Financial tsunami created by quarks and nerds who won the Nobel Prize in Economics
– Quarks and nerds created models for ‘derivatives’ to manage risk by diversification without managing greed
I am appending two long excerpts:
• First, is an excerpt from Wikipedia explaining a financial derivative called ‘option’.
• Second, is a brilliant expose by F. William Engdahl written in Feb. 2008 about the fraud inherent in financial derivatives.
G-20 may meet, drink and be merry with a lame-duck President of USA, George Bush. But, they will get nowhere near finding a solution to the global financial mess, unless they simply ban all financial derivatives from the financial system.
Let me explain why this is imperative.
Engdahl rightly cites the example of Long-Term Capital Management (LTCM) hedge fund in Greenwich, Connecticut which collapsed in 1998.
With a capital of $4.8 billion, LTCM held derivatives with a notional value of $1,250 billion.
The assumption was that like the fraudulent nobel prize winners in economics LTCM had assumed that life was a bell-curve (subject to the rules of a statistical stochastic model and the random, predictable, walk of a rational drunkard).
The assumption was wrong. Life was NO bell-curve. Economic actors were NOT rational. An ‘impossible event’ occurred (which was not figured out in the model). A non-normal event occurred. Russia declared it was devaluing its rouble currency and defaulting on its Russian state bonds. The risk parameters of the quarks’ and nerds’ risk models were rendered to be fraudulent. LTCM collapsed.
I do not know enough about justice system under international law to bring these quarks and nerds to justice and together with them, hoist on the hall of global shame, the likes of Greenspan and Treasury Secretaries of USA who were instrumental in acquiescing in this global fraud.
The fraud is so gigantic that it has led to the impoverishment of at least 3 billion people all over the world, many of whom are already reeling under oppressive regimes caring little for their welfare. Witness the utter contempt with which the 10-Janpath chamcha-s in India ignore the recurring suicides among farmers, without announcing ‘New Deals’ such as National Water Grid to achieve a new blue revolution in agricultural productivity or setting up an Indian Ocean Community to build trans-asian highway and trans-asian railroad. Instead, the PM and FM of India behave as though they are PM and FM of Dalal Street (Wall Street version in India) and not of the 1 billion people of the nation. Does the Hon’ble PM Manmohan Singh have enough leverage with the other G-20 members and with lame-duck President George Bush to ask for banning of all financial derivatives?
Saving institutions such as IMF or World Bank or commercial banks or investment houses is NOT the solution. Saving the economic system by ensuring full employment and fair compensation for the hard-working citizens IS the solution.
Don’t expect anything but pious declarations from the G-20 summit which is a gathering of chamchas hiding under the skirts of equally fraudulent nerds and quarks producing bogus models.
Kalyanaraman
[quote] Options are a financial instrument giving the holder the right to buy or sell an underlying stock or commodity at a future point in time, at an agreed upon price. The Black-Scholes model, for which Fischer Black, Myron Scholes and Robert Merton were awarded the Nobel Prize in Economics, is a tool for pricing equity options. Prior to its development there was no standard way to price options; in a very real sense, the Black-Scholes model marks the beginning of the modern era of financial derivatives.
There are several assumptions underlying the Black-Scholes model. The most significant is that volatility, a measure of how much a stock can be expected to move in the near-term, is a constant over time. The Black-Scholes model also assumes stocks move in a manner referred to as a random walk; at any given moment, they are as likely to move up as they are to move down. By combining these assumptions with the idea that the cost of an option should provide no immediate gain to either seller or buyer, a set of equations can be formulated to calculate the price of any option.
The Black-Scholes model takes as input current prices, length of time until the option expires worthless, an estimate of future volatility known as implied volatility, and the so-called risk free rate of return, generally defined as the interest rate of short term US treasury notes. The model also works in reverse: instead of calculating a price, an implied volatility for a given price can be calculated.
Options traders often refer to "the greeks", especially Delta, Vega, and Theta. These are mathematical characteristics of the Black-Scholes model named after the greek letters used to represent them in equations. Delta measures how much an option price will move relative to the underlying, Vega is the sensitivity of the option price to changes in implied volatility, and Theta is the expected change in option price due to the passage of time.
There are known problems with the Black-Scholes model; markets often move in ways not consistent with the random walk hypothesis, and volatility is not, in fact, constant. ABlack-Scholes variant known as ARCH, Autoregressive Conditional Heteroskedasticity, was developed to deal with these limitations. The key adjustment is the replacement of constant volatility with stochastic, or random, volatility. After ARCH came an explosion of different models; GARCH, E-GARCH, N-GARCH, H-GARCH, etc, all incorporating ever more complex models of volatility. In everyday practice, however, the classic Black-Scholes model remains dominant with options traders. [unquote] http://www.wisegeek.com/what-is-the-black-scholes-model.htm
For nerds and quarks, the link is http://en.wikipedia.org/wiki/Black-Scholes
[quote] The world financial system had faced a systemic crisis threat as recently as the September 1998 collapse of the Long-Term Capital Management (LTCM) hedge fund in Greenwich, Connecticut. Only extraordinary coordinated central bank intervention then, led by Greenspan’s US Federal Reserve, prevented a global meltdown.
That LTCM crisis contained the seed crystal of all that is going wrong with the multi-trillion dollar asset securitization markets today. Curiously, Greenspan and others in positions of responsibility systematically refused to take those lessons to heart.
The nominal trigger of the LTCM crisis was an event not foreseen in the hedge fund’s risk model. Its investment strategies were based on what they felt was a predictable mild range of volatility in foreign currencies and bonds based on data from historical trading experience. When Russia declared it was devaluing its rouble currency and defaulting on its Russian state bonds, the risk parameters of LTCM’s risk models were literally blown out of the water, and LTCM with it. Sovereign debt default was an event that was not “normal.”
Unlike the risk assumptions of every risk model used by Wall Street, the real world was also not normal, but rather highly unpredictable.
To cover their losses LTCM and its banks began a panic sell-off of anything it could liquidate, triggering panic selling by other hedge funds and banks to cover exposed positions. In response, the US stock market dropped 20%, while European markets fell 35%. Investors sought safety in US Treasury bonds, causing interest rates to drop by over a full point. As a result, LTCM’s highly leveraged investments started to crumble. By the end of August 1998, it lost 50% of the value of its capital investments.
…At the beginning of 1998, LTCM had capital of $4.8 billion, a portfolio of $200 billion, built from its borrowing capacity or credit lines loaned from all the major US and European banks hungry for untold gains from the successful fund. LTCM held derivatives with a notional value of $1,250 billion. That is one unregulated, offshore hedge fund held a portfolio of options and other financial derivatives nominally worth one and a quarter trillion dollars. Nothing of that scale had ever before been dreamed of. The dream rapidly turned into a nightmare.
In the argot of Wall Street, LTCM was a highly geared fund, unbelievably high. One of its investors was the Italian central bank, so awesome was the fund’s reputation. The major global banks who had poured their money into LTCM hoping to coattail the success and staggering profits included Bankers Trust, Barclays, Chase, Deutsche Bank, Union Bank of Switzerland, Salomon Smith Barney, J.P.Morgan, Goldman Sachs, Merrill Lynch, Crédit Suisse, First Boston, Morgan Stanley Dean Witter; Société Générale; Crédit Agricole; Paribas, Lehman Brothers. Those were the very banks that were to emerge less than a decade later at the heart of the securitization crisis in 2007…
The source of the awe over LTCM was the “dream team” who ran it. The fund’s CEO and founder was John Meriwether, a legendary trader who had left Salomon Brothers following a scandal over purchase of US Treasury bonds. That hadn’t dented his confidence. Asked whether he believed in efficient markets, he once modestly replied, “I MAKE them efficient.” The fund’s principal shareholders included the two eminent experts in the “science” of risk, Myron Scholes and Robert Merton. Scholes and Merton had been awarded the Nobel Prize for economics in 1997 for their work on derivatives by the Swedish Academy of Sciences. LTCM also had a dazzling array of professors of finance, doctors of mathematics and physics and other “rocket scientists” capable of inventing extremely complex, daring and profitable financial schemes. …
There was only one flaw. Scholes’ and Mertons’ fundamental axioms of risk, the assumptions on which all their models were built, were wrong. They had been built on sand, fundamentally and catastrophically wrong. Their mathematical options pricing model assumed that there were Perfect Markets, markets so extremely deep that traders’ actions could not affect prices. They assumed that markets and players were rational. Reality suggested the opposite—markets were fundamentally irrational in the long-term. But the risk pricing models of Black, Scholes and others over the past two or more decades had allowed banks and financial institutions to argue that traditional lending prudence was old fashioned. With suitable options insurance, risk was no longer a worry. Eat, drink and be merry…
That, of course, ignored actual market conditions in every major market panic since Black-Scholes model was introduced on the Chicago Board Options Exchange. It ignored the fundamental role of options and ‘portfolio insurance’ in the Crash of 1987; it ignored the causes of the panic that in 1998 brought down Long Term Capital Management – of which Scholes and Merton were both partners. Wall Street blissfully ignored the obvious along with the economists and governors in the Greenspan Fed.
Financial markets, contrary to the religious dogma taught at every business school since decades, were not smooth, well-behaved models following the Gaussian Bell-shaped Curve as if it were a law of the universe. The fact that the main architects of modern theories of financial engineering—now given the serious-sounding name ‘financial economics’—all got Nobel prizes, gave the flawed models the aura of Papal infallibility. Only three years after the 1987 crash the Nobel Committee in Sweden gave Harry Markowitz and Merton Miller the prize. In 1997 amid the Asia crisis, it gave the award to Robert Merton and Myron Scholes.
The most remarkable aspect of the incompetent risk models in use since the origins of financial derivatives in the 1980’s, through to the explosive growth of asset securitization in the last decade, was how little they were questioned.
LTCM had ace Wall Street investment bankers, two Nobel Prize economists who literally invented the theory of pricing derivatives on everything from stocks to currencies. To top its all-star LTCM lineup, David Mullins, the former vice-chairman of the Federal Reserve Board under Alan Greenspan quit his job with the Maestro to become a partner at LTCM. Despite all this, the traders at LTCM and those who followed them to the edge of the financial abyss in August 1998 did not have a hedge against the one thing they now confronted—systemic risk. Systemic risk was precisely what they confronted once an “impossible event,” the Russian state default, had occurred.
Despite the clear lessons from the harrowing LTCM debacle—there is no derivative that insures against systemic risk—Greenspan, Rubin and the New York banks continued to build their risk models as if nothing had taken place. The Russian sovereign default was dismissed as a “once in a Century event.” They were moving on to build the dot.com bubble and, in the aftermath, the greatest financial bubble in human history—the asset securitization bubble of 2002-2007.
Life is no Bell Curve
Risk and its pricing did not behave like a bell-shaped curve, not in financial markets any more than in oilfield exploitation. In 1900 an obscure French mathematician and financial speculator, Louis Bachelier, argued that price changes in bonds or stocks followed the bell-shaped curve that the German mathematician, Carl Friedrich Gauss, devised as a model to map statistical probabilities for various events. Bell curves assumed a mild form of randomness in price fluctuations, just as the standard I.Q. test by design defines 100 as “average,” the center of the bell. It was a kind of useful alchemy, but still alchemy.
That assumption that financial price variations behaved fundamentally like the bell curve allowed Wall Street Rocket Scientists to roll out an unending stream of new financial products each more arcane and complex than the previous. The theories were modified. The “Law of Large Numbers” was added to say that when the number of events becomes sufficiently large, like flips of a coin or rolls of die, the value converges on a stable value over the long term. The Law of Large Numbers, which in reality was no scientific law at all, allowed banks like Citigroup or Chase to issue hundreds of millions of Visa cards without so much as a credit check, based on data showing that in “normal” times defaults on credit cards were so rare as not to be worth considering.
The problems with models based on bell curve distributions or laws of large numbers arose when times were not normal, such as a steep economic recession of the sort the United States economy today is beginning to experience, a recession comparable perhaps only to that of 1931-1939.
The remarkable thing was that America’s academic economists and Wall Street investment bankers, Federal Reserve governors, Treasury secretaries, Sweden’s Nobel Economics Prize judges, England’s Chancellors of the Exchequer, her High Street bankers, her Court of the Bank of England, to name just the leading names, all were willing to turn a blind eye to the fact that economic theory, theories of market behavior, theories of derivative risk pricing, were incapable of predicting, let alone preventing, non-linear surprises. It was incapable of predicting bursting of speculative bubbles, not in October 1987, not in February 1994, in March 2002, and most emphatically not since June 2007. It couldn’t because the very model created the conditions that led to the ever larger and more destructive bubbles in the first place. Financial Economics was but another word for unbridled speculative excess.
A theory incapable of explaining such major, defining surprise events, despite Nobel prizes, was not worth the paper it was written on. Yet the US Federal Reserve Governors—above all Alan Greenspan, US Treasury secretaries, above all Robert Rubin and Lawrence Summers and Henry Paulsen—prevailed to make sure that Congress never lay a legislative or regulatory hand on the exotic financial instruments that were being created, created based on a theory that was utterly irrelevant to reality.
On September 29, 1998, Reuters reported, “any attempt to regulate derivatives, even after the collapse—and rescue—of LTCM have not met with success. The CFTC (the government agency with nominal oversight over derivatives trading-w.e.) was barred from expanding its regulation of derivatives under language approved late on Monday by the US House and Senate negotiators. Earlier this month the Republican chairmen of the House and Senate Agriculture Committees asked for the language to limit the CFTC’s regulatory authority over over-the-counter derivatives echoing industry concerns.” Industry of course meant the big banks.
Reuters added that “when the initial subject of regulation was broached by the CFTC both Fed chairman, Alan Greenspan, and Treasury Secretary Rubin leapt to the defense of the industry claiming that the industry did not need regulation and that to do so would drive business overseas.”
The combination of relentless refusal to allow regulatory oversight of the explosive new financial instruments from Credit Default Swaps to Mortgage Backed Securities and the myriad of similar exotic “risk-diffusing” financial innovations and the 1999 final repeal of the Glass-Steagall Act strictly separating securities dealing banks from commercial lending banks opened the way for what in June 2007 began as the second Great Depression in less than a century. It began what future historians will describe as the final demise of the United States as the dominant global financial power.
Liars’ Loans and NINA: Banks in an orgy of fraud
The lessons of the 1998 Russia default and the LTCM systemic crisis were forgotten within weeks by the major players of the New York financial establishment. Flanked by MBA whiz kid ‘rocket scientist’ analysts, bell curve models and fatally flawed risk models, the financial giants of the US banking world launched a wave of mega-mergers and began to create ingenious ways of getting lending risk off their books. That opened the doors to the greatest era of corporate and financial fraud in world history, the asset securitization bonanza.
With Glass-Steagall finally repealed in late 1999, at the urgings of Greenspan and Rubin, banks were now free to snatch up rivals across the spectrum from insurance companies to consumer credit or finance houses. The landscape of American banking underwent a drastic change. The asset securitization revolution was ready to be launched.
With Glass-Steagall gone, now only bank holding companies and subsidiary pure lending banks were directly monitored by the Federal Reserve. If Citigroup opted to close its Citibank branch in a sub-prime neighborhood and instead have a new wholly-owned subsidiary, CitiFinancial, which specialized in sub-prime lending, work the area, CitiFinancial could operate under entirely different and lax regulation.
CitiFinancial issued mortgages separately from Citibank. Consumer groups accused CitiFinancial of specializing in “predator loans” in which unscrupulous mortgage brokers or salesmen would push a loan on a family or person far beyond his comprehension or capacity to handle the risks. And Citigroup was only typical of most big banks.
On January 8, 2008 Citigroup announced with great fanfare publication of its consolidated “US residential mortgage business,” including mortgage origination, servicing and securitization. Curiously, the statement omitted CitiFinancial, the subsidiary with the most risk.
Basle I loopholes
The driver pushing the banks towards securitization and the proliferation of off-balance-sheet risks including highly leveraged derivatives positions was the 1987 Basle Bank for International Settlements Capital Adequacy Accord, known today as Basle I. That agreement among the central banks of the world’s largest economies required banks to set aside 8% of a normal commercial loan as reserve against possible future default. The then-new innovation of financial derivatives were not mentioned in Basle I on US insistence.
The Accord originally had been intended by Germany’s ultra-conservative Bundesbank and other European central banks to rein in the more speculative Japanese and US bank lending which had led to the worst banking crisis since the 1930’s. The original intent of the Basle Accord was to force banks to reduce lending risk. The actual effect for US banks was just the opposite. They soon discovered a gaping loophole—off-balance-sheet transactions, notably derivatives positions and securitization. Because they were left out of Basle I banks need not set aside any capital to cover potential losses.
The elegance of securitization of loans such as home mortgages for the issuing bank was that they could take the loan or mortgage and immediately sell it on to a securitizer or underwriter who bundled hundreds of such loans into a new Asset Backed Security. This seemingly genial innovation was far more dangerous than it sounded. Lending banks no longer needed to carry a mortgage loan on its books for 20-30 years as was traditional. They sold it on at a discount and used the cash to turn the next round of credit issuing.
