"How many of us should die and suffer for the Arab nation to wake up and take its destiny in its own hands?"
This is a question that I first asked myself in 2001. I did not think that a few million deaths would make any difference. I felt that the deaths needed to be humiliating. Women and children and old people needed to be slaughtered and made homeless. Even then it would not make a difference. Perhaps if all the women were raped before they were killed and all the men were brutually tortured before they were mercilessy killed and the Quran was despoiled before their eyes, then it would make a difference. I believed it would not but I did believe that it was a neccessary preamble to the awakening.
In the next 8 years George Bush as an agent of Destiny made it happen. He could not complete the course as I believe that one million Pakistanis need to die and probably will die. The cost of Muslim lives unfortunately has to be very heavy to wake up the Muslim world. The West believes that no amount of killing and humiliation will wake up the Muslims and are therefore quite relaxed about the Muslim Holocaust.
What the West did not reckon with was how much the killer is affected by the killing. Human beings, no matter how brainwashed they are by their love of wealth and money still have a ceratin level of Humanity. They will have to become dehumanized by their own inhumanity. Not every one in the West has sold their conscience and their morality. Not every one believes their own lies. To me, the cost of one helpless child or woman whether Muslim or not killed by the forces of the powerful are too many. That this is not so to the victim and perpetrator is the sign of how much both have fallen in their self esteeem. The one crushed by their ignorance and poverty, the other subsumed by their arrogance and affluence.
Unfortunately it is a neccesary part of the ultimate solution that the killings will continue. The arrogant must continue to be arrogant and the poor must continue to be humiliated to take this to it's logical conclusion. A just world will only rise from the debrise of Injustice. The poor must become defiant by the day and the affluent must become poorer by the day for there to be a more level playing field. It is no coincidence that one of the poorest countries of the world ( Afghanistan) is the most defiant against the richest countries of the world ( the US and Nato) and the rich countries continue planning to kill more and more of the people and lose what ever is left of their morality and their riches.
Things have come to a pass where it is the failed States of the world who will call the shots by becoming stateless. Non State actors who are being called terrorists and pirates will control the attention of the world. Pakistan, Afghanistan, Somalia,Palestine are just the tip of the iceberg, of failed States who are being allowed to fail because they are Muslim. Sudan, Egypt, Indonesia, Turkey are ready to follow suit. Islam has replaced Communism as public enemy # 1 for the West. The resistance to Hamas, to the Brotherhood in Egypt, the Islamists in Algeria and Somalia and the Taliban in Afghanistan are all symbols of the paranoia in the West of a phantom enemy who wants nothing but to develop outside the influence of the West.
There is an unmistakeable pattern in all of this which speaks to the original question. How Many Muslims must be killed to unite one billion people across 5 continents ? The shoe throwing Iraqi, represented the combined hatred of a segment of the world which sees itself targeted for abuse. New orders are not built on hatred and revenge but on Justice and fairness. This is the biggest challenge for the Muslims. Islam exists today in form and not in spirit. The form has been critical for their survival but the spirit has to be awakened if Muslims are ever to take their rightful place in the world.
Khusro
Tuesday, December 30, 2008
Wednesday, December 17, 2008
Failed States
This problem will not just be limited to Muslim States but there are other Somalias in Africa. The rich and poor divide across the world will become very ugly as people who are already on the border line of hunger become really hungry. The US will incur the wrath of peoples anger and when they overthrow their governments as they surely will, the people who come to power will be unfriendly to the US. This can have a domino affect not unlike what happened in South America. If Pakistan goes into unfriendly hands ( unfriendly to the US), the Afghan war can spill into the Central Asian Republics and topple Governments there. Failed States will be the biggest challenge to the world in 2009. It would be a good idea to identify them now and take preventive action. Pakistan has been a failed State for some time now and artificially kept alive. Unlike the Auto Industry in America, there is no chapter 11 for bankrupt countries. They must be saved or there will be a 1000 Mumbais.
