Sunday, October 19, 2008

Sunday Excerpts

The Op-ed columns in the Sunday Express make for disconcerting reading. This week all three stalwarts turned their guns on India's weakness in the face of ongoing economic turmoil. Here are some interesting numbers and arguments -

The Turning of the Wheel - 'Out of my Mind' - Meghnad Desai

Nehruvian Socialism: It should be said that Nehru only nationalized two firms - Imperial Bank of India, which became the State Bank, and life insurance, to create LIC. The economy grew 45% in 10 years in the fifties. It was his daughter who nationalized banks and tried to take over trade in food grains. As growth collapsed and inflation increased, she nationalized even more until Emergency had to be invoked to protest (Indira) Gandhi Socialism.

Whoever wins the next election will concede the demand for job protection and large uneconomic subsidies to sustain the protected jobs. For a spoiled middle class which enjoys $50billion of petrol subsidies, Socialism means even larger subsidies on jobs, to sustain low EMIs and for higher education in elite institutions.

TAVLEEN SINGH - Still a Land of Starving Millions

Global Hunger Index reported last week that more than 200 million Indians live in hunger and that 47% of Indian children are malnourished. Conditions in parts of Madhya Pradesh are as bad as Ethiopia and Chad and our infant mortality rate is worse than war-ravaged Eritrea. Despite our economy growing at 8% annually since 2002, three-quarters of our population lives on Rs. 25 a day.

These are sickening figures but Indian newspapers hate poverty so the report was virtually ignored here...

SUDHEENDRA KULKARNI - Importing a 'Made-in-America' crisis

$ 10.3 trillion denotes the outstanding pubic debt of the United States of America as of 17 October 2008. Just three years ago, at the end of 2005, it was $7.9 trillion, which itself was about nine times its 1980s level. The National Debt Clock at NY Times Square recently ran out of spaces.

America's gross debt amounts to 70% of the country's GDP this year.

Four-fifths of US borrowings are from foreign institutions and governments, including Government of India, which as invested in dollar-denominated debt instruments issued by the US Treasury.

(US has been fighting wars in foreign lands using borrowed money)

  • In US economy interest rates are kept artificially low for a prolonged period of time, citizens were first addicted to consumerism and then the culture of 'living the good life' by borrowing.
  • Americans spend $800 billion more than they earned. An average American family owns 13 credit cards, and 40% of them have a balance.
  • US Household debt grew from $ 7 trilion in 2001 to $14 trillion in 2008.

An entire industry of financial jugglery came into being to translate greed into profits. An this non-productive industry of 'financial products', and not the real industry of making physical products became America's primary business. Manufacturing today accounts for only 12% of USA's GDP.
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