The lost horizon of the emperors (by R. Vaidyanathan)

A must read article for everyone is here as published by Indian Express on 21st June 2009. The copyright is as mentioned in the link.



At every seminar on financial matters these days, there’s one question that lingers — even during the coffee breaks: will the economy recover, and when? And, it isn’t about the Indian economy but that of the US. I reiterate it will take at least 40 quarters — that’s a decade — for America to recover. I tell this, and am shunned — like a swine flu patient.I still maintain the US is going the banana republic way what with a national debt of more than $10 trillion, which is more than 80 per cent of its national income. Not only that the budget deficit is skyrocketing; it’s expected to reach more than 10 per cent soon. Last year, the US financial regulatory agencies came up with plans of financial support worth $6.8 trillion — comprising temporary loans and liability and asset guarantees. And by the third end of the first quarter of 2009, the financial support programmes reached $13.9 trillion.The federal deficit as percentage of GDP is now expected to reach more than 10 per cent. There will be furious printing of more treasury bills and notes. The expected inflation is going to rip apart the society and the largest selling item in the last quarter was handguns and rifles. Already intriguing reports have come about attempt to smuggle more than $134 billion in treasury bonds by two Japanese citizens through the Italian border into Switzerland. It could be a ploy by CIA or really a daredevil act by some foreign government to destabilise the global financial system. I am waiting for the creditrating agencies like S&P to downgrade the US economy like other developing countries and prove their independence from the sole superpower. High hopes. Angus Maddison in his pioneering work for OECD on the global GDP share for the last 2,000 years has brought out an interesting fact pertaining to India and China. As early as the 1820s, China (33%) along with India (16%) and other Asian countries had a share of more than 55 per cent in the global GDP. By the late 20th century, it has declined to 29 per cent. The China percentage slid to 12, India’s to 5.In the next 20 years, India should plan to have a share of at least 30 per cent of the global GDP. These imply that India should be racing ahead. If India grows at 8 to 9 per cent in the coming decade, then it can become the world’s third or fourth superpower.But it also implies that, parallely, the West should decline in terms of their importance in the share of global GDP and world affairs.Since the total is 100 per cent, any increased share for India and China would automatically reduce that of the other two.Unlike the Great Depression of the 1920s, the current crisis for the West is not just an economic crisis. It has a dimension of demography and conflict (ongoing war with radical Islam) to it. Demographic, because Europe is slowly fading away from the global map. It used to have more than 20 per cent of the global population during the First World War, and now has less than 11 per cent. What’s more, it’s expected to shrink to three per cent in as many decades.The reproductive rate in many European countries is less than 1.5, whereas the stable one is 2.1. In the case of US, the crisis is more severe due to its declining savings rate and a long-term tendency to nationalise families and privatise government.Social security and Medicare system in US is classic case of nationalising families.Such a declining Empire is dangerous to deal with. To start with, it does not want to accept the fact that it is a declining Empire.Plus, it wants to retain its sole power status when it realises that its writ does not any more hold good. It tries to bully India.Whenever a US official visits India, the beards in J&K become more active. Remember Robin Raphael of the nineties vintage who propped up the Hurriyat Conference? India recalls with anger the role Robin Raphael played during the Presidency of Bill Clinton in encouraging the formation of Hurriyat Conference, the umbrella organisation of moderate terrorists and terrorised moderates. Her only name to fame was she studied together with Clinton. When Hillary comes to India, the level of violence in J&K will increase. I wish someone in foreign office in India plots the correlation between visits of US officials and mob frenzy in the downtown Srinagar.The declining empire realises that its elbowroom is becoming lesser and lesser with the Pakistan army that owns and controls a country. Islamabad always has a peculiar way of coming to discussion on any issue.They keep a gun on their own head and argue with others. That is, they always threaten others with catastrophe if money is not given to them. This is the most sophisticated begging anywhere you can see in international relations. Bribing them won’t stop the plotters against the “US Satan”.The next thing the declining empire does is to cringe and appease. The speech by Obama in Cairo is of that variety. He ascribed every human scientific endeavor to Islamic civilisation. Forget the Hindus who invented zero, forget Ptolemy and forget Copernicus. Just rewrite history. The third thing a declining power does is to pressure others to sacrifice on its behalf to buy peace with bullies. It cannot deal with radical Islam and if the ISI (that is what is critical — not the ten per cent Zardari) needs to be appeased with a piece of J&K, then the US will try to arm-twist India.Herein comes our ability to understand declining powers.We must internalise that US is a declining power and our bureaucrats must chant it hundred eight times on a daily basis. We should also remember that USA is very uncomfortable in dealing with democracies.It’s natural ally is always a dictatorship since they can be “use and throw” friendships.Dealing with democracies is messy since they talk about a domestic constituency and behave similar to USA. A mirror image of itself is unacceptable to “sole super power”. As India continues to grow at more than 8 per cent — and simply due to the power of compounding emerges as a major power — the desperation of the declining power will be more since our terrorist neighbour who has a the largest begging bowl and highest per-capita AK-47s will blackmail the declining power to appease him to keep peace.What is in Indian interest is the continuation of civil war in Pakistan for, say, another ten to twenty years — ambient conflict — sort of auto-cannibalism which will be a dynamic disequilibria — situation.Other option is to have at least three or so states created out of that entity. The concept of stable Pakistan is passé and a mirage and that should be unequivocally communicated to the declining empire.Remember the last century. The declining British Empire — now it is the sick child of Europe but still with a grand illusion of influencing Indian sub-continent — created havoc by partitioning the land. The current declining empire may be tempted to do something rash to protect itself. And therein lays the challenge for our political leadership and mandarins. Dealing with a declining empire is more difficult than dealing with a stable empire.

