How will a war with Russia help the world?

What are the Europeans playing at? Do they really want a war with Russia and do they really think that they can win that war? Dutch investigators have published a report saying that the Buk missile from Russia destroyed the MH17 aircraft on 17 July 2014, killing all 283 passengers and 15 crew. They even say that the missile was carried over from Russia. The manufacturer of the missile insists that the missile used was an older model, still in use with the Ukraine army. Russians are using an updated version. The plane definitely came down in eastern Ukraine, territory controlled by Russian-speaking rebels but Ukraine army units and Ukrainian air force jets were attacking them. What the Dutch investigators do not explain is why the plane was flying 300 miles to the north of its normal route and why it was told to fly at 33,000 ft, instead of at 35,000 ft. As a satellite map shows, hundreds of planes fly across India everyday. We cannot see or hear them because a plane disappears at such heights. However, they can be tracked on radar. The Ukraine government had control over all airports and their traffic control systems. Why did they not direct the plane to the south. Clearly the Dutch report is totally mendacious. Meanwhile, in Syria the US is trying to stop Russian bombing of Aleppo. Why, to give the rebels a chance to regroup? We, in India, are used to this. When Pakistan attacks and kills Indians there is a deafening silence from the US and Europe, but the moment the Indian army starts to make gains against the cowards they rush over here to stop the fighting and start talking. Propaganda channels, like the BBC, are showing heart rending images of little children being pulled out of wreckage of buildings, allegedly bombed by the Russians. Russia has rejected US support for terrorist groups. We did not see such pictures during the US and British attacks on Afghanistan, Iraq or Libya. Why? Because the journalists were 'embedded'. Why were they in bed with US troops while the slaughter was going on? What is a smart bomb? Does it knock on the door and ask if Mr Terrorist is at home and if not waits till he returns? Erdogan of Turkey protects ISIS by killing Kurds, Saudi Arabia pays for spreading fanaticism all over the world and Pakistan is the epicenter of terrorism in the world today. Guess who is friend, protector and supplier of these barbaric countries? The US of A. The US has to give up its 'White man's burden' of slaughtering people for their own benefit. People have a habit of hitting back. No one will win World War III. Lots will die.

Secrecy leads to blackmail. Complete honesty will ensure security.

India conducted 'surgical strikes' across the Line of Control in Kashmir killing 38 terrorists. This was in retaliation for the attack on the brigade headquarters at Uri that killed 18 soldiers on 18 September. Our media has been giving detailed accounts of the operation and retired generals have suddenly come out of closets to give detailed analysis of every detail. The propaganda channel, BBC dismissed the news in one sentence by saying that Pakistan has denied any attack on occupied Kashmir but found time to show goat yoga in the US. The question is why have the British and Americans been supporting Pakistan through all these years especially now when it is clear that Pakistan is the center of terrorism in the world? India has had 3 wars with Pakistan which we have won but every time we have handed over territory without any concession in return. Israel could sign a peace treaty with Egypt in 1979 because it was able to offer the Sinai Peninsula, which it had captured in the Six Day War in 1967. Israelis sitting on the banks of the Suez Canal was seriously hampering Egypt's economy. Israel was also able to sign a peace treaty with Jordan in 1994 after Jordan had renounced any claim to the West Bank in 1988, which was won by Israel in 1967. Couple of days ago Shimon Peres passed away at the age of 93 years. He made Israel strong by secretly buying arms and military aircraft from the French, constructed the nuclear reactor at Dimona, which made it a nuclear weapons state, and was the Defense Minister during the daring raid on Entebbe Airport, which rescued 103 hostages. Contrast that with the conduct of our politicians. They keep our army weak, deprived of essential equipment. Every defense deal, including Bofors, has been tainted with stories of bribes. We buy junk from other countries which result in the death of our service personnel. Despite repeated attacks and despite threats of nuclear weapons against us we allow Pakistanis to work in our film industry, giving them freedom to run around India at will, and we run a Samjhauta Express between Delhi and Lahore, allowing terrorists a comfortable entry into India. Every time Pakistan attacks us we are advised by western countries not to retaliate and we bow down. Why? The same US and UK have no hesitation in killing hundreds of thousands in Iraq, Syria and Libya. What is their power over us? How did Obama threaten Modi in 2015 which resulted in a complete change of Modi's promise of a bullet for a bullet? Why is the post mortem report on Lal Bahadur Shastri still a secret? The only way India can get stronger is to publish everything, starting with the agreement between Nehru and Lord Mountbatten, everything about Indira Gandhi and how we are threatened by the west. Secrets lead to blackmail, complete honesty will make us strong. We have nothing to lose.

Will India become devoid of wildlife?

Politicians in Kerala beat 10 stray dogs to death and then paraded their carcasses along the streets, while shouting slogans against Ms Maneka Gandhi, who is a fierce defendant of animal rights. Stray dogs had killed a woman recently and killed and eaten half the body of an old woman a week previously. There are 30 million stray dogs roaming the streets of India and 20,000 people die of rabies every year. Rabies is viral disease with 100% mortality and the only way to get rid of this disease would be to cull all stray dogs. Will that eliminate the disease totally? No. There will still be a reservoir in wild animals such as bats, foxes and monkeys. Even in the US there are occasional cases every year. Rabies can even be transferred through organ transplant, in one case killing an organ recipient more than one year after transplant. The chick embryo vaccine costs Rs 355, so 4 doses of the vaccine will cost around Rs 1400, add doctor's fees and injecting charges and the total cost will be in excess of Rs 2,000. Poor people will be reluctant to spend so much, especially if the bite is small. Human rabies immunoglobulin will cost in excess of Rs 10,000. Animal activists insist that dogs should be immunised and neutered but want the taxpayer to pay for it, which no politician will want to do. The only answer is to eliminate street dogs without any suffering. Pet dogs, suffering from painful incurable illness are put down by vets, without anyone objecting. Sadly, instead of a rational examination of the problem our journalists write sensational articles about dog owners refusing to pick up dog feces from public spaces. This naturally raises the hackles of dog owners, who see this as unfair. Delhi is the crime capital of India where old people living alone are especially vulnerable. They often keep dogs as pets for security and pay people to take them for walks. These people will never clean up dog feces. Not just dogs. There are thousands of stray cows all over India. Although there are cow shelters conditions are terrible so that hundreds die. Cows eating discarded plastic bags from garbage dumps die a very painful death, without any succour. Around 12 years back almost all birds disappeared from Delhi and most of north India. Pigeons, grey doves, brown myna birds and crows have made a comeback but no sparrows are to be seen anywhere just yet. Disappearing birds have been noticed in the US but there seems to be no urgency in India. As the number of people increases so habitat disappears, poaching increases and conflict between humans and animals is increasing. However, there is no rational discussion, just stupid articles about dog poo. Because dog owners are seen as better off. So bashing them is popular. 

