shri Subhash Chandra Bose.
But the Second Act is clearly yet to come. Mr. Advani’s natural successor in spirit Narendra Modi, is not prime minister yet. But he is already a third term chief minister. He is phenomenally successful and undeniably runs the most business-friendly administration of any state of the Indian Union. He is tough on terrorism and committed to promoting prosperity. Is this then the correct template for India going forward? And even if it is, do we need some more time, and alas, more blood on the streets, to admit it to ourselves first?
We will, of course, see for ourselves when Act Two actually opens. Meanwhile, it is enough to realise what makes for a Game Changer. It is certainly more than mere leadership. It is something grander, something epochal, and needs some people to pave the way; and yet others to stand aside.
(1,050 words)
October 20th 2008
Gautam Mukherjee
Published in The Pioneer on November 1, 2008 as "India needs a game changer" and online at www.dailypioneer.com and archived there under "columnists".
Friday, October 10, 2008
Wet Wet Wet: With Barbarians At The Gate
Wet Wet Wet: With Barbarians At The Gate
Tough leaders in democracies use pejoratives when they are frustrated. These are vaguely derogatory, depend on tone to deliver their bite, and not outright swear words. And they target, not just the Opposition, because, after all, it is their duty to oppose; but also fellow party members, colleagues in government, advisers, hangers-on, and allies, particularly in coalitions. In short, anybody, or in reference to anyone, who has the temerity to feel uncomfortable when firm steps are taken to deal with situations. Firm steps that carry risks, electoral risks!
In the long ago eighties, Dame “Iron Lady” Thatcher, a good friend of our own “Indira is India,” used to call a wide range of people, in her own party, elsewhere, in her household, even certain less than forthcoming domestic pets, “wet” and whole collectives: “wets”.
This curious and panic inducing description, particularly in a country given to near incessant rainfall; was liberally used by the grand dame in public and private, in personal audiences with Queen Elizabeth II, and even in parliament. So much so, that it inspired a very popular and melodious British Pop Group of the time, to call themselves wet too, not once, but three times, as in, “Wet Wet Wet”.
Nearer home and present times, it is sometimes the Opposition that does the describing, calling incumbent prime ministers “weak” and “weakest” ; but probably feels a little foolish when the “weak” manage to get their own way in the end.
But not all elected leaders are quite so decorous. President Nixon liberally used expletives to describe a wide range of his contemporaries and situations. He also recorded his performances for posterity, so that all the world could admire his fluency. He was a Mormon, but also a consummate foul-mouth, who probably wanted to be portrayed by history warts and all. And, not surprisingly, that is how we remember the Republican president who delivered the body blow to the “Iron Curtain” with his bold tilt towards China.
Dictators, kings, chieftains, rulers, billionaires, and paupers, for that matter, are often coarse; but they don’t even have to brush their teeth, like Chairman Mao, if they don’t want to; let alone win elections.
But tough, attitudinal leaders in democracies, without benefit of absolute power, do sometimes get a lot done, besides calling people names. And the 1980’s must have been particularly good for tough democratic regimes.
Mrs. Gandhi liberated Bangladesh, to no great lasting benefit, but with undeniable courage, and in defiance of the US. She also crushed the Naxalite movement in West Bengal using the redoubtable Mr. Sidhartha Shankar Ray; all the while calling all sorts of people “elitist” and “anti-poor” herself. The duo used the Emergency, in 1975, to unleash a police and para-military pogrom, to effectively wipe it out.
It was bitter medicine, for a virulent disease, but also resulted, in a political revulsion among Bengalis that saw the end of Congress Party rule in West Bengal; replaced, ever since, for over thirty years, by a ruinous and toxic Communist rule that persists to this day.
But Mrs. Gandhi didn’t let possible political consequences deter her from doing her duty by the country. She did it again, authorising Operation Blue Star in 1984, arguing a terrorist was a terrorist, and a Sikh was a Sikh, and refusing to be confused between the two. She paid for this conviction with her life, but it was a tremendous demonstration of character, and does explain why Indira Gandhi admired Joan of Arc in her often lonely childhood.
Her son, Rajiv Gandhi, as prime minister, put in Mr. SS Ray once again, as Governor, to mop up in Punjab; and also Julio Ribiero and KPS Gill, tough cops both, with a mandate to end the Khalistan movement. This, they most ably did.
