Fear not in your “Life” but in your “Practices” you morons, you investment bankers!

We, the Wall Street Occupiers are not Dragons(like you bankers) but Paragons of Liberty!

This should be the ideal slogan of the “Occupy Wall Street”. I have thought on this for days and came up with this slogan!
So,
What triggered the Arab Spring?
Inflation plagued by age old state sponsored corruption.
Then what has triggered Occupy Wall Street? Two things:
Arab Spring and,
Deflation hidden under the veil of inflation induced by corporate corruption. This sounds tricky.
What triggered Anna Hazare’s movement?
Yet again, Arab Spring and Corruption. What things are common among these three contemporary revolutions?

The answer is again, “corruption”. It seems now that this evil has no place in a civil society and the common men and women are already fed up with this universal menace and malady inflicting humanity.

The Next big thing to evolve is the New World Order. A “common order” so to be deliberated by the common people of the states decreed by them, for themselves and for their political practice that would, in essence, include all the basic tenets of a free market democracy except one malady- corruption.

This New World Order inevitably is-“Free Market Democracy”. The CRUSADE against Wall Street corruption has already gained much heat and momentum by the day at the Wall Street, and will perhaps become bigger when the night falls. And by the dawn, a new sun will rise over the horizon with fresh breadth of the new morning carrying the lampoons of the order of the day-Freedom from Corruption, Freedom from oppression, Freedom from political prejudice and Freedom from the realms of financial subjugation. That will be the new independence day of our entire world. And which is predestined to happen.

This is not a demise of capitalism, but would help rather strengthen the art and practice of true capitalism that has given us many things, and has lifted us from the realms of poverty, and would help us to achieve what the Nordic countries have achieved: a true welfare state!, And then, about what we dream of to alleviate the poverty and hunger in the contemporary world as Prof. Amartya Sen has envisioned-the Africa, Latin America and South Asia. Let the fire spread like a beacon to the distant and far corner of the world carrying the lampoons of the new world order, to Africa, Latin America, Bangladesh, Sri Lanka, Somalia, China, India, Eastern Europe and to all those countries plagued by the common ailment of corruption.
Now let us come to the point that I have mentioned at the beginning of this critique considering it as a common cause of the revolutionary “Occupy Wall Street”.

Now the story begins:

As is evident now, the future of American economic policy now lay most in the hands of the people of America, the 99%, who have risen to their heights of agony and pain unleashed by the crooked politics of the state and by the illicit and immoral synergy between the investment banks with the bankers. Those collective pains have crossed the limits of human rationality, by the lies which are cozy and by the truth some believe to be crazy, and by the corrupt practices hidden through covert actions that ripped off the true ‘wealth of a nation’ (some $202trillion)- alongside those little savings of the common people. The common men and women of a great country, a country that fought hard through the passé of time to deliberate and install human rights, democracy, tolerance and liberalism are by themselves kept under the umbrella of darkness, as well, through hidden deals and cozy parables delivered by their patrons and the elected, now have nowhere to go-but head straight to the consign of the events, the place where it all began -the Wall Street.

The sheer occupation of those deprived now is to occupy and reestablish the commitment of truth and demolish the domination of lies backed up by the evil precept of corruption.

This is not a fight between the rich and the poor, neither between capitalism or socialism, nor between the bankers and their laid off employees, but a fight to install the righteous position of democracy, to end the malady of corruption hidden illusively under the veils of crony capitalism shielded by powershift politics, the power of which, is however conferred by the people, and for the people only in such faith that this faith shall not be broken. But greed loves to displace moderation. And this greed surplussed those lives that live for grandeurs of future shaped by crooked practices and concealed efforts (the investment bankers), for their own palatial house, evicting the righteous from their dwellings. And now, when the fire is lit up, it must reach out to the corner of the darkness where the sculpture of crony political capitalism is crafted. The violent form and shape of corruption coerced by the top 1% has been exposed, and uncovered are their lust for their dark money, which carries the parody of sinister, the lampoon of corruption and the satire of covetousness.

The angels of generosity are no more there, and have been replaced by the fiend of chastisement. People who had such faith in their money which has lost its value and worth, and had faith in depositories as banks which turned out to be their deadliest trap to misery, agony and despair, their last savings as pension funds, their hope in their times when they cherished would bring them recompense for their hard work and service, are all but gulped by those evils of lust, greed and self-indulgence. These are tough times and indeed, harsh moments but it is these times that encrypts new moments of change in the pages of history that mankind follow through. So, the future of America and her economy now lay most at the alms of those who have lost everything, and who are destined to reshape and mold them in the way that would install again the true faith in American democracy and free market capitalism.

The reverse is that,
One should press hard for public voting rights in investment and commercial banks to deploy new managers and BoDs for the time being. And we know the future is bright and open.

The pure reason for critique which might solve the problem, and perhaps which originated this debacle is the lack of "patent enforcement in the financial sector". Now the time is ripe enough to check those tricky innovations and confer patent rights to the righteous so that these exotic instruments gets public in the right manner, franchised and regulated.

