The rogues are falling out.

In an interview with a US magazine President Obama criticised British Prime Minister, David Cameron for making a mess of Libya. He called it a " shit show ". " We actually executed this plan as well as I could have expected. We got a UN mandate, built a coalition, it cost us $1bn - which, when it comes to military operations, is very cheap. We averted large scale civilian casualties, we prevented what almost surely would have been a prolonged and bloody civil conflict. And despite all that, Libya is a mess," he said. We know he is an accomplished liar, but this is blatant. No one is sure how many died in the attacks but estimates vary from 30,000 to 100,000. Libya has been in a constant state of civil war for the 5 years since Gaddafi's death. The UN mandate was for a no-fly zone for the protection of civilians in Libya and for the Arab League to ensure peace and security in the region. Bombing Gaddafi's forces and killing his grandchildren was never allowed in the UN resolution. That makes Obama, Cameron and Sarkozy war criminals and they should be serving life in prison. As it loses ground in Syria, ISIS is shifting its base to Libya, as Gaddafi had predicted would happen. Mohammed Elbibi, the man who took Gaddafi's golden gun is in hiding because he is afraid for his life. If Gaddafi was such a villain, as the West makes him out to be, why do people still support him? In his almost 8 years as president Obama has never taken responsibility for the disasters his administration has caused. Just like he has not taken responsibility for the murder of Ambassador Chris Stevens in Banghazi in September 2012 he shifted the blame for the war in Syria on Cameron. Just as Obama won 2 elections because of a combination of over 90% black votes and political correctness among whites so Cameron won an absolute majority last year by scaring people about the Scottish National Party and blaming the Lib-Dems for increasing tuition fees for college students. With absolute majority Cameron cannot shift blame any more so when the Work and Pensions Secretary, Iain Duncan Smith resigned for cuts in disability benefits the proverbial shit hit the fan. Cameron could lose his job as prime minister if his party goes against him. The coming referendum on Britain's membership of the European Union has divided the Tories and he might face the same end as Margaret Thatcher did over Europe. Just like the Congress did in India the economic recovery has depended largely on rising property prices, as the rich have benefited from low interest rates. The poor have lost through higher taxes, to balance the budget, and having to pay high rents. The villains are falling out with each other. Sadly they will not get the punishment they deserve.

The more the rights the more the bonds.

Niti Aayog, the organization set up in place of the Planning Commission, has come up with 2 suggestions to tackle poverty in the country. The first is to identify the extreme poor, by setting a bare subsistence level of earning so that subsidies can be targeted to them, and the second is to impart skills to those people so that they can lift themselves out of poverty. But will it work? With respect to the eminent economist Arvind Panagariya, who is the head of Niti Aayog, the answer must be no. The reason why people get caught in a poverty trap is because they have too many children, as another report shows. In this report the woman, having worked extremely hard to bring up 6 children single-handed, voluntarily offers herself as a bonded laborer because her son wants to get married. More children and more bonded labor. The study shows that when a factory owner acquires a bonded labor for $200 he makes a net profit of $2,585, which is 191%, over an average of 6.3 years. There are an estimated 11.7 million bonded laborers in India. The punishment for any attempt at escape can be severe. At one level human beings are like commodities where value is decided by supply and demand. The more scarce the skills or knowledge the more the earning potential. Thus, chartered accountants are highly educated and highly paid but actuaries earn twice as much. The mystery is why do poor people have so many children when 35% of rural families have double income and 42% of these are in the DINK category, which means 'double income no kids'. It cannot be a lack of aspirations because 60% of households possess televisions, even with a lack of dependable electricity supply in rural areas. It must be because of economics. Those who see children as added expense will have few and those who see children as a source of income will have more. India has followed socialism since independence but has the largest number of poor people in the world. So, how to reduce the number of poor people? Some would recommend even more handouts and complain that " obligations to secure rights- based laws are being ignored by the Union government." But that is precisely what the Congress did and was routed in the elections in 2014 because it increased poverty by causing double digit inflation and tanking growth rate. Maybe it was a Malthusian warning of the population reaching unsustainable levels. Is there any proof fewer people increase wealth? The much criticised one-child policy of China has made it the second richest country in the world, after the US. Real wages in England increased by 250% between 1300 and 1450 because a large part of the population was wiped out by plague. Reducing the poor reduces poverty. More bonded labor means more NGOs. Must be very profitable, but not for the poor.

Can we stay far from the coming war?

Another explosion in Turkey killed at least 4 people in Istanbul yesterday. Last month car bombs killed more than 37 in the capital, Ankara. In retaliation Turkish warplanes bombed Kurdish positions in northern Iraq. As usual, Turkish President, Erdogan and his pack of henchmen have heaped abuse on terrorists. " Democracy, freedom and rule of law " have " absolutely no value " to us, said Erdogan. Truth at last. He is solely responsible for the violence in his country. To increase his powers as President he broke off a ceasefire with the Kurds last year and won a landslide victory in November. On the one hand Erdogan is allowing US planes to bomb ISIS from bases in Turkey and, on the other, he is bombing the Kurds who are the only group fighting ISIS on the ground in Syria. Kurds blame Erdogan for smuggling oil from areas controlled by ISIS, a charge which has been echoed by Russia. The US urged Erdogan to stop shelling the Kurds, which is a laugh, because, as a member of NATO, Turkey is using planes supplied by the US to do its dirty work. When Russia started to bomb ISIS oil trucks Erdogan wanted to draw in NATO in an all out war with Russia but was bluntly told that his thuggery would not be supported. Meanwhile, European Union leaders have been begging Turkey to stop the flow of migrants crossing into Greece and have signed a deal promising to take in refugees from camps in Turkey and to pay billions of Euros as ransom. Turkey wants visa-free travel for its citizens into the Schengen zone, which will allow 8 million Turks to flood into Europe instead of a couple of million Syrians. Wonderful irony. The EU surrendered to Erdogan's threats of opening the floodgates of migrants, saying that he does not have " idiot " written on his forehead. Angela Merkel's party suffered defeats in recent regional elections, with the rise of the anti-immigration Alternative fur Deutschland Party. All across Europe parties against immigration are making gains as Europeans become increasingly uneasy at the dilution of their culture, terrorist attacks and influx of economic migrants disguised as refugees. Just yesterday Paris attacker, Abdeslam, who has been on the run for 4 months, was arrested in Brussels, after being shot in the leg. The only way to stop the flood of migrants would be to bomb ports in Turkey and Libya from where they are sailing. Some already think that an all out war is a definite possibility. Why is our government surprised that the US is supplying F16 planes to Pakistan? Obama has been supplying advanced weapons to Pakistan regularly. Surely, he made a deal with the ISI of Pakistan to supply sophisticated weapons if it gave up Osama bin Laden to help him win his re-election in 2012. Never has the world seen such a collection of unscrupulous thugs and gutless wimps in power. War is inevitable. We have to maintain distance.