How do you separate the rich from the poor?

Prof Pranab Bardhan form Berkeley, in California, writes that subsidies for the rich should be replaced by a Universal Basic Income, or UBI of about Rs 10,000 per person per year. According to an Economic Survey the rich get subsidies worth Rs 1 trillion every year. According to this survey the bottom 30% of the population is poor and the rest 70% is rich. That is just so much rubbish that it is hard to believe that even professors of economics actually take it seriously. Another study, based on figures for 2011, shows that 19.8% of people in India earn less than $2 a day, the vast majority of 76.9% are in the low income group, earning $2-10 per day, 2.6% are in the middle income group of $10-20 per day, 0.6% earn $20-50 per day and the rich are only 0.1% at over $50 per day. So, a huge 96.7% of the population earn less than $10 per day which converts to Rs 21,000 a month. With current prices no family can survive on such a paltry sum. What are the subsidies being enjoyed by the rich? The rich apparently corner 98% of subsidy on diesel. The price of diesel is around Rs 51 per liter and the price of petrol in India is around Rs 63 per liter. The price of diesel in the US is $2.38 per US gallon, which is around Rs 43 per liter, and the price of petrol is $2.22, which is around Rs 40 per liter. Why are prices so high in India despite a fall in the price of crude? Because the government increased the excise duty on fuel. Even when crude prices were above $100 per barrel and we were being 'pampered' with subsidies the government was earning more from taxes and dividends than it was spending. Why not raise the price of diesel to the same level as petrol? That will stop people buying diesel cars. Because all of our fresh food moves on trucks and raising the price of diesel will increase retail inflation, which will prevent the Reserve Bank from lowering interest rate. Air tickets have a large number of extra charges which add 50% to the base fare. Taxes on aircraft fuel are levied by states and can go up to 30%. The government is keen to develop regional airports, to stimulate business. If first class passengers shift to flying what happens to Indian Railways? Will it be a 2 tier system where the rich travel by high speed trains at higher prices while the unwashed pay less for slower travel? It is the ordinary people who buy gold as a hedge against inflation, the rich invest in real estate. If interest rate is low the poor get less on their money while the rich buy land by borrowing cheaply. You cannot buy real estate for Rs 50,000 but you can buy 15 grams of gold, so increasing taxes on gold is a bonanza for smugglers. Politicians are handcuffed to subsidies to win elections and the rich benefit. Giving Rs 10,000 per year will not change the system.

The sky is going to fall, not just yet.

Prof Vivek Dahejia writes that leaders of the US Federal Reserve, the European Central Bank and the Bank of Japan must be feeling like the 3 characters in a play from Jean-Paul Sartre, who were locked in a room with no exit for all of eternity, after death. Why? Because having embarked on a course of unconventional monetary policy they seem to be locked into it. They brought down interest rates to near zero, or ZIRP, then the ECB and Japan lowered that to negative, or NIRP, so that people would spend their money, rather keeping them in the bank because they are being charged for saving. Increased spending would lead to greater demand, which would lead to greater investment, financed by borrowing from banks which are loaded with cash because of the bond-buying program, known as quantitative easing. The central banks want to increase the rate of inflation because that reflects increased spending and demand, but nothing seems to be working. People are saving more to protect their pensions. Our previous Governor of the Reserve Bank, Raghuram Rajan warned of this back in 2014. There is now a contrarian view that restrictive monetary policy, or RIRP, might work. On 21 September the Fed voted to keep interest rate as it is, as predicted by Narayana Kocherlakota. There was hope that China will continue to grow strongly, pulling the rest of the world up with it. But the Beijing consensus turns out to have been a mirage, based on huge debt, excess of unusable infrastructure and falling productivity. Prof Ken Rogoff thinks that China is in for a calamitous "hard landing" which will hurt the global economy. India is too far behind to make a difference. Our share of nominal global GDP was 2.97% in 2015 and is projected to grow to 3.58% by 2020, the present growth rate being 7.26%. Prof Persaud thinks that asset prices are hugely over-inflated but the dollar index shows that the Fed is not about to raise interest rates any time soon. He thinks that one day the link between policy rates and the dollar index will stop working and that day will be chaotic. Recently the Deutsche Bank predicted that its recession indicators are flashing red for the US economy. So what about India? There is no debate about economic policy here. There is only one solution for everything, which is lower interest rate. Recently our Current Account Deficit almost turned into surplus. All of us would think that it is a good thing. If the nation is earning more from others than they are squeezing out of us that is very good. China, Japan South Korea have huge foreign exchange reserves and are doing very well but for us it is bad because it signals greater savings. But household savings are actually dropping. That is why we call ourselves 'Ram bharosey' which means 'God help'.

If the US learns from Israel why not India?

In his monthly radio broadcast to the nation the Prime Minister, Modi promised that those involved in the attack on Uri, in Kashmir, will be punished but he did not specify how. He also promised to exact revenge against Pakistan. How? By eradicating poverty. That is not as silly as it sounds. Pakistan is a failed state where the army has vast business interests, worth an estimated $20 billion, most probably a gross underestimate. With a nominal GDP of around $285 billion, the army controls over 10% of the economy. At $2.2 trillion India's GDP is about 8 times that of Pakistan. If we grow our economy and reduce poverty tax collections will increase and the government will be able to spend more on defense, as China is doing. It will vastly increase our soft power, as business with India creates wealth for other nations. China has gained a lot of support at international forums by its "no strings attached" policy for foreign aid. That is for the long term. But what about the short term? We cannot have Pakistan sheltering, training and arming terrorists to cross into our country at will. Shashank Joshi, a research fellow in London writes that Indians are envious of Israel's tough response against terror. Most of the top political leaders of Israel have served in the army, it spends a lot on research and its intelligence agency, the Mossad, is spread all over the world. But Israel has not always been successful, as in the war against the Hezbollah in 2006 in Lebanon. But India is different to Israel. How? "India aspires to a UN security council council seat, Nuclear Suppliers Group membership, and recognition as a great power. Israel seeks none of these things," writes Joshi. India will not become a member of the Security Council by begging. Every permanent member is a nuclear weapons state and keeps them ready as part of their nuclear deterrence doctrine, which relies on all out nuclear response in case of a nuclear attack. We just keep on repeating a "no first use" policy. We have to link that with total assured destruction of Pakistan as nuclear deterrence, especially the top brass of the army and the ISI. They maybe mad dogs, but are certainly not suicidal. China will block membership of the NSG by linking it to membership for Pakistan as well. Israel is probably too tiny to be a great power in the world but when your enemies are terrified of you, despite being 20 times in number, then you are a great power for your people. "But Israel has no silver bullet to the problem of cross-border, state-sponsored terrorism," opines Joshi. Israel has built a wall that has cut cross-border attacks by 90%. We should ask Israel to construct a fence along the border with Pakistan, lay land mines along it and construct an Iron Dome defense, which even the US finds attractive. It will save money on funerals for our soldiers. 

