Equality of power leads to equality of wealth and opportunity.

As we wish everyone a prosperous 2017, our welfare, as individuals, is tied to the welfare of our nation and the welfare of the nation depends on its economy. The vote for Brexit, the election of Donald Trump and the resignation of Matteo Renzi, following the comprehensive rejection of his proposal to amend the constitution, have alarmed economists the world over, who see this as an epidemic of populism. Ruchir Sharma, of Morgan Stanley, compares 2016 to 1914, when World War I resulted increased protectionism and falling trade, which led to the Great Depression and finally, to World War II. Christine Lagarde, MD of the IMF, makes a case of reducing inequality. "Our research shows that reducing high inequality makes economic growth more robust and sustainable over the long term," she writes. But surely we cannot have economic growth without efficiency, and efficiency results in inequality. For instance, increased efficiency of labor results in the same amount of goods being produced by fewer people, but may result in some people losing their jobs. So those in employment earn more while those who have lost their jobs struggle to survive. Prof Noah Smith confesses that economists understand efficiency, which they can calculate, but tend to avoid discussions on fairness, which is seen as philosophical. "Whether inequality is bad depends on how it comes about and what it does. There is nothing inherently bad about inequality," writes Nobel laureate, Angus Deaton. Globalization may have brought great income inequality in India and China but it has pulled hundreds of millions out of poverty. The problem is that politicians need huge amounts of money to get elected which gives unfair advantage to the rich. "Rich people should buy yachts, establish foundations, or become philanthropists, not buy the government, which should be taken off the market," writes Deaton. Trouble is globalization has come to mean free markets, wherein finance is free to go anywhere in the world but people are restricted within national borders. The enormous liquidity unleashed by central banks has resulted in bubbles in stocks and bonds which are certain to collapse, thinks Anantha Nageswaran. Prof Kaushik Basu is alarmed by the displacement of workers by machines. He cites the example of Eastman Machine in Buffalo, New York, which exports textile machines to Bangladesh and Vietnam. "...it employs 122 people, who account for a mere 3% of its total production costs," he writes. Total freedom for markets leads to disaster. Finally, Prof Raghuram Rajan says that democratic accountability leads to good governance. Sadly, not in India, where democracy means an ever increasing number of poor people who can be bribed with populist measures to win elections. Kind people think that equality is economic, actually it is of power. Politicians are all powerful and their power depends on inequality. Inequality is here to stay.

Does Xi Jinping know that it's all in the economy, stupid?

Xi Jinping has been consolidating power ever since he became President of China. First he became the Commander in Chief of the army. Then he was named 'core leader', an honorific enjoyed by Mao Zedong and Deng Xiaoping. On social media he has been hailed as 'mighty Uncle Xi', an imperial term used to greet the emperor in the past. The Chinese Communist Party, CCP, holds a National Congress every 5 years and the next one will be held in the autumn of 2017. The National Congress elects the next generation of leaders of the Party, including the General Secretary, members of the Politburo, members of the Central Military Commission and members of the all powerful Standing Committee of the Politburo. Having concentrated so much power in his hands surely Xi Jinping will be able to pick his people to all the positions of power? "But looks can be deceiving, and his consolidation of power may not be as unassailable as it seems," writes Professor Minxin Pei. After the Tiananmen massacre of 1989 the Party has avoided power struggles by picking the next president and prime minister years before the hand over of power. "In 1992, Deng Xiaoping picked Hu Jintao to take over in 2002. In 2007, the party's top leaders agreed to anoint Xi as Hu's successor, five years before the latter's term expired," writes Minxin Pei. Xi is assured of the next 5 years as President but may not agree to pick his successor. That will give him the options of picking his own man in 2022 or to stay on for a third term. Five of the 7 members of the Standing Committee reach retirement age next year and opponents will resist fiercely if Xi tries to get his own people elected to those positions. What weapons do his opponents have? The economy. There is debate about how big or risky the debt burden is for China. Some economists think that since most of the debt is in Chinese yuan and domestic savings are 50% of GDP there is no danger but the Bank of International Settlements says that red lights are flashing for the Chinese economy. No one knows for certain but some guess that the government is suppressing the debt crisis to keep the economy growing at all costs. One indication of a weak economy is the value of the Chinese currency, the yuan, which has been falling against the dollar. To protect their wealth the rich transfer money abroad, which weakens the yuan even further. The government has limited the amount of currency that maybe transferred abroad. There are 2 problems. The yuan has been accepted in the International Monetary Fund's Special Drawing Rights, which means that it should be tradable. And then, there is the underhand way of transferring money abroad, known to all of us Indians as 'hawala transactions'. If Trump helps a little by increasing taxes on Chinese imports the mess could really hit the fan. 2017 is going to be fun.

How can you convince others if you cannot convince yourself?

Harvard Professor, Ricardo Hausmann writes that all politicians tell lies, but they are most dangerous when they start believing in their own lies. "All governments lie. A few believe their own lies. But things get dangerous when they act in order to be true to their lies," he writes. He points to his own country, Venezuela, where first Hugo Chavez, and now Nicolas Maduro have almost destroyed the economy with their policy of "lavish spending, expropriation, price and foreign-exchange controls, and reckless borrowing abroad" and blaming the US for their total mismanagement. The 100-bolivar note, which was worth $46.5 in 2008, has fallen to $0.03 today. He then gives figures to try and prove that Donald Trump is lying about the effects of Nafta on jobs in the US. He says that Mexican value added was 7.7% of US manufacturing in 1993, but it rose to 10% by 2014, which is a gain of $50 billion. With average US productivity of $150,000 it represents 330,000 jobs in the US. We do not understand how value being added in Mexico can increase jobs in the US. Does it mean that Apple manufacturing its products in China is increasing jobs in the US? If so, why is Apple holding $200 billion outside the US? Economics is a strange beast indeed. While there are incessant attacks on Donald Trump, political correctness prevents any honest examination of Barack Obama's record. Recently Obama suggested that he could have won a third term easily. FDR he is not, so why the giant ego? "My name may not be on the ballot, but our progress is on the ballot," he said before the election, in September. Well, the people rejected him and his vision. He must wish he was in Africa where rulers run for third terms by force. Burundi is in a state of civil war after President Nkurunziza refused to step down when his term ended and now Joseph Kabila, of the Democratic Republic of Congo, is refusing to go after his mandate expired. Having made a mess of Libya by bombing Gaddafi, which led to the death of Ambassador Chis Stevens, he did not kill Bashar al-Assad of Syria. Whether it was because 10% of the Syrian population are Christians and support Assad's party we do not know, but his support of rebel groups has kept the civil war going for over 5 years and resulted in nearly half a million deaths. Yesterday, Russia, with the help of Turkey, announced a ceasefire which seems to be holding. So, in retaliation Obama expelled 35 Russian diplomats and levied sanctions on certain Russian individuals and companies. This despite Julian Assange saying that Russia was not behind the hacking of Democrat Party emails and the hack showing how the Party worked against Bernie Sanders in the primaries. At home Prime Minister Modi has convinced himself of his greatness. He is portraying himself as a crusader against corruption when his actions have converted India into a nation of money launderers. You can only convince others if you believe your own lies.