That meant as well that the lending bank now no longer had to worry if the loan would ever be repaid.
Fraud a la mode
It didn’t take long before lending banks across the United States realized they were sitting on a bonanza bigger than the California gold rush. With no worry about whether a borrower of a home mortgage, say, would be able to service the debt for the next decades, banks realized they made money on pure loan volume and resell to securitizers.
Soon it became commonplace for banks to outsource their mortgage lending to free-lance brokers. Instead of doing their own credit checks they relied, often exclusively, on various online credit questionnaires, similar to the Visa card application where no follow-up was done. It became common practice for mortgage lenders to offer brokers bonus incentives to bring in more signed mortgage loan volume, another opportunity for massive fraud. The banks got more gain from making high volumes of loans then selling for securitization. The world of traditional banking was being turned on its head.
As the bank no longer had an incentive to assure the solidity of a borrower through minimum cash down payments and exhaustive background credit checks, many US banks, simply to churn loan volume and returns, gave what they cynically called “Liars’ Loans.” They knew the person was lying about his credit and income to get that dream home. They simply didn’t care. They sold the risk once the ink was dry on the mortgage.
A new terminology arose after 2002 for such loans, such as “NINA” mortgages—No Income, No Assets. “No problem, Mister Jones. Here’s $400,000 for your new home, enjoy.”
With Glass-Steagall no longer an obstacle, banks could set up myriad wholly-owned separate entities to process the booming home mortgage business. The giant of the process was Citigroup, the largest US bank group with over $2.4 trillion of group assets.
Citigroup included Travelers Insurance, a state-regulated insurer. It included the old Citibank, a huge retail lending bank. It included the investment bank, Smith Barney. And it included the aggressive sub-prime lender, CitiFinancial, according to numerous consumer reports, one of the most aggressive predatory lenders pushing sub-prime mortgages on often ignorant or insolvent borrowers, often in poor black or Hispanic neighborhoods. It included the Universal Financial Corp. one of the nation’s largest credit card issuers, who used the so-called Law of Large Numbers to grow its customer base among more and more dodgy credit risks.
Citigroup also included Banamex, Mexico’s second largest bank and Banco Cuscatlan, El Salvador’s largest bank. Banamex was one of the major indicted money laundering banks in Mexico. That was nothing foreign to Citigroup. In 1999 the US Congress and GAO investigated Citigroup for illicitly laundering $100 million in drug money for Raul Salinas, brother of the then-Mexican President. The investigations also found the bank had laundered money for corrupt officials from Pakistan to Gabon to Nigeria.
Citigroup, the financial behemoth was merely typical of what happened to American banking after 1999. It was a different world entirely from anything before with the possible exception of the excesses of the Roaring ‘20’s. The degree of lending fraud and abuse that ensued in the new era of asset securitization was staggering to the imagination.
The Predators had a ball
One US consumer organization documented some of the most common predatory lending practices during the real estate boom:
“In the United States in the first decade of the 21st century there are many storefronts offering such loans. Some are old — Household Finance and its sister Beneficial, for example — and some are newer-fangled, like CitiFinancial. Both offer credit at rates over thirty percent. The business is booming: the spreads, Wall Street says, are too good to pass up. Citibank pays under five percent interest on the deposits it collects. Its affiliated loan sharks charge four times that rate, even for loans secured by the borrower’s home. It’s a can’t-miss proposition. Even if the economy goes South they can take and resell the collateral. The business is global: the Hong Kong & Shanghai Banking Corporation, now HSBC, wants to export it to the eighty-plus countries in which it has a retail presence. Institutional investors love the business model and investment banks securitize the loans. These fancy terms will be defined as we proceed. The root, however, the fodder on which the whole pyramid rests, is the solitary customer at what’s called the point of sale… points and fees can be added to the money that’s lent. CitiFinancial and Household Finance both suggest that insurance is needed. This they serve in a number of flavors — credit life and credit disability, credit unemployment and property insurance — but in almost all cases, it is included in the loans and interest is charged on it. It’s called “single premium” — instead of paying each month for coverage, you pay in advance with money on which you pay interest. If you choose to refinance, you will not get a refund. It is money down the drain, but at the point-of-sale it often goes unnoticed.
Take, for example, the purchase of furniture. A bedroom set might cost two thousand dollars. The sign says Easy Credit, sometimes spelled E-Z. The furniture man does not manage these accounts. For this he turns to CitiFinancial, to HFC or perhaps to Wells Fargo. While the Federal Reserve lends money to banks at below five percent, these bank-affiliates charge twenty or thirty or forty percent. You will have insurance on your furniture: to protect you, they say, from having it repossessed if you die or become unemployed. Before the debt is discharged, dead or alive, you will have paid more than the list-price of a luxury car or a crypt with a doorman.
Midway you’ll be approached with a sweet-sounding offer: if you’ll put up your home as collateral, your rate can be lowered and the term be extended. A twenty-year mortgage, fixed or adjustable. The rate will be high and the rules not disclosed. For example: if you satisfy the loan too quickly, you’ll be charged a pre-payment penalty. Or, you’ll pay slowly and then be asked to pay more, in what’s called a balloon. If you can’t, that’s okay: they knew you couldn’t. The goal is to refinance your loan and charge you yet more points and fees.
In prior centuries, this was called debt peonage. Today it is the fate of the so-called sub-prime serf. Fully twenty percent of American households are described as sub-prime. But half of the people who get sub-prime loans could have paid normal rates, according to Fannie Mae and Beltway authorities. Outside it’s the law of the jungle; the only rule is Buyer Beware. But this is easier for some people than others.
Why would a person overpay by so much? In the nation’s low-income neighborhoods, sometimes called ghettos or, in a more poetic euphemism, the inner city, there’s a lack of bank branches. In the late 20th century, many financial institutions left the ‘hood in the lurch. They refused to lend money; they refused to write insurance policies.
In the 1980’s this author interviewed a senior Wall Street banker, at the time recovering from some kind of burnout. I asked about his bank’s business in Cali, Colombia during the heyday of the Cali cocaine cartel. Speaking not for attribution, he related, “Banks would literally kill to get a slice of this business, it’s so lucrative.” Clearly they moved on to sub-prime lending with similar goals in mind, and profits as huge as in money laundering drug gains.
Alan Greenspan openly backed the extension of bank lending to the poorest ghetto residents. Edward M. Gramlich, a Federal Reserve governor who died in September 2007, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford. When Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan. Greenspan ruled the Fed with nearly the power of an absolute monarch.
Revealing what was most certainly the tip of a very extensive iceberg of fraud, the FBI recently announced it was investigating 14 companies for possible accounting fraud, insider trading or other violations in connection with home loans made to risky borrowers. The FBI announced that the probe involved companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors.
At the same time, authorities in New York and Connecticut were investigating whether Wall Street banks hid crucial information about high-risk loans bundled into securities sold to investors. Connecticut Attorney General Richard Blumenthal said he and New York Attorney General Andrew Cuomo were looking whether banks properly disclosed the high risk of default on so-called “exception” loans — considered even riskier than sub-prime loans — when selling those securities to investors. Last November, Cuomo issued subpoenas to government-sponsored mortgage companies, Fannie Mae and Freddie Mac, in his investigation into what he claimed were conflicts of interest in the mortgage industry. He said he wanted to know about billions of dollars of home loans they bought from banks, including the largest US savings and loan, Washington Mutual Inc., and how appraisals were handled.
The FBI said it was looking into the practices of sub-prime lenders, as well as potential accounting fraud committed by financial firms that hold these loans on their books or securitize them and sell them to other investors. Morgan Stanley, Goldman Sachs Group Inc. and Bear Stearns Cos. all disclosed in regulatory filings that they were cooperating with requests for information from various unspecified, regulatory and government agencies.
One former real estate broker from the Pacific Northwest, who quit the business in disgust at the pressures to push mortgages on unqualified borrowers, described some of the more typical practices of predatory brokers in a memo to this author:
The sub-prime fiasco is a nightmare alright, but the prime ARMs hold potential for overwhelming disaster. The first “hiccup” occurred in July/August 2007 - this was the “Sub-prime Fiasco,” but in November 2007 the hiccup was more than that. It was in November 2007, that the prime ARMs adjusted upwards.
What this means is that upon the “anniversary date of the loan” the Adjustable Rate Mortgage adjusts up into a higher payment. This happens because the ARM was “purchased” at a teaser rate, usually one or one and one half percent. Payments made at that rate, while very attractive, do nothing to reduce principal and even generate some unpaid interest which is tacked onto the loan. Borrowers are permitted to make the teaser rate payments for the entire first year, even though the rate is good only for the first month.
Concerns about “negative amortization,” whereby the indebtedness on the loan becomes more than the market value of the property, were allayed by reference to the growth in property values due to the bank-created bubble, which it was said was normal and could be relied upon to continue. All that was promoted by the lenders who sent armies of account executives, i.e., salesmen, around to the mortgage brokers to explain how it would work.
Adjustable interest rates on home loans were the sum of the bank’s profit - the margin - and some objective predictor of the cost of the borrowed funds to the bank, known as the index. Indexes generated by various economic activities - what the banks around the country were paying for 90 day CD’s or what the banks in the London Interbank Exchange (LIBOR) were paying for dollars - were used. Adding the margin to the index produces the true interest rate on the loan - the rate at which, after 30 years of payments, the loan will be completely paid off (”amortized”). It is called the “fully indexed rate.”
I am going to pick an arbitrary 6% as the “real” interest rate (3% margin + 3% index). With a loan amount of $250,000.00 the monthly payment at 1% would be $804.10; that is the “teaser rate” payment, exclusive of taxes and insurance. This would adjust with changes in the index, but the margin remains static for the life of the loan.
This loan is structured so that payment adjustments only occur once per year and are capped at 7.5 % of the previous year’s payment. That can go on, stair stepping, for a period of 5 years (or 10 years in the case of one lender) without regard to what is happening in the real world. Then, at the end of the 5 years, the caps come off and everything adjusts to payments under the “fully indexed rate.”
If the borrower has been making only the minimum required payments the whole time, this can result in a payment shock in the thousands. If the value of the home has decreased twenty-five percent, the borrower, this time someone with stellar credit, is encouraged to give it back to the bank, which devalues it at least another twenty-five percent and that spreads to the surrounding properties.
According to a Chicago banking insider, during the first week of February 2008, bankers in the U.S. were made aware of the following:
Chase Manhattan Bank (”CMB”) has sent out an unlimited number of statements to its customers about Lines of Credit (”LOC’s”. The terms of its LOC’s, which, have been popular in the past, are now being manipulated and the values of the properties securing them are being unilaterally adjusted down, sometimes as much as 50 percent. This means homeowners are faced with making payments on a loan to buy an asset that is apparently worth half of the principal amount of the loan and paying interest on top of that. The only sensible thing to do in many cases is walk away, which results in a major loss in equity, reducing the value of all surrounding properties and adding to the avalanche of foreclosures.
This is especially aggravated in cases of “Creative Financing” LOCs - those that were drawn on equal to between ninety and one hundred percent of the value of the property before the bubble burst…
CMB has automatically closed credit lines that have “open” credit on them - meaning that the borrower left some money in the LOC for the future - over an 80% ratio of the amount of the loan to the value (”LTV”) of the property. This has been done on a mass basis without any reference to the “property owners.”
Loan to Value limits mean that the amount of money which the lender is willing to loan cannot exceed the stated percentage of the property value. In common practice, an appraiser would be hired to assess the value of the property. The appraisal is informed by comparable sales of other properties which have sold in an area that, with a few exceptions, must be no more than one mile away from the subject property. That was merely the tip of the mortgage fraud bonanza that preceded the present unfolding Tsunami.
The Tsumani is only beginning
The nature of the fatally flawed risk models used by Wall Street, by Moody’s, by the securities Monoline insurers and by the economists of the US Government and Federal Reserve was such that they all assumed recessions were no longer possible, as risk could be indefinitely diffused and spread across the globe.
All the securitized assets, the trillions of dollars worth, were priced on such flawed assumption. All the trillions of dollars of Credit Default Swaps—the illusion that loan default could be cheaply insured against with derivatives—all these were set to explode in a cascading series of domino-like crises as the crisis in the US housing market unraveled. The more home prices fell, the more mortgages facing sharply higher interest rate resets, the more unemployment spread across America from Ohio to Michigan to California to Pennsylvania to Colorado and Arizona. That process set off a vicious self-feeding spiral of asset price deflation.
The sub-prime sector was merely the first manifestation of what was to unravel. The process will take years to wind down. The damaged products of Asset Backed Securities were used in turn as collateral for yet further bank loans, for leveraged buyouts by private equity firms, by corporations, even by municipalities. The pyramid of debt built on assets securitized began to go into reverse leverage as reality dawned in global markets that no one knew the worth of the securitized paper they held.
In what would be a laughable admission were the consequences of their criminal negligence not so tragic for millions of Americans, Standard & Poors, the second largest rating agency in the world stated in October 2007 that they “underestimated the extent of fraud in the US mortgage industry.” Alan Greenspan feebly tried to exonerate himself by claiming that lending to sub-prime borrowers was not wrong, only the later securitization of the loans. The very system they worked over decades to create was premised on fraud and non-transparency. [unquote] http://tinyurl.com/6yutf2
Friday, November 14, 2008
Thursday, November 13, 2008
Lessons for India from the ongoing global recession
Lessons for India from the ongoing global recession
The state of the world economy is indicated by the following gloomy reports.
First, it should be noted that economy is delinked from finance system.
Second, the finance system is governed by fetishism of money dealing with currency as a commodity inventing bizarre instruments without or with little underlying ‘real’ assets. Witness the instruments such as index funds or participatory notes (which allow for hawala transactions from resident Indians in the Indian context).
Third, the finance system lives on intense speculation, greed and self-aggrandisement not unlike the Indian political system. This is casino-brothel capitalism.
The extent to which the finance system of a country is delinked from the economic system (that is, the measurement of real wealth of a nation by valuing the productivity of assets) is a measure of the volatility noticed in the stock markets.
It is unfortunate, in the Indian context, that there is a regime run by 10-Janpath chamcha-s who care little for enhancing the nation’s wealth. The substitute PM and the self-proclaimed main-hoon-na FM seem to operate like PM and FM of the Dalal Street and not of the Indian economy. Witness the reluctance to reduce the oil prices even though the world-wide prices for oil have been reduced by over 50%. This together with the tax reliefs given to aviation fuel (allegedly to rescue airlines) indicate that there is excessive patronage system (main-hoon-na) in operation. The permission given to resident Indians to indulge in hawala transactions manipulated through participatory notes is a crime of the worst order. The participatory notes should be nationalized and the holders of the notes booked under Benami Transactions (Prohibition) Act, making them accountable to prove the source of their funds held as p-notes. See the bare act http://www.vakilno1.com/bareacts/Benamiact/benami.htm which provides for legal remedies for the treasonous financial dealings. The next Government should within the first 100 days announce the nationalization of the P-notes, ban all derivative instruments (puts, calls, credit swaps, P-Notes) created by FIIs, switch the system of financing India’s projects by stock-market medium to direct investments by foreign technology companies directly into specific development projects. India should take a cue from China on this financial system reform.
The economy is measured by the strength of the capacity of the inviduals and guilds to produce income-yielding wealth and to create employment opportunities. These should be the only two true measures to declare a PM or an FM as truly concerned about the nation’s economy. Luckily, Indian currency is not fully convertible. Thus, there is substantial leverage available in putting an effective financial system in place to shield the Indian economy from the global financial sharks and recession in the developed economies. Luckily, again, India is not excessively dependent upon the export earnings to build up a fragile foreign exchange reserve (quite unlike China which is totally exposed to the world markets through dependence on exports). The economic steps to be announced by the next Government should include a declaration of development of an energy policy based on thorium-based breeder reactors to produce 40,000 MW additional nuclear energy within the next 20 years, to expand research and development of wind-energy, geo-thermal energy, hydropower, solar-energy and other renewable energy resources. There should be a cut-back on the expansion of the auto industry dependent upon imported fuels. The ISRO technology available for hydrogen cars should be used in production facilities within the next 5 years.
There is need for an economic ministry in GOI. This should consist of experts who are nationalists and not the 10 Janpath chamcha variety nor those who believe that India should catch cold when Uncle Sam sneezes.
Dhanyavaadah.
kalyanaraman
Rajesh Mahapatra and Gaurav Choudhury, Hindustan Times
Email Author
New Delhi, November 13, 2008
India loses $63 billion in six months
India’s richest are not the only ones who have lost billions in net worth amid the global meltdown. The country’s central bank has seen its foreign exchange reserves shrink more than $63 billion — enough to fund 600 Moon missions — in less than six months as exports slumped, trade deficit widened on a surge in the oil import bill and foreign investors pulled out of the stock market.