That will be the true future of American Economy-Free Market Democracy. And that would again reshape the future of the world- A New World Order.

Crisis of Confidence by Default

The “Voice of Euro zone” has been quietly subdued by the countercyclical fear of defaults! And the economic powers are becoming pitiful being at the end of their resources.

The grandeur seems to have been short-lived and failed to reach the magnificence of a United States of Europe! Yet, one shall keep in hope alive as crisis often do wonders, though seldom astounding.

Continued fiscal doldrums in Euro zone has literally put countries in crisis of confidence by the panic of default- the very same dialect which USA has avoided by hook-and-nook, just a few weeks ago, with much pain still left behind. The theory of growth now lays “much in paper than in practice” which remains confined to mathematical theorists of growth. The actual growth in the Euro zone in entirety has been of one such nonplus 1.1%.

Ideological Divisions

And now, the whole of the EU continent has been holed up in debt crisis. Lack of prudency in monitoring fiscal balances and failure to move on sustainable fiscal track aided by mismanagement of public debt has led to political turmoil shaken up by economic crisis, which at present, strictly undermines the confidence of the euro zone currency- and the European Union, by itself. The rise of disparity due to differences in governance, political and ideological both, over bond purchases which has taken its first toll in Juergen Stark, who resigned from the ECB governing council, is giving a hard time to policy makers- in one of the hardest of times the EU ever faced since its conception. The ECB’s purchase of troubled nation’s debt that has somehow given an opportunity to escape from the blunt of the fiscal debacle for those countries counting their untenable and mountaineering debt has indeed created a political firestorm giving policy-makers a run for their pedagogical opinions. Political and ideological divisions at the independent ECB has taken a front seat that mellows down on the rationality of backing those member countries with bailout funds until its own treasury gets exhausted! Those Countries who were listening in silence and observing in despair, now, have become more thoughtful than usual, and are much active in charting out in what could be the worst case scenario.

The subject of recurrent bond purchases almost concealed a serious import of “wholesale” fiscal calamity, although the balance of perception has been relatively on the default side. Ever since the euro came into existence, it has been under some kind of attack-whether speculative or from systemic crisis, whilst the present bond market meltdown have placed it under existential threat.

There have been some genuine causes behind such ideological imbalances. As Prof. Krugman has rightly pointed out, that the policy makers did a pathetic job of targeting inflation rather than monitoring fiscal balances whereby, (inflation) actually never posed a greater problem than the problem of default itself. They would have acted in anticipation in devising deficit-cutting measures as a “priori” and hence the questions arise- of what were the three musketeers (ECB, IMF, and the EC) doing all through these two years of euro-zone crisis as mariners and foreseers who failed to see a much deeper yet impregnable trouble? People know what the IMF was going through-fighting scandals. But what about the other two? Sleeping?

Well, the real thing is, you need to blame the government policy makers ‘even’ if they were right, and yet, must hold them responsible when they are wrong. It’s a great paradox, the greatness, which cannot be hired by default!

Oration of Aid and Sermon of Charity!

Well, I do not want to condemn in haste without taking into consideration of the adjacent circumstances in foretaste.

In effect, they (the ECB) did just one thing, undoubtedly (in) sensible, to maintain price stability, but they also failed to anticipate some sort of fiscal calamity that would undermine the real efficacy of those EU policy practices. And what are they doing now? Buying up bad debts to prevent crises of the states! Indeed, that is their ‘Sermon of Charity’, backed up by “Oration of Aid” at present. Now, I do think that they really need to rethink on their inflation targeting monetary policies yet over and in entirety again.

A central institution like the ECB is predestined to posses’ variety in judgment and diversity in policy making. The trio seems to have forgotten all these norms of normative policy practices since they singled out a simple policy of targeting inflation, that’s all, and though it was indeed questionably necessary, over and above, what was required to be mandated-a monitoring of the physical health of euro zone states, which was however, ignominiously ignored. And now, the situation has molded up in such grandeur that it has really become tricky to decide “whom to attend and who to leave out”. The ECB until now has bought €135 billion worth of bonds of Italy, Greece, Spain, Ireland and Portugal. It is now faced by the “dual dilemma” of restructuring Greece’s public debt along with buying Italian and Spanish bonds. Greece, as euro zones’ weakest debtor, has already received €110 billion as bailout, and more may be in the offering.

So now, as I have already mentioned in my review a couple of weeks earlier, don’t expect asperities of austerity. That won’t work.

The ECB have already provided preventive credit lines but those were not enough to immunize against such dreadful disease of default! With fear of default that risks investor capital flight and run on the banks, less attractive becomes a country’s bonds to already unwilling investors unless offered at a very high interest rate. What would have made those bonds attractive, if ever backed-up by proactive govt. measures to infuse new life in those ailing old economies, was never a distant prospect, neither a far-flung nebulae. A trouble-free strategy of maintaining budged deficits was all that was mandated as an obligation to maintain the value of the euro zone currency, as well, the value of the member states themselves. What was required was to oversee the structural issues underlying the origin of fiscal imbalances and mounting debt, by reexamining the path over which the fault line has passed- by resolving issues related to stagnating growth, and by judging things with commitment.