It is all because of a Russian after all.

Normally, a new year is just an excuse for having a few drinks and making silly resolutions which no one keeps. But this year there is a hint of excitement because of the unexpected victory of Donald Trump who has no experience in politics or government and hence no track record. We maybe at the other side of the world from the US but his policies will affect us. It is possible that the Prime Minister, Narendra Modi banned high denomination notes on 8 November, the day of the US election, because he expected Hillary Clinton to win and things to continue as before. But with Trump's victory he is running around changing rules everyday, sometimes twice in one day. Yesterday, he announced that anyone possessing more than 10 banned notes after March will be fined and imprisoned for 4 years. So if you find some notes in the pocket of a pair of trousers that you forgot about you go to prison. Brilliant. Trump's economic policies will be vital for us. Our IT companies are preparing for a reduced number of H-1B visas under which Indian workers on lower salaries could be taken to the US for a limited period. HCL is already looking to employ Americans. It is not just about the US. What will happen to China and Europe will have a big impact on our economy. The European Central Bank decided to continue with its bond buying program till the end of 2017 but with elections in France and Germany, the 2 core members of the European Union, no one is sure how the EU will fare. The Bank of International Settlements predicts a credit crisis in China. This could be severely exacerbated if the new administration decides to go ahead with taxes on imports into the US while making exports tax free. Anantha Nageswaran in certain of economic crisis in Europe and China and predicts a recession in the US if interest rate goes up any higher. If that happens stock markets and bonds will fall all over the world and fund managers will rush into safe US treasuries, which will make the dollar stronger. In the past a strong dollar resulted in a number of crises. A strong dollar could hurt our growth even though exports might get a boost. Companies, which have borrowed in foreign currencies to take advantage of very low interest rates abroad, will suffer and fuel prices will go up, raising retail inflation. With a severe contraction in money supply, because of demonetization, the rupee could go into free fall. That is why Modi is frantic to push us into a cashless system. Why such panic? Apparently it all began in Russia in 1863 when a man, named Nikolai Chernyshevsky wrote a book titled,'What is to be Done? Stories about the New People'. Ayn Rand was influenced by the book and Fed Chairman, Alan Greenspan was her disciple. He reduced bank regulations and interest rate, known as the Greenspan Put, which resulted in the crisis of 2008. Hence all the gloom. All because of a Russian.

We disagree with the 3 wise men. Are we wrong?

Three distinguished professors of economics, Jadish Bhagwati, Vivek Dahejia and Pravin Krishna, have written an article appreciating the demonetization of currency, unleashed on the nation by the Prime Minister, Narendra Modi. They seek to dispel certain beliefs which they think are false. They say that even if most of the old currency comes back to the banks the government is bound to gain. Since no one knows how much black money there really is, the guess is that out of Rs 15.4 trillion in banned notes around 30%, or Rs 5 trillion, is black. The professors calculate that if people had paid income tax on that money the government would have got Rs 1.5 trillion but now the government may get Rs 2.5 trillion because of the penalties it will extract. Already Rs 14 trillion is back in banks and there are still another 3 days to go. It is amazing that no one has thought of the simple explanation that most of the cash money is held by the poor and the middle class and the reason for the popularity of the Rs 500 note is that retail inflation has made everything so expensive that smaller value notes are of little use. It is not corruption as experts seem to believe. The really corrupt do not keep billions of rupees at home. They either launder that money into white or invest in assets such as real estate, gold or the stock market, by round-tripping it from abroad through hawala. The professors believe that withdrawal of so much cash from the circulation will not have a contractionary effect on the economy because all this money coming into banks means that more money will be available for loans. Loans for what? If demand disappears why will companies take loans for further expansion. Banks are facing Rs 6.7 trillion of default on corporate debt so they have little to lend. On top of that they will have to pay interest on the Rs 14 trillion deposited so far, which will be a lot of money. The professors feel that black money going into Jan Dhan accounts will benefit the poor who will spend it so the economy will expand. Not if most of the money being deposited is theirs and they have lost jobs because construction and the unorganized sector have shut down. Some think that the real intention of Modi was to push India into a cashless economy. If so how? Millions of Indians cannot read and so will have difficulty in understanding mobile or other types of payments systems. They will be at the mercy of thieves. None of our banks are likely to spend millions on upgrading firewalls against cyber attacks. If you lose a banknote you lose a finite amount but if someone hacks into your debit card they can empty out your entire savings. Finally, the professors feel that demonetization will not destroy the trust of the people. The people do not matter because we do not have black money, but the real crooks will shift to other avenues. When you are sitting in dollar land it is hard to understand.

If the police could run the economy it would be easy.

Our most esteemed Finance Minister, Arun Jaitley said that taxes have to be globally compatible. Pious thought. First, he should have talked to his Prime Minister, who was talking about increased tax rates on long term capital gains, at the same time. Markets fell by near 1%. By "globally compatible" we presume he meant low taxes with simple rules which everyone can understand. So far there is little sign of that. Foreign investors have no idea whether they are to pay 10% or 40% on capital gains on share transfers. These are people with enormous knowledge, so if they do not understand what chance have we? The government wants to combine all indirect taxes across all the states so that the whole of India becomes a common market with easy transport of goods and services to every citizen. Which means that the tax should have one rate and be simple so that every grocer and tailor understands what to do. But it seems that there is going to be at least 4 rates with added cess on certain products that are considered to be sinful by our holy politicians. Politicians do not trust each other, parties are suspicious of other parties and the states are in conflict with the central government, so consensus is difficult. Economic growth may fall steeply as the effects of demonetization works into the economy, which means indirect tax collections will drop due to lower consumption. States are demanding higher compensation from the center to fund social schemes to win elections. So, what "globally compatible" tax rates is Jaitley talking about? Is he talking about the 57.1% income tax rate, as in Sweden, or is he talking about 0% rate as in Dubai? But it is not just about rates. It is about what we get for the enormous taxes we pay. Politicians live in enormous luxury in palatial bungalows, with gun-toting security, free travel and healthcare while we get nothing. There are 579,092 VIPs in India. People see no reason to pay taxes while politicians are enraged at, what they see, as an attack on their entitlements. In their suspicion they have made the GST so complicated that every business will end up filling endless forms and tax officers are given targets to fulfill, so they resort to severe repression of taxpayers. Behind Jaitley's double-talk was a threat. He said that not paying taxes is "improper or immoral". If a big thug steals our money and we steal a little back, is it wrong? It maybe improper but it is certainly not immoral. The US is contemplating huge taxes on imports which could impact our exports. A fall in exports, a sell out of our stocks and bonds by foreign investors and the severe contraction in money  supply, due to demonetization, could see a big fall in the rupee. That will reduce growth even further, says the Bank of International Settlements. And that will reduce tax collections. Jaitley is a lawyer so he thinks of using law, the economy belongs to us.