Lately, the reserves are falling at an alarming pace, squeezing much of the room for manoeuvre that India had in the face of the ongoing financial turmoil. The fall was a staggering $31 billion in October, or almost half of the decline since May 23, when reserves touched a record $316 billion.
The fast depletion has serious implications, as it could bring more pressure on the rupee, which has already depreciated about 20 per cent this year and made everything from imported machinery to foreign travel and education more expensive. A weaker rupee could also reverse the recent slide in inflation.
“If this trend continues for more than three months, there could be a problem,” said a top monetary policy official, who didn’t want to be named because the issue is market sensitive.
The government, however, is hopeful that the situation would change once its policy responses begin to play out and stability returns to global financial markets. “We are trying to minimise the drawdown on reserves,” said Suresh Tendulkar, who heads the prime minister’s economic advisory council. He said the Centre is trying to induce NRI deposits and tap sovereign wealth funds, especially from the Gulf. Efforts are underway to revive exports growth, he said.
http://www.hindustantimes.com/StoryPage/Print.aspx?Id=edd12119-d4b3-4f13-816f-bbac2610ef60
Germany enters recession, China output growth hit
13 Nov 2008, 1713 hrs IST, REUTERS
LONDON/TOKYO: Germany has fallen into recession and China's industry output growth waned to its weakest in seven years, data showed on Thursday, reinforcing evidence the financial crisis is plunging the world into a painful downturn.
Seeking to limit the fallout from a crisis that began when the U.S. housing market collapsed more than a year ago, Japan said it would offer up to $100 billion to the International Monetary Fund (IMF) for emerging economies.
The impact of the worst financial conditions in 80 years was felt sharply in Germany, Europe's largest economy, where the economy contracted by 0.5 percent in the third quarter, putting it in recession for the first time in five years.
The decline -- much sharper than the 0.2 percent forecast -- was accentuated by German export growth grinding to a halt.
"We are going to have to face up to a very difficult and long-lasting economic crisis," Germany's Deputy Economy Minister Walther Otremba told Reuters.
Analysts agreed with that grim forecast.
"The headwinds of the financial crisis and the global economic slowdown are blowing right in the face of the German economy," said Carsten Brzeski of ING Financial Markets.
"Even more worrying, the full impact of the financial crisis still has to unfold," he said. "If you think today's numbers are already bad, just wait for the next quarter."
In China, which has unveiled a 4 trillion yuan ($586 billion) stimulus package, annual industrial output growth slowed to 8.2 percent in October, its weakest showing since October 2001, as the global downturn took its toll.
Among corporates, British telecoms company BT Group said it was cutting 10,000 jobs at home and overseas.
Stock markets tumbled again in Asia. Tokyo shares slid 5.3 percent and the price of oil hit a 22-month low at $55 a barrel on worries that a recession will curb demand.
http://economictimes.indiatimes.com/articleshow/3709435.cms
Japan on the brink financial crisis: Nakamura
13 Nov 2008, 0947 hrs IST, REUTERS
Nakamura is thought to have called for an interest rate cut of 0.25 percentage point with two other board members on Oct. 31, when the BOJ cut
rates by 0.20 percentage point on the casting vote of Governor Masaaki Shirakawa after the board was split 4-4 on the proposal.
Following is a summary of Nakamura's speech on Thursday:
"The global financial crisis could slow down the world economy. Japanese economy could be on the brink of a drawn-out adjustment phase. The downside risk to the Japanese economy is rising further." "After the policy meeting on Oct 6-7, in the United States, we've seen weakness in consumption and output, and marked deterioration in consumer sentiment, on top of a slump in housing markets." "In Japan, exports and output, which have been leading the economy, were both confirmed as weak in July-September." "The turmoil in overseas financial markets are starting to affect Japanese markets, which had been relatively stable."
"The yen is appreciating, particularly against the euro, worsening exporters' earnings... Capital market conditions, including commercial paper, have deteriorated as investors are becoming cautious, raising companies' dependence on bank loans" "At the same time, Japanese banks' lending attitude is turning cautious due to concern over the economy and the earnings outlook, suggesting a change in easy monetary conditions." "Capital spending is likely to be weak for the time being. But it is unlikely to fall sharply if expectations of mid to long-term growth in global demand will be maintained."
"As the latest turmoil in the global financial markets is increasing pressure on the real economy, the risk of further slowdown in the world economy is rising and it's getting hard to predict when it will stop decelerating and accelerate again. "There's the risk that growth expectations in emerging economies and resource-rich countries, which have been propping up the world economy, will ebb, which could further push down the economy in the Western developed countries."
"The emergence and bursting of the bubble this time was not necessarily caused by the subprime mortgage problem alone. "The world economy grew steadily from 2002 to 2006 on the back of emerging economies and U.S. consumption while interest rates remained low worldwide thanks to globalisation, providing very accommodative monetary conditions. "This nurtured expectations for stable growth and firm asset prices to continue, resulting in a massive fund flow to money markets and a huge distortion in the market pricing of assets. "I understand adjustments are now taking place in the wake of the bursting of the bubble that had created a big gap between the value of assets based on fundamentals, and actual assets and debts. "This situation is similar to the bubble and ensuing financial crisis that Japan has experienced, and a recovery in the balance sheets (of Western banks) will take a considerable time."
"We judged that we should pay attention to downside economic risks while maitaining our basic stance that we will conduct policy in line with our assessment of the economic scenario and risk factors." "We will also ensure stability in financial markets by conducting appropriate market operations."
http://economictimes.indiatimes.com/articleshow/3707394.cms
Major world economies appear in recession: OECD
13 Nov 2008, 1555 hrs IST, AGENCIES
PARIS: Leading industrialised nations appear to be in a "protracted" downturn, with the US, Japanese and eurozone economies likely to shrink next
year, the OECD said on Thursday.
The Organisation for Economic Cooperation and Development predicted a return to modest growth in 2010 but warned that the United States, the world's largest economy, would suffer a whopping 2.8 percent contraction in fourth quarter 2008.
It called for further government stimulus measures and steps to shore up financial markets but also warned against any move that would distort competition or threaten the operation of open markets.
The OECD, the Paris-based grouping of the world's 30 most developed countries, issued a one-page statement ahead of an emergency summit in Washington Saturday of 20 developed and developing nations aimed at dousing a global financial and economic firestorm.
"The OECD area now appears to have entered recession," the statement said, with OECD projections pointing to "a protracted downturn." It sees the OECD countries contracting 0.3 percent in 2009, after growth of 1.4 percent this year, before rebounding to 1.5 percent in 2010.
The US economy will contract 0.9 percent in 2009, Japan 0.1 percent and the eurozone 0.5 percent after posting respective gains this year of 1.4 percent, 0.5 percent and 1.1 percent. In 2010, according to the OECD, the United States should grow 1.6 percent, Japan 0.6 percent and the eurozone 1.2 percent.
The OECD said the US econony shrank 0.3 percent in the third quarter this year and would contract 2.8 percent in the fourth, thereby meeting the traditional measure of recession -- two consecutive quarters of negative growth.
The United States will not enjoy positive growth -- 0.6 percent -- until the third quarter of 2009, according to the OECD.
The Japanese economy will also see negative growth in the final two quarters of 2008 before returning to positive territory -- 0.8 percent -- in first quarter 2009. But in the third quarter of 2009, Japan will slip back and its economy will contract 0.3 percent.
In the eurozone, the economy will not begin to grow again until the third quarter of 2009, when it should expand 0.1 percent.
The OECD said its analysis was based on an assumption that the "extreme" financial market distress that erupted in mid-September would be "short-lived" but "followed by an extended period of financial headwinds through late 2009, with a gradual normalisation thereafter."
It said it expected a continued moderation in inflation while "against the backdrop of a deep economic downturn, additional macroeconomic stimulation is needed," suggesting that tax cuts for credit-strapped households could prove effective.
The OECD said that in the United States and Japan the scope for additional interest rate cuts to spur momentum had narrowed. The US Federal Reserve has already slashed its benchmark rate to a record low 1.0 percent while the Bank of Japan last month reduced its key rate to 0.30 percent.
Many OECD members in recent weeks have adopted vigorous measures to revive their struggling banks, notably through direct injections of capital and credit guarantees aimed at inducing them to start lending money again. "The need for further measures to stabilise financial markets cannot be excluded," the OECD said.
It also called for "international cooperation ... to avoid measures that distort competition" and said that regulatory and supervisory frameworks would have to be "re-examined." "When addressing these issues, it will be important to focus on reforms to the global financial architecture and at the same time resist pressures for a wider rollback of open markets which would prove costly," it added.
http://economictimes.indiatimes.com/articleshow/3709010.cms
Emerging economies more vulnerable to credit crisis: Lamy
13 Nov 2008, 1840 hrs IST, PTI
LONDON: The World Trade Organisation has warned of a deteriorating trade-finance situation in coming months, stating that emerging economies
would be more vulnerable to the impact of fund scarcity.
"The situation is likely to deteriorate further in the months to come," WTO Director General Pascal Lamy said addressing trade ambassadors in Geneva yesterday.
Underscoring the importance to keep the flow of trade-finance, Lamy said, "Countries most vulnerable to shortages of trade-finance are the emerging market economies on whom we are counting to sustain trade and economic growth as the developed countries slow down."
Lamy said private banks, international financial institutions and export credit agencies have confirmed that the market for trade-finance has severely deteriorated over the last six months and particularly since September.
"The financial crisis is a wake-up call indicating that the world economy cannot grow above the limits of its real production, and that feeding it by debt and liquidity may only provoke severe corrections," the WTO chief said ahead of the G-20 Summit on November 15 in Washington, called by US President George Bush to discuss the financial meltdown.
In fact, the G-20 Summit cast a shadow on Lamy's meeting where heads of multilateral institutions like the World Bank and International Monetary Fund remained absent.
Conveying a message to world leaders who would assemble in Washington on Saturday, the WTO Chief said, "The world economy is slowing and we are seeing trade decrease. If trade-finance is not tackled, we run the risk of further exacerbating this downward spiral." The market at present estimates the liquidity gap in trade-finance at about USD 25 billion.
http://economictimes.indiatimes.com/articleshow/3709806.cms
Testimonies in US Congress
Hedge fund chiefs blame the system for financial crisis (13 Nov. 2008)
The statements by George Soros and others suggested that hedge fund executives and lawmakers were reaching a consensus in the wake of the credit crisis that the status quo, in which the funds largely escape scrutiny, was no longer tenable…
Mr Soros pinned blame on the “financial system itself”, while James Simons, president of Renaissance Technologies, criticised credit ratings agencies, which he said had facilitated the sale of “sows’ ears … as silk purses” through “fanciful” ratings of mortgage-backed securities.
http://www.ft.com/cms/s/0/0f8c0216-b193-11dd-b97a-0000779fd18c.html?nclick_check=1
Aurangzeb Naqshbandi, Hindustan Times
Email Author
New Delhi, November 14, 2008
First Published: 00:03 IST(14/11/2008)
Last Updated: 00:07 IST(14/11/2008)
Haj officials want 5-star facilities
The government has taken a serious note of the Central Haj Committee’s letter to the Indian consulate in Jeddah, seeking five-star accommodation and separate facilities for its 100-member delegation, comprising officials and their family members, during the pilgrimage.
The visit can set the Haj committee back by Rs 8 crore. The government has questioned the committee’s decision allowing families with the officials at a time of economic downturn.
The external affairs ministry has sought the list of officials, with their antecedents.
In a letter to the Consulate General of India in Jeddah, Saudi Arabia, Haj committee chief executive officer Mohammed Owais sought separate accommodation, with better kitchen and toilet facilities, for officials and their families “befitting their status” during their stay in Mina. He said the delegation be provided five-star accommodation in ‘Markaziyah area’ during its visit to Madinah Munawwarah and their transport arrangements made.
A Haj committee official said it was a routine practice and government money was not being used. “The Haj committee does not use government money. It’s customary to send a delegation, which may include family members,” he said. Despite repeated attempts, Owais could not be contacted for comments.
“If the Haj committee is not using the government money, then whose money is being wasted?” asked Dr Zafarul-Islam Khan, head of All-India Muslim Majlis-e Mushawarat, an umbrella body of Indian Muslim organisations.
“It’s very unfortunate. The Haj committee is overcharging the pilgrims and spending their money on fun trip,” he said.
The committee’s move is in violation of a government order, asking all ministries to cut down foreign and domestic travel under the mandatory 10 per cent cut in the non-plan expenditure, sources said.
There was no need for huge delegations to Saudi Arabia, Khan said. “The past experience shows that the Haj committee officials pose problems to the Indian staff,” he said.
http://www.hindustantimes.com/StoryPage/Print.aspx?Id=70c21c5a-6c7d-4290-98ac-425be366dd93
The state of the world economy is indicated by the following gloomy reports.
First, it should be noted that economy is delinked from finance system.
Second, the finance system is governed by fetishism of money dealing with currency as a commodity inventing bizarre instruments without or with little underlying ‘real’ assets. Witness the instruments such as index funds or participatory notes (which allow for hawala transactions from resident Indians in the Indian context).
Third, the finance system lives on intense speculation, greed and self-aggrandisement not unlike the Indian political system. This is casino-brothel capitalism.
The extent to which the finance system of a country is delinked from the economic system (that is, the measurement of real wealth of a nation by valuing the productivity of assets) is a measure of the volatility noticed in the stock markets.
It is unfortunate, in the Indian context, that there is a regime run by 10-Janpath chamcha-s who care little for enhancing the nation’s wealth. The substitute PM and the self-proclaimed main-hoon-na FM seem to operate like PM and FM of the Dalal Street and not of the Indian economy. Witness the reluctance to reduce the oil prices even though the world-wide prices for oil have been reduced by over 50%. This together with the tax reliefs given to aviation fuel (allegedly to rescue airlines) indicate that there is excessive patronage system (main-hoon-na) in operation. The permission given to resident Indians to indulge in hawala transactions manipulated through participatory notes is a crime of the worst order. The participatory notes should be nationalized and the holders of the notes booked under Benami Transactions (Prohibition) Act, making them accountable to prove the source of their funds held as p-notes. See the bare act http://www.vakilno1.com/bareacts/Benamiact/benami.htm which provides for legal remedies for the treasonous financial dealings. The next Government should within the first 100 days announce the nationalization of the P-notes, ban all derivative instruments (puts, calls, credit swaps, P-Notes) created by FIIs, switch the system of financing India’s projects by stock-market medium to direct investments by foreign technology companies directly into specific development projects. India should take a cue from China on this financial system reform.
The economy is measured by the strength of the capacity of the inviduals and guilds to produce income-yielding wealth and to create employment opportunities. These should be the only two true measures to declare a PM or an FM as truly concerned about the nation’s economy. Luckily, Indian currency is not fully convertible. Thus, there is substantial leverage available in putting an effective financial system in place to shield the Indian economy from the global financial sharks and recession in the developed economies. Luckily, again, India is not excessively dependent upon the export earnings to build up a fragile foreign exchange reserve (quite unlike China which is totally exposed to the world markets through dependence on exports). The economic steps to be announced by the next Government should include a declaration of development of an energy policy based on thorium-based breeder reactors to produce 40,000 MW additional nuclear energy within the next 20 years, to expand research and development of wind-energy, geo-thermal energy, hydropower, solar-energy and other renewable energy resources. There should be a cut-back on the expansion of the auto industry dependent upon imported fuels. The ISRO technology available for hydrogen cars should be used in production facilities within the next 5 years.
There is need for an economic ministry in GOI. This should consist of experts who are nationalists and not the 10 Janpath chamcha variety nor those who believe that India should catch cold when Uncle Sam sneezes.
Dhanyavaadah.
kalyanaraman
Rajesh Mahapatra and Gaurav Choudhury, Hindustan Times
Email Author
New Delhi, November 13, 2008
India loses $63 billion in six months
India’s richest are not the only ones who have lost billions in net worth amid the global meltdown. The country’s central bank has seen its foreign exchange reserves shrink more than $63 billion — enough to fund 600 Moon missions — in less than six months as exports slumped, trade deficit widened on a surge in the oil import bill and foreign investors pulled out of the stock market.
Lately, the reserves are falling at an alarming pace, squeezing much of the room for manoeuvre that India had in the face of the ongoing financial turmoil. The fall was a staggering $31 billion in October, or almost half of the decline since May 23, when reserves touched a record $316 billion.
The fast depletion has serious implications, as it could bring more pressure on the rupee, which has already depreciated about 20 per cent this year and made everything from imported machinery to foreign travel and education more expensive. A weaker rupee could also reverse the recent slide in inflation.
“If this trend continues for more than three months, there could be a problem,” said a top monetary policy official, who didn’t want to be named because the issue is market sensitive.