Shouting "impeccable, impeccable" won’t resolve systemic crises. A pure instance of such impeccability is the present state of affairs, which is indeed an impeccable sample by itself.

In effect, it’s the same old idiom-“growth” herein and over again which rules the board and displaces the weak for the mighty. Neither is any hope for Dennis Robertson’s once reproached chance of reviving foreign trade as an engine of growth in Euro zone-barring Germany. Error of irrelevancy is sharp as it reminds me of a theory once in ardent demand, and once successful enough- Rostow’s ‘takeoff’ induced by innovation drive back in the 19th century in the US as a sharp rise in savings rate which had been much critical for economic growth, and which is much relevant at this moment. Vintage things don’t age faster than new stuffs. And so, new stuffs are discarded as quickly as they are introduced. But it’s these new stuffs that once do indeed become priceless vintage!

And hence, it seems that the great Western powers are loosing out in the “art of competitive innovation” to their sister Eastern concerns- to China in great extent and to India, in some measures. Yet, you can’t blame these two righteous competitors since these two are beautiful places for learning about real growth to begin with, and more generous place for them to end in.

Sources: IHT, NY Times, Economic Times

Where is “The Real Chance” of a Double-dip Recession?

Indeed, rationality says that there is some chance of a recession along with few questionable probabilities. And arguably there are certain clinical manifestations and diagnostic symptoms that points to a highly perceivable recession looming across the US and the Europe. Consider many circumstances. The economic state of affairs isn’t doing well with faltering economic recovery and job growth rate which has fallen bellow previous records. We are waiting for the NBER academic review of a probable recession as of late. They are doing this for the last eight decades ever since “Wesley Mitchell” started to analyze business cycles by around 1916 and he was the front runner of measuring business cycle timings as well of the term BRICS-about 80 years ago (Jeffrey Sachs actually didn’t invented the term BRICS- he rather innovated Mitchell’s concept!). What a great foreseer who foresaw nearly 100 years ahead of his business days!

Coming “directly to the point” and without inventing parables, I would say, one of the prime real indicators of a probable modern economic recession is perhaps and without doubt- the stagnating FFR, or the Federal Funds Rate. This unique yet powerful Federal Reserve instrument (interest rate) after declining for more than a couple of years since 2008 isn’t moving upwards at all. And here lay the hidden problem!

The FFR rate should have moved by April or say, June by most this year (2011), which it did not! And I was alarmed by the fact that if this trend continues for another 2-3 months more, it can profoundly spell a rebound recessive doom for the OECD economies. And that’s what it is technically lingering right now!

Some interesting connotations;
The FFR touched a formidable low at 1% on June 29th 2004, at the peak of the great credit boom, when, the then Fed governor Mr. Greenspan kept the policy rate indicatively low during the period of 2002-2003. This ultralow rate scenario fuelled credit boom, we all know that. Well, it was a causal effect to cushion the economy from the dotcom bubble burst of 2000. Indeed, that helped revive the American market economy from the aftermath of the first millennium crash (dotcom). The FFR started its journey high up in the air from August 9th 2004, when it was increased by 0.25% bps. Symbolically, the FFR peaked incrementally to 5.25% at the mid of September 17th, 2007 say, when Mr. Bernanke took over as Fed Chairman just a year before from Mr. Greenspan. It’s quite interesting to note that the FFR rate also peaked to 9% during 1987-1988. Questions arise of whether this high FFR rate did actually precipitate the 1987 market crash, since, there are no other potential predisposing factors being found yet, and I “can’t” answer that (which is beyond my cognizance).

If that’s so, then it’s the rate hike which peaked (5.25%) during the September 2007 and this was “the time” when markets globally started to become volatile, and write-downs and default news circulated throughout the USA.

Speaking in the “wind” won’t do any good, so one requires backing up with some clear facts.
And the fact is; it’s time for some “reality show” in economics!

My question is-

Who’s the “d.g” who moved the rate and messed up things? Why did they take that bold decision to raise the interest rate and that too, based on what rationality? Or was it inevitable and beyond human control? Why it went up so much and now why is it stagnating? Who’s gonna answer?

Now, it’s exactly four years from today, when the rate peaked, as well, exactly 3 years since the Lehman Bros went bust on September 13th. What a strange coincidence!

Nevertheless, those ensuing rate increases set-off uncompromising adjustments in amortization schedules of subprime loans extended on lax documentations to less creditworthy individuals, who found it comparatively difficult to pay back the installments as well as the interest payments all due to intricacies in Adjustable Rate Mortgages (ARM) settings, a common story with which we all are familiar.

You may find more about these from a beautiful paper written by Gary Gorton from the NBER in 2008.