Theories based on western economies may be the wrong medicine.

Economic policies of governments and banks are based on macroeconomic theories and one of the gurus of macroeconomics has been Milton Friedman. His teaching on monetary policy on the role of inflation on unemployment was discussed by Nobel Prize winner, Paul Krugman in an article in 2007. However, not all of Friedman's theories have been proved to be correct. His Permanent Income Hypothesis predicts that people base their spending on expectation of future income and not on how much money they have at present. Thus, if someone gets a rise in salary she will spend more in expectation of a continuing rise in prosperity but if the same person were to receive a windfall she will stick it in the bank. So, if any government resorts to 'helicopter money', which means issuing a cheque to every citizen, will it result in increased spending, which in turn will increase production and lead to economic growth? Studies are showing that Friedman's theories are not fully correct, half the people behave opposite of what Friedman's theory would predict. The trouble with this kind of policy is that there is enormous difference between economies. In Sweden where everyone is assured of cradle-to-grave social security, based on high taxes, there would be no need to save. Whereas, in India subsidies are targeted at the poor, so the middle class tries to save for retirement, education of children and health emergencies. This is touted as moral. Targeting subsidies at the poor received a huge boost from the success of Bolsa Familia in Brazil where women were paid for each child, if the child went to school and for regular medical check up. That was fine when commodity prices were high but when prices fell in 2014 its economy declined and is now in recession. President Dilma Rousseff has been impeached and is facing criminal charges for hiding the extent of deficit. In India politicians have divided people into 'r' types who have lots of children and are dependent on handouts. They do not look after their children, as we can see from children begging on streets to working in hazardous industries. The 'k' type are fewer in number, have few children, who they look after and educate for a better quality of life. The only way towards prosperity is to target all handouts to not having children. That would make the 'r' type of people more responsible, in their own interest. Meanwhile, some economists are suggesting that higher interest rate will result in higher spending, leading to higher growth. If interest rates start to rise in the US a lot of foreign money will leave India, leading to a fall in the rupee and higher prices. Nations are putting up barriers to free trade in an effort to protect their businesses. Theories which apply to the US may not be applicable in India. Our policy makers should beware.

There can be no ceasefire without trust. And there is no trust.

ISIS and Al Qaeda are a bunch of fanatics, Bashar al-Assad is a bloodthirsty dictator and Putin is a former KGB agent, but the US and Britain are very good. Got it. The US and Russia reached a ceasefire deal in Syria which came into effect on 12 September. The Syrian conflict is going on since 2011 and the Sunni rebels have been supported by Saudi Arabia against an Alawi government. The US and its allies have been supplying a mythical Free Syrian Army which was supposed to be the 'good terrorists' as opposed to Jabhat al-Nusra and ISIS who are bad terrorists. The open support for rebels by Sunni Saudi Arabia, Qatar and Turkey naturally drew Shia Iran and Hezbollah to the aid of Assad. Meanwhile ISIS, which is more brutal than anything seen so far, was spreading rapidly across Iraq and Syria. Turkey was initially supporting ISIS with weapons and financially, by buying oil from wells captured by ISIS in Iraq and Syria. Russia directly joined the war in September last year when they started bombing ISIS targets and oil trucks in Syria. This seemed to galvanize the US and its allies to start bombing ISIS targets as well. The Iraqi army had fled in disarray before ISIS advance in 2014 but reorganized and have recently captured lost territory and is preparing to take Mosul back from the terrorists. Syrian government forces have also been making gains which prompted a confident Assad to vow to take every inch of territory back from the rebels. Suddenly the US was talking about peace and agreed a ceasefire with the Russians so that aid convoys could reach civilians. "We --- the Obama administration, the United States is going the extra mile here because we believe that Russia and my colleague have the capability to press the Assad regime to stop this conflict and to come to the table and make peace," said US Secretary of State, John Kerry. We, in India, have seen this many times before. The US is silent when Pakistan attacks us, killing soldiers and civilians, but when we  prepare to retaliate they come rushing to advise peace. At the same time there is a thundering silence on the relentless massacre of civilians in Yemen by Saudi Arabia. While bombing Yemen's infrastructure Saudi Arabia is blockading Yemeni ports, creating a widespread famine. So what happened to the ceasefire? On 17 September the US bombed Syrian armed forces, killing 62 soldiers and injuring 100. The killing restarted. An enraged Kerry abused Russia at the UN Security Council. Maybe he was angry because US-backed rebels chased American commandos out of al-Rai in Syria. With so much lies and bad faith it will be a fight to the finish. Assad seems ahead at the moment.

If Manmohan Singh is Caesar's wife, companies cannot be far behind.

Indian companies do not understand the importance of quality, writes Sundeep Khanna. Couple of months back US retailers, Target and Walmart, stopped buying sheets from Welspun because it was not using Egyptian cotton, as per their contract. Welspun is the world's largest maker of bed sheets and towels. Class action lawsuits have been filed in 2 US states. Earlier an arbitration court in Singapore ruled that Ranbaxy cheated Daiichi Sankyo by deliberately concealing problems with its manufacturing units. There are some companies with excellent record for quality but for the most part Indian companies are happy to cut corners. Why? Because we have vast numbers of people, so there will always be buyers and if the thing turns out to be a dud, tough luck. What can you do? Of course, we have consumer courts which are supposed to uphold standards. But, our justice system is affectionately known as 'tarikh pe tarikh' which translates to 'date after date', because cases are postponed an infinite number of times, till the complainant is dead of old age. In India, we get our television content either through satellite transmission, known as Direct to Home, or DTH, and through cables. DTH companies have been adding channels on high definition for sometime and advertising the much better quality of pictures and sound on those channels. But, why would anyone want to watch children being bombed to bits in Syria on HD? So why are they pushing it? Because the regulator, Telecom Regulatory Authority of India allows service providers to charge as much as they like on HD channels. So push us to change over to HD and then increase charges, that's their game. To force us to change they will broadcast Premier League matches only on HD from 1 November. Which means we have to pay Rs 1,800 for new set top boxes and buy new HD television sets if we enjoy football. Star Sports has the EPL rights for India but they provide content, it is up to Indian companies how they broadcast that content. In 2011, 83 million people watched football in India, more than the population of Britain, so our service providers can drive a bargain if they want to. But they don't. There are some 8 channels showing English movies but they show the same old ones again and again. Sports channels show endless repeats of previous cricket marches. No boxing, no rugby, no American football or ice hockey. Just endless rubbish. And now on high definition. Companies follow politicians. Members of parliament are not allowed to work for profit. Our previous Prime Minister, Manmohan Singh is going to teach economics at Punjab University. But he will not be paid a salary so no profits. Instead he will get a 'daily allowance' of Rs 5,000, which is Rs 150,000 per month. More than the salary of a Lieutenant General in the army. And he insists he is Caesar's Wife. How easy. 