When people believe in ghosts, why the surprise at fake news?

As 2016 gradually fades away a host of pundits are giving their opinions about the events that took place this year. Regardless of their political views all agree that the peoples of the world are angry with politicians, Brexit and the election of Donald Trump, and people are no longer listening to reason, a town in Macedonia has got rich by publishing fake news. Anil Padmanabhan writes that a physicist, named David Bohm discovered some 5 decades back that we have stopped listening to each other. "Just scroll through the myriad WhatsApp dysfunctional groups you subscribe to and figure for yourself how there is now little distinction between fact and fiction or news and views..," he writes. Pundits seem to live in some other world. Vast numbers of people believe in God even if no one has seen Him or Her. People also believe in ghosts. If people did listen to each other why would there be so many divorces? In the US about 50% of marriages end in divorce, the rate in India is lower, but growing fast. The lower rate in India could be partly due to the very low rate of employment among women. In the 18th century Rev Thomas Bayes wrote his theorem which shows that people use the same set of figures to arrive at opposite opinions. Anklesaria Aiyar is contemptuous about the way people are voting for right wing parties. "When things don't improve despite changes in government, the veneer of civilization peels off and dark passions blow to the surface," he writes."Surly voters take refuge in conspiracy theories, blaming all ills on foreigners, immigrants, ivory-tower experts, minorities and other hate objects." As an "ivory-tower expert" himself he should ask why. Are Germans wrong to blame the Angela Merkel government for the Berlin attack? The killer, Anis Amri was both an illegal immigrant and a minority. One year back 130 people died in terrorist attacks on Paris. In January of last year, after the Charlie Hebdo killings, Israelis offered a software which would mine all the data and point to terrorist cells most likely to mount lethal attacks. The French refused. It is a good thing that Francois Hollande is not standing for reelection, he will be trounced. When the left wing Politico publishes a piece on how Obama manipulates the news what are people going to believe? When the mainstream media abuse voters as a "Confederacy of Dunces" and calls them "racists, xenophobic" they have a right to be angry. Today all the news is concentrated on suffering of people in Aleppo, with not one report about what is happening in Mosul when the US has killed more than a quarter of million in Iraq already. Before pouring scorn on people the pundits must examine what they write. Maybe they will understand why we are so angry.

Narrative will not decide the economy, the rupee will.

Politics is all about creating a narrative that the greatest number of people will share, wrote Prof Ricardo Housmann. So what is Prime Minister Narendra Modi's narrative about the sudden withdrawal of large denomination notes, called demonetization? "There is pain due to my decision, but there is more gain.." This is the old socialist nostrum practiced by all politicians in India. Which is that rich people are all corrupt and if all their money is taken away the poor will become rich with government handouts. "There used to be news about the coal scam, 2G scam...After November 8 announcement you saw what happened." This implies that all corruption has suddenly vanished. Not one of those guilty of all the scams has gone to prison. Yesterday he claimed that it is the beginning of the end for the corrupt. Is it? First Vijay Mallya flew out of Delhi Airport in March with 7 large suitcases and yesterday it was discovered that arms dealer Sanjay Bhandari has left the country, without his passport, which was impounded by the government. Prof Hausmann argues that curtailing corruption does not result in growth of the economy. "Policemen may stop asking for bribes, but that won't make them better at catching criminals and preventing crime," he wrote. Modi underestimated his opponents. Already Rs 12.44 trillion, out of a total of Rs 15.44 trillion, in old currency is back in banks and by 31 December it is expected that very little will be left out. So Modi has changed his tune to making India a 'cashless society'. However, Modi is not the originator of this idea. Prof Rogoff has been going on about banning $100 notes for a long time. German economists have been debating getting rid of cash but the Bundesbank reported that 79% of all transactions in Germany in 2014 was in cash. One economist, Lars Feld said that cash is "printed freedom" and without it governments will have total control over citizens. Elaine Ou writes that becoming cashless means that banks have the power to refuse a transaction, giving them control over our money. According to the UK government banks are the highest risk of money laundering, with a grade of 158, accountancy service providers are second, with a grade of 90, cash is third with 88 and legal service providers come fourth with 84. Which means that accountants and lawyers combined are double the danger of cash. Indian economists are either politically biased or paid. An editorial in the Mint says that lack of cash has no danger for the economy. After all, the British economy has not collapsed with Brexit, as some predicted. False. All that has happened is that people have voted to leave the EU. The process will start when Prime Minister Theresa May triggers Article 50. Already the British pound has fallen 17% against the rupee. What happens to the rupee when Donald Trump comes in will decide our fate. The omens do not look good.

Europe a sitting duck and sabotage in the US, the result next year.

A 24-year old Tunisian man, named Anis Amri, drove a truck at speed into a crowd of shoppers in a Berlin market on Monday night, killing 12 and injuring 49. In the early hours of yesterday he was shot dead by Italian police in Milan after pulling a gun during a routine stop, and hurting a policeman. What is known about Amri? Apparently he fled to the Italian island of Lampedusa in 2011 after stealing a truck in Tunisia for which he was sentenced to 5 years in prison, in his absence. He was jailed for 4 years in Palermo for burning down a school. Italy tried to deport him back to Tunisia twice but they refused to take him. Why? Normally, it takes years and costs a fortune to extradite a criminal from another country, as India has found to its cost, but on this occasion Tunisia refused to take back a convicted fugitive. Perhaps, the government of Tunisia can be sued by families of victims for compensation. What about Germany? Amri was under surveillance by police after he was heard making an offer of a suicide attack in a phone call with an extremist preacher but he was not arrested. Instead, his surveillance was stopped. They managed to lose sight of him even though the US warned of risks of a market attack during the Christmas shopping season. Political correctness gone mad? If that was ineptitude it is criminal neglect that Amri was able to get hold of a gun, exactly a year after the attack on Paris that killed at least 130 people, and cross over into France and then into Italy. At the very least they should be able to stop smuggling of guns across borders. Open borders seems to have been designed for terrorists. After shooting him the police tried to revive Amri, as shown by an endotracheal tube and an intravenous line in photographs. The British were wise to vote for Brexit weren't they? Meanwhile, instead of helping in a smooth transfer of office to Donald Trump, Obama is trying to make his start as difficult as possible. Using an obscure 1953 law Obama has permanently banned drilling in parts of the Atlantic and Arctic Oceans. After all, Obama studied law at Harvard. He has scrapped the National Security Entry-Exit Registration System which was started after 9/11 to monitor people coming from countries with active terrorist groups. Yesterday the US abstained from a vote in the UN Security Council condemning settlement building by Israel on occupied Palestinian lands. Obama has been president for 8 long years. Why is he taking all these actions now when he could really have made a difference had he done them in his first term? Because then he may have lost a large chunk of oil and Jewish money for his reelection. Mean and vindictive. He is proving Trump was right to question the place of his birth. We wait to see how much more damage he will do before he leaves. 2017 is going to be interesting.