Rajiv Gandhi, a soft-spoken gentleman, was moved nevertheless to speak of action that would remind the terrorists, and the Pakistanis who supported them, of their grandmothers: “naani yaad dila denge,”, wagging his finger from the ramparts of the Red Fort, no less.
Mrs. Thatcher, on her part, broke the backs of very powerful Trade Unions, used to domination ever since WWII and pampered by successive Labour Governments. Their version of Socialism wouldn’t have allowed Britain to move into the 20th century, wouldn’t allow closure of industries that were bankrupt, ports without traffic, mines that were spent. It was a difficult path to tread, and Thatcher was expelled from office, eventually, by her own Conservative party, but not before she had brought Britain back from the brink of being a failed state and restoring a little of the once “great”.
Her counterpart in America, Ronald Reagan, called “Reaguns” often enough by disgruntled left-wingers, played a pivotal role in ending the sufferings of Eastern Europe, by finishing what his predecessor Nixon had started.
Reagan ended the Cold War by upping the ante on the USSR with his multi-billion dollar “Star Wars” defense shield, and had no compunctions about calling the Soviet Block “The Evil Empire”. It was Reagan who precipitated the disintegration of the USSR, bankrupting them as they tried to keep up, and forcing the pulling down of the Berlin Wall. Reagan, avuncular and steely at once, was the only one amongst his global contemporaries, who pulled it off without losing any of his popularity.
Today, as we look around us here in India, the epitome of a soft state, bullied by our neighbours, intimidated by multiple pressure groups, reeling day-to-day from the havoc being wrought by Jihadists, Naxalites, “freedom fighters”, communalists of various hue, and other assorted thugs; we might do well to remember Prime Minister Indira Gandhi. Mrs. Gandhi did not play ducks and drakes with India’s internal security.
There was then, as there is now, much public debate, much media critique, motivated, narrow, and sectarian politicians pushing their agendas, equally vociferous civil society caterwauling; and just as many accusations of victimisation and persecution of minorities.
Thomas Sowell, an American writer and economist from the 1930’s wrote: “If the battle for civilization comes down to the wimps versus the barbarians, the barbarians are going to win.”
That there are barbarians at the gate is beyond doubt. We must be busy with our understanding of civilisation, but either way, for our survival, we cannot afford to be wimps.
(1,050 words)
10th October 2008
Gautam Mukherjee
Published in print, The Pioneer, Tuesday, October 14th, 2008, as "Barbarians at the gate" and online at www.dailypioneer.com Also see it archived under "Columnists" at www.dailypioneer.com
Tough leaders in democracies use pejoratives when they are frustrated. These are vaguely derogatory, depend on tone to deliver their bite, and not outright swear words. And they target, not just the Opposition, because, after all, it is their duty to oppose; but also fellow party members, colleagues in government, advisers, hangers-on, and allies, particularly in coalitions. In short, anybody, or in reference to anyone, who has the temerity to feel uncomfortable when firm steps are taken to deal with situations. Firm steps that carry risks, electoral risks!
In the long ago eighties, Dame “Iron Lady” Thatcher, a good friend of our own “Indira is India,” used to call a wide range of people, in her own party, elsewhere, in her household, even certain less than forthcoming domestic pets, “wet” and whole collectives: “wets”.
This curious and panic inducing description, particularly in a country given to near incessant rainfall; was liberally used by the grand dame in public and private, in personal audiences with Queen Elizabeth II, and even in parliament. So much so, that it inspired a very popular and melodious British Pop Group of the time, to call themselves wet too, not once, but three times, as in, “Wet Wet Wet”.
Nearer home and present times, it is sometimes the Opposition that does the describing, calling incumbent prime ministers “weak” and “weakest” ; but probably feels a little foolish when the “weak” manage to get their own way in the end.
But not all elected leaders are quite so decorous. President Nixon liberally used expletives to describe a wide range of his contemporaries and situations. He also recorded his performances for posterity, so that all the world could admire his fluency. He was a Mormon, but also a consummate foul-mouth, who probably wanted to be portrayed by history warts and all. And, not surprisingly, that is how we remember the Republican president who delivered the body blow to the “Iron Curtain” with his bold tilt towards China.
Dictators, kings, chieftains, rulers, billionaires, and paupers, for that matter, are often coarse; but they don’t even have to brush their teeth, like Chairman Mao, if they don’t want to; let alone win elections.