Politicians are being shown up by social media. They don't like it.

One Samanth Subramanian, an author, writes about the corrosive effects of politics in India.  'Politika' in Greek means 'affairs of citzens' and 'politicus' in Latin means 'of, for, or relating to citizens'. This is perhaps what Abraham Lincoln was referring to in the Gettysburg Address when he said that the "government of the people, by the people, for the people, shall not perish from the earth". Unfortunately, politics has long ceased to be about citizens and has become an end in itself, a means for criminals to evade justice, a means to get elected any which way and a means to enrich self and family for generations. "Politics now swamps every square inch of our national discourse; it contaminates every corner of our waking existence," he writes. Apparently it started in the US in the sixties with the feminist slogan, "The personal is political", which was to include the personal problems of women in the national discourse. Politics in India has come to mean "the antic rhetoric of campaigns, to the manoeuvres of leaders, and to the efforts of parties to chivvy and stymie each other". Having begun so well the author becomes overtly political by bashing the media and the election of 2014 which led to the present BJP government of Narendra Modi. "The divisive rhetoric of that election has, like acid, chewed straight through to the cores of our lives," he rants. Has it? India was divided into states according to languages by Jawaharlal Nehru, "the last Englishman to rule India". Books have been banned in this country for as long as we can remember, long before Modi was born. The amendment to Article 66A in 2009, by the then Congress government, which would punish any criticism of the government, should make him very angry, but perhaps he has a short memory. As for the media concentrating on politics it has always been the case. We, who are old enough, remember a time when there was only the radio and every news, read by Melville de Mellow or Surajit Sen, started and finished with Nehru. The reason why the media devotes so much time on politics is because today, with a camera on every mobile phone, politicians are revealed as they are, crude, corrupt and criminal. That is why it is known as a media curcus and probably why Arnab Goswami has the highest ratings. As for social media, it certainly has its dark side but it has done more to empower ordinary people since the printing press was invented in the fifteenth century. The official media, comprising of the press, television and radio, is owned by the rich who decide how news is to be presented. Thus, Fox News, controlled by Rupert Murdoch, is hated by liberals for its right wing bias, while Donald Trump blames the 'disgusting' media for being against him. Social media has given all of us a voice. Like this blog. 

The lower the prices the more we can buy. Makes us richer.

Earlier this month trade unions called a strike against rising prices, while business leaders and bond markets expect a cut in interest rate because of low inflation, which means falling prices. Our Commerce Minister called for a 200 basis point cut in interest rate. This seems to have surprised our pundits who set out to solve the puzzle. Actually, prices are not falling. Retail prices are rising by 5.05%, much less than 10% during the Congress, but growing nonetheless. Wholesale prices rose by 3.74% in August, the highest in 2 years. We know the usual arguments. The lower the interest rate the easier it is for companies to borrow money from banks to set up new capacity, increasing jobs and stimulating economic growth. Food and fuel have a very high weightage on retail inflation and these are not controlled by monetary policy because they are dependent on supply. Increase supply and prices will come down. Not true. Because if prices keep rising wage demand also increases and this feeds into general inflation. The authors calculated how food prices affect the poor and the rich differently, based on figures published by the National Sample Survey Organisation. They found that 55% of the richest 5% live in cities while 85% of the poorest 5% live in villages. The abject poverty in rural areas was vividly illustrated when villagers made off with 'khaat', or cots, at a Congress political rally in Deoria in UP, not having understood a word of the speech by Rahul Gandhi. The rural poor spend 61.88% of their total consumption on food and beverages while the urban rich spend only 23.35%. The rich need to eat less because they do less exercise but in absolute terms they probably spend much more on food and beverages because they may look for organic or imported items. The poor eat more grains, which are cheaper, but earn much less and have to eat a large quantity because of the enormous physical labor they have to put in. Low interest rate helps the rich to invest in assets, such as real estate, which pushes up costs and rents. 50% of urban households and 10% of rural households are landless. Paying rent is completely unproductive and increases poverty. Only 3.2% of Indians are middle class, 2.6% are low middle and 0.6% are upper middle, 19.8% are poor and 0.1% are rich. The vast majority, 76.9% of Indians are in the low income group, which means that they can become poor if an emergency, like a hospital admission, suddenly strikes. This small number of rich people control 54% of total wealth of India, much of which is in real estate. No surprise that they want low interest rates. However, if people get less on their savings, while prices keep going up, they will resort to hedging. Which means buying gold. If you control prices people feel richer. Why is it so difficult to understand?

They are not martyrs, they were sacrificed.

Insult, humiliation, sorrow and a deep burning anger, but no surprise. An attack on an army base in Kashmir by 4 jihadists killed 17 soldiers, a ratio of over 1:4. How shameful is that? This was not some small outpost on a remote hill, it was the brigade headquarters. The attack took place a 5.30 AM, apparently when all the soldiers were sleeping. This is just 9 months after the attack on the airbase at Pathankot. As civilians we think that the first thing the army would do in a hostile area is to establish a perimeter, like the US does. US bases in Afghanistan, a foreign country, were heavily fortified so that the Taliban could never get close to them despite innumerable attempts, whereas we cannot protect our soldiers inside our own country.  Our generals seem to know little and learn nothing. How could 4 terrorists enter so easily? Where were the trenches, the concrete walls, the barbed wire and radar to look for movement? Why no sentries with night vision goggles? General Dalbir Singh became Commander in Chief under controversial circumstances. He has alleged malfeasance against one of his predecessors, Gen VK Singh, at the Supreme Court who, he says, tried to halt his promotion because of "malafide intent". Surely, he should take full responsibility for the latest deaths of soldiers under his command and resign. India is proud that the army has always been under civilian control, unlike in Pakistan where the elected government takes orders from the army. So the ultimate responsibility for the latest deaths are on the politicians. While useless civil servants get humongous pay rises and politicians cavort round the world on our money, soldiers die because of lack of proper equipment. Most of the defence budget of Rs 2.58 trillion goes on salaries and pensions. Capital expenditure is only Rs 786 billion this year but that is in the hands of the government. We are spending a large amount on Rafale jets and Scorpene submarines, whose designs have been leaked by a disgruntled employee in France. What for? We are never going to use them. They maybe used to ferry politicians and civil servants and their families for marriage parties and other occasions. Nothing we can do about that. What about supplying our soldiers with spades to dig ditches, barbed wire, and cement and bricks to build concrete walls around army camps? Drones with cameras cost from $400 to $1300 and are available online. And if we are serious about protecting our soldiers how about buying a few of these babies from South Korea? Our wise politicians are mulling 'graded options'. They reject knee-jerk reactions. So what are the grades of options? Should we bow from the waste, crawl on all fours or lie down prone, known as 'sashtang' in Sanskrit? Not much to be proud of, have we?