We need to know whose money it is.

News channels in India have been full of the debt problems of liquor baron, Vijay Mallya who is now in residence in his house in Hertfordshire in England, which he bought for 11.5 million pounds, over Rs 1 billion, last year. He is said to owe Rs 90 billion, but he has pledged shares to the banks, so the net loss maybe around Rs 50-60 billion. Not small change, but nothing compared to what other companies owe. Relaince ADAG owes an eye watering Rs 1.25 trillion, Essar Group owes Rs 1.01 trillion, Jaypee Group owes Rs 762 billion, GMR Group owes Rs 480 billion, Videocon Group owes Rs 454 billion, Lanco Group owes Rs 471 billion and GVK Group owes Rs 334 billion, giving a combined total of about Rs 5 trillion. There are 9 companies whose debts are higher than those of Mallya and their earnings are less than their interest payments. 5,600 companies have been declared willful defaulters, with debts of over Rs 600 billion, but the loans of the big firms are so huge that banks are terrified to call them bad because they will lose a lot more than the promoters of the companies. In India, business fellows do not risk their own money. Public sector banks are owned by the government which allows politicians to treat public funds as their own money. " Bankers recall that in early 2009 there was practically weekly hounding of bankers by the ministries asking them to clear more loans. The government was facing its re-election and there was a general feeling that while the West had problems, India, along with the BRICS countries was set for 10% growth. Caution was scarce." This was the Congress, led by the world famous economist. But not just in India. No banker went to jail in the US for nearly collapsing the global economy in 2008 because no one can be prosecuted for making a bad business decision, even though a lot of these fellows were playing with savers' money and doing their best to hide the losses. However, Bernie Madoff is serving a 150 year prison term for a ponzi scheme and Rajat Gupta has just been released after serving 2 years in prison for insider trading, although he did not make any personal gain from his supposed crime. In India no one goes to jail because politicians treat public funds as their own, there is close friendship between business fellows, politicians and civil servants and cases drag on forever so that crooks die of old age before being convicted. While Ms Mamata Banerjee has increased West Bengal's debt by Rs 850 billion to Rs 2.78 trillion by dishing handouts to win elections. Salaries of government employees and interest payments total Rs 660 billion, Rs 210 billion more than what the state earns. Meanwhile, MPs of the Trinamul Congress have been shown to be accepting bribes in a sting operation. They pocket our money, we are left with none.

Is Obama responsible for the Trump bandwagon?

Last Tuesday Donald Trump won in Florida, forcing Florida Senator, Marco Rubio to suspend his campaign,  Illinois, home state of Barack Obama, and North Carolina. He lost in Ohio and is ahead by less than 2000 votes in Missouri. He now has 673 delegates compared to 411 for Ted Cruz and 143 for John Kasich. If he wins Missouri he will pick up another 25 delegates while Cruz will get 5. Republican Party leaders would do anything to get rid of Trump because of risks to down-ballot contests for Republicans standing for the Senate and the House. Some think that he will destroy the conservative agenda built up since Ronald Reagan. There is a trend to the US presidency. The incumbent usually wins a second term but after 2 terms the vote swings to the other party. So, 2 terms of Obama followed by 2 terms of Donald Trump and then 2 terms of a Democrat would mean 24 years without a conservative in the White House. Problem for the Republicans is that pretty much every Republican Senator hates Ted Cruz who is running second. Liberals blame the Republican Party for Donald Trump's success. It is as if he was lurking in the shadows like some undead, waiting to pounce on the unsuspecting Americans with his racism, xenophobia, gender bias and impossible economic policies. After the miserable failure of Jeb Bush, the other establishment candidate, Marco Rubio dropped out after his humiliation in his home state of Florida saying," From a political standpoint, the easiest thing to have done in this campaign is to jump on all those anxieties. But that is not what's best for America. The politics of resentment against other people are not just going to leave us as a fractured party. They're going to leave us a fractured nation." The usual bromide dished out by the politicians. We know best, voters are mugs. Meanwhile, Hillary Clinton has squeaked through in Missouri. Her biggest mistake was working as the Secretary of State for Obama. She has been blamed for a cover up of the attack on a consulate in Benghazi, in Syria, in September 2012, in which Ambassador Chris Stevens and 3 other Americans were killed. But it was not Clinton's fault. Susan Rice, a personal friend of Obama, went round the news channels claiming that it was not a premeditated terrorist attack but a spontaneous outburst in response to an anti-Muslim video on the internet. Why was she lying? Because Obama was up for reelection in November. Having won 2 terms through a combination of racism (overwhelming black votes) and political correctness Obama has presided over the greatest loss of down-ballot Democrat seats than any president in 70 years. His boast about economic recovery is shaky at best and he is despised by working class whites, who should be the bedrock of Democrats. If Trump becomes president Obama will have no legacy. Better to have no legacy than one like his.

Why a tendency to use a sledgehammer instead of logic?