Khusro
Khusro
Sunday, November 30, 2008
The Mumbai bombings
The Pakistanis have always been fond of pointing toward the hand of RAW in any domestic acts of violence even if it was a Shia/Sunni act of violence. The Indians have a similar bogey man in the ISI. The US has an equally ingenuous bogey man in Al Qaeda.
No one wants to recognise that the Economic Policies of all three countries have created a monster which up until now was unarmed but thanks to Afghanistan, they are now equipped with the latest weaponry.
I am not justifying the mayhem in Mumbai or Islamabad which were tragic but simply pointing out that just applying short term solutions or standard answers to a wound which has long been festering will not put a stop to these activities.
Kashmir has suddenly got the attention of the US, not because they care about the Kashmiris but because they see it as a distraction for Pakistan in their so called war on terror. The Mumbai attackers have suddenly put Kashmir back on the front pages. If this was their aim, they more than achieved it except that they never made their demands known.
Militants world wide must be watching with interest the new tactics employed here. This was a suicide attack with a difference. It grabbed media attention for 60 hours rather than 12. How ever no one claimed responsibility, no one made any demands and left the world guessing and pointing fingers.
The impact of this incidence will not stop at highlighting Kashmir. Here is what I foresee:
Congress will almost certainly lose the forthcoming elections in India. Had this happened a month earlier McCain might have won the US elections. Matters will heat up considerably between India and Pakistan ( including punitive Military action by India) and if there is a right wing Govt. in India, Zardari's days are numbered ( which they are in any case). There will be a repeat of this type of terrorism in the area. First there was just Al Qaeda, now there is also the Lashkare Taiba and Jaishae Mohammadi, not to mention the Taliban. These are stateless organisations whose reach is longer than people thought. They are getting better armed and do more planning by the day and they have millions of potential recruits and sympathisers, not just in Pakistan but across the Muslim world.
We have to be very careful how we react to these incidents. 9/11 changed the face of the world. The US went wild and caused untold death and destruction. If India treats this as their 9/11 and react similarly, then the militants would have achieved their goals beyond their wildest dreams.
No one wants to recognise that the Economic Policies of all three countries have created a monster which up until now was unarmed but thanks to Afghanistan, they are now equipped with the latest weaponry.
I am not justifying the mayhem in Mumbai or Islamabad which were tragic but simply pointing out that just applying short term solutions or standard answers to a wound which has long been festering will not put a stop to these activities.
Kashmir has suddenly got the attention of the US, not because they care about the Kashmiris but because they see it as a distraction for Pakistan in their so called war on terror. The Mumbai attackers have suddenly put Kashmir back on the front pages. If this was their aim, they more than achieved it except that they never made their demands known.
Militants world wide must be watching with interest the new tactics employed here. This was a suicide attack with a difference. It grabbed media attention for 60 hours rather than 12. How ever no one claimed responsibility, no one made any demands and left the world guessing and pointing fingers.
The impact of this incidence will not stop at highlighting Kashmir. Here is what I foresee:
Congress will almost certainly lose the forthcoming elections in India. Had this happened a month earlier McCain might have won the US elections. Matters will heat up considerably between India and Pakistan ( including punitive Military action by India) and if there is a right wing Govt. in India, Zardari's days are numbered ( which they are in any case). There will be a repeat of this type of terrorism in the area. First there was just Al Qaeda, now there is also the Lashkare Taiba and Jaishae Mohammadi, not to mention the Taliban. These are stateless organisations whose reach is longer than people thought. They are getting better armed and do more planning by the day and they have millions of potential recruits and sympathisers, not just in Pakistan but across the Muslim world.
We have to be very careful how we react to these incidents. 9/11 changed the face of the world. The US went wild and caused untold death and destruction. If India treats this as their 9/11 and react similarly, then the militants would have achieved their goals beyond their wildest dreams.
The Conseqences of US policies will go way beyond any thing they had ever thought of ( See my essay on unintended consequences of US Policy). The Muslim population that is most asleep are the Indian Muslims. The atrocities of Kashmir never woke them up but if they start regarding themselves as part of the Muslim disadvantaged then India will have a huge problem on their hands. Pakistan is in any case is like a time bomb waiting to be ignited. The reaction of the Indian Government to Mumbai may well be the match that ignites it.