Democracy is a cot at the end of an incomprehensible speech.

On 6 September Rahul Gandhi, Vice President of the Indian National Congress, addressed a rally in Deoria, in Uttar Pradesh, hoping to revive fortunes of the Congress in the coming assembly elections in early 2017. Opinion polls are predicting a hung assembly but there is still a lot of time. The Congress has employed the ace election consultant, Prashant Kishor to run its campaign in India's largest state. Kishor is credited with crafting Modi's victory in the national elections in 2014 and creating the Grand Alliance that won the assembly elections in Bihar last year. Problem is that Modi's victory is now credited to his friend and President of the BJP, Amit Shah, and Bihar Chief Minister, Nitish Kumar is having to resort to draconian punishment to prevent 'goonda raj' from benefiting from prohibition, by smuggling alcohol from neighboring states. Rahul Gandhi's rally was called 'khaat sabha' because people were invited to sit on cots.  A 'khaat' is a cot made by weaving a rope, usually made of coir, on a wooden frame, on 4 legs. The cots used in the rally used multi-colored plastic ropes, which made them attractive to villagers, hundreds of whom made off with the cots on their heads. Journalists traced 6 families who brought home one cot each and related their stories. Politicians have taunted the embarrassment of the Congress, but that is not important. What is important is the shocking picture it provides about the rural population in UP, India's largest state. Rural population is about 70% of the total population of India so the country cannot progress unless we make them prosperous. UP is the second poorest state in India and it is no surprise that its fertility rate is the second highest in India. Of the 6 families in the report, only one is Muslim and this family has only one child while others have at least 3 children. The family of 85 year old Ram Nath has 34 members, including 5 sons, their wives and children. All 6 families seem to own their own residences, so they will not be paying any rent. Shakina Bano lives in a hut which does not even have a door. Kishan Rajbhar's family own a small plot of land on which they grow corn and vegetables. Kishan and his 2 siblings attend a private school. Balai Paswan seems almost well off by comparison with others, in that he owns a plot of land, a cow, a buffalo and a machine to cut grass for fodder. All of them said that they did not understand a word of what Rahul Gandhi said but everyone was very pleased with the cot. The Congress is trying to prevent people from running away with the cots but this is creating resentment. What is the point in sitting through a boring speech without understanding a word of what is being said if you cannot get a cot at the end. What does is say about our vaunted democracy?

The old models are not working. What will the new model look like?

The capitalist model is not working, says Anklesaria Aiyar, but the Beijing consensus is not working either. The Federal Reserve is going to meet next week but whatever it does will be wrong, says Narayana Kocherlakota. After the crash of 2008, economic recovery began in mid 2009 but the Fed has been unable to stimulate retail inflation to 2%. It is still at 0.8%. The bond market is discounting a rise in interest rate, with yields on 10 year bonds at 1.69%. The Fed will probably leave interest rate at the same level. Just a short while back everyone thought that China was going to overtake the US to become the richest nation on earth, but that looks increasingly unlikely to happen. GDP growth rate is down to 6.7%, but economists, such as Ruchir Sharma, believe that it is actually below 5%. China's debt to GDP ratio has risen from 150 to 250% and capital to output ratio has doubled to 6, which means that it needs double the amount of investment to produce the same amount as before. Investors, like George Soros, are worried about the level of Chinese debt, which has reached over $26.6 trillion, although most of it is local currency. China needs $4 of new investment to generate $1 of GDP. If Donald Trump wins the presidential election in November he has promised to impose a 45% tariff on Chinese goods which will result in a decline of $420 billion in Chinese exports to the US and a fall of about $426 billion in foreign direct investments into China. So, what is to be done? Central banks have been trying hard. They reduced interest rates, to near zero in some cases, resorted to buying government bonds, to inject vast quantities of money into banks to force them to lend, reduced interest rates to negative, to force people to spend, and have now resorted to buying corporate bonds, to support the stock market. The Swiss National Bank owns $1.5 billion worth of Apple shares and $1 billion worth of Microsoft shares. With so much money floating around why is inflation still suppressed in western countries and Japan? Because banks are using the money to balance their balance sheets, which are full of bad loans, and individuals, who are employed, are paying off their own loans, in what is called deleveraging. Low interest rates have resulted in increasing inequality so that people in US cities have seen an increase in income while those in rural areas have seen loss of jobs, and increase in drug addiction and suicide rates. The elite see Donald Trump as a threat to their privileged lifestyles, which is why the attacks on Trump have been ferocious and unrelenting. Governments are increasing barriers to free trade and the WTO is looking increasingly useless. We cannot see the future but if no one has any idea what to do then it cannot be good. Perhaps a genius will come along.

To get rich we need to copy rich countries.

With a GDP at just over $2 trillion and a population of 1.3 billion India is a poor country. At present the per capita income is $1,500 which will have to increase to $6,000-7,000 for us to become a middle income nation. Not easy when 400 million people, greater than the entire population of the US, are living in abject poverty. At present 65% of the population is below the age of 35 years, presumably working and paying taxes, while only 9% are over 60 years of age. By 2030 those above the age of 60 years will be 12.5%, reaching 19.4% by 2050. At the same time smaller families mean fewer children to look after the elderly and as the economy changes children move away leaving large numbers of elderly on their own. At the same time the total lack of state pension or health assistance makes retirement a miserable time. Poverty is not a curse for everybody. Politicians can win elections by promising social schemes to help the poor and large numbers of civil servants on exorbitant salaries are required to administer the schemes, which may require visits to exotic foreign locales, with wives, for study purposes. Poor people need 3.1 million NGOs to alleviate their suffering, startling even our Supreme Court judges. What is the importance of aging of the population? Aging of the population reduces labor productivity and causes GDP growth to slow down. On the other hand the consequence of a booming population on land, food production, need for fresh water, recurrent epidemics and the downward pressure on wages is keeping millions trapped in poverty. In India the gap in prosperity between rich states and poor ones is growing, Kerala being 4 times richer than Bihar. Although the authors refuse to draw any connection, the poorest states in India have the highest fertility rates - 3.4 in Bihar, 3.1 in UP and 2.9 in MP. Bengal is an outlier, being poor but with a fertility rate of only 1.6. Is there any proof that reducing the number of people will increase prosperity? An epidemic of plague in 1348 decimated the population of Britain. Real incomes grew by 250% between 1300 and 1450. Some 60 million people died in World War II, mostly young men, but the post-war reconstruction led to an economic boom which has not been seen since. We need to reduce our population drastically. Will it be a disaster as it is being made out to be? Maybe not. Only 27% of women are working so there are vast millions being wasted. Old people could be encouraged to continue working. Retired people could be paid to run creches so that women can work without worry. Unlike war and pestilence we have lots of time to adjust. All rich countries have small populations. Let us join them.

We are not dead, because a minister says so.