But tough, attitudinal leaders in democracies, without benefit of absolute power, do sometimes get a lot done, besides calling people names. And the 1980’s must have been particularly good for tough democratic regimes.
Mrs. Gandhi liberated Bangladesh, to no great lasting benefit, but with undeniable courage, and in defiance of the US. She also crushed the Naxalite movement in West Bengal using the redoubtable Mr. Sidhartha Shankar Ray; all the while calling all sorts of people “elitist” and “anti-poor” herself. The duo used the Emergency, in 1975, to unleash a police and para-military pogrom, to effectively wipe it out.
It was bitter medicine, for a virulent disease, but also resulted, in a political revulsion among Bengalis that saw the end of Congress Party rule in West Bengal; replaced, ever since, for over thirty years, by a ruinous and toxic Communist rule that persists to this day.
But Mrs. Gandhi didn’t let possible political consequences deter her from doing her duty by the country. She did it again, authorising Operation Blue Star in 1984, arguing a terrorist was a terrorist, and a Sikh was a Sikh, and refusing to be confused between the two. She paid for this conviction with her life, but it was a tremendous demonstration of character, and does explain why Indira Gandhi admired Joan of Arc in her often lonely childhood.
Her son, Rajiv Gandhi, as prime minister, put in Mr. SS Ray once again, as Governor, to mop up in Punjab; and also Julio Ribiero and KPS Gill, tough cops both, with a mandate to end the Khalistan movement. This, they most ably did.
Rajiv Gandhi, a soft-spoken gentleman, was moved nevertheless to speak of action that would remind the terrorists, and the Pakistanis who supported them, of their grandmothers: “naani yaad dila denge,”, wagging his finger from the ramparts of the Red Fort, no less.
Mrs. Thatcher, on her part, broke the backs of very powerful Trade Unions, used to domination ever since WWII and pampered by successive Labour Governments. Their version of Socialism wouldn’t have allowed Britain to move into the 20th century, wouldn’t allow closure of industries that were bankrupt, ports without traffic, mines that were spent. It was a difficult path to tread, and Thatcher was expelled from office, eventually, by her own Conservative party, but not before she had brought Britain back from the brink of being a failed state and restoring a little of the once “great”.
Her counterpart in America, Ronald Reagan, called “Reaguns” often enough by disgruntled left-wingers, played a pivotal role in ending the sufferings of Eastern Europe, by finishing what his predecessor Nixon had started.
Reagan ended the Cold War by upping the ante on the USSR with his multi-billion dollar “Star Wars” defense shield, and had no compunctions about calling the Soviet Block “The Evil Empire”. It was Reagan who precipitated the disintegration of the USSR, bankrupting them as they tried to keep up, and forcing the pulling down of the Berlin Wall. Reagan, avuncular and steely at once, was the only one amongst his global contemporaries, who pulled it off without losing any of his popularity.
Today, as we look around us here in India, the epitome of a soft state, bullied by our neighbours, intimidated by multiple pressure groups, reeling day-to-day from the havoc being wrought by Jihadists, Naxalites, “freedom fighters”, communalists of various hue, and other assorted thugs; we might do well to remember Prime Minister Indira Gandhi. Mrs. Gandhi did not play ducks and drakes with India’s internal security.
There was then, as there is now, much public debate, much media critique, motivated, narrow, and sectarian politicians pushing their agendas, equally vociferous civil society caterwauling; and just as many accusations of victimisation and persecution of minorities.
Thomas Sowell, an American writer and economist from the 1930’s wrote: “If the battle for civilization comes down to the wimps versus the barbarians, the barbarians are going to win.”
That there are barbarians at the gate is beyond doubt. We must be busy with our understanding of civilisation, but either way, for our survival, we cannot afford to be wimps.
(1,050 words)
10th October 2008
Gautam Mukherjee
Published in print, The Pioneer, Tuesday, October 14th, 2008, as "Barbarians at the gate" and online at www.dailypioneer.com Also see it archived under "Columnists" at www.dailypioneer.com
Wednesday, October 8, 2008
Opportunity Knocks If We React Quickly Enough!
Opportunity Knocks If We React Quickly Enough!