How can you be called rich if you don't even own a fridge?

A survey of 61,000 households, of which 36,000 were urban, carried out by a private organisation, headed by Rama Bijapurkar and Rajesh Shukla, showed how poor India still is 69 years after independence. Naturally, there is a very big difference in consumption patterns between the top 20% and the bottom 20%. But what of the middle 60% of households, that the survey calls Middle India? To their surprise they found that Middle India is not middle class. Middle class is classified as those with an income of $10-$20 per day. Pew Research found that only 3% of people in the world are in that bracket. "An overwhelming majority of the richest Indians consider themselves to be middle class and actually a third of those actually in the middle of India's income distribution pyramid consider themselves to be poor," the survey found. It is no surprise that only 6% of the middle 60% own cars, 31% of the rich 20% and 11% of the all Indian households own cars, compared to one car for every 1.3 people in the US, which means over 70% people. "Seventy-two per cent of breadwinners in Middle India are either unlettered or have received only primary schooling. Most of them are either self-employed or labourers, and very few (17%) have regular salaried jobs," they write. About 35% of the rich have salaried jobs which shows how high salaries are in India, probably as a result of continuously high retail inflation. The shocking thing is that only about 25% of Middle India, comprising 60% of households own a refrigerator, which should be absolutely essential in a hot country. Only 60% of the top 20% of households own refrigerators. About 65% of Middle India and 100% of the rich own televisions. Less than 10% of Middle India own a washing machine, which has revolutionised the lives of women and increased prosperity in western countries, by allowing many more women to work. Another shocking fact is that nearly 60% of breadwinners are either illiterate or have studied up to primary school. Which means that the vast majority of people cannot be retrained for a digital future. Not surprising that only 23% of households have some form of health insurance. 3% of households in the top 20% faced a health shock this year which wiped out more than 20% of their wealth. The figure for the bottom 20% was more than double at 6.8%. Figures do not reveal the nature of health shock. For the rich it could have been cancer which costs tens of millions of rupees but for a poor person it could be a simple dog bite which would cost a couple of thousand in doctor's fees and anti-rabies injections. Only politicians and civil servants are rich in India, with high salaries and every expense paid by the government. The rest of us are poor.

Whose muck will stink the most? Elections will show.

Congress Vice President, Rahul Gandhi has alleged that the Prime Minister, Narendra Modi received kickbacks 9 times as Chief Minister of Gujarat. A total of Rs 650 million was paid to Modi, he said. He received Rs 50 million 7 times and Rs 25 million twice, which comes to a total of Rs 400 million, from the Sahara group. Apparently, the income tax authorities are in possession of papers from the Birla group, one of which says,"Gujarat CM (to be paid) Rs 25 crore, Rs 12 crore paid, the rest?" Which means that, according to Gandhi, Modi has been paid Rs 520 million already and but he is not sure of the remaining Rs 130 million. These same documents, which appear show these payments, were produced by lawyer Prashant Bhushan in a Public Interest Litigation in front of the Supreme Court and were deemed as "fictitious", "not authentic" and "zero" by the court. How the court deemed the documents "fictitious" we do not know but surely providing fake documents to the Supreme Court amounts to perjury and Bhushan should have been punished. The Congress says that Gandhi will provide further proof in the New Year. If there is no proof why is Rahul Gandhi making wild allegations? Won't people laugh at him? At first, maybe, but if he keeps repeating the allegations some will say there must be some truth in it. After all, there can be no smoke without fire. This is great strategy. Just as the Congress party is nothing without the Nehru-Gandhi family so the BJP has now come to mean Narendra Modi, who came to power as a crusader against corruption. So, if Rahul manages to tarnish his image a tiny bit it may translate into enough votes to make a significant difference in the coming assembly elections in UP and Punjab. Naturally the BJP has rushed into Modi's defence saying that he is "pure as Ganga". People in India have a deep-rooted contempt for all politicians. Honesty is relative to others, so Modi has to be defended. "I condemn the irresponsible, shameful allegations of Rahul...the public will never believe this," said Ravi Shankar Prasad. "Congressmen and even the family has been named in AgustaWestand investigations. It is not surprising that they resorted to this baseless tactic given that they're feeling cornered." Who has done the naming? Was it our government, the CBI or the courts? No. The Italian courts have sentenced 2 officials to prison for bribery in the case and have held Indian officials guilty of taking bribes. Has anything happened in India? A big no. A commission implicated Gandhi's brother-in-law, Robert Vadra in a land deal. Has he been punished? Vadra has been taunting Modi about using banks to catch people with black money. Throw muck at each other and eventually everyone stinks. We watch in despair.

If only she had listened to her husband?