The government, however, is hopeful that the situation would change once its policy responses begin to play out and stability returns to global financial markets. “We are trying to minimise the drawdown on reserves,” said Suresh Tendulkar, who heads the prime minister’s economic advisory council. He said the Centre is trying to induce NRI deposits and tap sovereign wealth funds, especially from the Gulf. Efforts are underway to revive exports growth, he said.
http://www.hindustantimes.com/StoryPage/Print.aspx?Id=edd12119-d4b3-4f13-816f-bbac2610ef60
Germany enters recession, China output growth hit
13 Nov 2008, 1713 hrs IST, REUTERS
LONDON/TOKYO: Germany has fallen into recession and China's industry output growth waned to its weakest in seven years, data showed on Thursday, reinforcing evidence the financial crisis is plunging the world into a painful downturn.
Seeking to limit the fallout from a crisis that began when the U.S. housing market collapsed more than a year ago, Japan said it would offer up to $100 billion to the International Monetary Fund (IMF) for emerging economies.
The impact of the worst financial conditions in 80 years was felt sharply in Germany, Europe's largest economy, where the economy contracted by 0.5 percent in the third quarter, putting it in recession for the first time in five years.
The decline -- much sharper than the 0.2 percent forecast -- was accentuated by German export growth grinding to a halt.
"We are going to have to face up to a very difficult and long-lasting economic crisis," Germany's Deputy Economy Minister Walther Otremba told Reuters.
Analysts agreed with that grim forecast.
"The headwinds of the financial crisis and the global economic slowdown are blowing right in the face of the German economy," said Carsten Brzeski of ING Financial Markets.
"Even more worrying, the full impact of the financial crisis still has to unfold," he said. "If you think today's numbers are already bad, just wait for the next quarter."
In China, which has unveiled a 4 trillion yuan ($586 billion) stimulus package, annual industrial output growth slowed to 8.2 percent in October, its weakest showing since October 2001, as the global downturn took its toll.
Among corporates, British telecoms company BT Group said it was cutting 10,000 jobs at home and overseas.
Stock markets tumbled again in Asia. Tokyo shares slid 5.3 percent and the price of oil hit a 22-month low at $55 a barrel on worries that a recession will curb demand.
http://economictimes.indiatimes.com/articleshow/3709435.cms
Japan on the brink financial crisis: Nakamura
13 Nov 2008, 0947 hrs IST, REUTERS
Nakamura is thought to have called for an interest rate cut of 0.25 percentage point with two other board members on Oct. 31, when the BOJ cut
rates by 0.20 percentage point on the casting vote of Governor Masaaki Shirakawa after the board was split 4-4 on the proposal.
Following is a summary of Nakamura's speech on Thursday:
"The global financial crisis could slow down the world economy. Japanese economy could be on the brink of a drawn-out adjustment phase. The downside risk to the Japanese economy is rising further." "After the policy meeting on Oct 6-7, in the United States, we've seen weakness in consumption and output, and marked deterioration in consumer sentiment, on top of a slump in housing markets." "In Japan, exports and output, which have been leading the economy, were both confirmed as weak in July-September." "The turmoil in overseas financial markets are starting to affect Japanese markets, which had been relatively stable."
"The yen is appreciating, particularly against the euro, worsening exporters' earnings... Capital market conditions, including commercial paper, have deteriorated as investors are becoming cautious, raising companies' dependence on bank loans" "At the same time, Japanese banks' lending attitude is turning cautious due to concern over the economy and the earnings outlook, suggesting a change in easy monetary conditions." "Capital spending is likely to be weak for the time being. But it is unlikely to fall sharply if expectations of mid to long-term growth in global demand will be maintained."
"As the latest turmoil in the global financial markets is increasing pressure on the real economy, the risk of further slowdown in the world economy is rising and it's getting hard to predict when it will stop decelerating and accelerate again. "There's the risk that growth expectations in emerging economies and resource-rich countries, which have been propping up the world economy, will ebb, which could further push down the economy in the Western developed countries."
"The emergence and bursting of the bubble this time was not necessarily caused by the subprime mortgage problem alone. "The world economy grew steadily from 2002 to 2006 on the back of emerging economies and U.S. consumption while interest rates remained low worldwide thanks to globalisation, providing very accommodative monetary conditions. "This nurtured expectations for stable growth and firm asset prices to continue, resulting in a massive fund flow to money markets and a huge distortion in the market pricing of assets. "I understand adjustments are now taking place in the wake of the bursting of the bubble that had created a big gap between the value of assets based on fundamentals, and actual assets and debts. "This situation is similar to the bubble and ensuing financial crisis that Japan has experienced, and a recovery in the balance sheets (of Western banks) will take a considerable time."
"We judged that we should pay attention to downside economic risks while maitaining our basic stance that we will conduct policy in line with our assessment of the economic scenario and risk factors." "We will also ensure stability in financial markets by conducting appropriate market operations."
http://economictimes.indiatimes.com/articleshow/3707394.cms
Major world economies appear in recession: OECD
13 Nov 2008, 1555 hrs IST, AGENCIES
PARIS: Leading industrialised nations appear to be in a "protracted" downturn, with the US, Japanese and eurozone economies likely to shrink next
year, the OECD said on Thursday.
The Organisation for Economic Cooperation and Development predicted a return to modest growth in 2010 but warned that the United States, the world's largest economy, would suffer a whopping 2.8 percent contraction in fourth quarter 2008.
It called for further government stimulus measures and steps to shore up financial markets but also warned against any move that would distort competition or threaten the operation of open markets.
The OECD, the Paris-based grouping of the world's 30 most developed countries, issued a one-page statement ahead of an emergency summit in Washington Saturday of 20 developed and developing nations aimed at dousing a global financial and economic firestorm.
"The OECD area now appears to have entered recession," the statement said, with OECD projections pointing to "a protracted downturn." It sees the OECD countries contracting 0.3 percent in 2009, after growth of 1.4 percent this year, before rebounding to 1.5 percent in 2010.
The US economy will contract 0.9 percent in 2009, Japan 0.1 percent and the eurozone 0.5 percent after posting respective gains this year of 1.4 percent, 0.5 percent and 1.1 percent. In 2010, according to the OECD, the United States should grow 1.6 percent, Japan 0.6 percent and the eurozone 1.2 percent.
The OECD said the US econony shrank 0.3 percent in the third quarter this year and would contract 2.8 percent in the fourth, thereby meeting the traditional measure of recession -- two consecutive quarters of negative growth.
The United States will not enjoy positive growth -- 0.6 percent -- until the third quarter of 2009, according to the OECD.
The Japanese economy will also see negative growth in the final two quarters of 2008 before returning to positive territory -- 0.8 percent -- in first quarter 2009. But in the third quarter of 2009, Japan will slip back and its economy will contract 0.3 percent.
In the eurozone, the economy will not begin to grow again until the third quarter of 2009, when it should expand 0.1 percent.
The OECD said its analysis was based on an assumption that the "extreme" financial market distress that erupted in mid-September would be "short-lived" but "followed by an extended period of financial headwinds through late 2009, with a gradual normalisation thereafter."
It said it expected a continued moderation in inflation while "against the backdrop of a deep economic downturn, additional macroeconomic stimulation is needed," suggesting that tax cuts for credit-strapped households could prove effective.
The OECD said that in the United States and Japan the scope for additional interest rate cuts to spur momentum had narrowed. The US Federal Reserve has already slashed its benchmark rate to a record low 1.0 percent while the Bank of Japan last month reduced its key rate to 0.30 percent.
Many OECD members in recent weeks have adopted vigorous measures to revive their struggling banks, notably through direct injections of capital and credit guarantees aimed at inducing them to start lending money again. "The need for further measures to stabilise financial markets cannot be excluded," the OECD said.
It also called for "international cooperation ... to avoid measures that distort competition" and said that regulatory and supervisory frameworks would have to be "re-examined." "When addressing these issues, it will be important to focus on reforms to the global financial architecture and at the same time resist pressures for a wider rollback of open markets which would prove costly," it added.
http://economictimes.indiatimes.com/articleshow/3709010.cms
Emerging economies more vulnerable to credit crisis: Lamy
13 Nov 2008, 1840 hrs IST, PTI
LONDON: The World Trade Organisation has warned of a deteriorating trade-finance situation in coming months, stating that emerging economies
would be more vulnerable to the impact of fund scarcity.
"The situation is likely to deteriorate further in the months to come," WTO Director General Pascal Lamy said addressing trade ambassadors in Geneva yesterday.
Underscoring the importance to keep the flow of trade-finance, Lamy said, "Countries most vulnerable to shortages of trade-finance are the emerging market economies on whom we are counting to sustain trade and economic growth as the developed countries slow down."
Lamy said private banks, international financial institutions and export credit agencies have confirmed that the market for trade-finance has severely deteriorated over the last six months and particularly since September.
"The financial crisis is a wake-up call indicating that the world economy cannot grow above the limits of its real production, and that feeding it by debt and liquidity may only provoke severe corrections," the WTO chief said ahead of the G-20 Summit on November 15 in Washington, called by US President George Bush to discuss the financial meltdown.
In fact, the G-20 Summit cast a shadow on Lamy's meeting where heads of multilateral institutions like the World Bank and International Monetary Fund remained absent.
Conveying a message to world leaders who would assemble in Washington on Saturday, the WTO Chief said, "The world economy is slowing and we are seeing trade decrease. If trade-finance is not tackled, we run the risk of further exacerbating this downward spiral." The market at present estimates the liquidity gap in trade-finance at about USD 25 billion.
http://economictimes.indiatimes.com/articleshow/3709806.cms
Testimonies in US Congress
Hedge fund chiefs blame the system for financial crisis (13 Nov. 2008)
The statements by George Soros and others suggested that hedge fund executives and lawmakers were reaching a consensus in the wake of the credit crisis that the status quo, in which the funds largely escape scrutiny, was no longer tenable…
Mr Soros pinned blame on the “financial system itself”, while James Simons, president of Renaissance Technologies, criticised credit ratings agencies, which he said had facilitated the sale of “sows’ ears … as silk purses” through “fanciful” ratings of mortgage-backed securities.
http://www.ft.com/cms/s/0/0f8c0216-b193-11dd-b97a-0000779fd18c.html?nclick_check=1
Aurangzeb Naqshbandi, Hindustan Times
Email Author
New Delhi, November 14, 2008
First Published: 00:03 IST(14/11/2008)
Last Updated: 00:07 IST(14/11/2008)
Haj officials want 5-star facilities
The government has taken a serious note of the Central Haj Committee’s letter to the Indian consulate in Jeddah, seeking five-star accommodation and separate facilities for its 100-member delegation, comprising officials and their family members, during the pilgrimage.
The visit can set the Haj committee back by Rs 8 crore. The government has questioned the committee’s decision allowing families with the officials at a time of economic downturn.
The external affairs ministry has sought the list of officials, with their antecedents.
In a letter to the Consulate General of India in Jeddah, Saudi Arabia, Haj committee chief executive officer Mohammed Owais sought separate accommodation, with better kitchen and toilet facilities, for officials and their families “befitting their status” during their stay in Mina. He said the delegation be provided five-star accommodation in ‘Markaziyah area’ during its visit to Madinah Munawwarah and their transport arrangements made.
A Haj committee official said it was a routine practice and government money was not being used. “The Haj committee does not use government money. It’s customary to send a delegation, which may include family members,” he said. Despite repeated attempts, Owais could not be contacted for comments.
“If the Haj committee is not using the government money, then whose money is being wasted?” asked Dr Zafarul-Islam Khan, head of All-India Muslim Majlis-e Mushawarat, an umbrella body of Indian Muslim organisations.
“It’s very unfortunate. The Haj committee is overcharging the pilgrims and spending their money on fun trip,” he said.
The committee’s move is in violation of a government order, asking all ministries to cut down foreign and domestic travel under the mandatory 10 per cent cut in the non-plan expenditure, sources said.
There was no need for huge delegations to Saudi Arabia, Khan said. “The past experience shows that the Haj committee officials pose problems to the Indian staff,” he said.
http://www.hindustantimes.com/StoryPage/Print.aspx?Id=70c21c5a-6c7d-4290-98ac-425be366dd93
President-elect Obama had questioned evangelizing and proselytizing
President-elect Obama had questioned evangelizing and proselytizing (March 27, 2004)
Nov. 14, 2008
[quote] FALSANI:
The conversation stopper, when you say you're a Christian and leave it at that.
OBAMA:
Where do you move forward with that?
This is something that I'm sure I'd have serious debates with my fellow Christians about. I think that the difficult thing about any religion, including Christianity, is that at some level there is a call to evangelize and prostelytize. There's the belief, certainly in some quarters, that people haven't embraced Jesus Christ as their personal savior that they're going to hell.
FALSANI:
You don't believe that?
OBAMA:
I find it hard to believe that my God would consign four-fifths of the world to hell.
I can't imagine that my God would allow some little Hindu kid in India who never interacts with the Christian faith to somehow burn for all eternity.
That's just not part of my religious makeup. [unquote]
Obama's Interview on Faith with Cathleen Falsani (2004) unearthed, can be found here:
"Tuesday November 11, 2008
The most detailed explication of Barack Obama's faith came in a 2004 interview he gave Chicago Sun Times columnist Cathleen Falsani when he was running for U.S. Senate in Illinois. The column she wrote about the interview has been quoted and misquoted many times over, but she'd never before published the full transcript in a major publication.
Because of how controversial that interview became, Falsani has graciously allowed us to print the full conversation here."
"At 3:30 p.m. on Saturday, March 27, 2004, when I was the religion reporter (I am now its religion columnist) at the Chicago Sun-Times, I met then-State Sen. Barack Obama at Café Baci, a small coffee joint at 330 S. Michigan Avenue in Chicago, to interview him exclusively about his spirituality. Our conversation took place a few days after he'd clinched the Democratic nomination for the U.S. Senate seat that he eventually won. We spoke for more than an hour. He came alone. He answered everything I asked without notes or hesitation. The profile of Obama that grew from the interview at Cafe Baci became the first in a series in the Sun-Times called "The God Factor," that eventually became my first book, The God Factor: Inside the Spiritual Lives of Public People (FSG, March 2006.) Because of the staggering interest in now President-Elect Obama's faith and spiritual predilections, I thought it might be helpful to share that interivew, uncut and in its entirety, here."
--Cathleen Falsani
http://blog. beliefnet. com/stevenwaldma n/2008/11/ obamas-interview -with-cathleen. html
Some exerpts related to the ongoing discussion here:
[...]
FALSANI:
Do you pray often?
OBAMA:
Uh, yeah, I guess I do.
Its' not formal, me getting on my knees. I think I have an ongoing conversation with God. I think throughout the day, I'm constantly asking myself questions about what I'm doing, why am I doing it.
One of the interesting things about being in public life is there are constantly these pressures being placed on you from different sides. To be effective, you have to be able to listen to a variety of points of view, synthesize viewpoints. You also have to know when to be just a strong advocate, and push back against certain people or views that you think aren't right or don't serve your constituents.
And so, the biggest challenge, I think, is always maintaining your moral compass. Those are the conversations I'm having internally. I'm measuring my actions against that inner voice that for me at least is audible, is active, it tells me where I think I'm on track and where I think I'm off track.
It's interesting particularly now after this election, comes with it a lot of celebrity. And I always think of politics as having two sides. There's a vanity aspect to politics, and then there's a substantive part of politics. Now you need some sizzle with the steak to be effective, but I think it's easy to get swept up in the vanity side of it, the desire to be liked and recognized and important. It's important for me throughout the day to measure and to take stock and to say, now, am I doing this because I think it's advantageous to me politically, or because I think it's the right thing to do? Am I doing this to get my name in the papers or am I doing this because it's necessary to accomplish my motives.
FALSANI:
Checking for altruism?
OBAMA:
Yeah. I mean, something like it.
Looking for, ... It's interesting, the most powerful political moments for me come when I feel like my actions are aligned with a certain truth. I can feel it. When I'm talking to a group and I'm saying something truthful, I can feel a power that comes out of those statements that is different than when I'm just being glib or clever.
FALSANI:
What's that power? Is it the holy spirit? God?
OBAMA:
Well, I think it's the power of the recognition of God, or the recognition of a larger truth that is being shared between me and an audience.[.. .]
FALSANI:
Who's Jesus to you?
(He laughs nervously)
OBAMA:
Right.
Jesus is an historical figure for me, and he's also a bridge between God and man, in the Christian faith, and one that I think is powerful precisely because he serves as that means of us reaching something higher.
And he's also a wonderful teacher. I think it's important for all of us, of whatever faith, to have teachers in the flesh and also teachers in history.
[...]
FALSANI:
Do you try to take some time for whatever, meditation prayer reading?
OBAMA:
I'll be honest with you, I used to all the time, in a fairly disciplined way. But during the course of this campaign, I don't. And I probably need to and would like to, but that's where that internal monologue, or dialogue I think supplants my opportunity to read and reflect in a structured way these days.
It's much more sort of as I'm going through the day trying to take stock and take a moment here and a moment there to take stock, why am I here, how does this connect with a larger sense of purpose.
[...]
FALSANI:
Jack Ryan [Obama's Republican opponent in the U.S. Senate race at the time] said talking about your faith is frought with peril for a public figure.