Indians are convinced that all the jokers in the world are in this country. Delhi Health Minister, Satyendra Jain insisted that Chikungunya cannot kill, because Google told him so. He also advised people not to go to hospital because it is only a viral illness. Perhaps if the minister actually contracted the disease, although we do not wish it, he would appreciate that Professor Google gives general information, while each person reacts differently to an infection. That is why doctors train for years. The WHO gives exact figures of deaths due to Chikungunya in various epidemics all over the world. The WHO also accused the Delhi government of concealing the true figures of the twin epidemics of Dengue and Chikungunya. No one has talked about malaria as yet. Meanwhile, Delhi Chief Minister, Arvind Kejriwal is not receiving any sympathy after his surgery to reduce his soft palate and tongue, which were enlarged, not because he abuses everyone constantly, but because it was causing chronic cough because of aspiration of sputum. If our lot are jokers others are no better. Hillary Clinton has been accused of using a body double because of her rapid recovery following a near syncope during the 9/11 commemoration and the absence of secret service agents when she emerged from her daughters apartment. If Saddam had doubles why not Hillary. The question is if the double does the campaigning will she become president, if Hillary wins in November, or will Hillary get the crown because people were actually voting for her because they believed the double to be Hillary, even though she is not? Very complicated. Clinton has been diagnosed with bacterial pneumonia which is being treated with Levofloxacin. The pneumonia is being dismissed as insignificant, but pneumonia is always to be taken seriously. She had a myringotomy in January, which is small hole made in the ear drum under general anesthesia to let out accumulated fluid from the middle ear. The middle ear drains into the upper part of the nose through the Eustachian tube which gets blocked in children but very seldom in adults. She is on Warfarin, which is a blood thinner, prescribed for a clot in her brain. Warfarin cross-reacts with many other drugs and needs regular tests to keep the thinning within range. Had she fallen when she stumbled a cut would have resulted in prolonged bleeding. Donald Trump is on low dose Aspirin even though he has no evidence of coronary artery disease. Why did he undergo a colonoscopy, which is extremely unpleasant, when he has no symptoms? Strange. Americans get treatment before illness gets serious, whereas out lot do not even respect death. The joke is on us. 

The honeyed words of political repression.

The Goods and Services Tax bill, which is supposed to help all the people by uniting the whole country into a single market, has taken years of debate and objections to become law. There are still a lot of hurdles before it becomes operational. Manufacturing states fear a loss of revenue because the tax will accrue at the point of consumption, so states like Tamil Nadu and Gujarat may see a fall in their share of indirect taxes. Companies will see a huge increase in paperwork which will add to costs, which they will pass on to consumers. There is no consensus on amending our labor laws which are so restrictive that companies are loathe to employ any worker directly and depend on contract workers to run their factories. The Land Acquisition Act is a hindrance to most infrastructure projects but there is great obstruction to any amendment. Curiously, there has been no debate on the Aadhar bill which was sneaked in as part of the money bill in this year's budget. Which meant that the bill did not have to ratified by the Rajya Sabha, where the government is in minority, and was passed by a simple vote in the Lok Sabha, where the government has a solid majority. Aadhar is an identity card, based on a full face photograph, prints of all 10 fingers and iris scans of both eyes. It was the brainchild of the previous Congress regime and was enthusiastically taken up by this BJP government. Why? The government insists that it is only for those who receive subsidies from the government, such as MGNREGA or subsidised cooking gas but is surreptitiously making it mandatory. Why? We, the educated middle class, receive nothing from the government - no old age pension, no healthcare and no income support. Why are we being forced to get this pernicious card when the Supreme Court opined that Aadhar is to be purely voluntary? Banks are insisting on Aadhar card to open accounts and the Railways internet booking site is now insisting on Aadhar. So brazen are the politicians that they are pressuring Google and Apple to incorporate Aadhar recognition technology, which will make us easy prey to political repression. This is the worst kind of police atrocity, that the Stasi would have been proud of. Yet there are no howls of indignation from the media, no shouting by the opposition in parliament and an abject acceptance by the people. Meanwhile banks looted people of Rs 1.5 trillion in 7 years by selling inappropriate insurance products and mutual funds looted $350 million in 22 months through hidden fees. Those who have money are already making arrangements to beat the system. Big companies are researching ways of shifting to blockchains, such as Bitcoin. Since these are digital they will be out of Aadhar. Politicians will join them there. We will remain in the net.

The TINA rule of boom and bust.

Everyone, writing on the global economy, agrees that growth has slowed down, but there is great debate about how to get out of the chains. The US is the richest country in the world, with a GDP of nearly $18 trillion but here too growth was 1.2% in the second quarter of this year. The US economy grew 7.6% from 1949-53, probably because of the enormous stimulus provided by the post-war reconstruction of Europe. After the stagflation caused by the oil price shock of 1973 the economy bounced back to grow by 4.3% from 1975-80. It grew 4.3% from 1982-90 but from 1991 growth rate has fallen steadily. It was 3.6% from 1991-2001, 2.8% from 2001-07, 2.1% from 2009-16 and now just 1.2%. According to an analysis by McKinsey and Global Institute 81% of the population in the US suffered a stagnant or fall in income in the last decade, compared to 97% in Italy, 70% in Britain and 63% in France. Strangely, companies are not investing in new machinery because employing people is cheaper. Sounds like India, doesn't it? Why is recovery taking so long after the crash of 2008? Apparently, because this recession was caused by high debt. When that happens households and businesses use any extra cash to pay off existing debt rather than on new expenditure, reducing both demand and supply. Politicians are loathe to take definitive action in case things go wrong, in which case they will be blamed and lose elections. So the responsibility has fallen wholly on central banks who have resorted to ZIRP, or zero interest rate and NIRP, or negative interest rate, in an effort to discourage savings and increase spending. With no return from their savings people save even more so they had an opposite effect so what about RIRP, or restrictive interest rate policy. To force banks to lend several central banks resorted to buying bonds, know as quantitative easing. With borrowing almost free and so much liquidity in the system it should be leading to rising prices as people buy on credit. But inflation rate in the US in the year to July was 0.8%, much lower than 2%, favored by the Federal Reserve. Now the Swiss National Bank has disclosed that it bought shares of 1,500 mid to large sized companies and 4,400 small companies in advanced economies  and in 800 companies in emerging markets. The SNB owns $1.5 billion worth of Apple and $1 billion worth of Microsoft shares. Central banks should not be in the business of supporting share markets, in a capitalist system. It seems that they are captives of TINA, or There Is No Alternative, first propounded by Margaret Thatcher. In the process they are building enormous asset price bubbles which will burst, to produce another recession. There really is no alternative to boom and bust.

If love is good why is it wrong to love your nation?