Donald Trump's victory was confirmed by the Electoral College but immediately there are calls for impeaching him. Even some Republicans hate him so much that they reject him as a president. Texas Republican elector, Chris Suprun, who voted for Ohio Gov John Kasich, said,"As a person who has played fast and loose with the law, Trump will likely be impeached within the first year of his Presidency by responsible Republicans in Congress." The anger is all the more because Hillary Clinton has received 2.7 million popular votes more than Trump, about 2% of the total votes cast, as predicted by opinion polls. Only the USC/Los Angeles Times was right by consistently predicting a Trump victory, by consistently getting it wrong in giving a lead to Trump in opinion polls. Clinton won the heavily populated states of California, New York and Illinois, with large immigrant populations, while Trump won most of the swing states. Clinton got a majority of 4.3 million votes in California alone, without which Trump has a majority of 1.4 million popular votes. Seems that it was Clinton's election to lose and she did. How? Apparently, because of a single typo. Clinton campaign Chairman, John Podesta received an email claiming to be from Google, advising him to change his Gmail password immediately. This email was shown to a computer technician, Charles Delavan who replied,"This is a legitimate email. John needs to change his password immediately." Delavan maintains that he meant to type 'illegitimate'. Whatever the truth, WikiLeaks got hold of 60,000 emails which they started dumping one hour after a tape surfaced, showing Trump boasting about groping women. But the Clinton campaign team got things wrong by not paying attention to people on the ground. When local organisers in Michigan began to get anxious they were overruled. Clinton campaign manager, Robbie Mook says he never heard of the complaints. Trump won the state despite getting 30,000 fewer votes than George Bush did in 2004 when he lost the state. "They believed they were more experienced, which they were," said Donnie Fowler. "They believed they were smarter, which they weren't." Not just the presidential campaign, the Democrats lost the Senate as well. There were 24 Republican Senators up for reelection compared to 10 for the Democrats so the Democrats were certain of winning enough seats to get a majority. Surprisingly, it was Trump who pulled many of the Republicans, who were almost certain to lose, to victory. But perhaps, Hillary's biggest mistake was not listening to the arch-campaigner, her husband, Bill, who blamed Podesta and Mook for her flagging campaign. A few days before the election the two had a furious fight, with Bill throwing his phone towards the Arkansas River in rage. An old campaigner can smell a defeat.

If it's a government cat who will dare to bell it?

Anantha Nageswaran, a financial consultant, analyses the "Costs and benefits of the currency swap..." presently taking place in India. The sudden withdrawal of high denomination notes by Prime Minister Modi was a replay of the old socialist mindset of 'Naked poor man very good, rich man very bad' which has been exploited by politicians to win votes since independence in 1947 and by a succession of Bollywood movies. While the people are castigated for not paying taxes political parties are exempt from declaring the sources of their wealth. Any donation to a political party less than Rs 20,000 remains anonymous so parties have been able to sanitise all their money by showing donations of Rs 19,000 each. So every party runs on black money. The Prime Minister, Narendra Modi has never held a productive job in his entire life, so presumably never paid any tax. He has probably lived on payments by the Rashtriya Swayamsevak Sangh, a political organisation, so he has lived his entire life on black money.  The Election Commission said that there are over 1,900 political parties in India and over 400 have never fought any election. Which means they are conduits for money laundering. So our fearless crime fighting PM is going to throw all criminal politicians in jail, right? Er, no. "The legal and taxation regime with regard to political parties remains absolutely what it has been in the last 15-20 years. There is not a single change that has been brought about nor is any change at the moment contemplated," said our esteemed Finance Minister, Arun Jaitley. Which means,'Carry on as before chaps. Enjoy.' Talking about not paying taxes he thundered,"This had become an acceptable way of life and stealing money from the government was considered smart." An eminent lawyer like him has not heard the phrase 'We the people'. People are dying of frustration, trying to change old notes for new. Almost daily stories of people committing suicide for not being able to pay medical bills or for not being able to meet ordinary commitments. Is it the fault of the government that these fools cannot get access to their own money? Of course, not. Everyday they keep discovering millions of new notes in unexpected places, such as banks or from a law firm or even from a bathroom in Karnataka. The last one seems most appropriate, seeing that the Prime Minister has converted our currency into toilet paper anyway. Trouble is that all cash money is not black money. "The informal economy too, whether we like it or not, is a subset of black money," writes Nageswaran. Today plumbers and masons are earning enough to be paying income tax at the highest rates. Will they arrest the 'vote bank'? The Bombay High Court was surprised that no one is ever convicted of corruption. Who can convict politicians and civil servants?  

Why is Obama poisoning relations with Russia just before he goes?

Barack Obama is to leave office on 20 January, when the next president, presumably Donald Trump, will be sworn in, but he is doing his best to make sure to poison relations with Russia to such an extent that Trump will find it impossible to solve problems, such as the civil wars in Ukraine and the Middle East. The CIA and the FBI are accusing the Russian government of hacking into and releasing Democratic National Committee emails which helped Trump win the election. WikiLeaks founder, Julian Assange flatly denied receiving the emails from Russia and former UK Ambassador, Craig Murray has said that he met the man who leaked the emails in Washington DC and he was an American. However, Obama is continuing with his hate campaign against Russia saying that he ordered Vladimir Putin to "cut it out". Putin must have been trembling with fear. "Whatever they do to us, we can potentially do to them," said Obama. Like what exactly? Precipitate World War III? Hillary Clinton said that Putin has a "personal beef" against her. "He is determined not only to score a point against me but also undermine our democracy," she said. There are 3 points here: 1. The DNC should have protected its servers against hacking, 2. The hacking was only effective because the Chair of the DNC, Debbie Wasserman Schultz was found to be actively undermining Bernie Sanders, who was fighting Clinton in the primaries and 3. Clinton should have treated Putin with more respect when she was Secretary of State. Instead she is supposed to have said that since he had been in the KGB then "by definition he doesn't have a soul". We cannot comment about anyone's soul but a trained KGB officer would certainly know how to play the underhand game. She alleged vote-rigging by Putin to win the elections in 2011. A weak government like ours would smile and carry on sucking up to the Americans but not Putin who harbors a grudge because of the humiliation of former president, Boris Yeltsin. At the time the Soviet Union had fallen apart, the Russian economy was in dire straits and criminal oligarchs were looting the state. Yeltsin's drunken antics were a source of amusement to the US press. But, perhaps the worst humiliation was the expansions of Nato to former Comecon countries. An article on the days just before the US election by David Remnick, a total Obama supporter, for the left wing New Yorker, shows how arrogant and egotistical Obama is. When asked if he could imagine Trump delivering a State of the Union address he said," Well, I can imagine it in a 'Saturday Night' skit." Faced with a President Trump in exactly one month he is going all out to destroy Trump's credibility, even if that damages the interests of the nation. The electoral college is to meet today to decide on the next president and there are threats against the electors. We will know tomorrow.

The world is changing. How do we manage without money?