Brainfall tests

I took three pastime tests today:

Which Seinfeld Character Are You?

You are Jerry. You prefer to sit back and watch the world rather than to participate. You can seem aloof and uncaring, but beneath your distance is a unique take on the world that that consistently draws friends to you--and your apartment.

Find Your Character @ BrainFall.com


Which Friends Character Are You?

You are Chandler. You're funny and that's why people like to have you around. You're also a great friend, and when someone you care about is in trouble, they know to come to you for some level-headed advice followed by some sharp sarcasm.

Find Your Character @ BrainFall.com


How well do you know Friends?

You are Chandler. Can your Friends IQ be any higher? Not by much! You are Chandler. You are so close to knowing everything that it's crazy. You need to pay just a little more attention to your friends and then you'll be obsessing with Monica!

Find Your Character @ BrainFall.com

Tata Sierra, a temptation

Last June, I was in Bangalore around this time. I'd been planning to buy an old car for some experimentation in a village and I used to like Sierra as a child. So giving into temptations, I just walked into a used car dealer's and asked him if he had any Sierra Turbo. He had two and I asked him to get me the latest: 2001 model. Somehow, I was in a hurry to leave Bangalore and waited for hours for him to get the vehicle. By then it was pretty dark and I couldn't see the vehicle well. I liked the drive off it and trusting the fella, closed the deal. Next day, I picked up the car, but saw that it had many issues! Still, I paid heavy for the car, spent a lot over it on electricals, some A/C work and interiors, new speakers, insurance and drove from Bangalore to KA villages.





Unfortunately, I had to leave KA and end up in Vasai in MH, before any experimentation or major drives began. I drove fully packed to Mumbai and since five months, Sierra is lying mostly unused, sucking dust, with children having a gala summer vacation, scribbling over it with whatever they find, even stones or sharp objects. By such hurting, I decided to sell the car, got new art leather seats, JK Brute 4x4 tyres, A/C cooling coil, receiver-drier, expansion valve... well, the works, . I spent around 2.75L over all thus far. The offers I got are ridiculously low to even discuss. Best ones among them were with one chap agreeing up at 2L and another at 2.2L, if I get it to him. I planned to leave tomorrow, until few minutes back, when I went for some minor issues and fell in love with Sierra once again! I'm tempted to keep it now for a while and think over more, because I'll never find a 2001 Tata Sierra again.

I suppose human desires never end and I'm falling for it once more, but then again because I bought the vehicle for some use last year that didn't work out yet, I don't need to do away with it at such a loss.

Traddiction

In the days when nonsensical additions to English dictionary are taking place with words such as Jai Ho, I'm working on something similar myself. Due to economy crisis, people are struggling to make any money anywhere in any way. For example, out in the US, people known to be generally nice earlier have suddenly turned cheats. They are dumping their cars in far away deserted areas or burning them and claiming insurance, instead of wasting effort to sell those when there are obviously no buyers! For some reason, they don't seem to know that insurance cos. themselves, among other financial institutions, are in trouble.

In India, OTOH, the stock markets are celebrating the strong growth prediction by a seemingly strong govt, post elections. They are attracting lot of foreign investments too, possibly to take away the profits once a certain stage in markets is reached, causing the Indian stock market to crash. Despite knowing this for a fact, some small players like me are trading in extremely risky and volatile conditions. That, my friends, is what I'd like to call as Traddiction and is defined as follows:

Noun
  • (n) traddiction: being abnormally tolerant to and dependent on stocks/ stock markets that is psychologically or physically habit-forming (especially even when losing money).
  • (n) traddiction: an abnormally strong craving to trade in stocks regardless of profit or loss.
Adjective
  • (adj) traddictive: causing or characterized by traddiction "traddictive stocks"; "traddictive behavior"; "traddictive markets"
Noun
  • (n) traddict: someone who is so ardently devoted to stock trading that it resembles a traddiction) "an F&O traddict"; "a day-traddict"; "a short traddict"
  • (n) traddict: someone who is psychologically dependent on stock markets; abrupt deprivation of the shares trading access produces withdrawal symptoms
Verb
  • (v) traddict: to cause (someone or oneself) to become dependent on share/ stock trading, especially a risky one.