Professor Paranjape of Jawaharlal Nehru University, known as a bastion of communism in Delhi, has written an article praising Prime Minister Narendra Modi for bringing a sense of nationalism to the people of India. Ever since his victory being a Hindu nationalist has become a crime, according to many. However, these same people do not see anything strange in Barack Hussein Obama or Bobby Jindal converting to Christianity to win elections. Nikki Hailey has a Christian surname from her husband. Prof Paranjape writes of rising nationalism everywhere in the world, especially in the European Union, which may break up because of the influx of refugees. "Indian nationalism, however, is not quite as negative or defensive. It is a positive, even assertive upsurge. Its central theme, tone, and tenor is the expectation that India can be great again," he writes. And it is Modi "who has made India and Indians proud once more." In their hatred of Modi the liberals make a distinction between patriotism, which is good, and nationalism, which is seen as Hindu and is therefore very bad. Patriotism is 'devotion to one's own country and concern for its defence', while nationalism is defined as 'a feeling that people have of being loyal to and proud of their country often with the belief it is better or more important than other countries'. Thus, our soldiers are patriotic, laying down their lives time after time to keep the country safe from Pakistani attacks but our politicians have always managed to turn victories into defeats by giving up the gains, because they have no pride in their nation, they are not nationalists. "In the recent past, scam after brazen scam made us hang our heads in shame. The apathy and indifference of government, not just of selfish netas but of callous babus, made us feel alienated from the state. All the while, the ultra-rich found new ways of making even more money in India and stashing it away abroad. Rich or poor, no one felt a sense of belonging and ownership," he writes. Neatly put. It is this lack of pride in the nation that allowed civil servants to waste Rs 1 billion of aid money for victims of floods in Uttarakhand in 2013, on having parties. It is this lack of nationalism that gives higher salaries to useless civil servants than to army officers who have to risk their lives for the nation. That is why Indians living abroad are ashamed of our politicians who loot our money and foist their criminal children on the nation. While a marathon runner was not provided with water while running the marathon our shameless ministers were enjoying themselves at the Rio Olympics with their wives, on taxpayer money. Without nationalism there is no pride and without pride there is no excellence. 

The grassy knoll of 9/11.

Yesterday was what is known as 9/11 in the US. In 2001, Islamist terrorists hijacked 4 planes and crashed them deliberately, killing 2,996 and injuring 6,000 others. Suspicion fell on Al Qaeda and Osama bin Laden, who denied it at first but claimed responsibility 3 years later in 2004. Naturally, there are many conspiracy theories, most of them claiming that US and/or Jews were responsible. We have our own conspiracy theory. Bill Clinton launched Cruise missiles at an Al Qaeda training compound in Afghanistan in an attempt to kill Bin Laden in 1998 but he had probably been alerted by an attack on a pharmaceutical factory in Sudan and so had stayed away. After the missile attacks Bin Laden knew he was a marked man and stayed hidden. Was it Bin Laden who planned the 9/11 attacks? All the 4 planes used in the attacks took off from airports on the east coast of the US and were destined for California on the west coast, which meant that their fuel tanks were full, so as to inflict maximum damage. At 8.46 AM one plane flew into the upper third of the North Tower of the World Trade Center in New York. This tower collapsed after 102 minutes, at 10.28 AM. At 9.03 AM a second plane hit the South Tower in the middle and this tower collapsed after just 56 minutes, at 9.59 AM. Most of the casualties were in this tower. Why did the first plane hit so high? Had it hit lower down casualties would have been much higher as people would have been trapped in the upper floors. Apparently, the first plane hit high deliberately so that the smoke rising from the burning tower would not cloud the view of the second plane, which flew underneath the smoke to get a clear view. This was precise military planning, which would have been beyond Bin Laden's knowledge. So who planned the entire operation? Saddam Hussein hated the Al Qaeda and Iran would not indulge a bunch of Sunni extremists. Fifteen of the 19 hijackers were Saudi Arabian citizens but the royal family which controls that nation with an iron grip is dependent on the US for survival. Bin Laden was killed in 2011 in Abbottabad which hosts the Pakistani military academy. Bin Laden was a passenger in a car stopped by police in Abbottabad for speeding. No one noticed. The Taliban leader, Mullah Omar, who was Bin Laden's father-in-law and protector, died in a hospital in Karachi in 2013. Is it too much to think that the ISI in Pakistan was protecting both Bin Laden and Mullah Omar and planned the 9/11 attacks. No wonder Bin Laden denied any involvement in the attacks till 2004. Now suddenly US Senators are alleging Pakistani involvement in killing of US soldiers in Afghanistan. Are they really that stupid or is the US slightly responsible for 9/11 for supporting the Pakistani Army? No wonder they are terrified of Donald Trump as president.

Why not let rates adjust automatically every month?

A retired civil servant, Alok Sheel, revisits the old argument about low interest rates. He calls it financial repression. Retirement must be very liberating for civil servants. "Financial repression is a term used to describe a policy environment where central banks and governments deliberately keep interest rates below the rate of inflation," he writes. In which case we Indians are a very repressed people because our politicians, the Congress and now the BJP, fervently believe that low interest rate is the only solution to India's poverty and all its ills. The previous Governor of the Reserve Bank, Raghuram Rajan believed that interest rate should be 150-200 basis points above the rate of inflation. This is known as the real interest rate. Previously inflation was calculated on wholesale prices but Rajan based his monetary policy on the Consumer Price Index, which is usually much higher. Earlier this year the WPI was actually negative, mainly because of lower commodity prices, while retail prices were high at near 6%. Food and fuel have much greater weight on retail prices and these cannot be controlled by raising interest rate. Food prices are dependent on supplies, which are dependent on the vagaries of the monsoon, while fuel depends on international prices, which can vary because of war in the middle east or a severe winter in Europe. Prices change fast but monetary policy has a lag period before it works. Core inflation measures retail inflation minus food and fuel, but those two affect the poor the most. Some kind of inflation targeting is practiced in almost all economies in the world, the only difference being what goods and services go into the price basket. "In market economies with a developed financial system, where alternative avenues of investment are available, financial repression discourages financial savings. It pushes savings into risky assets and unproductive sectors such as gold, speculative real estate and moneylending," writes Sheel. From 2000 to 2007 when India ran positive real interest rates our domestic savings rose from 23.8% to 36.8% of GDP. Current Account Deficit, or CAD, was less than 1% and growth was nearly ind double digits. From 2008 to 2013 real interest rates were negative so savings fell to 33% of GDP and growth rate fell to below 5% while the CAD rose to 4.5%. Negative real interest rates from 1987 to 2000, known as the Greenspan Put, resulted in the sub-prime crisis that nearly brought down the global economy. Sheel reckons that this pressure to lower interest rates is taking away any autonomy that the Reserve Bank is supposed to have. To us it seems simple. Let parliament decide the level of the real interest rate and the interest rate will adjust automatically to the inflation rate published by the Central Statistical Office. But then the politicians will only have themselves to blame.