Economists are sounding the death knell of neoliberalism, with free immigration, globalization of trade and wealth shifting to financiers from manufacturing. Apparently started by Ronald Reagan and Margaret Thatcher, neoliberalism is now being questioned by those who supported it in the past. Economists sound confused. They recognise that although globalisation has increased wealth generally, the distribution has been grossly unequal, while others say that economic growth has to be rapid to benefit those left behind. For rapid growth we need increased trade but free trade is creating inequality. Professor Dani Rodrik sees trade deals, that open up economies to free trade, as a means of strong nations, like the US, imposing unequal treaties on weaker countries. "Newer trade agreements incorporate rules on "intellectual property", capital flows,and investment protections that are mainly designed to generate and preserve profits for financial institutions and multinational enterprises at the expense of other legitimate policy goals," he writes. In other words, governments work as agents of the rich, rather than all their own citizens. In another article he wrote that one economic model cannot fit all countries. "The social world differs from the physical world because it is man-made and hence almost infinitely malleable," he wrote. Thus economists have been largely supportive of Prime Minister Modi's decision to suddenly withdraw the 1000 and 500 rupee notes. They note all the bad effects it is and might have but argue that all inconvenience it is causing is temporary and the final result will be great. Professor Gita Gopinath thinks that it is a good move but will not work in the long run because black money and counterfeit currency will return. Economists point to the rise of high denomination notes in circulation. The number of 500 rupee notes rose from 11.41 billion on 31 March, 2014 to 15.71 billion on 31 March, 2016, an increase of 38%, while the number of 1000 rupee notes increased from 5.08 billion to 6.33 billion over the same period. However, the 500 rupee note constituted only 17.4% and the 1000 rupee note constituted 7% of total notes used. Not very large. The reason is the love for low interest rates among our politicians, regardless of the level of inflation. Rising prices mean that Rs 100 buys nothing these days so we need to use higher denomination notes. The Reserve Bank is not supplying enough replacement notes, whether through inefficiency or design we do not know. Retail inflation has fallen 3.63% in November because of the severe contraction in demand. Farmers are unable to buy seeds because of lack of cash and because they cannot borrow as moneylenders have no cash either. Food prices should rise in April and if the rupee falls sharply against the dollar, because of Trump effect, the economy will tank. Modi can control cash but he cannot control human behavior. Despite huge ego. 

Our banks are open, just hack in.

We are in good company. Last year it was Zimbabwe, this year it is India and now Venezuela who have demonetised their currencies. We should have Robert Mugabe, Narendra Modi and Nicolas Maduro on our banknotes. Australia is thinking of withdrawing the Aussie $100 note but 66.75% of people are against the move. At first Modi said that demonetisation of 1000 and 500 rupee notes was essential to root out black money and counterfeit notes printed in Pakistan. Guess what? Out of a total of Rs 15.44 trillion around Rs 13 trillion is already back into banks. And an ATM machine in Bihar spat out the first counterfeit note. Every year Pakistan prints Rs 700 million worth of Indian currency in its official mint, to organise terrorist acts in India. Pakistan also buys the special paper from the same sources as we do. Apparently, the new 2000 and 500 rupee notes are impossible to counterfeit. But they do not have to be perfect. Ordinary people do not have the expertise to recognise fake notes where faults are tiny so will accept them in good faith, only to lose money when banks refuse to accept them. Seeing the original purpose of eradicating black money was going to fail Modi has changed his tune to cashless economy. If there is no cash there can never be black money, there can be no counterfeit notes and people will be forced to pay tax as their earnings will be exposed. Modi is used to changing his stand. The biometric identity card, Aadhar was proposed by the Congress to transfer handouts to the poor. BJP was opposed to it when in opposition but now Modi has seized it and is forcing every savings account, which means every citizen, to be linked to Aadhar. In the last few days a hacker group, calling itself Legion, said in an interview with the Washington Post,"Let me tell you....the banking system of India is deeply flawed and has been hacked several times." So, now Pakistan does not have to spend money printing fake currency. Just hack into any bank account and transfer the money to the bomb-makers mobile payment system. Welcome to India. "The government's practiced apathy in the wake of cyber attacks has only encouraged their repetition," writes Arun Mohan Sukumar. "The Reserve Bank of India's recent decision to waive 2FA for transactions less than Rs 2,000 treats each individual transaction as a self contained unit, without acknowledging that devices once infected will also compromise higher-value payments." So why is Modi ramming all this down our throats? Digital transactions means total financial surveillance on citizens. "This might gladden an authoritarian heart, but it would strip citizens of any rightful anonymity," writes Amulya Gopalakrishnan. "Add biometric tracking to that, and we are all just insects in the state's laboratory." This is worse than China. 

Is it despair or is it guilt?

2016 was probably not the worst year in history, but a lot of people think so, writes Jia Tolentino in The New Yorker, a leftist liberal publication. She enumerates the Zika epidemic, which resulted in babies born with small heads, terrorist attacks in Europe and the US and the killing of blacks by the police in the US. "And then, of course -- not that you've forgotten!-- there was the election. The weeks since November 8th have resembled, in terms of collective psychology, the aftermath of a natural disaster -- a demented, abhorrent catastrophe that remains invisible to some and for others prompts nothing but glee," she laments. No wonder the left is described as 'loony'. "What hurts so badly right now, I think, is this sense of unexplained retrenchment -- the fear that decades of incremental progress will be rapidly eradicated by an empty-headed demagogue who appears to be doing everything on a whim," she snarls in hate. And what is this "incremental progress" that decades of liberals have given us? "The North Pole, a week after the election, was thirty-six degrees hotter than normal. Venezuela has fallen; Turkey is a vortex of human rights abuses; Aleppo is experiencing 'a complete meltdown of humanity'. Power is accruing everywhere to the hard and heartless right." Liberals everywhere are furious in their arrogance. They fail to understand that they had decades to improve the world but they failed and people hold them responsible. Syriza in Greece is extreme left wing and the Five Star Movement in Italy is almost libertarian in its beliefs. Obama, the darling of the liberals, has allowed fracking on the California coast, his administration in the arctic and in the Gulf of Mexico. Although hydraulic fracturing began in the US in 1949 it has grown by 45% a year between 2005 and 2010 and shale gas has increased from 4% in 2005 to 24% in 2012. Obama was elected in 2008. US support of a coup against him prompted Hugo Chavez into extreme socialist policies which is why Venezuela's economy has collapsed. For us living far away from the US, it is incomprehensible why Turkey is a vital ally and a member of Nato, while Bashar al-Assad is a vile tyrant. The Syrian war has dragged along so long because of US support of terrorist groups. Only imbeciles make a distinction between good terrorists and bad terrorists, good Taliban and bad Taliban. We Indians suffer regular attacks because of this criminal stupidity. The armed coup in Ukraine was totally unnecessary. Even now Obama is needling Russia when he should be facilitating the handover to Donald Trump. Does he think that Europe will survive a war with Russia? Meanwhile, China, a rogue nation, is arming the disputed artificial reefs in the South China Sea. People feel the world is deteriorating. They blame the liberals.

India is facing a 'dollar winter' almost naked.