The “crux” of the matter is however, to pin down on the main culprit-here, the FFR rate or “the d..” and some evidence I have provided that might be of some interest to the readers, just to tag the main villain-Federal Fund Market Rate. And that isn’t moving; since there is no ensuing inflation target and if this particular trend goes through October this year, I may well assume that there is a “sure shot” recession in the line. Comparably better, Euro zone is at least experiencing some dynamicity in its ECB policy rates (due to some inflation targeting).
This is the reason I am rhetorically shouting as an inflation hawk, to see some real dynamicity in the FFR rate. That would do just good enough to stall a double-dip recession, from my viewpoint.

The rest is-well, Mr. Bernanke knows.

The inherent risk of raising it too quickly yet again may result in counter-calamity similar to one above. What a dreadful trap it is- and where is the way out?

President Obama has a trademark answer. His oratory proposal of including an expansion of a cut in payroll taxes- and the much awaited mission on new spending on public works carving out $447 bn through 2012 may help infuse some “life” in the FFR rate and the economy. Well, only if it goes through in full part and parcel!

Else, there’s every possibility that a recession is too near at hand. There’s nothing to get bunged up however. And even if you don’t really need a PhD to buck up those things like business cycles, neither it requires you to be a financial geek. It’s that simple as ups and downs in our life cycle.
This is business cycle. Good old stories retold in new flavors. It’s gonna get moving as life goes on...they are looking at it, kid.

Sources: NY Times.

Politics of the Public Divided by Questions of Austerity and Affluence

Take it easy. Ease, easing makes it easier.

If they would have done those “easiest” things before, just by making things easier for (by bailing out) Lehman Bros and all those in the great line of fire back in the summer of September 2008, things would have been different today!

And now, that’s what the Fed actually is doing by instituting Episcopal policy of buying long-term debt which you may call “quantitative easing”. Perhaps, there are no other better options at hand and in practice. Get the economy moving, let the people borrow and set the platform where people unhoard cash and invest in productivity. Paying up such a great price for past indecisiveness!

One strange coincidence-sooner Greenspan left started the economic and financial firestorms!
Actually, this was what attempted by the Bank of Japan, quite unconventionally, but it did in fact some good job in the early 2000. And it was masterminded by the very same economist that we know today, Mr. Ben Bernenke, to whom we often entitle with adoration- Big Ben.

So, I am not much “optimistic” about those views and tell you why it might not work out in identical way, since; both are quite different economies; though they now seem to converge on a common theme- deflation trap. The commonalities are remarkably identical. Both Japan and the USA have ultra-low interest rates, both are not growing and both do not have any substantial inflation. Only, Japan scores better in employment and job creation, even in these hard times (Japanese unemployment rate @4.1%).

Rather, I am quite optimistically agreeable to Mr. Andrew Ross Sorkin’s ideas, a columnist of IHT who has quite fittingly noted that tax breaks wouldn’t help much. Let’s see why.

It is impulsively cheeky to conceive that tax breaks will help create new jobs. Betting on temporary tax cuts as a tool to combat unemployment and stimulate growth is not an ideal option anyway. That might primarily risk in tax revenue losses-which, the govt. is already losing money in all sides and from most corners (through bail-out programs)! But there is a compromise too. Well, this sounds tricky- as it would create an environment where every company would ask for tax breaks in future for a job- and in return, carving a niche to evade the radars of taxmen. Rather, what Obama administration has geared up for, say, pay-roll tax holidays to incentivize hiring? This sounds tricky too!

What a pity for the foreseers that would have them forced to observe this doomster side of the story- incentivizing employers to give employment. Well, not a bad idea, since, special programs have been underway as SEZ’s and as others’ in the emerging economies with great success-but not anything like this kind of horse-trading! The US govt. is in the line of begging jobs from the corporate sector for the sake of economic growth. What if even after such tax breaks they don’t hire quoting bleak business environment?

The sheer reality is; businesses tend to hire only when there is some business. And there is some business since there are demand for goods and services. And this “demand” comes from the consumers who opt to buy those services, and only when, they have enough discretionary savings (money and credit)!

So, I don’t see tax policy as a covenant tool to fight the malady of unemployment, yet, it is powerful enough to make the balance of statements go either way for other causes.

Back to the real story;

So, three things require get to be going “moved” if we really are to hope for some authentic change. First, inflation, and that would bring back growth(and with that if not jobs, then it would be terrible!), second, dynamicity in rates, and last but not the least of all, give a free hand to the Fed to use it’s interest rate choreographic tools and machineries to target inflation when that breaks the fence. To speak of, let’s talk about inflation hawks.

Those measures have seen rolling back the Japanese economy into growth path which foresaw a 25% rally in the Nikkei in 2003, the same year when Germany went into a recession. But things cooled off much faster, and in a much worst silhouette. When the world markets started to rally, the Japanese economy plunged back into a terrible stagflation from the beginning of 2007, and from which, it never regained which saw 3 Japanese Prime Ministers in and out of the game within a span of four years. Political chaos swapped economic doldrums. Who wants that in the long run- do you Mr. Krugman?

I think, Mr. Krugman might have perceived that those Fed announcements were rather awful.
So, the effect was rather transient and unsustainable. The reason I doubt what good would it do this time! Consider the scenario.