The government has banned 344 fixed dose combinations of drugs available in India. Most of them are combinations of antibiotics, painkillers or cough medicines. Some of the combinations do not make sense while others are positively dangerous. Trouble is that the list itself is incomplete and seems illogical. For example, combinations of Cefixime, a third generation cephalosporin used in typhoid, with linezolid and levofloxacin have been banned, but not its combination with cloxacillin. Linezolid and cloxacillin are both indicated only for gram positive bacteria, as for an abscess, whereas levofloxacin would make more sense. The list does not include fixed dose combinations of anti-tuberculosis drugs which have been supported by the World Health Organization because they ensure that the patient takes all 4 drugs. This stops patients from taking partial treatment and emergence of resistant strains of the bacteria. The problem is that all these combinations are for patients who weigh less than 50kg and inadequate for heavier people. Also a patient with tuberculosis gains weight once the disease comes under control, so the dose needs to be increased. The biggest problem is that there is no law on who can call himself a doctor. While rules are very strict about trained doctors, who have to undergo Continuing Medical Education, to keep up to date, there are no rules for the millions of quacks who practice with complete impunity. Homeopaths, vaids, physiotherapists, dietitians, foot massagers and even snake oil salesmen are allowed to call themselves doctors and prescribe allopathic drugs. Companies make combinations for these illiterates who find it convenient to prescribe a concoction of stuff in the hope that something will work. Poor patients go to these charlatans because their fees are less than trained physicians. However, India is not the only country with drug combinations. Every country has over the counter, or OTC, preparations for simple illnesses, such as flu or loose motions, which are combinations of commonly used drugs. Cough, especially dry, can cause great inconvenience, especially because it tends to get worse at night when the patient lies down, keeping her awake. Most syrups for dry coughs will contain codeine, pholcodine or dextromethorphan, mostly in combination with an antihistamine. These make people drowsy so should be taken only before going to bed. Unfortunately, some people have become addicted to such combinations. But taking a sledgehammer approach takes away treatment options from trained doctors. Morphine is invaluable for treatment of heart attacks and terminal cancer but is not available on prescription. That has not stopped an addiction epidemic in Punjab. But, as is normal in India, drug companies have obtained injunction orders from courts so patients can relax for the next 25 years. You cannot do good unless it is logical.

Why do they ask us to invest in froth?

Pundits are puzzled and indignant as to why Indians do not invest in the share market. Less than 1.5% of Indians invest in shares, compared to 10% in China and 18% in the US. Only 2% of our household savings are invested in stocks compared to 45% in the US. Learned articles are written on how markets always give good returns if you hang in there. However, even in the US there are those with contrary views. Our market fell by 8.5% in August last year, when China devalued the yuan by 3.2%, and by 7.7% in January when the yuan was devalued by 1.4%. The S&P 500 in the US also fell both times but has recovered whereas the Sensex is weak because foreign investors have sold $2.4 billion worth our stocks. Foreigners own 70% of our market at $257 billion so we are at their mercy. There is another danger lurking in the background. Emerging markets have borrowed heavily in foreign currencies because of very low interest rates in the US, Europe and Japan and $1.6 trillion will need to be paid back over the next 5 years. If there is any default it will immediately affect all emerging market stocks. Indian companies have external commercial borrowing of $181.9 billion, Rs 4.5 trillion, of which 37% are at risk. Which puts us at the mercy of the US Federal Reserve. If the interest rate in the US goes up and/or the dollar becomes stronger it will immediately increase the debt burden of our companies. Indians think that our market is manipulated by some big players but it seems that the US market is also manipulated because earnings per share have fallen but the market is almost at record level. The Fed raised rate by a timid 25 basis points in December which was criticised by some as being too soon. Like drug addicts markets have become so addicted to near zero borrowing costs that they celebrated when US employment figures came in lower than expected. Since money does not earn any interest from banks investment into risky assets was the only way to generate returns. This has naturally built up bubbles in markets everywhere. The Eurozone, Japan, Switzerland, Sweden and Denmark have adopted negative interest rate where depositors are charged to keep their money in banks. This is to force people to spend money, in an effort to increase demand, and to devalue the respective currencies. In an assault on basic freedom governments are trying to engineer cashless economies which will prevent people holding their savings in cash and allow banks to make windfall profits from charging customers. Globalisation has made problems so interconnected that constant adjustments are required, which is beyond the scope of central banks. So great is the desperation that serious economists are actually discussing 'helicopter money' where people are just given money to spend. But what if they don't? Take them shopping at the point of a gun? Better to stay away from the stock market, what?

Why do we have the same discussion every month?

It is that time of the month again. Figures for the economy have just been published which will lead to a cacophony of calls for the Reserve Bank to reduce interest rate. The Consumer Price Index was 5.18% in February compared to 5.69% in January. It does not mean that prices are falling, it merely means that prices are rising at a slower pace compared to the month before. The average rate of CPI last year was 5.88% while it is 5.91% so far this year, so prices are rising faster, compared to last year. Those demanding lower interest rate point to 2 other indices. The Wholesale Price Index which has been negative for 16 months which means that wholesale prices of commodities, especially fuel, and manufactured products are falling. This is supported by the Index of Industrial Production which fell by 1.5% in January because of fall in manufacturing and capital goods. However, there are questions about this because the capital goods part is lower than in 2009, just after the Lehman Brothers incident, and the consumer goods component is the same as in 2012. Since IIP is measured against a base year, which is taken as 100, it would seem that growth is stagnant. The difference between wholesale prices and retail inflation maybe explained by the fact that WPI does not include services, such as education and recreation and amusement, whose prices have soared because of increased taxes. Average movie ticket in the US costs $8.70, which would work out to around Rs 600, whereas the price for a ticket at any multiplex in India would range from Rs 300-400. The median household income for people of Indian origin in the US is $101,591, which would be more than Rs 7 million a year. The average annual income of affluent people in India is a mere Rs 1.5 million. Compare college fees in the US to what the Indian Institute of Management charges in India. While one can postpone the purchase of a car or buy a cheaper brand of toothpaste, services, such as education, rent and healthcare are essential. Consumer spending is not going to rise by reducing interest rate as the total number of credit cards in India were a meager 21.1 million last year and the increase in spending maybe due to online purchase of retail products at the cost of bricks and mortar stores. So why the outcry for lower rates? The reason is that banks have huge amounts of bad loans, a lot of which has been hidden. Most of these are in infrastructure, metals and power sectors so low interest rate may allow the loans to be restructured at lower rates, providing some relief to companies. The hope is that lower rate will stimulate the real estate sector but that will help only those who can afford to buy properties at these levels, which means the rich. Increasing real estate prices only increase poverty as Britain is discovering. Lack of ideas all round. Worrying.

We have more to learn from Brazil than just football.