Ajit Ranade, Chief Economist at Aditya Birla group, thinks that "A dollar winter is coming". Yesterday, the Federal Reserve in the US raised interest rate by 25 basis points, to between 0.5 and 0.75%. The last time the Fed raised interest rate was in December 2015, which was 7 years after it raised rates in 2008. The bond market had priced in the increase as yields of benchmark 10 year treasuries have risen to 2.57%, after dropping to around 1.3% in July. The Federal Reserve has indicated that it may raise rates another 3 times next year. This is because it sees inflation rising due to a tight labor market, rising oil prices and increased spending by the new government of Donald Trump. The price of crude oil has risen to $56 per barrel, from below $40 per barrel around June 2016, after oil producers, such as OPEC and Russia, agreed to cut output. Some are predicting a price of $75 per barrel by New Year, as winter increases demand for heating oil in the US and Europe. However, there is an upside restraint on the price of oil and that is shale oil production in the US, which will become profitable at prices above $60 a barrel. If US interest rates rise investors will move back into the US which will make the dollar stronger. "So, 2017 promises to be a year of dollar strengthening, and US yields hardening," writes Ranade. That is confusing. Because if investors pile into US Treasuries their prices will rise and yields should fall. A strong dollar should help emerging economies by making their exports cheaper, but apparently that is not the case. A strong dollar in 1979 resulted in the Latin American debt crisis and in 1985 a dollar bought 250 Japanese yen. (It is at 117 today). That resulted in the Plaza accord, which ended Japan's asset price bubble, resulting in a prolonged deflation in Japan. The 1997 East Asian crisis was the result of a sharp devaluation in the Chinese yuan, starting in 1994. China's foreign currency reserve declined by almost $1 trillion this year, to around $3.12 trillion. Trump has promised to levy higher taxes on Chinese imports which could hit China's economy. China is sitting on mountain of credit and a slowdown in the economy could precipitate a crisis. That could precipitate severe social unrest, even a civil war, in China, very satisfactory for us in India. But what happens to India? Although retail inflation has fallen to 3.63% in November core inflation, which strips out food and fuel, was steady at 4.9%. If foreign investors sell out of Indian bonds and equity the rupee will fall which will add to the cost of fuel, increasing retail inflation. Spending will be severely restricted due to the sudden banning of high denomination notes. There is a real danger of stagflation. Ranade does not say so because he does not want vindictive politicians on his back. We cannot control what Trump does and there is no way of going back on demonetisation. We are sitting ducks.

A post-truth world because truth died?

Writing for Politico, Susan B Glasser laments the fact that truth does not seem to matter to people in the US any more. "I have a different and more existential fear today about the future of independent journalism and its role in our democracy," she writes. "Stories that would have killed any other politician -- truly worrisome revelations about everything from federal taxes Trump dodged to the charitable donations he lied about, the women he insulted and allegedly assaulted, and mob ties that have long dogged him -- did not stop Trump from thriving in this election year." Liberals call this a post-truth world, in which people vote for the side which is lying, and has been chosen as the word of the year by Oxford Dictionaries. Liberals cite Brexit and the election of Donald Trump as examples of post-truth. The shocking truth is that liberals, who pride themselves on their intellect and knowledge, do not realise that truth cannot be politically correct. Oxford University has banned the use of 'he' and 'she' to denote gender and advised the use of the word 'ze' for both men and women. But gender is not for Oxford University to decide. It has been decided by Mother Nature over 3 billion years of evolution. It is not just that our bodies and hormones are different we think differently, which is not surprising when we see that our brains are wired differently. It does not mean that one gender is superior to the other, rather that we are different. Nature does not do generics, each animal is highly specialised. Thus, a male lion is more powerful than a female and can kill her but a male hyena is smaller and nowhere in hierarchy. Ms Glasser does not realise that the media in the US were guilty of severe bias in news reporting and in opinion polls. Skewing opinion polls to generate a victory for Hillary Clinton is lying. Accusing Trump of avoiding taxes is not the truth because all wealthy Americans use the rules to pay as little tax as they can, which prompted Warren Buffet to say that he pays a lesser tax rate than his secretary. Trump was not the only one lying. Hillary Clinton "could not recall" answers to 35 questions put to her by the FBI. As a trained lawyer she must have known that it is a criminal offence to lie to the FBI, but how can anyone be punished for forgetting. The BBC thinks that it is the internet which is making us small-minded, conveniently forgetting its intense coverage of the fight in Aleppo while completely ignoring the killings in Mosul. "We've achieved a lot more transparency in today's Washington -- without the accountability that was supposed to come with it," mourns Ms Glasser. Because you have lost trust. 

You can force taxes, but can you force love?

In 2013, the Congress government of the time passed the Corporate Social Responsibility Act, which made it mandatory for large companies to spend 2% of their profits on social service, to help the poor. Prof Aneel Karnani, of the University of Michigan, writes that the law has not been a success. After studying it he has concluded that, "....the CSR law is only apparently successful, and in reality is harmful." "There is some evidence that firms that were initially spending less than 2% increased their CSR spending, but those that were initially spending more than 2% reduced their CSR expenditure," writes Prof Karnani. Why? Because, "A required expenditure that does not lead to higher to higher profits is essentially a tax. This is a back-door way to increase corporate taxes without a transparent political debate. The corporate tax rate in India is 34.61% -- already one of the highest, compared to the global average of 24.09%, according to KPMG, and audit and consulting company." Indian politicians are adept at increasing taxes on us in the guise of social welfare for the poor, while they lead lives of extreme luxury on taxpayer money. Another such tax was the Right to Education Act which forced private fee paying schools to reserve 25% of seats for poor students. The result was that school fees soared as schools tried to recover their losses from students who paid fees. Did it result in a dramatic increase in standards? No, standards have actually fallen as Class 8 students are unable to read or do maths up to Class 5 standard. Last year was worse than the year before. Why? Because, majority of students, especially in rural areas, attend government schools and here there is no teaching. Traveling across India Mar Tully discovered that even in rural areas about 30% of parents are sending their children to private schools, though they could not afford the fees. In this way private schools draw away children of middle class parents and thus reduce pressure on government schools to perform. Why, when salaries of government school teachers have soared in recent years? Because teachers are forced to undertake many tasks other than teaching, such as "...conducting housing and economic surveys, census duty, election duty, voter identity card duty, opening bank accounts, Aadhar card registration, and managing mid-day meals," writes Omar Rashid. One solution would be to privatise education, wherein the government will give vouchers to poor people who will choose the school that their children will attend. Schools will compete for students, thereby keeping standards high. You can force taxes but you cannot force equality. Poorer children feel the difference in standards of living between themselves and the children of the rich. Punishing the middle class earns votes from the poor. Our politicians love the poor. The more the better.

Sweden is experimenting. Why not wait to see the results?