The strength, tenacity and resilience of the US economy seem to have disappeared. Even Big Ben’s rhetorical speech at the recently concluded annual Fed gathering at Jackson Hole failed to infuse renewed interests in the economy. Mr. Paul Krugman rightly embarked that the policy announcements are not in line and lacked substantive goals. The political as well as the economic ‘think tanks’ are thus struggling hard to envision an ideal economic policy path that may chart future growth prospects of the ailing economy plagued by uncertainty and despair. Some ideal growth-oriented policy shifts are required, and there is indeed urgency for that. Political opposition has almost crippled fiscal policy, according to great many policy makers. Markets are oscillating in a see-saw fashion, and volatility has become much trendy. Businesses are apprehensive of whether a repeat of 2008 is in the line. And job-holders are anxious about what appraisals would come in their way. While the East looks at the giant Western economy with few last hopes of any acts of extraordinary.

So, what has all this got to do with the job market? More Austerity measures- an easy answer. Note that Greece is already holed up austere ring!

With the scrambling economy and the uncertain macro-fundamentals, pink slips and layoffs are silently becoming symbolic these days. More than a dozen large banks in the United States have nearly lost faith in a growth rebound story told and retold many a times, and even with a historically low interest rates, bank lending has been depressed so far- a substantial source of bank revenue. Trading in volatile markets is expensive, and thus to maintain competitiveness, they have embarked on programs aimed at cutting operating costs and have emblematically announced layoffs as cost cutting initiatives that may further compound the problem of unemployment.

So, what did the Fed actually do to tackle the problem of fiscal melancholy? They are in fact going for quantitative easing policy. Can’t place a blame game here and above. They have indeed a very few policy options on balance. And measuring the efficacy of those is taking much time-precious enough to act on immediacy. But as Mr. Krugman has emphasized, Mr. Bernanke could have deviated from those orthodox measures which would have presented a different scenario had been he given enough freedom to embark on some unorthodox policies (say, PRP, or public reconstruction program-backed bond issuance- I would tell you, they would sell well as like China!). But something is holding on to that freedom- and which is almost killing the last few hopes of economic recovery, according to Mr. Krugman, and I really agree on this, and do thank him for such rhetoric expositions. But the reality of the fact is we cannot believe in what we see often; that this could ever have happened right in the US heartland- and that too ideally in the land of ultimate freedom as the Statue of Liberty stands aloft on the Liberty Island across the Manhatten.

Freedom of thinking, in actions and in policy making is what that is destined for every central bank established with those motives in place. And political firestorm and backlashes have cut down that freedom to act independently, and in demand as and when the situation calls for. This is not central banking- rather, eco-political despotism. The Fed, if given that independency could have unveiled new policies however unorthodox that might help lift the US economy from the ever depressing state of low demand and high unemployment.

As Prof. Krugman has mentioned, America is now very much in a Japan-like economic booby trap. I have also mentioned this a few days ago just before the Fed announcements. That the Fed has a lot of tools (stuffs), but most of them are limited in activity, except the great “FFR”. God knows when they will find their own righteous place (both Mr. Bernenke and his FFR).

· There are very few proponents of growth oriented policy practices and a great many opponents of those however; yet, there is hardly any promoter of economic stimulus thus so far...except Mr. Krugman.

Whoever had started the “tax-fire wall” back in 2004, they will require it to douse it someday or run for cover- I can only tell you this, not more. Better listen to Billy Joel’s oldies... “We didn’t start the fire...” and the debate will go on.

Keep reading.

Some “Hard Decisions” and “Soft Bargains”...

I don’t fully agree with the author’s view published in an article yesterday in NY Times News Services. The author may be right on some aspects, but I have something more to point out. The US economy suffers from under-savings- that’s what I mean. They might have spent much, but saved too less. Those spending- quite rightly pointed out by the author, may be ascribed to military expenditures or homeland securities which however, can be well justified given the post 9/11 security concerns. But on healthcare, it’s like an odd-even puzzle. Can’t say those were too wasteful either.

Well so, things aren’t going as though they seems to be somewhere between a ‘tough bargain for a simple deal’. That was all mandated, and all which was required to keep ticking the hopes of a turnaround show. But to speak, The Whitehouse now seems to have become the hotbed for some diplomatic DJs. Indeed, perhaps they could go all the Gaga way...for some good music.

The economy continues to weaken. Productivity is slowing down. It’s not that about always having a whole piece of cake.

And not even that of forever having some good luck. It’s about morality which even a moron knows well.

• Indeed, President Obama still occupies important place in the hearts of the millions, not only in America, but in the entire world. And so is the reason he is trying hard to bring in some change-both in policies and practices. These days, he has but very few options except for a dip in the pink, well, you need to go into debt first. That’s the norm these days, yet unavoidable.
What is avoidable and can be averted is-a ‘hard luck’ for America from ever hanging in an innovation and productivity shortfall, as also, to avert a potential disinflationary shock. Well, let’s go a little deeper, down the line, a few decades ago, and review how things got fared up in those fair days.