Thousands of people are protesting in Brazil against the government of President Dilma Rousseff who says that she is not going to resign because she has been democratically elected and blamed the opposition for creating a crisis. Sounds familiar? That is exactly what our politicians say when they are accused of hanky-panky. People are angry because the economy shrank by 3.8% last year and the currency has dropped by 55%. Brazil's economy relies largely on exports of minerals, controlled by the government, and agricultural products and the slump in commodity prices has resulted in huge deficits. People are enraged at allegations of $2 billion scam at the oil company, Petrobras. Something like our 2G and Coalgate scams. While the economy was booming the previous president, Lula da Silva started a direct benefit transfer scheme, called Bolsa Familia, in which the government paid a subsidy of 70 Reals for every child to the mother, provided the child attended school and health checks regularly. It was hailed for lifting 11 million families out of poverty and Lula is revered by the poor. We have the MGNREGA, Food Security Act and the Right to Education Act to subsidise the poor. Now the government has decided to provide free cooking gas to 50 million poor women. Prosecutors even picked up Lula and his wife for questioning. Such an act will be impossible in India where politicians can travel to the US for secret medical check ups in private planes, with lots of boxes, without any customs search. As the recent games with Vijay Mallya has shown. Mallya was Member of the Rajya Sabha and as an MP got himself a diplomatic passport. Clearly Rs 90 billion can buy an awful lot of support. To get their money back banks applied to the Supreme Court to impound his passport on 8 March but Mallya had left India on 2 March, no doubt assisted by his well-wishers. Now the Attorney General wants Mallya to come back to India to surrender his passport. Naturally, Mallya has declined the invitation. You cannot take Rs 90 billion from banks by being stupid. He said that he does not feel safe in India and, although he feels sick to be in hiding, one day he will return to clear his name. Retail inflation rate in Brazil was 10.36% in February despite the interest rate being held at 14.25% for 5 months straight. The Governor of the Reserve Bank, Rajan has cited Brazil as an example of what can happen if you try to grow the economy too fast. However, politicians have elections to win and in a poor country like India handouts are the easiest way to win. Politicians get power and pelf and the hapless taxpayer foots the bill. In other countries people are protesting against corruption, here they are protesting to bring corruption back. The irony is that most people here have heard of Brazil, but only for its football.

Will it be good for us to have no rights at all?

On 2 December 14 people were shot to death and 22 seriously injured in a shooting in San Bernadino, in the US, by a couple of Pakistani origin. The police found an iPhone 5C belonging to one of the shooters, Syed Rizwan Farook, which has advanced security features. The FBI asked Apple to create a software which will bypass the security feature so that they can try millions of passwords to break into its contents. Apple CEO, Tim Cook resisted the FBI demand, saying that it will endanger the security of millions of people who use Apple devices, not just phones. A magistrate ordered Apple to comply with the FBI demand but Apple has appealed the decision and says it intends to fight to the Supreme Court.Whenever any government takes away our rights it is presented as a service which will be good for the people. Like our government, which tagged the Aadhar Bill to the budget as a money bill to avoid any discussion in the Rajya Sabha. This sinister act forces every citizen to provide prints of all 10 fingers, iris scans and photographs in chilling reminder of George Orwell's 1984, where Big Brother controls all information. The government says that it will enable it to pay subsidies directly into bank accounts of the poor, eliminating theft, but it is completely silent on why it is spending billions of rupees collecting particulars of the middle class who do not receive any subsidies. Similarly the government wants to eliminate cash transactions, ostensibly to eliminate black money. How pious is that? There is no discussion on how the government will be able to track movements of whoever they want simply by finding out where they have used their debit or credit cards. Denmark has already gone largely cashless, which has allowed its government to slash interest rate to negative which means that people are charged if they save money in banks. This is a financial assault on people because they cannot avoid the charge by keeping their savings in the form of cash. The real intention of the government is to increase tax collections by tracking every transaction but if every plumber, electrician or mason is forced to pay tax on income over Rs 250,000 a year there will be an increase in poverty. Sadly, while there is debate about government diktat in other countries there is none in India because politicians know that they can win elections by distributing handouts. Meanwhile, the FBI has admitted that it wants Apple to unlock other phones as well and is using the All Writs Act of 1789 to get its way. If the FBI wins there will be 2 consequences. One, Apple is already working on an encryption software which even its own engineers will not be able to break and two, other governments will also demand the 'backdoor' key. In the end the US may have to share control of the internet with other countries, like China. Is that what it wants?

The slippery road to wealth.

To spend or not to spend, that is the question being debated by pundits in India. It refers to the budget which has committed to stick to a fiscal deficit target of 3.5%. Fiscal hawks want the government to stick to its deficit target, no matter what. While the Chief Economic Adviser, Arvind Subramanian wanted the target to be relaxed and expenditure increased, in an effort to boost growth, the Governor of the Reserve Bank, Raghuram Rajan warned," As Brazil's experience suggests, the enormous costs of becoming an unstable country far outweigh any small growth benefits that can be obtained through aggressive policies. We should be careful about jeopardizing our single most important strength during this period of global turmoil, macroeconomic stability." Commodity prices, especially that of crude, are down which gives the government plenty of extra money to spend, by reducing its import bill. As the price of crude has dropped so the government has been increasing the excise duty on fuel, raking in over Rs 1 trillion in revenue. If there is a global recession we may need to increase spending to stimulate growth, so we must consolidate at present. Others take the opposite view. For them "....it was necessary to to breach the Lakshman Rekha for the fiscal deficit at 3.5% of GDP. The second was additional resource mobilization through taxation, which could have increased degrees of freedom for the government." The budget has done precisely that. There was a cess on service tax and another on cars. Car sales have fallen 2 months in a row and higher taxes may cause a further fall in sales, which will reduce tax collections. A tax has been imposed on dividend income above Rs 1 million and a surcharge of 15% on incomes above Rs 10 million a year, are taxes on the rich. According to these people ".....the size of our market, in terms of population if not income, is the biggest asset." Is it? Only about 3% of people pay income tax. That is because most wealth is in real estate, a lot of which is inherited. Thus there are millionaires on paper who do not earn enough to pay taxes. Secondly, the vast majority of poor spend more than half their income on food and essential items so most of service tax is realised from the middle class. Cost of healthcare and education have spiraled and while these add to the GDP they are not productive. China provided a stimulus of $586 billion in 2008 which was widely praised for reducing the length of the global recession. Now China is struggling with a debt of $28 trillion which is a drag on the global economy. Pundits urge India to institute structural reforms but the discussion is always centered around how to increase subsidies to the poor and not on how to create wealth. We can be poor or we can be rich, we cannot be both.

Predictions of the number 'seven'?