OBAMA:
Which is why you generally will not see me spending a lot of time talking about it on the stump.
Alongside my own deep personal faith, I am a follower, as well, of our civic religion. I am a big believer in the separation of church and state. I am a big believer in our constitutional structure. I mean, I'm a law professor at the University of Chicago teaching constitutional law. I am a great admirer of our founding charter, and its resolve to prevent theocracies from forming, and its resolve to prevent disruptive strains of fundamentalism from taking root ion this country.
As I said before, in my own public policy, I'm very suspicious of religious certainty expressing itself in politics.
Now, that's different form a belief that values have to inform our public policy. I think it's perfectly consistent to say that I want my government to be operating for all faiths and all peoples, including atheists and agnostics, while also insisting that there are values tha tinform my politics that are appropriate to talk about.
A standard line in my stump speech during this campaign is that my politics are informed by a belief that we're all connected. That if there's a child on the South Side of Chicago that can't read, that makes a difference in my life even if it's not my own child. If there's a senior citizen in downstate Illinois that's struggling to pay for their medicine and having to chose between medicine and the rent, that makes my life poorer even if it's not my grandparent. And if there's an Arab American family that's being rounded up by John Ashcroft without the benefit of due process, that threatens my civil liberties.
I can give religious expression to that. I am my brother's keeper, I am my sister's keeper, we are all children of God. Or I can express it in secular terms. But the basic premise remains the same. I think sometimes Democrats have made the mistake of shying away from a conversation about values for fear that they sacrifice the important value of tolerance. And I don't think those two things are mutually exclusive.
FALSANI:
Do you think it's wrong for people to want to know about a civic leader's spirituality?
OBAMA:
I don't' think it's wrong. I think that political leaders are subject to all sorts of vetting by the public, and this can be a component of that.
I think that I am disturbed by, let me put it this way: I think there is an enormous danger on the part of public figures to rationalize or justify their actions by claiming God's mandate.
I think there is this tendency that I don't think is healthy for public figures to wear religion on their sleeve as a means to insulate themselves from criticism, or dialogue with people who disagree with them.
FALSANI:
The conversation stopper, when you say you're a Christian and leave it at that.
OBAMA:
Where do you move forward with that?
This is something that I'm sure I'd have serious debates with my fellow Christians about. I think that the difficult thing about any religion, including Christianity, is that at some level there is a call to evangelize and prostelytize. There's the belief, certainly in some quarters, that people haven't embraced Jesus Christ as their personal savior that they're going to hell.
FALSANI:
You don't believe that?
OBAMA:
I find it hard to believe that my God would consign four-fifths of the world to hell.
I can't imagine that my God would allow some little Hindu kid in India who never interacts with the Christian faith to somehow burn for all eternity.
That's just not part of my religious makeup.
Part of the reason I think it's always difficult for public figures to talk about this is that the nature of politics is that you want to have everybody like you and project the best possible traits onto you. Oftentimes that's by being as vague as possible, or appealing to the lowest commong denominators. The more specific and detailed you are on issues as personal and fundamental as your faith, the more potentially dangerous it is.
FALSANI:
Do you ever have people who know you're a Christian question a particular stance you take on an issue, how can you be a Christian and ...
OBAMA:
Like the right to choose.
I haven't been challenged in those direct ways. And to that extent, I give the public a lot of credit. I'm always stuck by how much common sense the American people have. They get confused sometimes, watch FoxNews or listen to talk radio. That's dangerous sometimes. But generally, Americans are tolerant and I think recognize that faith is a personal thing, and they may feel very strongly about an issue like abortion or gay marriage, but if they discuss it with me as an elected official they will discuss it with me in those terms and not, say, as 'you call yourself a Christian.' I cannot recall that ever happening.
FALSANI:
Do you get questions about your faith?
[...]
FALSANI:
Do you believe in heaven?
OBAMA:
Do I believe in the harps and clouds and wings?
FALSANI:
A place spiritually you go to after you die?
OBAMA:
What I believe in is that if I live my life as well as I can, that I will be rewarded. I don't presume to have knowledge of what happens after I die. But I feel very strongly that whether the reward is in the here and now or in the hereafter, the aligning myself to my faith and my values is a good thing.
When I tuck in my daughters at night and I feel like I've been a good father to them, and I see in them that I am transferring values that I got from my mother and that they're kind people and that they're honest people, and they're curious people, that's a little piece of heaven.
FALSANI:
Do you believe in sin?
OBAMA:
Yes.
FALSANI:
What is sin?
OBAMA:
Being out of alignment with my values.
FALSANI:
What happens if you have sin in your life?
OBAMA:
I think it's the same thing as the question about heaven. In the same way that if I'm true to myself and my faith that that is its own reward, when I'm not true to it, it's its own punishment.
FALSANI:
Where do you find spiritual inspiration? Music, nature, literature, people, a conduit you plug into?
OBAMA:
There are so many.
...
I can be transported by watching a good performance of Hamlet, or reading Toni Morrison's Song of Solomon, or listening to Miles Davis.
FALSANI:
Is there something that you go back to as a touchstone, a book, a particular piece of music, a place ...
OBAMA:
As I said before, in my own sort of mental library, the Civil Rights movement has a powerful hold on me. It's a point in time where I think heaven and earth meet. Because it's a moment in which a collective faith transforms everything. So when I read Gandhi or I read King or I read certain passages of Abraham Lincoln and I think about those times where people's values are tested, I think those inspire me.
FALSANI:
What are you doing when you feel the most centered, the most aligned spiritually?
OBAMA:
I think I already described it. It's when I'm being true to myself. And that can happen in me making a speech or it can happen in me playing with my kids, or it can happen in a small interaction with a security guard in a building when I'm recognizing them and exchanging a good word.
[...]
FALSANI:
... An example of a role model, who combined everything you said you want to do in your life, and your faith?
OBAMA:
I think Gandhi is a great example of a profoundly spiritual man who acted and risked everything on behalf of those values but never slipped into intolerance or dogma. He seemed to always maintain an air of doubt about him.
I think Dr. King, and Lincoln. Those three are good examples for me of people who applied their faith to a larger canvas without allowing that faith to metasticize into something that is hurtful.
[...]
Nov. 14, 2008
[quote] FALSANI:
The conversation stopper, when you say you're a Christian and leave it at that.
OBAMA:
Where do you move forward with that?
This is something that I'm sure I'd have serious debates with my fellow Christians about. I think that the difficult thing about any religion, including Christianity, is that at some level there is a call to evangelize and prostelytize. There's the belief, certainly in some quarters, that people haven't embraced Jesus Christ as their personal savior that they're going to hell.
FALSANI:
You don't believe that?
OBAMA:
I find it hard to believe that my God would consign four-fifths of the world to hell.
I can't imagine that my God would allow some little Hindu kid in India who never interacts with the Christian faith to somehow burn for all eternity.
That's just not part of my religious makeup. [unquote]
Obama's Interview on Faith with Cathleen Falsani (2004) unearthed, can be found here:
"Tuesday November 11, 2008
The most detailed explication of Barack Obama's faith came in a 2004 interview he gave Chicago Sun Times columnist Cathleen Falsani when he was running for U.S. Senate in Illinois. The column she wrote about the interview has been quoted and misquoted many times over, but she'd never before published the full transcript in a major publication.
Because of how controversial that interview became, Falsani has graciously allowed us to print the full conversation here."
"At 3:30 p.m. on Saturday, March 27, 2004, when I was the religion reporter (I am now its religion columnist) at the Chicago Sun-Times, I met then-State Sen. Barack Obama at Café Baci, a small coffee joint at 330 S. Michigan Avenue in Chicago, to interview him exclusively about his spirituality. Our conversation took place a few days after he'd clinched the Democratic nomination for the U.S. Senate seat that he eventually won. We spoke for more than an hour. He came alone. He answered everything I asked without notes or hesitation. The profile of Obama that grew from the interview at Cafe Baci became the first in a series in the Sun-Times called "The God Factor," that eventually became my first book, The God Factor: Inside the Spiritual Lives of Public People (FSG, March 2006.) Because of the staggering interest in now President-Elect Obama's faith and spiritual predilections, I thought it might be helpful to share that interivew, uncut and in its entirety, here."
--Cathleen Falsani
http://blog. beliefnet. com/stevenwaldma n/2008/11/ obamas-interview -with-cathleen. html
Some exerpts related to the ongoing discussion here:
[...]
FALSANI:
Do you pray often?
OBAMA:
Uh, yeah, I guess I do.
Its' not formal, me getting on my knees. I think I have an ongoing conversation with God. I think throughout the day, I'm constantly asking myself questions about what I'm doing, why am I doing it.
One of the interesting things about being in public life is there are constantly these pressures being placed on you from different sides. To be effective, you have to be able to listen to a variety of points of view, synthesize viewpoints. You also have to know when to be just a strong advocate, and push back against certain people or views that you think aren't right or don't serve your constituents.
And so, the biggest challenge, I think, is always maintaining your moral compass. Those are the conversations I'm having internally. I'm measuring my actions against that inner voice that for me at least is audible, is active, it tells me where I think I'm on track and where I think I'm off track.
It's interesting particularly now after this election, comes with it a lot of celebrity. And I always think of politics as having two sides. There's a vanity aspect to politics, and then there's a substantive part of politics. Now you need some sizzle with the steak to be effective, but I think it's easy to get swept up in the vanity side of it, the desire to be liked and recognized and important. It's important for me throughout the day to measure and to take stock and to say, now, am I doing this because I think it's advantageous to me politically, or because I think it's the right thing to do? Am I doing this to get my name in the papers or am I doing this because it's necessary to accomplish my motives.
FALSANI:
Checking for altruism?
OBAMA:
Yeah. I mean, something like it.
Looking for, ... It's interesting, the most powerful political moments for me come when I feel like my actions are aligned with a certain truth. I can feel it. When I'm talking to a group and I'm saying something truthful, I can feel a power that comes out of those statements that is different than when I'm just being glib or clever.
FALSANI:
What's that power? Is it the holy spirit? God?
OBAMA:
Well, I think it's the power of the recognition of God, or the recognition of a larger truth that is being shared between me and an audience.[.. .]
FALSANI:
Who's Jesus to you?
(He laughs nervously)
OBAMA:
Right.
Jesus is an historical figure for me, and he's also a bridge between God and man, in the Christian faith, and one that I think is powerful precisely because he serves as that means of us reaching something higher.
And he's also a wonderful teacher. I think it's important for all of us, of whatever faith, to have teachers in the flesh and also teachers in history.
[...]
FALSANI:
Do you try to take some time for whatever, meditation prayer reading?
OBAMA:
I'll be honest with you, I used to all the time, in a fairly disciplined way. But during the course of this campaign, I don't. And I probably need to and would like to, but that's where that internal monologue, or dialogue I think supplants my opportunity to read and reflect in a structured way these days.
It's much more sort of as I'm going through the day trying to take stock and take a moment here and a moment there to take stock, why am I here, how does this connect with a larger sense of purpose.
[...]
FALSANI:
Jack Ryan [Obama's Republican opponent in the U.S. Senate race at the time] said talking about your faith is frought with peril for a public figure.
OBAMA:
Which is why you generally will not see me spending a lot of time talking about it on the stump.
Alongside my own deep personal faith, I am a follower, as well, of our civic religion. I am a big believer in the separation of church and state. I am a big believer in our constitutional structure. I mean, I'm a law professor at the University of Chicago teaching constitutional law. I am a great admirer of our founding charter, and its resolve to prevent theocracies from forming, and its resolve to prevent disruptive strains of fundamentalism from taking root ion this country.
As I said before, in my own public policy, I'm very suspicious of religious certainty expressing itself in politics.
Now, that's different form a belief that values have to inform our public policy. I think it's perfectly consistent to say that I want my government to be operating for all faiths and all peoples, including atheists and agnostics, while also insisting that there are values tha tinform my politics that are appropriate to talk about.
A standard line in my stump speech during this campaign is that my politics are informed by a belief that we're all connected. That if there's a child on the South Side of Chicago that can't read, that makes a difference in my life even if it's not my own child. If there's a senior citizen in downstate Illinois that's struggling to pay for their medicine and having to chose between medicine and the rent, that makes my life poorer even if it's not my grandparent. And if there's an Arab American family that's being rounded up by John Ashcroft without the benefit of due process, that threatens my civil liberties.
I can give religious expression to that. I am my brother's keeper, I am my sister's keeper, we are all children of God. Or I can express it in secular terms. But the basic premise remains the same. I think sometimes Democrats have made the mistake of shying away from a conversation about values for fear that they sacrifice the important value of tolerance. And I don't think those two things are mutually exclusive.
FALSANI:
Do you think it's wrong for people to want to know about a civic leader's spirituality?
OBAMA:
I don't' think it's wrong. I think that political leaders are subject to all sorts of vetting by the public, and this can be a component of that.
I think that I am disturbed by, let me put it this way: I think there is an enormous danger on the part of public figures to rationalize or justify their actions by claiming God's mandate.
I think there is this tendency that I don't think is healthy for public figures to wear religion on their sleeve as a means to insulate themselves from criticism, or dialogue with people who disagree with them.
FALSANI:
The conversation stopper, when you say you're a Christian and leave it at that.
OBAMA:
Where do you move forward with that?
This is something that I'm sure I'd have serious debates with my fellow Christians about. I think that the difficult thing about any religion, including Christianity, is that at some level there is a call to evangelize and prostelytize. There's the belief, certainly in some quarters, that people haven't embraced Jesus Christ as their personal savior that they're going to hell.
FALSANI:
You don't believe that?
OBAMA:
I find it hard to believe that my God would consign four-fifths of the world to hell.
I can't imagine that my God would allow some little Hindu kid in India who never interacts with the Christian faith to somehow burn for all eternity.
That's just not part of my religious makeup.
Part of the reason I think it's always difficult for public figures to talk about this is that the nature of politics is that you want to have everybody like you and project the best possible traits onto you. Oftentimes that's by being as vague as possible, or appealing to the lowest commong denominators. The more specific and detailed you are on issues as personal and fundamental as your faith, the more potentially dangerous it is.
FALSANI:
Do you ever have people who know you're a Christian question a particular stance you take on an issue, how can you be a Christian and ...
OBAMA:
Like the right to choose.
I haven't been challenged in those direct ways. And to that extent, I give the public a lot of credit. I'm always stuck by how much common sense the American people have. They get confused sometimes, watch FoxNews or listen to talk radio. That's dangerous sometimes. But generally, Americans are tolerant and I think recognize that faith is a personal thing, and they may feel very strongly about an issue like abortion or gay marriage, but if they discuss it with me as an elected official they will discuss it with me in those terms and not, say, as 'you call yourself a Christian.' I cannot recall that ever happening.
FALSANI:
Do you get questions about your faith?
[...]
FALSANI:
Do you believe in heaven?
OBAMA:
Do I believe in the harps and clouds and wings?
FALSANI:
A place spiritually you go to after you die?
OBAMA:
What I believe in is that if I live my life as well as I can, that I will be rewarded. I don't presume to have knowledge of what happens after I die. But I feel very strongly that whether the reward is in the here and now or in the hereafter, the aligning myself to my faith and my values is a good thing.
When I tuck in my daughters at night and I feel like I've been a good father to them, and I see in them that I am transferring values that I got from my mother and that they're kind people and that they're honest people, and they're curious people, that's a little piece of heaven.
FALSANI:
Do you believe in sin?
OBAMA:
Yes.
FALSANI:
What is sin?
OBAMA:
Being out of alignment with my values.
FALSANI:
What happens if you have sin in your life?
OBAMA:
I think it's the same thing as the question about heaven. In the same way that if I'm true to myself and my faith that that is its own reward, when I'm not true to it, it's its own punishment.
FALSANI:
Where do you find spiritual inspiration? Music, nature, literature, people, a conduit you plug into?
OBAMA:
There are so many.
...
I can be transported by watching a good performance of Hamlet, or reading Toni Morrison's Song of Solomon, or listening to Miles Davis.
FALSANI:
Is there something that you go back to as a touchstone, a book, a particular piece of music, a place ...
OBAMA:
As I said before, in my own sort of mental library, the Civil Rights movement has a powerful hold on me. It's a point in time where I think heaven and earth meet. Because it's a moment in which a collective faith transforms everything. So when I read Gandhi or I read King or I read certain passages of Abraham Lincoln and I think about those times where people's values are tested, I think those inspire me.
FALSANI:
What are you doing when you feel the most centered, the most aligned spiritually?
OBAMA:
I think I already described it. It's when I'm being true to myself. And that can happen in me making a speech or it can happen in me playing with my kids, or it can happen in a small interaction with a security guard in a building when I'm recognizing them and exchanging a good word.
[...]
FALSANI:
... An example of a role model, who combined everything you said you want to do in your life, and your faith?
OBAMA:
I think Gandhi is a great example of a profoundly spiritual man who acted and risked everything on behalf of those values but never slipped into intolerance or dogma. He seemed to always maintain an air of doubt about him.