India has a mere twelve per cent exposure to the export market: software, back-office customer support and Business Process Outsourcing (BPO) services, diamond polishing and re-export, auto parts, engineered goods, other exports, iron ore, grain, sundry commodities and, its people, both skilled and unskilled. This is despite our best efforts to date, and not by design. Our impact on world trade is around 1 per cent. That is why our inward remittances from Indians working abroad rival our export figures.
But, as things stand in the global economy, our currently low dependence on exports puts India in a unique pole position and affords a great opportunity to benefit from the present situation.
Because India runs overwhelmingly on its internal growth drivers, and even as the global financial markets are melting down, Finance Minister P Chidambaram, blithely ignoring the 500 and 700 point daily drops in the Sensex, says he still expects to restore a 9 per cent Gross Domestic Product(GDP) growth rate in fiscal 2009.
Mr. Chidambaram is backed up by the Planning Commission’s Mr. Montek Singh Ahluwalia, who still expects us to post an 8 per cent GDP growth in fiscal 2008 and suggests the stopped Foreign institutional Investment (FII) flows will resume after a couple of months.
Commerce Minister Kamal Nath also supports the view that our economy is doing well, citing revived manufacturing statistics, export statistics, investment statistics and particularly, a 124 per cent rise in Foreign Direct Investment (FDI); the last most welcome, because this money goes into the ground to create new factories, facilities and jobs.
The Prime Minister too is hinting at imminent change, saying that the Reserve Bank(RBI) is watching the liquidity situation very carefully.
When all the economists in the government, including Mr. Subbarao at the RBI, and Mr. Bhave at the Securities and Exchange Board (SEBI), keen on facilitating liquidity, one might be forgiven for reading the pronouncements as intended and rapid unmuzzling of the Indian economy, after a year spent obsessed with inflation. It looks like our economic managers are hinting at reducing some of the highest lending rates in the world, sooner rather than later, given the understandable drying up of foreign fund flows.
If India indeed cuts RBI regulated lending rates aggressively, for once as a pre-emptive measure, the country could benefit immensely. If the RBI cuts rates in a motivated, planned, monitored, and phased manner, say every six weeks, inclusive of the Repurchase Agreements (Repo), the Reverse Repo, and the Prime Lending Rate; and further cuts the Cash Reserve Ratio(CRR) of banks, say, once every quarter for the next year; we could see spectacular results in reaction.
After all, even with four further half percent cuts in the CRR, Indian banks would still be capitalised higher than everywhere else, albeit lower than the current 10 to 13.65 per cent. This conservatism with Cash Reserve Ratios is welcome in these uncertain times, and in any case, our lending processes are rigorous, and loans go only to the most deserving candidates. But, all in all, all these actions, taken together, would inject very badly needed liquidity into parched business and industry.
If undertaken, it will deliver a dramatic jump-start to our artificially suppressed economy, get our infrastructure projects surging forward, and get all our business and industry motors humming again. We will suffer a little consequent inflation perhaps, from consumerism, with cheaper money oiling the wheels, but not much, because it will be offset by decelerating oil prices and enhanced growth in the near term.
What we would also gain, by way of contrast, if nothing else, is a star economy in a sea of troubled ones. At present, in the celebrated BRIC, only Brazil is weathering the storm well. Russia is down with oil, and China is afflicted by US weakness. And that leaves us.
In fact, the contrast between the somewhat devalued trillion dollar Indian economy and the battered 3.5 trillion Chinese economy, is in the ways the two are structured. A full third of the Chinese economy is dependent on exports and another third on contract manufacturing for entities abroad, mainly US companies.
Similar, or even higher figures obtain for Japan, South Korea, Indonesia, Malaysia—all with their economies heavily dependent on US purchasing.
Singapore, a large, Canary Wharf-like Asian office block for the West, ditto Hong Kong, if you ignore the looming mainland, and beleaguered, tourism dependent Thailand, are also in trouble and largely helpless in the near term.
Other Asian economies such as Vietnam, Cambodia, Myanmar, tiny Brunei and even Australia, do not figure as emerging markets that can yield bumper profits for anyone. Australia has grown dependent on the Chinese and Japanese, both down themselves, in lieu of the distant and now recession hit Europeans. Myanmar, with considerable potential, is, sadly, locked away in its own time-warp.
SAARC Economies such as Pakistan, Nepal, Sri Lanka and Bangladesh, in our immediate neighbourhood, are slight, and bedevilled by long term weaknesses and deep political instability.