Srinath Raghavan of the Centre for Policy Research, New Delhi, writes that the sudden banning of high denomination notes in India, known as demonetisation, is an example of the "worst forms of central planning". Economists in India are lauding this move by the government when they "for years railed against the planned economy and had called for cutting back the state's role in the management of the economy". Why? Because, "Part of the explanation is that most pro-market economists would not recognize monetary policy as a form of central planning." At the very least it is an attack on the independence of the Reserve Bank which is trying to play catch up. Having realised that it is not going to get much black money the government has changed the narrative to 'cashless' transactions. With no cash no one will be able to take bribes because every transaction will be recorded. It will also allow the worst form of 'planned economy' as the RBI maybe coerced to set negative interest rate, where you have to pay to keep money in a bank. Sweden has become virtually cashless, where even some banks refuse to accept cash. Sweden also has a negative interest rate of minus 0.5%, but so far there are doubts as to its efficacy and it maybe encouraging excessive borrowing by people. We should wait to see what effect a cashless system, along with a negative interest rate, has on the economy. India is not Sweden. Sweden has a total population of just 10 million people, a Gini coefficient of 25.4 and a per capita GDP of $51,603, while we have a population of 1,300 million people, our Gini coefficient has worsened to 51 and our per capita GDP is a paltry $1805. Sweden's comprehensive social welfare schemes provide free healthcare, free education and social security from cradle to grave. In India social schemes are bribes to get votes. To force cashless on people the government is trying to arm-twist banks into lowering charges for using cards. The RBI and some banks are resisting the idea. In a wild country like India, where security is a matter of luck and hacking difficult to explain to the vast numbers of illiterate people, expect large numbers to lose their savings. Apparently, a credit or debit card can be hacked in 6 seconds and 70% of ATM machines use an old Microsoft software for which the company has stopped providing support. "Eminent commentators would do better to deride such extreme, rash policy decisions and call out this entire 'cashless' narrative for what it is -- a laughable afterthought -- rather than encouraging it and creating a perverse incentive for other such extreme policy measures in the future," writes Praveen Chakravarty. We agree.

The poorest people own the most housing. Strange.

An economic survey conducted this year looked at income and living standards of Indian society. The survey included 61,000 households which were divided into 5 equal segments. It found that the richest 20% earned 45% of income while the poorest 20% earned just 7%. The richest 20% spent Rs 15,882 per person per month while the poorest 20% spent Rs 6,980 per person per month. Thus, the poorest 20% is earning considerably higher than Rs 47 per person per day, less than Rs 1,500 per month, which has been fixed as the level of poverty in urban India. The biggest surprise from the survey is that 97% of the bottom 20% own their homes. Of the total population surveyed 89% of households live in their own homes. It is the relatively well off who live in rented accommodation. Anecdotal evidence suggests that almost everyone lives in own home in rural areas while most rented accommodation is in metro cities. But here there is an enormous difference in standards. Officers who have transferable jobs, as in banks, live in decent apartments because their rents are paid by their employers, while migrant labor lives in wretched conditions in slums or tiny rooms with shared bathrooms. Migration to cities is lower in India than China, Indonesia and Nigeria but even so, 5% of 1.3 billion people is a huge number. This probably explains how Indians are managing to survive on low incomes, with 19.8% of people earning less than $2 per day and 76.9% of people earning less than $10 per day, most of them closer to $2 than 10. With nearly 97% earning less than $10 per day it is not surprising that only about 3% of people file tax returns and 1% pays income tax. One big surprise thrown up by the survey is the cost of houses. The median price, which is middle of the range, paid by the top 20% was just Rs 1 million, while the median price paid by the top 1% was a paltry 1.8 million. A quick glance at real estate prices in Delhi shows that any 2 bedroom apartment in a good locality will cost well in excess of Rs 1.8 million. These are probably official rates. To buy an apartment one would have to pay at least an equal amount in cash, which means black money. With demonetisation cash has virtually disappeared so the real estate market is frozen until such time that people are able to collect enough cash. The average dwelling size in rural India is 431 sq feet while those in urban area are an average of 422 sq feet, while apartments in the US have fallen to an average of 934 sq feet. When it came to consumer spending rural areas spent 57% of the total Rs 42.2 trillion last year, but rural household spending was an average of Rs 9,423 per month compared to Rs 20,227 in urban areas. People cannot move because they do not earn enough and they cannot earn unless they move to where jobs are. The only solution is to bring down the number of people. Everyone will gain.

A conspiracy theory or a dangerous conspiracy?

An article by Shelley Kasli in Great Game India says that Pakistan prints counterfeit Indian notes on paper supplied by a British firm known as De la Rue. Apparently, sometime in 2009-10 the CBI discovered counterfeit currency notes in banks along the India-Nepal border, which were said to have been supplied by the Reserve Bank of India. Following this the CBI raided vaults of the RBI. "What the CBI found in the vaults of RBI were huge cache of counterfeit Indian currency lying in the denomination of 500 and 1000, the same counterfeit currency smuggled by the Pakistan intelligence agency ISI into India," writes Ms Shelley. Asking why our banknotes were being printed abroad a parliamentary committee noted,"The Committee expresses its strong resentment over such an unprecedented, unconventional and uncalled for measure."   De la Rue and a German company, Louisenthal were blacklisted after this episode. This is unbelievable stuff. 1. India has a huge paper industry so why are we unable to manufacture our own paper 2. There should have been a binding contract with the companies not to supply similar paper to any other country and India should have bought the entire production and 3. It would have been much better to have gone through the respective governments who would make sure that the companies stuck to the contract. That De la Rue used be one of the Crown Agents during the British empire is not relevant. The owner of De la Rue, Roberto Giori was on Flight 814 which was hijacked by Islamic terrorists in 1999. As we know the response to the hijacking by the  BJP government of the time was shamefully shambolic. Former Chief of the Research and Analysis Wing, which passes for India's intelligence agency, AS Dulat, has written about the hijacking in his book but fails to explain the presence of RAW agent, SBS Tomar on board the hijacked plane. It is known that the plane could have been stopped at Amritsar Airport where commandos could have stormed the aircraft if negotiations failed. Was Tomar on the flight only to protect Roberto Giori, was that the reason why the plane was not stormed and did India pay a ransom for his release? We do not know. But we remember Warren Andersen and Union Carbide. De la Rue apparently supplied passports and currency to Chechen terrorists. Without giving any reason the ban on the company has been lifted. We could have dismissed the whole article as conspiracy theory but yesterday a Delhi politician, Dilip Pandey asked why De la Rue is supplying banknote paper again. When Union Finance Minister, Arun Jaitley labeled it a "false campaign" Pandey tweeted,"Please check your facts and go through RBI's BRBNMPL website first. Del la Rue is working with Mysore printing press" We are suffering note-ban while the government is printing banned notes. Charming.