USA had experienced post-war high unemployment rate a couple of times earlier, so it’s not unusual, and it peaked from 6% to 10.5% by the mid 1982. What was unusual was that, inflation was already double digit by 1979!

That was Volcker era, and he left a legacy. For three years following 1979-1982, the ultimate policy target of the Fed was to contain inflation. Well, inflation though did come down to 5%, but unemployment rate rose to double digit (10%). One retort led to another facade!

So what did the Fed try?

Under Fed Reserve Chairman Paul Volcker, they returned to previous interest-rate operating maneuvers and initiated a managed program which reduced unemployment rate to 6%. A decade and a half later, it was 4.7% by 1997, at the same time, when the Euro zone unemployment rate stood at 12% (even now, they aren’t better off yet). So, what brought down the rate? Did they “pass-off” the triad to Europe? Well again, this assumption is moronic.

Actually, the expansionary monetary policy of the Fed during the 1972 led to inflationary build-up. Following this, there were two oil-price shocks- from 1973-74 and 1978-79. But before that, the Vietnam War led to price acceleration due to demand surge. And the counter-inflationary monetary policies led to four successive recessions, starting from the summer of 1969 to most notably of the 1972-76.

So, if on one hand easy monetary policy led to inflation, countering that led to high unemployment rate on the other. And yet again, you need to be back on the same track. But things took different shape from the beginning of the new millennium. Low interest rate, coupled with low inflation triggered a huge credit boom. And when the rates rose, everything fell off. And it’s heading for a stagflation right now which actually never happened in the USA before.

So far, and so well. The Fed seems to be already “fed-up” playing the cat-and-mouse game of “chasingflation”- once inflation, then again unemployment rate, and yet again disinflation. The Fed nowadays is just hoping for 'baby one more time- come back inflation' and we will do the rest! But now, Dr. Bernanke is more concerned with the macro-economic stability for the time being, after so much of economic and financial market chaos. Note that he is armed with a more powerful economic but rather diplomatic stuff- the Fed Fund Rate.

• Dr. Bernanke belongs to the aristocracy of those star economists who have under their credit more than a dozen publications on the cause and effects of recession. So, it’s good to see that the whole of his tenure as Fed Chairmanship has been much devoted to experiencing what a grand recession feels like in practice.

So, it’s a great paradox of who will win the next election? But that doesn’t mean to give up to the political chores. Whoever wins, rationality has to be restored. Since, the synonym (other meaning) of the word “Republican” means “Democracy”, so, that’s all about the two face of a single coin. And that’s democracy after all, in a re-elected republic state. President Obama isn’t happy at all with all those diplomatic leg-pulling politics well adapted by the Republicans, to which, he accused them of holding back developmental initiatives.

Well, I don’t believe this, neither do I doubt.

Still, someone might have learned somehow, something from Anna Hazare- only, the place and the cause isn’t so cogent. But the timing was perfect.

Even if the global markets are fighting among themselves for more genial financial innovation and reforms, the real reform perhaps awaits from the general mass of America, through her people and practice.

Put that all together, you may still get a full one and a year half to observe how things get going, either gaga way, or a way out. The politico may have to take very often, rough and tough decisions, rather few “hard decisions” with some “soft bargains” just to make sure that America doesn’t fall back into an extra double-dip recession( a giant recession with a smaller one free!), and this cannot be some discount shopping anyway, since that would be too awful for the global economy at large.

A New Indian dream

Today is our Independence Day. This is a very special day for each and every Indian, whether at home or abroad. Exactly 64 years ago, our country got liberated from the British Empire. And from then on, we started to move on a new path with new hope, leaving behind the agony of being ruled by colonial power-Britain. Our forefathers and freedom fighters left for us a beautiful country spanning from the Himalayas in the north to the Kanyakumari in the south, from Gujarat in the west to the far eastern province of Arunachal Pradesh to Mizoram, and so is our National Anthem “Jana gana mana” covering each and every state and provinces of this great motherland. Today, we sing our “National Anthem” with full vigor that holds more than our billion souls together on a same string of love, peace, forgiveness, equality and liberty. This day, let us pay homage to those great freedom fighters, who are but our great forefathers, and who selflessly sacrificed their lives to liberate our country from Britain.

Freedom is Independence, and Independence is Freedom!
Freedom is the most essential element of our life, as also, for our country. From the shackles of bondage, while turning back the pages of our eternal history, reveals our freedom fighters among many, Mangal Pandey, Rani Laxmibai of Jhansi, Shahid Bhagat Singh, Khudiram, Netaji Subhash Chandra Bose and others who fought bravely for this great country, gave up their life and died fighting valiantly, taking bullets and gallows smiling all the way to reach the heaven of martyrdom. They did this because they thought for us, our new generations, and generations to come, and for this very freedom and independence which we have today, so that, our life will be free from oppression and suppression from the colonial power-Britain, and also because, we can think independently, and work autonomously, which we do today.