This is the time therefore for India to be bold. It has every reason to pump-prime its economy now, when our problems are few in comparison, and when almost every other country is falling hard. We are down in sympathy, no more. If we can successfully demonstrate that our domestic economy alone can retain growth rates of 9 per cent, even without foreign fund flows, we will paradoxically, and inevitably, attract massive foreign investment, both as FDI and FII.
Not everyone is currently penniless abroad. The Sovereign Funds of the oil rich nations have very few decent investment options in the near term. Our relaxation of Participatory Notes norms should be accompanied by a Ministry of Commerce initiative to attract such monies. We should not make the perennial mistake of always and exclusively looking West in all seasons, even for External Commercial Borrowing (ECB) operations, also recently opened up again.
Our bourses have fallen to below 50 per cent of peak levels in the face of an FII and Hedge Fund withdrawal of a mere USD 10 billion since we learned of the sub-prime crisis. Just one Sovereign Fund from the Gulf could set such an amount right! It is, after all a win-win situation for both. We could, if we seize the moment, become the best performing economy and market in the world, circa 2009.
(1.050 words)
October 8th, 2008
Gautam Mukherjee
India has a mere twelve per cent exposure to the export market: software, back-office customer support and Business Process Outsourcing (BPO) services, diamond polishing and re-export, auto parts, engineered goods, other exports, iron ore, grain, sundry commodities and, its people, both skilled and unskilled. This is despite our best efforts to date, and not by design. Our impact on world trade is around 1 per cent. That is why our inward remittances from Indians working abroad rival our export figures.
But, as things stand in the global economy, our currently low dependence on exports puts India in a unique pole position and affords a great opportunity to benefit from the present situation.
Because India runs overwhelmingly on its internal growth drivers, and even as the global financial markets are melting down, Finance Minister P Chidambaram, blithely ignoring the 500 and 700 point daily drops in the Sensex, says he still expects to restore a 9 per cent Gross Domestic Product(GDP) growth rate in fiscal 2009.
Mr. Chidambaram is backed up by the Planning Commission’s Mr. Montek Singh Ahluwalia, who still expects us to post an 8 per cent GDP growth in fiscal 2008 and suggests the stopped Foreign institutional Investment (FII) flows will resume after a couple of months.
Commerce Minister Kamal Nath also supports the view that our economy is doing well, citing revived manufacturing statistics, export statistics, investment statistics and particularly, a 124 per cent rise in Foreign Direct Investment (FDI); the last most welcome, because this money goes into the ground to create new factories, facilities and jobs.
The Prime Minister too is hinting at imminent change, saying that the Reserve Bank(RBI) is watching the liquidity situation very carefully.
When all the economists in the government, including Mr. Subbarao at the RBI, and Mr. Bhave at the Securities and Exchange Board (SEBI), keen on facilitating liquidity, one might be forgiven for reading the pronouncements as intended and rapid unmuzzling of the Indian economy, after a year spent obsessed with inflation. It looks like our economic managers are hinting at reducing some of the highest lending rates in the world, sooner rather than later, given the understandable drying up of foreign fund flows.
If India indeed cuts RBI regulated lending rates aggressively, for once as a pre-emptive measure, the country could benefit immensely. If the RBI cuts rates in a motivated, planned, monitored, and phased manner, say every six weeks, inclusive of the Repurchase Agreements (Repo), the Reverse Repo, and the Prime Lending Rate; and further cuts the Cash Reserve Ratio(CRR) of banks, say, once every quarter for the next year; we could see spectacular results in reaction.
After all, even with four further half percent cuts in the CRR, Indian banks would still be capitalised higher than everywhere else, albeit lower than the current 10 to 13.65 per cent. This conservatism with Cash Reserve Ratios is welcome in these uncertain times, and in any case, our lending processes are rigorous, and loans go only to the most deserving candidates. But, all in all, all these actions, taken together, would inject very badly needed liquidity into parched business and industry.
If undertaken, it will deliver a dramatic jump-start to our artificially suppressed economy, get our infrastructure projects surging forward, and get all our business and industry motors humming again. We will suffer a little consequent inflation perhaps, from consumerism, with cheaper money oiling the wheels, but not much, because it will be offset by decelerating oil prices and enhanced growth in the near term.