Afpak, Indopak... er, Ameglobe?

Birds of a feather flock together, don't they? US funding Pak billions of dollars for the "anti-terror" effort, went with a last minute withdrawal of a rider that the same can't be used to buy weapons against India. Not that I'd any doubt that US doesn't really want peace in Asia or elsewhere, but for those who thought otherwise, it raises serious doubts now! Why else would Pak showcase their new acquisitions of arsenal by firing across the LOC without any incident or accident? This happened today yet again, twice overall in a month and more than 30 times till last year since an Indo-Pak ceasefire was signed in Nov 2003.

I reckon another reason for the last minute rider-removal to be need for more accounting too; the very place that US failed its economy. While Musharraf blew off billions of dollars on buying anti-aircraft missiles to shoot down non-existent Taliban planes, US really didn't know what was happening sitting there. They did ask Musharraf on where did those huge sums of monies go. Here's how the talk went:

Bush: Hey dude, whatever happened to those $10B we gave ya to fight those with turbans... er, whatchamacallit...

Mush: Taliban? Yeah, we almost got them.. that money really helped some, but we need more.
Bush: You spent it all?!!!
Mush: Of course! What good is keeping money lying around in Pak, someone might steal it, you know?
Bush: Hmm... I guess. But then what all did you get?
Mush: We got those arsenals, er, machine guns, bombs, anti-aircraft guns... all that stuff.
Bush: Do Taliban have planes though for you to buy anti-aircraft guns?

Mush: Have you forgotten 9/11?
Bush: Hmm, yea, yea, I get it.

Bush: May I see the bills?
Mush: What bills?
Bush: The things you spent billions on?
Mush: Er, no one told me I got to keep bills... do you know how difficult it is for us to account for billions of dollars? I mean we don't even deal in dollars here. The conversion rate keeps changing every day. Then, there's problem with rats eating into our files. And most of what we get is not really original unless you guys send it yourselves. Moreover, there's some taxation issue that I don't fully understand...
Bush: Stop! Please stop! I came here because I don't know what this economy screwup back in US is; and my credit card bills... Oh! God, its endless... please don't start with the accounting again.

Mush: ... er, did I say we need more money?
Bush: Yea, I'll arrange that right away, before I get thrown out in elections.

Post elections, Bush was replaced by Obama and the world cheered... well, meanwhile Mush too was replaced by Zardari and the world cheered again. Some sanity was finally hoped to prevail.

One of the first things that Obama realized on signing into White House was that US economy was in crisis and the only way US comes off a recession is by wars. "But then, before beginning a new war, lets fund some existing ones and get a headway" is what he thought. It dawned on him that very moment that Pak needs more money to fight terror... lets start there. So he called on Zardari for a chat that went so:

Obama: Hey dude, whats with Afpak these days? Have you enough money?
Zardari: Enough money? What are you kidding me? I thought that you'd be smarter than that miser Bush...
Obama: Yea, yea... I get it. Lets get down to some accounting this time, eh?
Zardari: Accounting? Do you want us to fight your war here or keep accounts?
Obama: Hmm, thats a tough one. If I could afford to pay you to keep accounts, I'd rather call you here for US accounts... but then its war against terror thats going to solve all accounting problems. Lets forget those books for a while, but promise me that you won't use our money to fight India.
Zardari: A gentleman's promise, it is.
Obama: Okay, that will do for now, but you have got to sign it too.
Zardari: Sign it? You mean an agreement and all?
Obama: Yea. We're going to put in a clause that will say that you can't use the anti-terror funding against India.
Zardari: What if we say Osama is hiding in India?
Obama: Good one... lets not do that for now, we'll cross the bridge when we arrive there. It might even cost me my next election bro!
Zardari: Okay, but I'm not going to sign anything. I thought you were smarter than Bush.
Obama: Stop insulting me and come to the point.
Zardari: Well, your country is as it is in recession. Why do you want to mess up further? If we sign that nonsense and break the clause, you are going to have to sue us or stop funding. The latter goes against your war-based economy. The former means having to spend lots on lawyers. Moreover, since we don't have any money to fight you in court, you'll have to fund us for lawyers too, which means further crash in your economy...
Obama: Yea, yea, I get it... screw the clause, but just hold on to your guns for a while, okay?

So, really, is the funding for Afpak, Indopak or Ameglobe?