Is the world facing 7 years of famine following 7 years of plenty as happened in Egypt couple of thousand years ago. A professor thinks not. But, in a telling coincidence, he lists 7 dangers to the world economy. 1. There are worries about China. Although it is still growing at 7% there are doubts about its figures, which prompted the present Prime Minister, Li Kiqiang to develop his own index based on electricity consumption, rail cargo volume and new loans. Using this index economic growth comes in at 5%, but the government is moving the economy from investment towards services, so new indicators are needed. But is it working? The stock market and the currency are still falling, retail sales are static and people are travelling less. New Zealand just reduced interest rate because its dairy exports to China are falling. If the economy is still growing why are people eating less? 2. Emerging markets have large debts which could become a drag if the Federal Reserve increases interest rate further and the dollar becomes stronger. Using the Keqiang index India's growth rate falls to around 6%. 3. The Federal Reserve has to walk a tight rope. The unemployment rate has fallen to 4.9% but wages are not growing and a strong dollar is hurting exports, drawing scorn from both Democrat Bernie Sanders and Republican Donald Trump. 4. The middle east is on a knife edge. Having conned the US into lifting sanctions Iran has tested ballistic missiles with 'Israel must be wiped out' written on them in Hebrew. When criticised for the tests they threatened to walk away from the nuclear deal knowing that Europe will be reluctant to impose new sanctions and the west needs Iran and its proxy, the Hezbollah, to defeat ISIS. 5. The fall in oil prices is adding to the fear of deflation and causing losses for the shale oil industry in the US. 6. Banks are still in difficulty with bad loans. Indian banks are drowning in a sea of bad loans, some due to falling growth rate, some due to genuine mistakes but most due to corruption, as shown in the Kingfisher case. 7. Finally, the European Union where the central bank cut the interest rate to 0% from 0.05%, which seems meaningless, cut deposit rate to minus 0.4%, so banks will have to pay the central bank to park money with it, in an effort to force banks to lend, and increased its bond buying program from 60 billion to 80 billion Euros a month. A negative interest rate is supposed to weaken the currency but in the case of Japan it a had the opposite effect. Experts advise structural reforms, but what? Write off bad loans, lend more money to countries like Greece to stimulate growth and stop the flow of migrants. But politicians are committed to austerity and are building walls, which hampers trade. Time to be an atheist?

The flight of the Kingfisher.

The kingfisher has flown the coop. The Attorney General informed the Supreme Court yesterday that Vijay Mallya left the country on 2 March, still owing Rs 90 billion to a bunch of banks in India. Of course, he did. Same as India's best friend, Ottavio Quattrocchi left Delhi for Kuala Lumpur in July 1993 even though the pay-offs in the Bofors case came to light in 1987. Billions of rupees makes lots of friends. For us, ordinary folks the case is hilarious because none of it makes sense. For instance, no one seems to know where Mallya is? With his distinctive hairstyle Mallya is instantly recognisable. A man of his flamboyance is not going to fly anything less than first class, fussed over by flunkeys, which will be clearly visible on CCTV footage in the airport, so his destination should be obvious from the flight he boarded. If he flew by private jet, its flight plan will have been filed and a few phone calls should reveal where it landed. A non-bailable arrest warrant was issued for him in October 2012 so he should not have been roaming around. In 2014 he was granted bail on a criminal charge of tax evasion for a sum of Rs 100,000 in cash and Rs 100,000 bond, for a grand total of Rs 200,000. This for a man who had already defaulted on loans of over Rs 70 billion to various banks. Contrast this to Subroto Roy who will remain in prison unless he pays Rs 100 billion towards his bail. Note what Mallya said,"I have been most pained as being painted as an absconder - I have neither the intention nor any reason to abscond. I have been a non-resident for almost 28 years and the Reserve bank of India acknowledged this in writing." We understand. When he left India he was only going home to wherever he lives and so cannot be described as an absconder. What does non-resident mean? Does it mean that he still carries an Indian passport but spends over 180 days outside the country, or that he is a citizen of a foreign country. If everyone knew that he is a non-resident why did they not impound his passport? Mallya struck a deal with Diageo which agreed to pay him $75 million as severance package, $40 million immediately and $35 million in installments over 5 years, and drop all criminal charges against him. The stock exchange regulator, Sebi has suddenly woken up to Mallya's naughty behavior, the same Sebi which has been implacable in the Subroto Roy case. Some 3,000 employees are still claiming Rs 3 billion in unpaid salaries. No doubt they will be paid with taxpayer money just before some elections. The money could have been much better utilised to restructure the airlines so that it remained viable when over Rs 222 billion has been wasted on the bottomless pit of Air India. Under no circumstance should the government try to extradite Mallya back to India. We do not want a repeat of the Quattrocchi carousel where our fearless sleuths ran to all the fleshpots of the world, costing billions of rupees, only to drop all charges. Curious goings on, isn't it? Alice would have recognised it.

Is Europe going to surrender to Erdogan?

After fighting each other nonstop for thousands of years, ending with World War II, European countries established the European Union, which created a common market of 28 countries, with free movement of people, goods and services. No visa is required to travel within the Schengen area of 26 countries. The European Convention on Human Rights even abolished the death penalty for the most heinous crimes. The union has been so successful in promoting peaceful coexistence for its citizens that the European Union was awarded the Nobel Peace Prize in 2012. Could all this, built up over half a century, be about to fall apart because of the migrant crisis? Various countries are building fences to stop the flow of migrants and thousands are gathering in Greece because Macedonia will not allow them through. There has been talk of expelling Greece from the Schengen area for not doing enough to stop the flow of migrants, although what the Greek navy is supposed to do is not clear. Armed forces are trained to fight other armed forces. They may refuse orders to shoot at defenceless civilians with little babies, which will make them guilty of war crimes. Matters got so bitter that at one point Greece recalled its ambassador to Austria. The problem is not Greece, but Turkey, whose President, Erdogan is an absolute corrupt thug. A big scandal was exposed in 2013 involving Erdogan's party and possibly his son Bilal. Instead of cleaning up his administration Erdogan arrested judges and prosecutors and sacked police chiefs. Bilal Erdogan was being investigated for money laundering in Italy. There are allegations of Bilal being involved in smuggling oil from Syrian areas controlled by ISIS. Authorities forcibly took over a newspaper, called Zaman which was critical of the government. It has now become a propaganda sheet for the government. The migrant crisis is a heaven sent opportunity for Erdogan. He has the European Union in a corner, and is demanding his pound of flesh. Europe has agreed to pay 3 billion Euros to help Turkey look after refugees but Erdogan is demanding double that. Naturally, he decides how the money will be spent. He is demanding visa-free travel for Turkish citizens to Europe and speeding up of Turkey's membership application to join the EU. He knows that by the time that happens the European Union may have broken apart. The real beauty is his demand for Europe to accept one Syrian refugee from a camp in Turkey for every illegal one returned to the country. So, allow smugglers a free hand to take money from desperate refugees, allow locals to earn good money by selling inflatable rafts and fake life jackets to refugees, and recycle the migrants through the camps. And get paid 6 billion Euros for that. Genius. He cannot lose the next election.