Today is our day to be reunited again, by the common melody of harmony and accord, joy and happiness and today is the day to reckon that our independence came after much agony and pain, we lost our greater parts of Bengal and Punjab, forever, following the partition. But again, this is also not the time to look back, but to look ahead for a better India, more prosperous, united and shining with splendor and magnificence while keeping our past hardships in the cover.
From that very auspicious day, August the 15th 1947, we started thinking independently, for us and our nation, collectively. And today, we ought to take that initiative again and reignite our soul to think united for a better India, full of opportunities and new prospects, as our country is racing past the time in full vigor, both economically, and politically.

India today is differently afresh, politically matured, and filled with vigor and potency, undeterred yet committed, firm yet flexible, competent and proficient, with our talent skillful and adept enough with our billion souls boasting just one “single unique dream- The New Indian Dream” that would fulfill those billion dreams. A dream that was dreamt by many, and now, it’s time to turn those into full reality. Nothing can stop India from achieving what other big league countries have achieved.

Our country is at the forefront of the world economy, with 8.5% GDP growth and a GDP on PPP basis at $3.5 trillion, the eleventh largest in the world by output, and third largest by purchasing power parity. This will soon double within no time.

Today, we can think about doing and achieving what any other nation in this world can do. We can also think about doing what others cannot even afford to do. That’s our ability spanning from our deep-rooted history of endurance through hard labour. This arrival on the global platform is different from our past. This is a new day, with new hopes, and no despair, but only bloom and blossom and let the world see what is happening in India, why is there so much of an “Indian Phenomenon”? And in no less time, India will not only catch up, but beat every other “equal” in terms of economic leadership and prosperity, in knowledge and in technology.

So how can one describe India?
Behold this great land of the people who worship Lord Shiva and start their day with a Sun Bath every dawn. India, yes, the mystic land of beauty where the Himalayas abode as the crown of this golden land, and where the Holy Ganges purifies the heart and soul of this ancient “land of the earliest civilization”, and where the oceans and seas washes the feet of this mystic land. Yes, this is our “Incredible India”! A country with a history as old as the history of the world itself, civilizations that was enlightened from the very beginning of sunrise and the country which taught the lessons of love, tolerance, peace, politics, medicine and economics, and what not? In effect, India boasts the largest diversity of her kind both in her ecosystem and her people, yet, united by the rhythmic string of a common song of love and eternal bond with her past legacy and her present people, to her future endeavors. Diverse food habits, customs and practices provide one an entirely unique ground for an inquisitive mind to go deeper inside the heart and soul of this GreatLand and unleash the treasure that this country boasts. India is never truly discovered unless one goes deep into the plain-land of this country, deep enough inside the country-life of Indian villagers which offers the only one-of-its kind in this planet.

About our Cultural and Anthropological Past:
Our Heritage:
Our heritage lies in our deep-rooted treasure-the origin of our knowledge, Veda and Bhagabat Gita that taught us morality, principles and ethics, gave us philosophy and adorned our minds with innumerable jewels that could be found only in this heartland for centuries. Yet, we take pride that we accept others views and adorn secularity in the matter of faith and religion. No matter, whether you are a Hindu, Muslim, Christian or Sikh, or Buddhist and Jains or Jews or Parsis, we invite all and accept all their belief, since, from a point of true intellectuality, it is very difficult to draw even a fine line among any religion, because, they all teach the same! And that is tolerance.

This country is the birthplace of some of the great sages of the ages, and of great personalities adorned far and wide, from the Far East to the Far west, and from polar north to the poles of south, and it is India, who taught the world about non-violence and so we have great leaders like Emperor Asoka and Mahatma Gandhi. And so is the birthplace of Gautama Buddha and his preaching’s in Buddhism, followed widely all across the world. And so we are proud to have great reformers in Swami Vivekananda, Bal Gangadhar Tilak, Raja Rammohan Roy, Dr. Rajendra Prasad, Motilal Nehru , Jawaharlal Nehru, Lal Bahadur Shastri, Dr. B.R. Ambedkar and Rishi Arobindo, among others.

It was a time when the world looked at India, through her excellence in education and knowledge, from far and wide as is evident from relics of Nalanda University (which is soon to be reopened). It is again that the West and the rest- of the world are looking at India again(look India policy), for the immense opportunities that she presents to the world, and share those in equitable vanity.

Indeed there are some problems of inequality and poverty, but these can all be overcome by the collective effort and participative role of all the Indians and to keep alive those dreams, and turn those into reality about -a New Indian dream.

“Jai Hind” and "Jai Ho...."

Is there a future without growth?

I doubted it. This was palpable, but in reality, not palatable. So, questions are invariably being raised on the issue of reliance on ratings and the rating agencies in regulation and for investment mandates.

And that’s not trifling nevertheless. The inebriated public borrowing practices of the US government that led to this ‘debt trap’ cannot but, invite downgrade and that was apparent. So I’m not surprised.

What I am surprised is at; the policy makers are up to some game planning that is undermining the theory of economic growth. They are fantasizing about a future without growth!