What we would also gain, by way of contrast, if nothing else, is a star economy in a sea of troubled ones. At present, in the celebrated BRIC, only Brazil is weathering the storm well. Russia is down with oil, and China is afflicted by US weakness. And that leaves us.
In fact, the contrast between the somewhat devalued trillion dollar Indian economy and the battered 3.5 trillion Chinese economy, is in the ways the two are structured. A full third of the Chinese economy is dependent on exports and another third on contract manufacturing for entities abroad, mainly US companies.
Similar, or even higher figures obtain for Japan, South Korea, Indonesia, Malaysia—all with their economies heavily dependent on US purchasing.
Singapore, a large, Canary Wharf-like Asian office block for the West, ditto Hong Kong, if you ignore the looming mainland, and beleaguered, tourism dependent Thailand, are also in trouble and largely helpless in the near term.
Other Asian economies such as Vietnam, Cambodia, Myanmar, tiny Brunei and even Australia, do not figure as emerging markets that can yield bumper profits for anyone. Australia has grown dependent on the Chinese and Japanese, both down themselves, in lieu of the distant and now recession hit Europeans. Myanmar, with considerable potential, is, sadly, locked away in its own time-warp.
SAARC Economies such as Pakistan, Nepal, Sri Lanka and Bangladesh, in our immediate neighbourhood, are slight, and bedevilled by long term weaknesses and deep political instability.
This is the time therefore for India to be bold. It has every reason to pump-prime its economy now, when our problems are few in comparison, and when almost every other country is falling hard. We are down in sympathy, no more. If we can successfully demonstrate that our domestic economy alone can retain growth rates of 9 per cent, even without foreign fund flows, we will paradoxically, and inevitably, attract massive foreign investment, both as FDI and FII.
Not everyone is currently penniless abroad. The Sovereign Funds of the oil rich nations have very few decent investment options in the near term. Our relaxation of Participatory Notes norms should be accompanied by a Ministry of Commerce initiative to attract such monies. We should not make the perennial mistake of always and exclusively looking West in all seasons, even for External Commercial Borrowing (ECB) operations, also recently opened up again.
Our bourses have fallen to below 50 per cent of peak levels in the face of an FII and Hedge Fund withdrawal of a mere USD 10 billion since we learned of the sub-prime crisis. Just one Sovereign Fund from the Gulf could set such an amount right! It is, after all a win-win situation for both. We could, if we seize the moment, become the best performing economy and market in the world, circa 2009.
(1.050 words)
October 8th, 2008
Gautam Mukherjee
Friday, October 3, 2008
Tales of Hands on Hank and Cool Hand PC
Tales of Hands on Hank and Cool Hand PC
CEO’s as front-men are hard-wired to be optimists.Henry, "Hank" Paulson, Treasury Secretary in the United States was, till lately, a consummate private sector CEO. He did very well at the helm of Goldman Sachs, just before taking on, probably the worst paying job of his life, in the US government.
Our own Mr. P. Chidambaram (PC) is a patrician Senior Counsel of lofty, if expensive, integrity; backed by much inherited land-holding and old money; gilded further by erudition and intellectual superiority; and crowned by tempered political experience. This is, after all, Mr. Chidambaram’s third stint as Union Finance Minister.
So, it is not surprising that every time PC makes one of his anodyne pronouncements on the state of the Indian economy, its stability, its prudence, in contrast with the financial storm that has seized the Western world; it soothes our financial markets and reinforces shaky sentiment. PC does not think we are in any substantial danger of being caught in the maelstrom, despite the Indian stock markets indulging their deep pessimism.
But PC’s boss, Prime Minister Manmohan Singh, quite the internationalist these days, glowing from his success with the Indo-US Nuclear Civil Cooperation Agreement, doesn’t believe we are insulated from the goings-on abroad. Being a celebrated economist himself, Mr. Singh warns us that we cannot possibly maintain our growth plans on track when the rest of the world is teetering on the edge of recession. He is therefore more interested in battening down the hatches and waiting out the fury.
But, in the eye of it, “Hands on Hank”, as The Economist describes Paulson, is challenged by the forces of posterity. He can fail, or go down in history as the man who, like the little Dutch boy with his finger in the dyke, prevented not only the trickle but the flood. And it is veritably a flood of absolute deluge proportions. Paulson did wonder, just as he took the job, about just how many people left after a turn at government, with their reputations intact.