If foreigners control our economy, how free are we?

Knowledge can be very scary. In an interview Christopher Wood, Managing Director at Credit Lyonnais Securities Asia, an investment bank, said that foreign investors have sold $2.4 billion worth of Indian equities and $978 million worth of debt, and could sell more. The scary thing is that foreign investors have invested a total of $308 billion in India, $257 billion in stocks and $51 billion in debt. Our total foreign currency reserve is $350 billion so significant selling by foreigners could result in a plunge in the value of the rupee, which will put immediate upward pressure on the cost of imports, especially fuel, pushing up inflation. Of course, foreign investors will lose when they exchange rupees for dollars but we will lose even more. Indians are reluctant to invest in the stock market because it is controlled by foreign funds and a few big Indian traders, which leaves individual investors at a disadvantage. Only 1.5% of people in India invest in stocks, as opposed to 10% in China and 18% in the US. Just 2% of household savings in India are exposed to equities, as opposed to 45% in the US. Foreigners control 70% of the market. Analysts point out that the Sensex generated returns of 17% from 2004-2014 but do not give us a breakdown. They do not tell us how many stocks have stopped trading because the companies have gone bankrupt and have been replaced by other companies. Because of greed Initial Public Offerings are priced very high, so that 60% of IPOs are trading below offer price, which means that investors lost out. Mutual funds are supposed to take away risks of investing in stocks because fund managers know when to buy and sell but charges are higher than in other countries, and companies are run by fellows, called 'promoters', who may have pledged all their shares to banks to borrow money and therefore should be operating under strict supervision. Indians have a deep distrust of markets because they have been burnt by scams many times previously, so fund managers should discourage people from investing in equity funds when the market is at a high. Recent evidence shows that they do not warn retail investors from rushing foolishly into a market when corporate profits are falling, maybe because more investments mean more bonuses. Global economy looks weak and the IMF warned that it is 'highly vulnerable'. Some predict a recession in the US within one year. Without the stimulus of US consumer spending the world economy may also go into a recession. Many central banks have introduced negative interest rates in an effort to depress their currencies which puts more pressure on the rupee. Meanwhile, our share market is holding its breath for the RBI to reduce interest rate, without which real estate prices may crash and a lot of black money maybe wiped out. 68 years after independence we are still controlled by foreigners. Not something to be proud of, is it?

Do you have to be blind to be liberal?

Liberals all over the world suffer from delusions of infallibility in their own intellect and their absolute conviction in the rectitude of their arguments. While heaping abuse on Donald Trump, Republican front runner for presidential election in November, they are puzzled by his popularity with grassroots voters. One compares him to right wing politicians in Europe, including Putin, who are guilty of " nationalism and a hatred of minorities ". In the opinion of another, Trump's appeal is to " white working-class ethnics ". It is not clear how white people can change their genes to add some color to their skins and why being working-class makes them somehow inferior. A third says that Trump has gone exactly opposite to the Republican Party's decision to be " kinder, more inclusive GOP ", after being defeated twice by Barack Obama. Obama was elected because 96% of blacks voted for him, which is racist, and others who saw it as being politically correct, because he had converted to Christianity, which is religious bigotry. Liberals seem completely blind to the killing of thousands of innocent people by the use of drones, which makes him a war criminal, and creating conflict where there was peace, such as in Libya and Ukraine. The liberal hatred of Trump can be compared to the hatred of the BJP government in India and the Prime Minister, Narendra Modi. Not a day passes without vitriolic abuse of Hindus, which is seen as a proof of secularism. A former member of the now defunct Planning Commission starts off by commenting on the Economic Survey, released just before the budget, but somehow twists its contents to revel in Hindu bashing. He quotes Francis Fukuyama who praises the roles of Judaism, Christianity and Islam in nation-building but doubts that Hinduism can play a unifying role in strengthening the nation. Fukuyama seems to be unaware that these religions have been fighting and killing each other for thousands of years, continuing to this day. The slaughters between Catholics and Protestants and between Shia and Sunni are hardly the best means of nation building. Over 1 million Armenians, orthodox Christians, were murdered in Turkey about 100 years back. Jews, Christians and Muslims worship the same God, just the one, and they kill each other constantly. Out of all religions only 2 religions convert and they have been attacking Hindus for over 600 years, only because we are idol worshipers, and so we can attain paradise by dying at the hands of 'believers'. Why is caste still a problem? Because liberals use it to divide Hindus to win elections while praising minorities as superior to Hindus, as happened in recent elections in Bihar " Human beings are not satisfied by material resources alone. They demand as well their authentic selves be publicly recognized - granted equal status," the fellow writes. Exactly. That is all we Hindus want.

Is it any point replacing hunger with cancer?