The social conception of unemployment has changed much since the last millennium. Now, the art of thinking about growth needs to be examined from a different perspective, given the regular bouts of business cycle fluctuations. And somehow, that equilibrium needs to be quickly restored.

See, you do all sorts of dim-witted things and expect people to admire you-that’s ridiculous! Actually, the ratings agencies did that exactly before the credit crisis. Well, they never expected those things that they call financial innovation (the mortgage-backed securities traded as wind and air-backed instruments) could take ugly shape, and few of them understood the intricacies, payoffs, risks inherent and details of those securitized designs. That was venture pollution, or rather speculative smog and the SEC is working hard to clean-off the haze. Inevitably, that required huge investments, rather bailout programs costing billions of much wanted greenbacks, thus making it weaker.

And now, they won’t do it again. Well, there is no payoff anyway. Mr. Bernanke is stuck to the great idea of zero-percent fed fund rate policy, just to stave off inflation that is never going to happen in the US, well, for the time being. However, in one way or other, these recent episodes will at least dampen global purchase of US debt. Mr. Bernanke since long time is strictly focusing on reviving the economy from a phenomenon known as Stagflation- a very common trend in Japan. Note that Japan’s debt is around 189% of their GDP, the highest so far. They lead them all (in the matter of debt). The toxic recombination of slow growth and high debt does worry everyone concerned with the economy since; Japan is still not out of it (the stagflation) even after a decade. Once, if the US is deeply ever into it, that’s sure to stunt the economy back into some spiraling no-growth-little-inflation story, at least for the next 10-15 years. That’s a bad bet anyhow.

But how is all that helping the American economy anyway? Is it creating enough jobs, bringing down unemployment levels or stimulating business sentiment or credit growth and uptake? The unemployment rate is stubbornly high at 9.1%.

Is there a future without growth?

A package of austerity becomes more painful during hard-times, we all know. It is not a takeaway piecemeal. What could have been imposed rather- enforcing the private sector to shoulder some of the burden of debt restructuring and their participation would ensure that they understand and respect what a debt crisis really means (People like Madoff). And that’s not just extending bailout funds to rescue those deeply indebted. There is something more than that- responsibility and restraint.

Everything works well during boom times. Things are taken as granted, even if they seem to be murkier. So did the happy business of credit therapy and leverage spas. They mushroomed all over the Wall-Street, in hidden alleys and gloomy corners. They did some brisk business. But those were so fair times!

Time is different now, and more precious than money. And it is running out.

America doesn’t have a labor centric jobs-for-votes electorate system, as like Greece or India. But that seems to be changing now. The recent Reuter/Ipsos poll proves that. As much as 73% of the results say that US is on the wrong track. As Ipsos pollster Julia Clark summed it up with a beautiful moral-“When the economy is bad, people look for a Change”. And so, there’s much to worry about a reelection campaign for the Nobel Prize winner President Obama who will be seeking a second term. The balance of power is tilting slowly against all odds. Now, it seems that the Republicans too aren’t as popular as they used be before the debt deal negotiations. So, what’s the third option?

Learn from Chindia! Cheekooo!!!

Well, there is at least one common principle among the Chinese. They don’t think too much about what has happened!

Things destined to happen has already occurred. No use in churning back those gone-by episodes. You can’t change your past, yet you can make a huge difference in your future, and so, they try to make their present as memorable as possible. They work hard to achieve those. Americans will have to work harder, even more than they used to, to put their house in order.
Expect a new decade of cheaper “Made in Wonderland-(America)” products flooding the world markets. Those would be much cheaper than China I can tell you! And better off course.

As for us Indians, we do not used to think too much as well complicated and hence, we seldom play with risk. However, we do think too much about what went wrong and do spend half of our life lamenting about those episodes. So, we are rather half-way down the line between US and China. Yet, for the Chinese, they have a huge appetite for victuals, but a very small one for their hard-earned money. That’s the reason they invest in risk free productive assets (they invest in labor-intensive industry, having the highest number of SEZ per country in the world) and hence savings rate more (savings rate @54% of GDP). Same goes with us, Indians, the exception being, we do not invest humanly in productivity and yet, saving rate is still one of the highest (savings rate @35.7% of GDP) - due to over-regulated labour market, and off course, economic growth!
As for the Americans, ahoy, they followed an entirely innovative trend- invest all your money in risky assets and just do the job of counting your chicken before they hatch. Hey, that’s funny.

The reason they are working hard to count those ever burgeoning national debt and the clock is still ticking! In terms of savings rate, Japan and Germany are still better off, both at 26% of GDP, compared to USA’s 13%.

That’s a different way of thinking after all! And the reason that is why it is; America-the Wonderland! They took the risk, which did pay off in those good times and the economy is still now by far the largest. A huge, complex economy is sure to have many intricacies, a few hiccoughs can occur, and problems can indeed get too tricky. A few sneezes from the US, and the rest of the world is destined to catch cold.

So now, rather than thinking too far beyond temporal domains, they have much important work on too near at hand to clean up the mess.

Nobody desires a ghost economy!