I think Dr. King, and Lincoln. Those three are good examples for me of people who applied their faith to a larger canvas without allowing that faith to metasticize into something that is hurtful.
[...]
Tuesday, November 04, 2008
Throw out of powre the 10 Janpath chamchas
Throw out of power the 10 Janpath chamchas
Disband Congress said Mahatma Gandhi. See note at:
http://dharma1.blogspot.com/2008/10/disband-congress-said-gandhi-act-on.html
Since there is little chance that voluntary disbanding will occur, it is time to throw out of power the 10 Janpath chamchas. This about summarises the following two incisive analytical articles from Offstumped.
The destruction of the polity through ‘extra constitutional wedlock’ -- as Offstumped picturesquely describes -- is the most serious act of treason reducing Indian democracy to a farce. Congress should be made accountable for this.
kalyanaraman
http://offstumped.nationalinterest.in/2008/10/25/mood-of-the-nation/
Offstumped For all things Right of Centre
Mood of the Nation
Offstumped wishes all its reader a Happy Deepavali with these musings.
The nation is less than six months away from the next general election. If the first four decades after Independence were marked by the absolute domination of one family in presiding over the nation’s affairs the last 2 decades saw the beginning of a more level playing political field. After some political turmoil and short lived national governments the nation has finally seen two back to back full term premierships from Atal Bihari Vajpayee and Manmohan Singh.
Perhaps it can be safely said that political stability is the only thing Vajpayee and Manmohan regimes had in common. It is useful to contrast the mood of the nation in the last 6 months of the Vajpayee regime with the Manmohan regime.
For the purpose of this exercise Offstumped examined the editorial pages of The Hindu between November of 2003 and March of 2004 with the editorial pages in the last 30 days.
It is striking that period between Nov 2003 and March 2004 was one of relative political calm across the nation. As latest as March 2004 the Vajpayee regime was firmly focused on Governance with initiatives like revamping the National Security Council to Urban reforms. There was some concern on lack of job growth but nothing of alarming proportions.
If optimistic editorials on the economy spelled the mood, here is what Offstumped found striking over a two month period between Feb and March 2004 after the Lok Sabha was dissolved Offstumped did not see a single divisive issue dominate the public debate to make its way to the editorial pages. In fact the majority of the editorials in The Hindu were on the state of the economy or foreign affairs.
Neither Divisive Identity Politics, nor Terrorism nor Caste or Class conflicts find any mention in the public debate during that period with the Gujarat riots of 2002 a faint and distant echo.
It is also striking that Communal Socialist rhetoric by the usual suspects that is so common these days makes no appearance during that entire period. The most dominant topics - Kashmir, peace talks with Pakistan, the economy and the U.S. elections.
Now contrast this with how the mood of the nation has soured over the past 5 years with the Manmohan Singh Sonia Gandhi duo presiding over the nation’s affairs.
From North to South and East to West if there is one sentiment in common it is the manner in which social conflicts have been allowed to fester and dominate the public debate. The legacy of the Manmohan Singh and Sonia Gandhi duo is not just the utter mismanagement of the economy but a litany of conflicts that have driven deep fissures into the social fabric in areas where none existed just 4 years back.
We went from a period of successful elections in Kashmir to deep conflict over Jammu, from a period where the wounds from Gujarat Riots were forgotten to a period where no debate would begin without invoking the riots, from a period where class entitlements were given the short shrift as the nation looked forward to a high performing economy to a period where the economy is no longer managed and entitlements have become the political mantra of the day.
If Terrorism was not even a footnote in the period leading up to the last election we are now faced with not just Terrorism becoming the most dominant issue of the day but with an obscenely vulgar public debate that will view everything only from the prism of vote bank politics.
How pray did the Mood of the Nation sour from one of Optimism fuelled by limitless possibilities to one of bitterness and myopic politics ?
In the answer to that friends lies the criminal irresponsibility of the Congress Party on two counts
- the first was in the foisting on this nation a political arrangement first with the Communists and then with the Samajwadi Party that thrived on Social Conflicts from communal issues in Uttar Pradesh to caste and class issues across the country
- the second was in the foisting on this nation another political arrangement of “Power without Accountability” that saw an electile dysfunctional bureaucrat in Manmohan Singh pushing the Communal Socialist agenda of a political leader in Sonia Gandhi who sees herself as being above any kind of public scrutiny.
It was not without reason that Offstumped described thepolitics of the Congress divisive. Premised on “Progresive Liberalism” that thrives on “victimhood” and “guilt” the evidence is incontrovertible that the Congress having inherited a nation bereft of conflict has damaged its fabric irreversibly with its Communal Socialist agenda.
On the auspicious occassion of Diwali Offstumped calls upon all right thinking nationalist Indians to reflect upon this souring of the mood of the nation and give serious thought to defeating this divisive brand of politics rather than fall into its trap for nothing serves the Communal Socialists better than festering conflicts that create new classes of victims while spreading around an all pervasive emotion of guilt.
http://offstumped.nationalinterest.in/2008/10/31/the-indian-state-adrift/
Offstumped: For all things Right of Centre
Offstumped
For all things Right of Centre: The Indian State adrift
When Offstumped began a look back at how the Mood of the Nation has soured since 2004 little did it expect that events would take such a dramatic turn across the nation.
It can now be safely said that the wages of Absentee Leadership and Executive Delinquency are finally being paid by citizens of India from East to the West.
It can now also be safely concluded that North Block no longer has a functioning Internal Security Executive at its helm. Some brain dead zombies may still be lurking in the corridors and finders may please return them to their respective constituencies in Maharashtra and Uttar Pradesh where they maybe safely put to rest.
Prime Minister Manmohan Singh has lost his grip on governance while Congress President and UPA Chairman Sonia Gandhi remains AWOL.
Reflecting back on the aberration of 2004 when an irresponsible Sonia Gandhi decided to foist a Manmohan Singh as Prime Minister , only one question comes to mind.
What was she thinking ?
Reflecting back on the more than 4 years of misery under the UPA dispensation throws up another question
How could we as citizens or voters have been so careless to have allowed such an incompetent and utterly clueless duo to ride roughshod on national affairs for 4 years ?
What were we thinking ?
Offstumped Bottomline: Sonia Gandhi and Manmohan Singh were way over their heads when they thought they could wing it with their extra-constitutional wedlock. Managing the Indian State is way beyond their league and it is time they recognized this bitter truth and spared the rest of us the costs of their absentee leadership and executive delinquency.
Offstumped calls upon this incompetent and utterly clueless duo to dissolve parliament and call for fresh elections so we can get some real leadership and governance before it is too late.
Disband Congress said Mahatma Gandhi. See note at:
http://dharma1.blogspot.com/2008/10/disband-congress-said-gandhi-act-on.html
Since there is little chance that voluntary disbanding will occur, it is time to throw out of power the 10 Janpath chamchas. This about summarises the following two incisive analytical articles from Offstumped.
The destruction of the polity through ‘extra constitutional wedlock’ -- as Offstumped picturesquely describes -- is the most serious act of treason reducing Indian democracy to a farce. Congress should be made accountable for this.
kalyanaraman
http://offstumped.nationalinterest.in/2008/10/25/mood-of-the-nation/
Offstumped For all things Right of Centre
Mood of the Nation
Offstumped wishes all its reader a Happy Deepavali with these musings.
The nation is less than six months away from the next general election. If the first four decades after Independence were marked by the absolute domination of one family in presiding over the nation’s affairs the last 2 decades saw the beginning of a more level playing political field. After some political turmoil and short lived national governments the nation has finally seen two back to back full term premierships from Atal Bihari Vajpayee and Manmohan Singh.
Perhaps it can be safely said that political stability is the only thing Vajpayee and Manmohan regimes had in common. It is useful to contrast the mood of the nation in the last 6 months of the Vajpayee regime with the Manmohan regime.
For the purpose of this exercise Offstumped examined the editorial pages of The Hindu between November of 2003 and March of 2004 with the editorial pages in the last 30 days.
It is striking that period between Nov 2003 and March 2004 was one of relative political calm across the nation. As latest as March 2004 the Vajpayee regime was firmly focused on Governance with initiatives like revamping the National Security Council to Urban reforms. There was some concern on lack of job growth but nothing of alarming proportions.
If optimistic editorials on the economy spelled the mood, here is what Offstumped found striking over a two month period between Feb and March 2004 after the Lok Sabha was dissolved Offstumped did not see a single divisive issue dominate the public debate to make its way to the editorial pages. In fact the majority of the editorials in The Hindu were on the state of the economy or foreign affairs.
Neither Divisive Identity Politics, nor Terrorism nor Caste or Class conflicts find any mention in the public debate during that period with the Gujarat riots of 2002 a faint and distant echo.
It is also striking that Communal Socialist rhetoric by the usual suspects that is so common these days makes no appearance during that entire period. The most dominant topics - Kashmir, peace talks with Pakistan, the economy and the U.S. elections.
Now contrast this with how the mood of the nation has soured over the past 5 years with the Manmohan Singh Sonia Gandhi duo presiding over the nation’s affairs.
From North to South and East to West if there is one sentiment in common it is the manner in which social conflicts have been allowed to fester and dominate the public debate. The legacy of the Manmohan Singh and Sonia Gandhi duo is not just the utter mismanagement of the economy but a litany of conflicts that have driven deep fissures into the social fabric in areas where none existed just 4 years back.
We went from a period of successful elections in Kashmir to deep conflict over Jammu, from a period where the wounds from Gujarat Riots were forgotten to a period where no debate would begin without invoking the riots, from a period where class entitlements were given the short shrift as the nation looked forward to a high performing economy to a period where the economy is no longer managed and entitlements have become the political mantra of the day.
If Terrorism was not even a footnote in the period leading up to the last election we are now faced with not just Terrorism becoming the most dominant issue of the day but with an obscenely vulgar public debate that will view everything only from the prism of vote bank politics.
How pray did the Mood of the Nation sour from one of Optimism fuelled by limitless possibilities to one of bitterness and myopic politics ?
In the answer to that friends lies the criminal irresponsibility of the Congress Party on two counts
- the first was in the foisting on this nation a political arrangement first with the Communists and then with the Samajwadi Party that thrived on Social Conflicts from communal issues in Uttar Pradesh to caste and class issues across the country
- the second was in the foisting on this nation another political arrangement of “Power without Accountability” that saw an electile dysfunctional bureaucrat in Manmohan Singh pushing the Communal Socialist agenda of a political leader in Sonia Gandhi who sees herself as being above any kind of public scrutiny.
It was not without reason that Offstumped described thepolitics of the Congress divisive. Premised on “Progresive Liberalism” that thrives on “victimhood” and “guilt” the evidence is incontrovertible that the Congress having inherited a nation bereft of conflict has damaged its fabric irreversibly with its Communal Socialist agenda.
On the auspicious occassion of Diwali Offstumped calls upon all right thinking nationalist Indians to reflect upon this souring of the mood of the nation and give serious thought to defeating this divisive brand of politics rather than fall into its trap for nothing serves the Communal Socialists better than festering conflicts that create new classes of victims while spreading around an all pervasive emotion of guilt.
http://offstumped.nationalinterest.in/2008/10/31/the-indian-state-adrift/
Offstumped: For all things Right of Centre
Offstumped
For all things Right of Centre: The Indian State adrift
When Offstumped began a look back at how the Mood of the Nation has soured since 2004 little did it expect that events would take such a dramatic turn across the nation.
It can now be safely said that the wages of Absentee Leadership and Executive Delinquency are finally being paid by citizens of India from East to the West.
It can now also be safely concluded that North Block no longer has a functioning Internal Security Executive at its helm. Some brain dead zombies may still be lurking in the corridors and finders may please return them to their respective constituencies in Maharashtra and Uttar Pradesh where they maybe safely put to rest.
Prime Minister Manmohan Singh has lost his grip on governance while Congress President and UPA Chairman Sonia Gandhi remains AWOL.
Reflecting back on the aberration of 2004 when an irresponsible Sonia Gandhi decided to foist a Manmohan Singh as Prime Minister , only one question comes to mind.
What was she thinking ?
Reflecting back on the more than 4 years of misery under the UPA dispensation throws up another question
How could we as citizens or voters have been so careless to have allowed such an incompetent and utterly clueless duo to ride roughshod on national affairs for 4 years ?
What were we thinking ?
Offstumped Bottomline: Sonia Gandhi and Manmohan Singh were way over their heads when they thought they could wing it with their extra-constitutional wedlock. Managing the Indian State is way beyond their league and it is time they recognized this bitter truth and spared the rest of us the costs of their absentee leadership and executive delinquency.
Offstumped calls upon this incompetent and utterly clueless duo to dissolve parliament and call for fresh elections so we can get some real leadership and governance before it is too late.
Thursday, October 30, 2008
How Indians could have saved the financial system
Three reports including a brilliant piece by E. Ramachandran on how Indians could have saved Lehman from bankruptcy.
The issues are these:
1. All attempts seem to be to bail out institutions such as commercial banks and investment banks
2. Little attempts are being made to work out an index beyond ‘consumer spending’ and measures other than promoting ‘spending’ by consumers
The most incisive comment relates to the concept of GDP itself as a measure of wealth.
To what extent is the mother’s contribution worked into the GDP? Zero, zilch. In the Indian tradition, she is the tutor, guru who moulds a child and equips her child to realize his or her full potential. Every child is a prospective contributor to the wealth of nations. Unfortunately, economists, nerds and quarks (the so-called winners of economics nobel prizes) have no clue to measure this contribution of the mother.
Unless the financial system comes to grip with dharma detailed by Kautilya in his Arthashastra, this fetishism of money will continue to yield bizarre, recurring recessions. Governments have no clue, no solutions beyond palliatives such as bailing out banks of a number of money varieties. P. Chidambaram for example is the promoter of Participatory Notes which have substantially spelt the doom of the Indian stock prices while making some Indians rich through hawala transactions which are endemic in this Participatory Note act of treason, trying to loot the nation’s wealth.
The next President of USA may have to establish an international commission including Nanubhai from India to start eating khaman dhokla and enjoy life. Life is a lot more pleasurable when various forms of money are ignored and varieties of dhokla are tasted and enjoyed.
Kalyanaraman
Banks borrow record amount from Fed (The Hindu, Oct. 30, 2008)
WASHINGTON (AP) : Banks borrowed in record amounts from the Federal Reserve's emergency lending programme over the past week, while investment banks drew loans at a slower pace.
The Fed's report, released Thursday, showed commercial banks averaged a record $111.9 billion in daily borrowing over the past week. That surpassed the old record, a daily average of $105.8 billion, from the prior week.
For the week ending Wednesday, investment firms drew $87.4 billion. That was down from $111.3 billion in the previous week. This category was recently broadened to include any loans that were made to the U.S. and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch.
The Fed report also showed that its net holdings of ``commercial paper'' came to $144.8 billion on Wednesday. The Fed created a first-of-its kind program, which started Monday, to buy mounds of this crucial short-term debt that companies use to pay everyday expenses.
Squeezed banks and investment firms are borrowing from the Fed because they can't get money elsewhere. Investors have cut them off, moving their money into safer Treasury securities. Financial institutions are hoarding whatever cash they have, rather than lend it to each other or customers. The lockup in lending has contributed to a sharp slowing in the overall economy.
Investment houses in March were given similar, emergency-loan privileges as commercial banks after a run on Bear Stearns pushed what was the fifth-largest U.S. investment bank to the brink of bankruptcy.
The identities of commercial banks and investment houses that borrow are not released. Commercial banks and investment companies now pay 1.25 percent in interest for the emergency loans.
Since the Bear Stearns debacle in March, the Fed has taken a series of unprecedented steps to get lending _ the economy's oxygen _ flowing more freely again. The central bank has repeatedly tapped its Depression-era authority to be a lender of last resort not only to financial institutions, but also to other types of companies.
Critics worry the Fed's actions could put billions of taxpayers' dollars at risk.
http://www.hinduonnet.com/thehindu/holnus/000200810310380.htm
How Indians would have saved Lehman Brothers
E.R. RAMACHANDRAN writes: I happened to run in to Nanubhaion Dalal Street. He was eating Khaman Dhokla in a farsan shop.
“Khem cho, Nanubhai?”
“Saru che.”
He was looking glum but gestured me to join him.
As I bit into the tasty dhokla with tangy chutney on the Friday afternoon, which was fast turning into a ‘Manic Friday’ as per Dalal Street lingo, he was staring at the bull near the entrance, which overnight had become a Russian bear hugging everybody that passed the Street.
Nanubhai is a well-respected Dalal Street dada with an answer to every shareholder’s query.
“What went wrong with Lehman Brothers?” I asked.
“Lots of things. If the founder brothers, Henry, Emanuel andMayer were alive this wouldn’t have happened. Lehman Brothers were more than a 150-year-old company. But yet, it had no Lehman in the company. Such a situation can never happen in India.”
“Are you trying to tell me an Indian would have handled this differently?”