Hank didn’t readily accept the ferocity of the approaching storm at first, using one rescue at a time tactics. But now, Paulson is manning the pumps 24/7 with horns and sirens blaring. The trillion odd, handed out in rescuing Bear Stearns, Fannie Mae, Freddie Mac, AIG, Merrill Lynch; and sundry others, via the newly established government credit programme; plus watching over the orderly dismemberment of Lehman Brothers, will obviously help.
So will the new bailout pack of 700 billion. It too is very creditable first aid. But to create actual solvency and sail into calm waters with most of the flotilla will take much more money than is being talked about at present.
The good thing is, that the US government, like governments everywhere, do not have to find real money in a drawer, to pay out. Governments can simply make book entries for lines of credit; and print more greenbacks on demand, for those who insist on cash. The US financial services economy is leveraged to about 3.5 times the size of the real economy of 12 to 15 trillion, and there is not much choice, because no one else, not even the funds rich Sovereign Funds from the Gulf, are going to throw good money after bad.
Still, the US government, of all governments, is good for the debt. Beside Henry Paulson’s colleague Ben Bernanke, at the Federal Reserve, will cut interest rates all the way to a quarter per cent, if need be, in a replay of the post 9/11 scenario.
Europe will be following suit; and begin by cutting interest rates this week, in addition to its frantic spate of nationalisations. Because, standing on the platform of their smaller economies, they are, in fact, leveraged much more than the US.
India is going to be conservative, months away from general elections, and with food prices spiking higher, but it will probably be persuaded to ease-up on its chokingly high interest rates designed to curb inflation.
Inflation is, in any case, headed downwards now. But so is growth, estimated now at about 6.5 to 7 per cent for fiscal 2008, down from the 8 to 8.5 per cent thought of just a couple of months ago. But, India could ease up; oil prices have dropped and look like they will stay below USD 100 a barrel for some time to come against reduced demand.
While the global analysis from all sides is deeply pessimistic, the state of play in America is hardly irremediable. Consider the fact that the bailout of USD 700 billion represents just 6 per cent of American GDP and the prior nationalisations and loans another 8 per cent or so. US unemployment is still at just 6 per cent, and not the 20 per cent it was in the Great Depression. Of course, the American economy is also much larger than it was in the 1930s and consequently more resilient.
But for now, as long as it is the government underwriting, nationalising, and printing notes, as necessary, there is really nothing to fear but fear itself. It is fortunate that Republican urges to back free-market capitalism have been reigned in, because at present, that simply wouldn’t work.
On the plus side, the US and European governments are picking up a lot of deleveraged assets very cheap, and buying off equity considerably below par. They are likely to make a profit on quite a lot of it in due course. In a miniscule parallel that is exactly what the Indian government rescue of Unit 64 achieved. They also end up providing much needed succour to the general public.
With all this turmoil, there are those who are announcing the imminent deposition of America as the pre-eminent economic power in the world. These delusional personages are unlikely to see this fond wish come true. But, calmer heads, like PC’s and that of the Prime Minister might well see opportunity calling. India could earn a bigger say in the international financial system as just rewards for our fiscal prudence and efficient management.
We have already been allowed, on an exceptional basis, to pull up a chair to the nuclear high table. Who knows, there may be quite a few others, waiting for us in the financial centres of the Western world too.
(1,050 words)
October 3rd, 2008
Gautam Mukherjee
Published in The Pioneer on the OP-ED Page as "Needed,a bold response" on Wednesday, October 8, 2008 and online at www.dailypioneer.com
CEO’s as front-men are hard-wired to be optimists.Henry, "Hank" Paulson, Treasury Secretary in the United States was, till lately, a consummate private sector CEO. He did very well at the helm of Goldman Sachs, just before taking on, probably the worst paying job of his life, in the US government.
Our own Mr. P. Chidambaram (PC) is a patrician Senior Counsel of lofty, if expensive, integrity; backed by much inherited land-holding and old money; gilded further by erudition and intellectual superiority; and crowned by tempered political experience. This is, after all, Mr. Chidambaram’s third stint as Union Finance Minister.
So, it is not surprising that every time PC makes one of his anodyne pronouncements on the state of the Indian economy, its stability, its prudence, in contrast with the financial storm that has seized the Western world; it soothes our financial markets and reinforces shaky sentiment. PC does not think we are in any substantial danger of being caught in the maelstrom, despite the Indian stock markets indulging their deep pessimism.