Different laws for different folks.

After a 3 year investigation the European Union Competition Commissioner declared that Apple paid only 0.5% tax in 2014 and asked Ireland, where Apple is based, to collect $14.5 billion in back taxes. An article in the Mint goes on to say,"Together, they sum up the problems with the ruling - a blinkered view of a situation fraught with ambiguities and an approach that could prove counterproductive in tackling a legitimate problem." Ireland has the lowest corporate tax rate of 12.5% in Europe. It also allows companies to avoid even that by showing that they are tax resident elsewhere, a sleight of hand known as the 'double Irish'. This apparently was stopped last year but Ireland reduced corporate tax on R&D to 6.25%, to encourage employment educated people. Apple took advantage of Irish tax laws to reduce its tax bill to almost zero. After the ruling Apple CEO, Tim Cook described the ruling as "total political crap" and alleged anti-US sentiment. Such contempt for the EU. Americans are allowed to commit any crime and get away with it. The article is supportive of Apple. "But tax avoidance is not tax evasion. It may exist in an ethical grey zone, but it is also mandatory for corporations to maximize profits," says the article. "Corporations will take every inch the law grants them, and they will lobby to have favourable regulations. That is the nature of the beast." The writer should then be against the Corporate Social Responsibility Act, passed by the Congress Party, which forces companies to spend 2% of their profits on social schemes for the poor. No such rule exists for politicians or civil servants who are free to use taxpayer money for their own social welfare. In the US CSR means sustainable business practices, employee welfare and research. Chipotle is given as an example of providing healthy meat in fast food setting but has lately suffered problems with food hygiene. Multinationals have an army of accountants and lawyers to advise them how to use, or misuse, laws to avoid paying taxes and have the power to blackmail governments by threatening to take manufacturing elsewhere, which will lose jobs. Politicians are terrified of being blamed for losing jobs and so give in. Apple keeps $181.1 billion in foreign countries to avoid paying $60 billion in tax in the US. So, Tim Cook is a US citizen, living and managing Apple while living in the US but the company pays no tax in the country. No such luck for ordinary citizens. They have to pay tax in the US, under a new law called FATCA, despite living and earning abroad, forcing some Americans to renounce their citizenship. In India if you are selling a house you have to collect 1% tax from the buyer and submit to the government. Politicians force us to act as tax collectors without pay. One rule for us and another for them. 

Borrowed wealth has to be repaid someday.

George Soros is worried about the rising debt in China. Who is George Soros? He is the man who made $1 billion in 1992, by shorting the British pound, and apparently earned $4 billion in 2013, partly by shorting the Japanese yen. So worried was China that it warned Soros in January not to go short on the renminbi. China has a debt of $26.6 trillion, which is 2.5 times the size of its entire economy. The US has a similar level of debt and Japan's national debt is 4 times its GDP. But some experts think that the US and Japan were developed economies before accumulating debt, while China is not, and the pace of debt accumulation is worrying. Others say that China's debt burden does not matter because it is mainly domestic, so it can be covered by the government. Soros is convinced that a hard landing for the Chinese economy is inevitable. There is so much debate because no one knows whether the figures published by the government are exact. No one can therefore say for certain whether the growth of the economy will generate enough revenues for the government to keep deficit within control and bring down the non-performing loans of the banks, while spending enough to stimulate growth. Interest rates are low and property prices are too high so the sudden fall in share prices last year means that people have few avenues to invest money. Recent arrests have revealed a huge shadow banking industry which is illegally transferring money to buy assets abroad. The government allows citizens to buy up to $50,000 every year but this is not enough to pay for investments or for paying tuition fees for children studying abroad. This has long been known in India as 'hawala' transactions. However, illegal money transfers are reducing China's foreign currency reserves which it may need to defend its currency if speculators were to mount a serious attack on it. Daily currency trade is over $5 trillion, which amounts to nearly $2 quadrillion every year, whatever that means. China had foreign currency reserves of over $4 trillion, which has dropped to $3.185 at the end of August. Although still the highest in the world it is worried enough to try to keep outflows within limits. A lot of debt is hidden, in that local governments and municipalities are reluctant to reveal their total debt and borrow more to show that they are still growing. In a system governed by fear of punishments no one will want to take responsibility. Maybe that is why Xi Jinping is accumulating absolute power by declaring himself 'core leader', like Mao Zedong so that when the crash comes he can remain unscathed. The trouble with that is that he will never be able to step down. And that is when the fun starts.

Is being pro-Pakistan a safe bet for India?

Shyam Saran, a retired foreign secretary, thinks that Hillary Clinton will be a safe bet for India. Why so? Because, "She visited India with her daughter Chelsea in 1995 as First Lady and has made several visits since." It is one thing to bring her daughter to enjoy tandoori chicken and quite another to be a friend of India in foreign policy. As Secretary of State she visited Pakistan 4 times while she visited India only twice. What was the total US trade with Pakistan last year? In 2015, the US imported $3.7 billion worth of goods from Pakistan and exported $1.8 billion worth, for a total trade of around $5.5 billion. In the same year, India exported $44.8 billion worth of goods and services to the US and imported $21.5 billion worth, for a total trade of $66.3 billion. China was out of sight with total trade worth $599 billion, of which $483 billion was exports to the US and $116 billion was imports from the US. China's importance is reflected by 6 visits by Hillary Clinton as Secretary of State. So, India ranks below China and Pakistan in the order of importance in Clinton's opinion. On Myanmar Saran explained why India had friendly relations with the military regime which ruled the country at the time. "When I added that Myanmar's relative isolation had led to China establishing a dominant position in the country, which was of concern to India she nodded in agreement," he writes. On a visit to India Clinton said,"The United States has always been a Pacific power because of our great blessing of geography. And India straddling the waters from the Indian to the Pacific Ocean is, with us, the steward of these waterways." This is just diplomatic rhetoric because the China has been investing in a string of naval bases along the edges of the Indian Ocean which it calls a string of pearls. The US is bound by its nuclear umbrella agreements with Japan, South Korea and Philippines so if China is kept engaged around the Indian Ocean it reduces the dangers to the US. On terrorists attacking targets inside Pakistan Clinton said,"....you can't keep snakes in your backyard and expect them only to bite your neighbors. Eventually, those snakes are going to turn on whoever has them in the backyard." That is not a support for India. It was a warning to Pakistan not to support Al Qaeda against US and Nato troops in Afghanistan. Bill Clinton appointed a very venomous snake against India as Assistant Secretary of State, namely Robin Raphel who was totally against India. As Secretary Clinton was party to the supply of sophisticated weapons to Pakistan, which are being used to kill Indians. The US has just reiterated that it will not apply sanctions on Pakistan, never mind its crimes against humanity, but had no qualms against applying sanctions on Iran. Clinton could be a safe bet for India but she will be a saviour for Pakistan.