“Bilkul. If it was an Indian firm, Lehman Brothers would have fought as soon as their father died and divided in to three companies. They would have diversified into clothing, polystyrene, petrochemicals, vegetables, movie making, telecom, drilling oil, mobile phones, retailing, books, spectacles, gyms, wellness. In short, anything and everything under the sun. They would have made money for themselves and their shareholders.”
“But when there is massive failure there would be no option but to file for bankruptcy?”
“Fail-wail chance hi nahin! Even if they encounter tough times, they would have friends like Mulayam Singh and Amar Singh to bail them out. They could finish off competition by befriending the finance minister and getting duties levied on the imports of competition. They would fund and befriend ruling parties. Unfortunately for Lehman Brothers in 2008, without a Lehman on the board or some Indian business brothers at the top, they couldn’t open the survival kit to stay afloat.”
As we were sipping double khadak chai, I asked: “Did anybody anticipate this global meltdown?”
“Anticipate? Mazak chodo! I will tell you something. America has some 45 Nobel laureates in economics from 1970. From 2000 alone there are 15 Nobel laureates in econometrics sitting on company boards, treasury benches and in places like Harvard, Stanfordetc. Kisiko kuch patha nahin tha! How come none of these had any inkling to the disaster awaiting the banking circles all over the world? Even the finance ministers of G-7 talked of strong “fundamentals” of world economy around this time last year! Two months back the only topic they were discussing was the rise in oil prices.”
“What will happen if it goes all on like this?”
“Some American economist will study this, write a new a theory and get Nobel Prize next year, dekhna. Seriously, they forgot things like control, double check, systems-in-place etc and brought in vague words like Subprimes to give loans left, right and centre.”
“What will happen to the Indian market?”
“It’s already having the Lehman Brothers’ effect. Our finance minister seems to like the figure 60,000. While presenting the budget earlier in the year he pledged Rs 60,000 crore to write off loans given to farmers. Now he is pumping Rs 60,000 crore to help out the banks! I don’t know what he will do next. He is again from Harvard!”
“What is the lesson to be learnt from the Lehman Brothers’ episode?” I asked as we were leaving.
Nanubhai took a spoonful of saunf and said: “You know, we have an old elementary rule for keeping hisab-kithab. Divide a page into ‘Left’ and ‘Right’ with a line in the middle to denote Debit and Credit. In case of LB, as somebody said, nothing was right in the ‘Left’ and nothing was left in the ‘Right’,” concluded Nanubhai.
http://churumuri.wordpress.com/2008/10/11/how-indians-would-have-saved-lehman-brothers/
Whoever captures the White House seems certain to inherit a starkly challenging economic picture. Thursday’s government report showed that consumer spending — which makes up more than 70 percent of American economy activity — dipped at 3.1 percent annual rate between July and September, after growing at a 1.2 percent annual rate in the previous three months.
http://www.nytimes.com/2008/10/31/business/economy/31econ.html?_r=1&hp&oref=slogin
OCTOBER 30, 2008, 12:41 PM
Alternatives to the G.D.P.
By CATHERINE RAMPELL (New York Times)
In response to our coverage of today’s gross domestic product estimate, a reader who goes by the name “TheBookkeeper” writes:
Has the time come to consider a better way to measure our economic state than to use consumer spending? Bookkeeping is a science that measure equity. Equity is the efficiency with which a business entity is operating, be that business a person, a household, or an industry. Doing more walking and less driving helps my equity account and hurts the economist’s consumer spending account. Is my walking a good thing or a bad thing?
Consumer spending is the largest component of G.D.P., and was a primary driver in G.D.P. decline in the third quarter. But it is far from the only component of G.D.P., which also includes investment, government spending and net exports.
So, to answer TheBookkeeper’s question, the preferred “way to measure our economic state” is usually G.D.P., which covers areas of growth other than consumer spending. But that does not mean G.D.P. is the best way to measure the health of an economy.
G.D.P. measures the total market value of final goods and services produced in a country during a given period. Ithas long come under fire, though, for not measuring “that which makes life worthwhile,” as Robert F. Kennedy put it 40 years ago.
G.D.P. does not take into account some of the negative effects of economic growth, like pollution. It does not factor in leisure time, or parts of the “informal economy” (like parents’ unpaid care for their own children) that have value but not necessarily measurable, marketable value. It does not give any sense of how equitably distributed a country’s wealth is; a country could theoretically have both the world’s highest G.D.P. and the world’s highest poverty rate simultaneously. It also does not reflect quality of life or happiness in any given country.
Along the years, economists have suggested alternative ways to measure a country’s economic health, most of which focus on measures of well-being. China has recently tried to use a measure known as “green G.D.P.,” an index of economic growth that factors in environmental consequences. The United States Congress has alsocommissioned research on “green accounting” measures.
The Organization for Economic Cooperation and Development has studied its own G.D.P. alternatives that take into account leisure. Others have proposed the Index of Sustainable Economic Welfare, which factors in both pollution and income distribution, and the Genuine Progress Indicator, which tries to determine if economic growth has improved a country’s welfare. Alternative efforts try to supplement or supplant traditional income-based measures with happiness-based measures. These include the Happy Planet Index, a Gross National Happiness measure and work on National Well-Being Accounts, which our Daily Economist Alan Krueger has studied extensively.
It is not clear that any one of these competing measures of economic and societal health will replace G.D.P. anytime soon.
But while TheBookkeeper and the rest of us wait for a new consensus on how to measure economic health, we can also experiment with how these measures would apply to our own lives. The Happy Planet Index lets you measure your own personal happiness level according to the H.P.I. metric. this site allows you to create your own I.S.E.W. (for Britain only), depending on how you weigh different measures of well-being and economic growth, and see how it compares to G.D.P.
http://economix.blogs.nytimes.com/2008/10/30/alternatives-to-the-gdp/
The issues are these:
1. All attempts seem to be to bail out institutions such as commercial banks and investment banks
2. Little attempts are being made to work out an index beyond ‘consumer spending’ and measures other than promoting ‘spending’ by consumers
The most incisive comment relates to the concept of GDP itself as a measure of wealth.
To what extent is the mother’s contribution worked into the GDP? Zero, zilch. In the Indian tradition, she is the tutor, guru who moulds a child and equips her child to realize his or her full potential. Every child is a prospective contributor to the wealth of nations. Unfortunately, economists, nerds and quarks (the so-called winners of economics nobel prizes) have no clue to measure this contribution of the mother.
Unless the financial system comes to grip with dharma detailed by Kautilya in his Arthashastra, this fetishism of money will continue to yield bizarre, recurring recessions. Governments have no clue, no solutions beyond palliatives such as bailing out banks of a number of money varieties. P. Chidambaram for example is the promoter of Participatory Notes which have substantially spelt the doom of the Indian stock prices while making some Indians rich through hawala transactions which are endemic in this Participatory Note act of treason, trying to loot the nation’s wealth.
The next President of USA may have to establish an international commission including Nanubhai from India to start eating khaman dhokla and enjoy life. Life is a lot more pleasurable when various forms of money are ignored and varieties of dhokla are tasted and enjoyed.
Kalyanaraman
Banks borrow record amount from Fed (The Hindu, Oct. 30, 2008)
WASHINGTON (AP) : Banks borrowed in record amounts from the Federal Reserve's emergency lending programme over the past week, while investment banks drew loans at a slower pace.
The Fed's report, released Thursday, showed commercial banks averaged a record $111.9 billion in daily borrowing over the past week. That surpassed the old record, a daily average of $105.8 billion, from the prior week.
For the week ending Wednesday, investment firms drew $87.4 billion. That was down from $111.3 billion in the previous week. This category was recently broadened to include any loans that were made to the U.S. and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch.
The Fed report also showed that its net holdings of ``commercial paper'' came to $144.8 billion on Wednesday. The Fed created a first-of-its kind program, which started Monday, to buy mounds of this crucial short-term debt that companies use to pay everyday expenses.
Squeezed banks and investment firms are borrowing from the Fed because they can't get money elsewhere. Investors have cut them off, moving their money into safer Treasury securities. Financial institutions are hoarding whatever cash they have, rather than lend it to each other or customers. The lockup in lending has contributed to a sharp slowing in the overall economy.
Investment houses in March were given similar, emergency-loan privileges as commercial banks after a run on Bear Stearns pushed what was the fifth-largest U.S. investment bank to the brink of bankruptcy.
The identities of commercial banks and investment houses that borrow are not released. Commercial banks and investment companies now pay 1.25 percent in interest for the emergency loans.
Since the Bear Stearns debacle in March, the Fed has taken a series of unprecedented steps to get lending _ the economy's oxygen _ flowing more freely again. The central bank has repeatedly tapped its Depression-era authority to be a lender of last resort not only to financial institutions, but also to other types of companies.
Critics worry the Fed's actions could put billions of taxpayers' dollars at risk.
http://www.hinduonnet.com/thehindu/holnus/000200810310380.htm
How Indians would have saved Lehman Brothers
E.R. RAMACHANDRAN writes: I happened to run in to Nanubhaion Dalal Street. He was eating Khaman Dhokla in a farsan shop.
“Khem cho, Nanubhai?”
“Saru che.”
He was looking glum but gestured me to join him.
As I bit into the tasty dhokla with tangy chutney on the Friday afternoon, which was fast turning into a ‘Manic Friday’ as per Dalal Street lingo, he was staring at the bull near the entrance, which overnight had become a Russian bear hugging everybody that passed the Street.
Nanubhai is a well-respected Dalal Street dada with an answer to every shareholder’s query.
“What went wrong with Lehman Brothers?” I asked.
“Lots of things. If the founder brothers, Henry, Emanuel andMayer were alive this wouldn’t have happened. Lehman Brothers were more than a 150-year-old company. But yet, it had no Lehman in the company. Such a situation can never happen in India.”
“Are you trying to tell me an Indian would have handled this differently?”
“Bilkul. If it was an Indian firm, Lehman Brothers would have fought as soon as their father died and divided in to three companies. They would have diversified into clothing, polystyrene, petrochemicals, vegetables, movie making, telecom, drilling oil, mobile phones, retailing, books, spectacles, gyms, wellness. In short, anything and everything under the sun. They would have made money for themselves and their shareholders.”
“But when there is massive failure there would be no option but to file for bankruptcy?”
“Fail-wail chance hi nahin! Even if they encounter tough times, they would have friends like Mulayam Singh and Amar Singh to bail them out. They could finish off competition by befriending the finance minister and getting duties levied on the imports of competition. They would fund and befriend ruling parties. Unfortunately for Lehman Brothers in 2008, without a Lehman on the board or some Indian business brothers at the top, they couldn’t open the survival kit to stay afloat.”
As we were sipping double khadak chai, I asked: “Did anybody anticipate this global meltdown?”
“Anticipate? Mazak chodo! I will tell you something. America has some 45 Nobel laureates in economics from 1970. From 2000 alone there are 15 Nobel laureates in econometrics sitting on company boards, treasury benches and in places like Harvard, Stanfordetc. Kisiko kuch patha nahin tha! How come none of these had any inkling to the disaster awaiting the banking circles all over the world? Even the finance ministers of G-7 talked of strong “fundamentals” of world economy around this time last year! Two months back the only topic they were discussing was the rise in oil prices.”
“What will happen if it goes all on like this?”
“Some American economist will study this, write a new a theory and get Nobel Prize next year, dekhna. Seriously, they forgot things like control, double check, systems-in-place etc and brought in vague words like Subprimes to give loans left, right and centre.”
“What will happen to the Indian market?”
“It’s already having the Lehman Brothers’ effect. Our finance minister seems to like the figure 60,000. While presenting the budget earlier in the year he pledged Rs 60,000 crore to write off loans given to farmers. Now he is pumping Rs 60,000 crore to help out the banks! I don’t know what he will do next. He is again from Harvard!”
“What is the lesson to be learnt from the Lehman Brothers’ episode?” I asked as we were leaving.
Nanubhai took a spoonful of saunf and said: “You know, we have an old elementary rule for keeping hisab-kithab. Divide a page into ‘Left’ and ‘Right’ with a line in the middle to denote Debit and Credit. In case of LB, as somebody said, nothing was right in the ‘Left’ and nothing was left in the ‘Right’,” concluded Nanubhai.
http://churumuri.wordpress.com/2008/10/11/how-indians-would-have-saved-lehman-brothers/
Whoever captures the White House seems certain to inherit a starkly challenging economic picture. Thursday’s government report showed that consumer spending — which makes up more than 70 percent of American economy activity — dipped at 3.1 percent annual rate between July and September, after growing at a 1.2 percent annual rate in the previous three months.
http://www.nytimes.com/2008/10/31/business/economy/31econ.html?_r=1&hp&oref=slogin
OCTOBER 30, 2008, 12:41 PM
Alternatives to the G.D.P.
By CATHERINE RAMPELL (New York Times)
In response to our coverage of today’s gross domestic product estimate, a reader who goes by the name “TheBookkeeper” writes:
Has the time come to consider a better way to measure our economic state than to use consumer spending? Bookkeeping is a science that measure equity. Equity is the efficiency with which a business entity is operating, be that business a person, a household, or an industry. Doing more walking and less driving helps my equity account and hurts the economist’s consumer spending account. Is my walking a good thing or a bad thing?
Consumer spending is the largest component of G.D.P., and was a primary driver in G.D.P. decline in the third quarter. But it is far from the only component of G.D.P., which also includes investment, government spending and net exports.
So, to answer TheBookkeeper’s question, the preferred “way to measure our economic state” is usually G.D.P., which covers areas of growth other than consumer spending. But that does not mean G.D.P. is the best way to measure the health of an economy.
G.D.P. measures the total market value of final goods and services produced in a country during a given period. Ithas long come under fire, though, for not measuring “that which makes life worthwhile,” as Robert F. Kennedy put it 40 years ago.
G.D.P. does not take into account some of the negative effects of economic growth, like pollution. It does not factor in leisure time, or parts of the “informal economy” (like parents’ unpaid care for their own children) that have value but not necessarily measurable, marketable value. It does not give any sense of how equitably distributed a country’s wealth is; a country could theoretically have both the world’s highest G.D.P. and the world’s highest poverty rate simultaneously. It also does not reflect quality of life or happiness in any given country.
Along the years, economists have suggested alternative ways to measure a country’s economic health, most of which focus on measures of well-being. China has recently tried to use a measure known as “green G.D.P.,” an index of economic growth that factors in environmental consequences. The United States Congress has alsocommissioned research on “green accounting” measures.
The Organization for Economic Cooperation and Development has studied its own G.D.P. alternatives that take into account leisure. Others have proposed the Index of Sustainable Economic Welfare, which factors in both pollution and income distribution, and the Genuine Progress Indicator, which tries to determine if economic growth has improved a country’s welfare. Alternative efforts try to supplement or supplant traditional income-based measures with happiness-based measures. These include the Happy Planet Index, a Gross National Happiness measure and work on National Well-Being Accounts, which our Daily Economist Alan Krueger has studied extensively.
It is not clear that any one of these competing measures of economic and societal health will replace G.D.P. anytime soon.
But while TheBookkeeper and the rest of us wait for a new consensus on how to measure economic health, we can also experiment with how these measures would apply to our own lives. The Happy Planet Index lets you measure your own personal happiness level according to the H.P.I. metric. this site allows you to create your own I.S.E.W. (for Britain only), depending on how you weigh different measures of well-being and economic growth, and see how it compares to G.D.P.
http://economix.blogs.nytimes.com/2008/10/30/alternatives-to-the-gdp/
Monday, October 27, 2008
Pushing Hindus into a corner -- Tarun Vijay
Pushing Hindus into a corner
Tarun Vijay | October 27, 2008 | 14:14 IST
One Diwali the highly revered monk of Hindus, Swami Jayendra Saraswati, was arrested while performing puja. The secular world celebrated it as a victory of law and constitutional propriety. When nothing was proved, all the chargesheets turned bunkum, the Supreme Court gave a verdict favouring theswami's release on bail, but no one retracted the strong, often abusive words used for the Hindu monk. It was met with silence as if nothing important had happened.
One Krishna Janmashtami night, another ochre-robed reformist monk, Swami Lakshmanananda, was murdered along with an aged Hindu nun, Ma Bhaktimoyee, in his ashram. Secularists tried to direct and guide the entire investigation till the arrested murderers confessed that swami's work among tribals made prosylitisation difficult and hence they took the violent way.
The media linked the violence post-Lakshmanananda's murder to various Hindu organisations and completely ignored the brutal killing of the sanyasi and the lady monk.
This Diwali, Hindus were labelled as 'terrorists'.
There is a university in Delhi which gets a large amount of Saudi grants, and which thought it appropriate to honour a Muslim painter whose nudes of Hindu gods and goddesses and Mother India were opposed by Hindus, with a Doctor of Philosophy degree, honoris causa. The same university's vice chancellor, in a display of public affection for those students arrested for treason by a Congress government, declared that he will fund their 'struggle' as they are his 'children' and they would be considered innocent till proved guilty.