But PC’s boss, Prime Minister Manmohan Singh, quite the internationalist these days, glowing from his success with the Indo-US Nuclear Civil Cooperation Agreement, doesn’t believe we are insulated from the goings-on abroad. Being a celebrated economist himself, Mr. Singh warns us that we cannot possibly maintain our growth plans on track when the rest of the world is teetering on the edge of recession. He is therefore more interested in battening down the hatches and waiting out the fury.
But, in the eye of it, “Hands on Hank”, as The Economist describes Paulson, is challenged by the forces of posterity. He can fail, or go down in history as the man who, like the little Dutch boy with his finger in the dyke, prevented not only the trickle but the flood. And it is veritably a flood of absolute deluge proportions. Paulson did wonder, just as he took the job, about just how many people left after a turn at government, with their reputations intact.
Hank didn’t readily accept the ferocity of the approaching storm at first, using one rescue at a time tactics. But now, Paulson is manning the pumps 24/7 with horns and sirens blaring. The trillion odd, handed out in rescuing Bear Stearns, Fannie Mae, Freddie Mac, AIG, Merrill Lynch; and sundry others, via the newly established government credit programme; plus watching over the orderly dismemberment of Lehman Brothers, will obviously help.
So will the new bailout pack of 700 billion. It too is very creditable first aid. But to create actual solvency and sail into calm waters with most of the flotilla will take much more money than is being talked about at present.
The good thing is, that the US government, like governments everywhere, do not have to find real money in a drawer, to pay out. Governments can simply make book entries for lines of credit; and print more greenbacks on demand, for those who insist on cash. The US financial services economy is leveraged to about 3.5 times the size of the real economy of 12 to 15 trillion, and there is not much choice, because no one else, not even the funds rich Sovereign Funds from the Gulf, are going to throw good money after bad.
Still, the US government, of all governments, is good for the debt. Beside Henry Paulson’s colleague Ben Bernanke, at the Federal Reserve, will cut interest rates all the way to a quarter per cent, if need be, in a replay of the post 9/11 scenario.
Europe will be following suit; and begin by cutting interest rates this week, in addition to its frantic spate of nationalisations. Because, standing on the platform of their smaller economies, they are, in fact, leveraged much more than the US.
India is going to be conservative, months away from general elections, and with food prices spiking higher, but it will probably be persuaded to ease-up on its chokingly high interest rates designed to curb inflation.
Inflation is, in any case, headed downwards now. But so is growth, estimated now at about 6.5 to 7 per cent for fiscal 2008, down from the 8 to 8.5 per cent thought of just a couple of months ago. But, India could ease up; oil prices have dropped and look like they will stay below USD 100 a barrel for some time to come against reduced demand.
While the global analysis from all sides is deeply pessimistic, the state of play in America is hardly irremediable. Consider the fact that the bailout of USD 700 billion represents just 6 per cent of American GDP and the prior nationalisations and loans another 8 per cent or so. US unemployment is still at just 6 per cent, and not the 20 per cent it was in the Great Depression. Of course, the American economy is also much larger than it was in the 1930s and consequently more resilient.
But for now, as long as it is the government underwriting, nationalising, and printing notes, as necessary, there is really nothing to fear but fear itself. It is fortunate that Republican urges to back free-market capitalism have been reigned in, because at present, that simply wouldn’t work.
On the plus side, the US and European governments are picking up a lot of deleveraged assets very cheap, and buying off equity considerably below par. They are likely to make a profit on quite a lot of it in due course. In a miniscule parallel that is exactly what the Indian government rescue of Unit 64 achieved. They also end up providing much needed succour to the general public.
With all this turmoil, there are those who are announcing the imminent deposition of America as the pre-eminent economic power in the world. These delusional personages are unlikely to see this fond wish come true. But, calmer heads, like PC’s and that of the Prime Minister might well see opportunity calling. India could earn a bigger say in the international financial system as just rewards for our fiscal prudence and efficient management.
We have already been allowed, on an exceptional basis, to pull up a chair to the nuclear high table. Who knows, there may be quite a few others, waiting for us in the financial centres of the Western world too.
(1,050 words)
October 3rd, 2008
Gautam Mukherjee
Published in The Pioneer on the OP-ED Page as "Needed,a bold response" on Wednesday, October 8, 2008 and online at www.dailypioneer.com
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