Monsanto is refusing to take any responsibility for the destruction of the cotton crop last year. Monsanto lost money last year because of the fall in commodity prices and the strength of the dollar but could still return $3 billion to shareholders in the form of share buyback. Domestic seed companies will face huge losses if Monsanto does not compensate farmers. Monsanto naturally denied any responsibility saying crop failures were as a " result of improper practices at farm level, absence of refuge planting(for the pest to feed on), and spread of illegal seeds." Entrepreneurs, such as Kiran Mazumdar Shaw, argue that the government should encourage research of genetically modified crops, which are the only solution to rapidly expanding numbers of poor people. That makes sense. Local production will make seeds cheaper and break the monopoly of foreign companies like Monsanto. But is it so simple? No company, including Indian ones, can function without making reasonable profits and there is no reason to believe that Indian companies are more righteous than foreign ones. They are always complaining about taxes, even though manufacturing companies get many exemptions, so that their ultimate tax liability is much lower than the service sector. It is inexplicable why not one Indian company finds it easy to manufacture refrigerators or air-conditioners while foreign companies seem to have no problems. While supporters see GM technology as the ultimate panacea for poverty among farmers, resistance to GM crops is ferocious. With some justification. They maybe GM but they cannot grow without water like Jack's beanstalk, so if the monsoon fails crops are destroyed. The seeds maybe resistant to one type of pest but mother nature may have others on offer. When farmers in Punjab planted cotton, resistant to boll worms, crops were destroyed by whitefly attack. Large families have led to divisions of farms so that most farmers have smallholdings. They cannot leave land aside for planting decoy corps for pests to feed on, as Monsanto demands. Excessive production may not be a boon because bumper crops result in falling prices, as happened last year. In any event farmers end up committing suicide. Pests are one problem. Then there is the problem of 'super weeds', resistant to Roundup, Monsanto's weedkiller. A farmer in Arkansas, in the US, described weeds " eight feet tall, they're the diameter of my wrist, and they can stop a combine (harvester) in its tracks ". BT is an abbreviation of Bacillus thuringiensis which produces 3 types of proteins, toxic to insects. While drugs have to undergo stringent tests for safety no such comparable tests have been carried out for BT corn or other food items. Drugs are prescribed for the duration of an illness but food has to be eaten for life. Therefore, we should study the effects of BT food on a group of volunteers who will eat only GM food, supplied by the companies. Maybe cancer rates are rising worldwide because of GM foods.

Helicopter money worked in India, perhaps too well.

Famous economist, Milton Friedman was responsible for inventing the term 'helicopter money' in which the government drops cash from a helicopter, which is collected by the people, resulting in a surge in demand as they spend their windfall, thereby stimulating growth in the economy. Apparently, economists are beginning to discuss such a possibility because quantitative easing and negative interest rates, where you pay to keep your money in the bank, have not dispelled the fear of deflation. Central banks of developed countries feel that an inflation level of 2% is ideal, low enough for people to plan their expenses, but with no danger of falling into deflation. 'Helicopter money' could be achieved by the central bank transferring money to bank accounts of citizens or by the government reducing taxes. Trouble is, that too little will not work and too much may result in prices jumping too high, so that tough measures have to be taken to bring them under control. Why the panic? The US payroll figures show that 242,000 jobs were added in February, bringing the unemployment level down to 4.9%. No economy can achieve 100% employment because then companies will not find any worker and wages will rise to unsustainable levels. Some unemployment will always be there as people change jobs and new applicants enter the job market from schools and universities. So what is the ideal rate of unemployment? The Federal Reserve considers that 4.5-6% is the normal long-term unemployment rate so the present rate should be satisfactory. Some think that the Fed should be aiming for an unemployment level of 3%. The US economy grew strongly last year and inflation has increased to 1.3% but some are predicting a 100% certainty of a recession in the US by 2018. The Chinese government is increasing credit towards keeping the rate of growth above 6.5%. Interest rate has been cut 6 times. Problem is that China already has an excess of infrastructure lying useless so would the increase in credit work at all. Despite buying bonds worth $661 billion per year, also known as quantitative easing, Japan's economy contracted by 0.4% in the last quarter of last year. In desperation the central bank cut interest rate to negative in January. Barclays Bank is predicting that negative interest rates could last for years in Japan and the Eurozone. But is there any evidence that 'helicopter money' will work? There is some evidence from India. The Congress increased handouts to hundreds of millions resulting in inflation levels of over 11% in 2012 and a fall in the growth of the economy. It was at a high of 5.69% in January. Yet stock markets have risen sharply because the recent budget predicts a fiscal deficit of 3.5% for the year. Why? Because the RBI may reduce interest rate, helping the rich to accumulate more assets. The rest of us will become poorer.

Enemies are not likely to cooperate, are they?

Some Americans ask in anguish why has the US stopped winning wars? Did the US ever win any war? The 2 World Wars were fought alongside European countries, especially Russia. Korea was a draw with a still undeveloped China, and after that it has been one ignominious defeat after another, despite having the most formidable fire power ever assembled in history. Maybe it is because they are so convinced of their superiority that they cannot imagine being beaten by superior strategy. " Together, Russia and the Assad regime are deliberately weaponizing migration in an attempt to overwhelm European structures and break European resolve," told a General Breedlove to the Senate Armed Services Committee. Of course, they are. How did this fellow get to be a general without hearing of " All's fair in love and war?" " The indiscriminate weapons used by both Bashar al-Assad and the non-precision use of weapons by Russian forces, I can't find any other reason for them other than to cause refugees to be on the move and make them someone else's problem," he said. Absolutely, and very successfully too. And pray, what exactly is a smart bomb? Does it have a name written on it so that it kills only one? A bomb maybe very smart and hit the exact target where a terrorist is known to be but it is surely going to kill any family and friends who are with him, including children. The general seems to be unaware that 200,000 died in Iraq in the first Gulf War. The Russians insist that they are using the smartest weapons but you cannot have 'shock and awe', an American doctrine, without huge casualties. The ploy seems to be working. Although there is a truce at present the flow of refugees is continuing. Macedonia has closed its border with Greece so refugees are massing at the fence. Germany has already taken 1.1 million and may have to take millions more. The present truce in Syria is because a panicked Europe sees this as the only hope of keeping Syrians in their own homes by helping them with aid. But, would it not be ironic if the lull in fighting allows people, who could not find a way out for fear of being killed, to make the journey to Europe? After all if there is no trade, agriculture or manufacturing how are people going to survive. Vigilante groups are patrolling towns in Scandinavian and Baltic countries to protect their own people from assault and rape by asylum seekers. The same could easily happen in Germany. A diabolical solution will be to evict Greece from the European Union to stop the flow. Will that result in a war between Greeks and refugees right on the border of Europe? The real answer is to accept Russia as a European nation, lift sanctions and help its economy to prosper so that it has no reason for a strongman like Vladimir Putin. But, for some mysterious reason, Russia is seen as an enemy and China and Pakistan are seen as friends. Total incomprehension, like General Breedlove.

Is it right to deceive us with a money bill?