The secular world applauded his decision as bold and highly moral.
A Hindu sadhvi has been arrested for her alleged involvement in the Malegaon blasts. But not a single Hindu organisation came out in her support saying she remains a member of the global Hindu fraternity and would be considered innocent till proved guilty and hence shall provide all the financial assistance to her.
I was thinking, suppose I start a 'support Pragya fund' how any Hindu saints and ashrams and mutts and leaders would come out in support?Doesn't she deserve help and support till proved innocent?
Unlike the sweet little students of the university's vice chancellor, who were arrested from the area of the Batla House encounter, Pragya was in Surat, giving a religious discourse when the Malegaon blasts occurred in September. Her bike had been sold years before. No one said the blasts were organised to make Hindu law applicable or turn the nation into a Hindu state. No one had quoted Hindu scriptures to justify what would be termed as a ghastly act, inhuman and un-Hindu.
Yet, there was a virtual celebration in the so-called secular camp, they were over-joyous as if they have reached the moon. Got it, they said, what we were saying for years! The usual suspects were on our TV screens, delightedly giving interviews and the media lapped up crispy descriptions like Hindu terror, Hindu bomb, Saffron terrorism. When they quote the Quran, seculars cry don't label them Islamic terrorists, but Hindus being Hindus must be termed as Hindu terrorists to keep a 'balance'. So those who insult the memory of a martyred police officer show their glee over having succeeded in bringing the term 'Hindu terrorism' in vogue. What greater shield could an Islamic terrorist have wished for.
They were itching for this day and they have got it.
Last year too the 2006 Malegaon blasts were blamed on Hindus. Later the agencies proved they were done by SIMI. This year, Union ministers were demanding the ban on SIMI be lifted in spite of truckloads of evidence of the organisation's involvement in deadly blasts and waging war against the State, the most heinous crime in any part of the world. And the investigations, gathering of proof and the hard, difficult investigation, were done by government agencies.
The same honourable members of the Union cabinet demanded banning Hindu organisations, in spite of having no evidence of their involvement in violent activities or working against the Indian State. Those who ignore the Supreme Court's verdict on a terrorist who was accused waging war against the State, demand that Hindu organisations be banned for theirpatriotism.Once they drove out the tricolour folks from the Kashmir Valley, now theyassassinatetheir morale in the rest of the country.
For the sake of Muslim vote-bank, SIMI had to be helped and Hindu organisations needed to be shown as being involved in anti-national activities. The balancing had to be achieved, like the U C Banerjee Commission. Much before the honourable commission could start work on Godhra, leaders were declaring during the Bihar election campaign -- many of whom loved to be seen with an Osama look-alike -- that the Godhra train inferno was a creation of Hindus so that they could get a chance to pounce on Muslims.
So much for their secular credentials!
This time, too, they had tremendous amount of pressure to nurse their vote-banks. Elections are right here, campaigning has begun, chances look very bleak seeing the public mood, and voters seem already restless with high prices, growing inflation and an insecure atmosphere. Hence a communal divide would help. If such considerations can be credited as having instigated the 'creation' of a Hindu or 'Saffron' terrorism, would it be a far-fetched conclusion?
The intelligent people who could create a Bhindranwale, or a Raj Thackeray, to 'defeat' one or the other political opponent, could also be trusted to repeat the feat elsewhere.
So, this time, the police version is not to be distrusted or questioned. The first suspicion about police action is reserved for the Batla House fraternity. Hindu monks do not deserve it.
The term 'Hindu terrorism' looks so attractive to secularists. Proof, evidence, and final acquittal may take year. But the articles, front page edits, condemnations, further isolation, and cornering of the saffron side, would help someone. That's enough for today.
That this way may turn more dangerous tomorrow is not understood by the perpetrators of the secular pogrom of words against the Hindu Right. Every nation has a soul and a colour. India's soul is Hindu civilisation and the colour is saffron. Samuel Huntington described America as a Latin Christian nation, and it doesn't make her any less to give other communities second-class citizenship.
It may be the first time in its four hundred years of democratic history that a Black might be sworn in as President, who would take oath on the Bible. Who would demand that it's an unhealthy tradition, as non-Christians also built America? Traditions, colours and the inner core are always sacred and nations preserve them at all costs. If the same elements are humiliated and turned into icons of shame, nothing remains except a dead, meaningless smoke of rootless words.
India's Hinduness is that essential element to define this nation. We can't be explained through Saudis, Marx or Bethlehem. Or through Arabic or Latin or Persian. India is explained by the Ganga, Krishna, Ram and Gandhi. By Kumbh Mela, Sanskrit chanting, lighting of the lamp, Namaste, the Vedas, Guru Nanak's teachings, Guru Gobind Singh's valour, Buddha's global message of peace and compassion and Mahavir's ahimsa. India is deciphered by Dhammapad, the Gita, the Guru Granth Sahib and a divine love that saw the emergence of Radha and Meera. That fired the imaginations of doyens like Tagore and Vivekananda. Together they make a mutually supportive group of Indian streams of faith that welcomed and accommodated without murmur all other ways of worship brought here through various means.
Every single persecuted community in the world found a respectable space here, while they were brutalised, uprooted, converted and 'museum-ised' in other countries. The legacy of tolerance and plurality is the legacy of the Hindus and all those faiths born and flowered here. It made Taj Mahal possible and Jesus adored by a non-Christian majority. You deny them this place of honour, make them shrink in a defensive shell, and you lose India.
For just a comeback to power? And how!
Ram Sethu becomes a target of destruction, Ram is denied, Ram's history linked with the bridge is mocked at, Sita's persona is caricaturized in public, the shrinking Hindu population and their conversion become victory signposts of the secularists, Hindus driven out of Kashmir are deleted from all lists of secular concern, Hindu temples are taken over by the atheist State and their revenue used on non-Hindu areas, while not a single non-Hindu place of worship is taken over or 'managed' on similar grounds by the governors! More than sixty thousand Hindus have been killed by terrorists in various actions during the last three decades, five lakh have been uprooted and turned refugees, but no one shares their grief or respects their courage, but terms them terrorist in a matter of 24 hours, that too relying on media hype and an election platform?
After centuries Hindus got freedom that should have meant a free space for them to flower their culture, language and traditions. After all, the invaders came to attack and loot them and raze their temples. Wasn't it a matter of logical right that they should have been honoured for exemplary resistance and resilience and showing an extraordinary tolerance towards all those communities whose leaders had been in the forefront to deprive them of basic human rights?
But instead, the victims were portrayed as aggressors and humiliated for their colour and faith. What has changed since Ghauris and Ghaznavis and the inquisitionist Portuguese left?
They killed us but never portrayed Hindus as terrorists. This secular dispensation is celebrating Diwali with that label gifted to Hindus. It will not remain unanswered. Hindus as a mainline faith never never never believed in any kind of cowardice that's the hallmark of terrorism we see today. Killing innocents, shooting at fellow citizens and the dreaded midnight knocks just for the reason they wear a different faith.
If that was the case, the way Islamists quote from religious scriptures and declare their religious intentions while committing ghastly acts of violence, how much ever disapproved of by their co- religionists living and enjoying democratic freedoms, Hindus too would have shown the same streaks immediately after their women were gang-raped and kids murdered in Kashmir. There was no revenge in the rest of the country. Not a single Hindu soul would ever justify any act of terrorism ever (and please don't refer to exceptions to corner Hindus, see the principal stream). Born reformists, they would revolt if anyone did that.
But I am afraid the secular hate-mongers are pushing Hindus into a difficult corner without a space to be heard. Not a single 'mainline' newspaper publishes their views, though any number of assaults on them are a matter of routine. This is creating a grave situation and it's a warning signal that can be ignored only at the peril of the nation's great legacy of pluralitity.
Tarun Vijay is a director of the Dr Syama Prasad Mookerjee Research Foundation
http://www.rediff.com///news/2008/oct/27tarun.htm
Tarun Vijay | October 27, 2008 | 14:14 IST
One Diwali the highly revered monk of Hindus, Swami Jayendra Saraswati, was arrested while performing puja. The secular world celebrated it as a victory of law and constitutional propriety. When nothing was proved, all the chargesheets turned bunkum, the Supreme Court gave a verdict favouring theswami's release on bail, but no one retracted the strong, often abusive words used for the Hindu monk. It was met with silence as if nothing important had happened.
One Krishna Janmashtami night, another ochre-robed reformist monk, Swami Lakshmanananda, was murdered along with an aged Hindu nun, Ma Bhaktimoyee, in his ashram. Secularists tried to direct and guide the entire investigation till the arrested murderers confessed that swami's work among tribals made prosylitisation difficult and hence they took the violent way.
The media linked the violence post-Lakshmanananda's murder to various Hindu organisations and completely ignored the brutal killing of the sanyasi and the lady monk.
This Diwali, Hindus were labelled as 'terrorists'.
There is a university in Delhi which gets a large amount of Saudi grants, and which thought it appropriate to honour a Muslim painter whose nudes of Hindu gods and goddesses and Mother India were opposed by Hindus, with a Doctor of Philosophy degree, honoris causa. The same university's vice chancellor, in a display of public affection for those students arrested for treason by a Congress government, declared that he will fund their 'struggle' as they are his 'children' and they would be considered innocent till proved guilty.
The secular world applauded his decision as bold and highly moral.
A Hindu sadhvi has been arrested for her alleged involvement in the Malegaon blasts. But not a single Hindu organisation came out in her support saying she remains a member of the global Hindu fraternity and would be considered innocent till proved guilty and hence shall provide all the financial assistance to her.
I was thinking, suppose I start a 'support Pragya fund' how any Hindu saints and ashrams and mutts and leaders would come out in support?Doesn't she deserve help and support till proved innocent?
Unlike the sweet little students of the university's vice chancellor, who were arrested from the area of the Batla House encounter, Pragya was in Surat, giving a religious discourse when the Malegaon blasts occurred in September. Her bike had been sold years before. No one said the blasts were organised to make Hindu law applicable or turn the nation into a Hindu state. No one had quoted Hindu scriptures to justify what would be termed as a ghastly act, inhuman and un-Hindu.
Yet, there was a virtual celebration in the so-called secular camp, they were over-joyous as if they have reached the moon. Got it, they said, what we were saying for years! The usual suspects were on our TV screens, delightedly giving interviews and the media lapped up crispy descriptions like Hindu terror, Hindu bomb, Saffron terrorism. When they quote the Quran, seculars cry don't label them Islamic terrorists, but Hindus being Hindus must be termed as Hindu terrorists to keep a 'balance'. So those who insult the memory of a martyred police officer show their glee over having succeeded in bringing the term 'Hindu terrorism' in vogue. What greater shield could an Islamic terrorist have wished for.
They were itching for this day and they have got it.
Last year too the 2006 Malegaon blasts were blamed on Hindus. Later the agencies proved they were done by SIMI. This year, Union ministers were demanding the ban on SIMI be lifted in spite of truckloads of evidence of the organisation's involvement in deadly blasts and waging war against the State, the most heinous crime in any part of the world. And the investigations, gathering of proof and the hard, difficult investigation, were done by government agencies.
The same honourable members of the Union cabinet demanded banning Hindu organisations, in spite of having no evidence of their involvement in violent activities or working against the Indian State. Those who ignore the Supreme Court's verdict on a terrorist who was accused waging war against the State, demand that Hindu organisations be banned for theirpatriotism.Once they drove out the tricolour folks from the Kashmir Valley, now theyassassinatetheir morale in the rest of the country.
For the sake of Muslim vote-bank, SIMI had to be helped and Hindu organisations needed to be shown as being involved in anti-national activities. The balancing had to be achieved, like the U C Banerjee Commission. Much before the honourable commission could start work on Godhra, leaders were declaring during the Bihar election campaign -- many of whom loved to be seen with an Osama look-alike -- that the Godhra train inferno was a creation of Hindus so that they could get a chance to pounce on Muslims.
So much for their secular credentials!
This time, too, they had tremendous amount of pressure to nurse their vote-banks. Elections are right here, campaigning has begun, chances look very bleak seeing the public mood, and voters seem already restless with high prices, growing inflation and an insecure atmosphere. Hence a communal divide would help. If such considerations can be credited as having instigated the 'creation' of a Hindu or 'Saffron' terrorism, would it be a far-fetched conclusion?
The intelligent people who could create a Bhindranwale, or a Raj Thackeray, to 'defeat' one or the other political opponent, could also be trusted to repeat the feat elsewhere.
So, this time, the police version is not to be distrusted or questioned. The first suspicion about police action is reserved for the Batla House fraternity. Hindu monks do not deserve it.
The term 'Hindu terrorism' looks so attractive to secularists. Proof, evidence, and final acquittal may take year. But the articles, front page edits, condemnations, further isolation, and cornering of the saffron side, would help someone. That's enough for today.
That this way may turn more dangerous tomorrow is not understood by the perpetrators of the secular pogrom of words against the Hindu Right. Every nation has a soul and a colour. India's soul is Hindu civilisation and the colour is saffron. Samuel Huntington described America as a Latin Christian nation, and it doesn't make her any less to give other communities second-class citizenship.
It may be the first time in its four hundred years of democratic history that a Black might be sworn in as President, who would take oath on the Bible. Who would demand that it's an unhealthy tradition, as non-Christians also built America? Traditions, colours and the inner core are always sacred and nations preserve them at all costs. If the same elements are humiliated and turned into icons of shame, nothing remains except a dead, meaningless smoke of rootless words.
India's Hinduness is that essential element to define this nation. We can't be explained through Saudis, Marx or Bethlehem. Or through Arabic or Latin or Persian. India is explained by the Ganga, Krishna, Ram and Gandhi. By Kumbh Mela, Sanskrit chanting, lighting of the lamp, Namaste, the Vedas, Guru Nanak's teachings, Guru Gobind Singh's valour, Buddha's global message of peace and compassion and Mahavir's ahimsa. India is deciphered by Dhammapad, the Gita, the Guru Granth Sahib and a divine love that saw the emergence of Radha and Meera. That fired the imaginations of doyens like Tagore and Vivekananda. Together they make a mutually supportive group of Indian streams of faith that welcomed and accommodated without murmur all other ways of worship brought here through various means.
Every single persecuted community in the world found a respectable space here, while they were brutalised, uprooted, converted and 'museum-ised' in other countries. The legacy of tolerance and plurality is the legacy of the Hindus and all those faiths born and flowered here. It made Taj Mahal possible and Jesus adored by a non-Christian majority. You deny them this place of honour, make them shrink in a defensive shell, and you lose India.
For just a comeback to power? And how!
Ram Sethu becomes a target of destruction, Ram is denied, Ram's history linked with the bridge is mocked at, Sita's persona is caricaturized in public, the shrinking Hindu population and their conversion become victory signposts of the secularists, Hindus driven out of Kashmir are deleted from all lists of secular concern, Hindu temples are taken over by the atheist State and their revenue used on non-Hindu areas, while not a single non-Hindu place of worship is taken over or 'managed' on similar grounds by the governors! More than sixty thousand Hindus have been killed by terrorists in various actions during the last three decades, five lakh have been uprooted and turned refugees, but no one shares their grief or respects their courage, but terms them terrorist in a matter of 24 hours, that too relying on media hype and an election platform?
After centuries Hindus got freedom that should have meant a free space for them to flower their culture, language and traditions. After all, the invaders came to attack and loot them and raze their temples. Wasn't it a matter of logical right that they should have been honoured for exemplary resistance and resilience and showing an extraordinary tolerance towards all those communities whose leaders had been in the forefront to deprive them of basic human rights?
But instead, the victims were portrayed as aggressors and humiliated for their colour and faith. What has changed since Ghauris and Ghaznavis and the inquisitionist Portuguese left?
They killed us but never portrayed Hindus as terrorists. This secular dispensation is celebrating Diwali with that label gifted to Hindus. It will not remain unanswered. Hindus as a mainline faith never never never believed in any kind of cowardice that's the hallmark of terrorism we see today. Killing innocents, shooting at fellow citizens and the dreaded midnight knocks just for the reason they wear a different faith.
If that was the case, the way Islamists quote from religious scriptures and declare their religious intentions while committing ghastly acts of violence, how much ever disapproved of by their co- religionists living and enjoying democratic freedoms, Hindus too would have shown the same streaks immediately after their women were gang-raped and kids murdered in Kashmir. There was no revenge in the rest of the country. Not a single Hindu soul would ever justify any act of terrorism ever (and please don't refer to exceptions to corner Hindus, see the principal stream). Born reformists, they would revolt if anyone did that.
But I am afraid the secular hate-mongers are pushing Hindus into a difficult corner without a space to be heard. Not a single 'mainline' newspaper publishes their views, though any number of assaults on them are a matter of routine. This is creating a grave situation and it's a warning signal that can be ignored only at the peril of the nation's great legacy of pluralitity.
Tarun Vijay is a director of the Dr Syama Prasad Mookerjee Research Foundation
http://www.rediff.com///news/2008/oct/27tarun.htm
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