June 9, 2010

Uncle Sam’s Scam

Filed under: Economics — Tags: , , , , — HarryCool @ 5:48 am

I can always post a link to this article, but then by god I like this dude so much that I want to post his full article on my blog.

Jug Suraiya, 08 June 2010, 09:51 PM IST

The Regency age dandy, Beau Brummell, who is credited with having invented trousers, also invented an economic model which could be called a debt spiral. When his tailor would present an unpaid bill, Brummell would order another three outfits, also on credit. Eventually, the dandy owed his tailor so much money that he became the tailor’s most valuable customer, whom the tailor couldn’t afford to offend in the slightest way for fear of forfeiting all of Brummell’s IOUs.

The world’s supposedly richest nation, America, has perfected Brummell’s economic model: US debt has spiralled not just through the roof; it has rocketed out of the stratosphere. China alone holds some $895.2 billion of US treasury bonds. All the countries in the world, in some measure or other, perforce have to keep US dollars for the simple reason that almost all international trade including the oil trade is conducted in American currency.

This represents the biggest financial confidence trick in the world. For what it means is that like Beau Brummell the US is living off the fat of the land on an ever-growing mountain of debt which is being financed by the rest of the world.

The US stopped making things cars, ballpoint pens, TV sets years ago. It didn’t have to make anything. Other countries made all the things that America needed and America bought everything from these other countries. Using US dollars of course. What else?

So the only thing that America actually had to produce were US dollars, or US treasury bonds. Whenever America has felt it was running out of cash as happened in the wake of the subprime crisis, when the Obama government authorised the pumping in of almost a trillion dollars into the economy to avert a total meltdown all it has to do was print more money. Then it could go on throwing away money like it’s nothing but bits of paper, because that’s exactly what it is: bits of paper, more and more of which can be printed up, as and when need arises.

The so-called Almighty Dollar is not backed by anything of real value. It is not backed by gold. It is not backed by any tangible goods that America produces and sells to the rest of the world, because America doesn’t make any such goods. There is only one thing that imparts value to the dollar: universal gullibility.

America has successfully pulled the wool over the world’s eyes. Like Beau Brummell’s tailor, the international community has been conned into paying to keep the US in the high-spending style to which it has become accustomed.

The more America spends i.e., the more dollars it prints the more the world laps up those dollars. The euro was supposed to be a counterbalance to the dollar monopoly. Unfortunately, fiscal indiscipline (an indiscipline learnt from the US) in Greece, Ireland, Spain, Italy and Portugal, has eroded confidence in the euro. The result? International investors are busily buying dollars and US bonds as a hedge against economic uncertainty. That’s not like a drowning man clutching at a straw; it’s like a drowning man clutching at an electrified wire to save himself. The dollar-rush is largely the cause of market volatility in India and other parts of the world. How does this affect India? If foreign investors pull out of India and park their cash in US bonds as they’re doing Indian enterprise could be starved for capital, shackling economic growth.

What can the world do to stop the US like a monstrous Beau Brummell take the pants off us? Maybe it’s time for the world’s two fastest growing economies, China and India, jointly to come up with a viable alternative to the dollar. They’ll never do it, of course. But it’s something to dream on. A yuan-rupee hybrid. The Sino-Indian yupee, anyone?


November 21, 2009

Da Vinci Koda

Filed under: Funny — Tags: — HarryCool @ 1:52 am

Another masterpiece from my favorite – Jug Suraiya in the Times of India

Best-selling author Dan Brown has written a new international chartbuster called Da Vinci Koda which deals with a secret more profoundly perplexing than such eternal conundrums as the name of the houseboat Jesus stayed in during his incognito sojourn in Kashmir (was it in fact the Merry Magdalene ) , and the encrypted evidence in the Dead Sea scrolls which proves that Deepak Chopra is a direct reincarnation of Mary Poppins, minus the flying umbrella . Yes, Browns sensational new book is about the greatest mystery of all times and climes: what happens to all the money that gets unearthed in Indian scams Scams have long been a natural phenomenon in India, like the monsoons, except far more predictable . And each new scam seems to be bigger, better and generally scammier than the preceding one. So far so good. But what happens to all the lolly, the loot, the crores and crores of boodle, involved in each and every scam Where does it go Take just one instance in the Koda case. A henchman of Jharkhands ex-CM Madhu Koda is said to have paid Rs 640 crore into a nationalised bank. Let alone Rs 640 crore, you try putting in Rs 64,000 in cash into any bank, nationalised , non-nationalised , or piggy, and the IT heavies will jump on you with hobnailed boots and take you off screaming to the dungeons to confess under pain of torture of being repeatedly read out Article 17, sub-clause 15 (B) of the Income Tax Act (1951) as to just how in hell or hawala you got your filthy little hands on all that moolah, all 64,000 smackers worth of it.

Yet, in the Koda case the teller at the banks cash counter apparently didnt so much as blink an eyelid, let alone hit the alarm button which would make red lights flash and sirens go off WHOOOWHEEE ! WHOOO-WHEEE ! summoning the Flying Squad. Nope. None of that. Just a polite: Rs 640 crore to be deposited, sirji Certainly, sirji. And would sirji like a receipt For the crores as well as the suitcase in which the crores were carried Here are sirjis receipts. Aur kuch seva

Rs 4,000 crore give or take a zillion in the Harshad Mehta scam. Rs 1,400 crore in the Ketan Parekh scam. Rs 20,000 crore, and still counting, in the Telgi fake stamp paper scam. Rs 7,800 crore, as of now, in the Satyam scam. And now Rs 4,000 crore, plus an iron mine or two in Africa, in the Koda scam. And going back into proto-history there was the grandmother, the dadi, of all scams the 64-crore Bofors scam which began it all and has been immortalised in verse: We look Bofors and after/ And pine for what is not/ Our sweetest scams are those that tell of saddest loss. (Bofors Only Rs 64 crore Never mind onions, potatoes and pulses. See what inflation has done to scams. Itll get to the stage where the average middle-class family wont be able to afford them anymore.)

Inflation notwithstanding , scams remain a staple in India. But the curious thing about our scams is that as more and more of them are exposed involving more and more money, the less and less of the loot is ever recovered . If a percentage of the scammed-off cash were to be got back, wed not only wipe out our fiscal deficit but could transform our Maoists who are holding the country to ransom into portfolio managers for no-longer-dispossessed tribals whod all become HNIs, high net-worth individuals. Where does the scammed money go Thats what Dan Browns hero archaeologist Robert Langdon has to find out in Da Vinci Koda. Is it buried in an unmarked cache on the continent of Atlantis, has it been sucked through a black hole into an alternative universe called Haloom, which is moolah spelt backwards You dont have to wait until Dan Browns book comes out to discover the incredible truth. Just send 5,000 bucks in unmarked, used 100-rupee notes and youll receive a sneak preview of the devastating denouement by return post. Address your application to P.O. Box SKAM 420. Hurry till stocks last. jug.suraiya@timesgroup .com http:// blogs.timesofindia.indiatimes.com/ jugglebandhi/

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