In a trick on the people of the nation the government is going to table Aadhar (Targeted Delivery of Financial Services and other Subsidies, Benefits and Services ) Bill, as a money bill in the Lok Sabha today. At first glance the intention seems to be pious. All handouts to the poor are to be transferred directly into their bank accounts. To that end 210 million people without bank accounts have been encouraged to open accounts, even with zero balance. This enables the government to transfer money directly into accounts of beneficiaries, thus eliminating theft. It also reduces the number of people who falsely register themselves as Below the Poverty Line, to take advantage of handouts. Thus, by targeting subsidies to the genuine poor the government reduces its total bill while making sure that no deserving person misses out.  So what is the problem? The first trick is that by introducing it as a money bill the Rajya Sabha, where the government is in minority, is taken out of the equation, because a money bill needs a simple majority in the Lok Sabha to be passed. The second trick is that the Public Distribution System or ration shops distribute grains, sugar and kerosene, which cannot be transferred to bank accounts, and is the source of massive thefts, as happened in UP. The National Food Security Act, passed by the Congress in 2013, guarantees grains at throwaway prices, take home rations and hot meals. Which, apart from costing humongous amounts of money, encourages the poor to produce more children. We are told that increasing number of young people is a demographic dividend because this provides India with a huge labor force, to increase production and create double digit growth in the economy. China is cited as an example. Is it? It is entirely possible that China's rapid industrialisation was due to its one child policy which prevented 400 million births and released millions of women into the workforce, which brought down labor costs, increased production and brought 600 million people out of poverty. Only 22.5% of women in India are working which means that 217 million women are missing from the workforce. The IMF estimates that if all these women joined the labor force the GDP would expand by a mind-blowing 27%. The final trick is that the tax paying middle class receives nothing from the government. No education, no healthcare and no pension. In Denmark, where every citizen receives social benefits, such a number makes sense but in India it smacks of a gestapo state forcing citizens to provide photos, prints of all 10 fingers and iris scans. For what? When a Home Minister covers up for terrorists it means that our politicians are our worst enemies. Our biometric data in the hands of such scum is deeply worrying. It is not a money bill, it is a double-cross bill.

Must be all in the genes.

They live in huge houses in Lutyens Delhi, make us sweat in traffic jams when they sweep past in a cavalcade of heavily armed commandos and receive a lavish lifestyle on taxpayer money, that even members of the US Congress can only dream about, but for what? They have to take an oath of office to " bear true faith and allegiance to the Constitution of India " and " uphold the sovereignty and integrity of India ", but the then Home Minister, Chidambaram, in-charge of the security of the nation, deliberately removed Ishrat Jahan's connection to Lashkar-e-Taiba, a terrorist organisation based in Pakistan, from an affidavit to the Supreme Court. Ishrat Jahan was killed in an encounter in Gujarat in 2004 along with 3 terrorists, 2 of them from Pakistan. The Congress which was in power for 10 years from 2004 tried to portray her as innocent and implicate the then Chief Minister of Gujarat, and now Prime Minster of India, Narendra Modi in the killing. Turns out that she and Javed lived as a couple in various hotels in UP, which is completely out of character for a single Muslim woman, and was claimed as a martyr by the LeT on its website and on its mouthpiece, Ghazwa Times, which was later withdrawn. Now a former Under Secretary in the Home Ministry, RVS Mani has claimed that a second affidavit was doctored as well and he was burnt with cigarettes by an officer of the Indian Police Service, Satish Verma, to submit the false affidavit to the Supreme Court. If that is bizarre, it gets worse. The commander of LeT in Kashmir, Shahid Mehmood, who would have known about Ishrat's involvement, was himself killed in an encounter in Kashmir 13 days after Ishrat's death and 18 members of the LeT cell, arrested by the J&K Police, were quickly freed on bail. Having got rid of the main witness the second affidavit sought to dismiss all circumstantial evidence by stating," All such inputs do not constitute proof.... The Centre is in no way concerned with any police action nor does it condone or endorse any unjustified or excessive police action." This is not a case of perjury or contempt of court, this is pure treason and treason is surely a hanging offence. If the father was conspiring to commit treason the son was building up a huge financial empire, spread over 15 countries, according to the Enforcement Directorate. Resorts in Sri Lanka, wine and stud farms in South Africa and a luxury flat in Malaysia, among others, acquired while dad was the Finance Minister. Of course Karti Chidambaram found the allegations very funny and dismissed them as " All yarns ". After her victory in a primary Hillary Clinton said," America has never stopped being great." We, sadly, will always remain a nation of traitors.

A bit of this, a bit of that and a bit meaningless.

The Union Budget day, the most terrifying day of the year, passed yesterday and thankfully we have not been saddled with huge tax hikes. What a relief! Now we can wipe our sweat and relax till next year, when the circus returns once more. There are some good things in the budget and some idiotic. What is the point in spending Rs 1 billion in reviving 160 airports if the excise duty on jet fuel is raised from 8% to 14%, which will make flying too expensive for a majority of people? With salaries of useless govt employees jumping due to the Seventh Pay Commission it is sensible to try to reduce the number of employees. Provided, of course, the govt knows how many employees it has. The biometric identity card will be made mandatory for all citizens so govt employees should be paid according to their Aadhar number, which will immediately banish ghost employees. A 0.5% cess has been added to Service Tax which will take it to 14.5% but it does not matter because a tax rate of 18-20% has been proposed in the Goods and Services Tax Bill. The budget hopes that the GST bill will be passed. Really? The nominal GDP growth has come down because of lower inflation which has increased the debt to GDP ratio from 57% to 67% in 3 years. With yields on bonds rising the interest outgo will be higher. Wholesale prices have been falling for 15 months in a row which means less collections from excise duties and VAT, which are levied on ad velorem basis. If GST becomes law the govt will not be able to increase taxes at whim with sly additions of cess, which are taxes on taxes, so its wish maybe pious, but false. Increasing rural infrastructure is vital and the proposal to create an e-market, which will reduce the stranglehold of middlemen on agricultural products, is absolutely brilliant. However, the increase in duty on latex to 20% will increase the price of condoms. Absolutely stupid, seeing that India is suffering from a population curse and condom use needs to be encouraged. Levying a cess of 2.5% on diesel cars is completely senseless. It would be much better to increase excise duty on diesel while lowering it on petrol so that both cost the same, as in the US, where petrol is slightly cheaper than diesel. Since diesel cars cost a lot more car owners will shift to petrol engines while diesel prices will not rise much because of very low crude price at present. Keeping diesel price low to keep inflation in check is stupid. Finally, the intention behind spending Rs 18 billion on increasing skills of young people is good but where are the jobs. Banks cannot lend because of huge bad loans and business fellows cannot repay loans because they have diverted the money into real estate and cannot reduce prices to sell properties because they have bought land at humongous prices. It will be a hard slog. But at least get rid of the idiotic bits.