Khusro
Saturday, November 29, 2008
Unintended consequences of US Foreign Policy
Preamble
I am not just interested in what went wrong but why decisions go wrong. My talk therefore starts with some conceptual assumptions. I believe that important decisions which affect the lives of millions of people need to be taken in harmony with the environment. There is a cosmic plan that is in motion and if we are not in harmony with it there will be a backlash from the environment. When we violate nature, nature will react adversely. We see this in adverse reaction of nature in the form of global warming.
Let me give another example. When we swim in a river and if we do not take into account the current of the river then we may have to use more energy and we may still not get to where we wanted to go. In all the analyses of what went wrong with the Iraq War one statement that is made is that we needed more Military or in other words more energy.
On the other hand if we swim with the current behind us then we will be in harmony with the river and more likely to get to our destination and reach it with less energy.
This is a large part of why there are “unintended consequences.”
Introduction
Decisions taken in a digital environment tend to ignore the analogue consequences of those decisions.
The preference for short term fixes results from a lack of foresight and vision.
Also when solutions are imposed on people by force, they tend to be short lived because the people affected were never consulted.
The carve up of the world after the two world wars, are all backfiring. Iraq, Palestine the rest of the Middle East for that matter are unhappy with those solutions and a roll back is taking place.
Destiny is built into History but never recognized by any but the few. The coincidence that the major oil reserves of the world are in Islamic countries or that the haven to Al Qaida is a no mans land called Waziristan are no coincidences. Do we understand that unless we partner with the environment, we risk ending up in the opposite direction to the one we intended?
Do we understand that whether we are interested in the so called war on terror or not, the war on terror is interested in us.
1.The rise of Islam
Reaction to 9/11, the attack on Iraq and the continuing support of Israel at all odds has sent a strong anti Muslim message. Over a billion Muslims world wide are beginning to view the US as seeing Islam as an enemy. Even moderate Muslims are puzzled and upset by this stance.
The Muslims, if they were at all united, which they are not, have been discarded to the dustbin of History ( deservedly so). So far they have been reactive only. Although being proactive is a much better alternative but a people pretty much asleep for the last 100 years are only just waking up to their vulnerabilities. Had it not been for Oil no one except perhaps Israel would have bothered to wake them up. My thesis is that the Muslim countries will be forced to unify as a matter of self preservation, that in the process they will overthrow the governments imposed on them by the US and that they will look to Islam as their alternate whether Islamic ideology has been thought through or not, in the modern context.
There has been a growing interest among Muslims and non Muslims about Islam. Islam is talked about and read as never before. Moderate secularists want to know if Islam is being unjustly maligned. Secularist Muslims want to know more about their religion in order to defend it properly. The Quran has become a best seller. The general population in Muslim countries have become anti US and the mosques on Fridays all over the world are full as never before.
The steep increase in oil, helped by the US threat of attacking Iran has helped fill the coffers of Oil producing Islamic countries and Russia. These countries feel under pressure to defend a Religion under siege.
The word Jihad has become the best known Arabic name in the English Language without any one knowing what it really means except something negative.
Muslim Nations hitherto poor, colonized or dependant on Western largess are beginning to realize that the West does not have their best interest at heart.
Although the economic or military stranglehold that the US has over Islamic countries like Saudi Arabia, Egypt, Pakistan and Jordan remains intact, the public in these countries are ready to overthrow their Governments, the moment there is a free and fair election. The prospect of anti US governments in these countries will lead to the closing of these countries to American Influence and a greater leaning for Islamic countries to look to themselves as a pro Islamic bloc. This would not be dissimilar to events in South America.
Muslims in America are getting better organized in order to protect themselves from unfair discrimination and beginning to take an interest in standing for public office. Even as the deliberate demonization of Islam continues, there is now one Muslim in the US Congress.
2. 5 million refugees in Iraq
Conditions in Iraq have created a huge refugee problem. Syria, Jordan, Sweden have all pitched in to help but there is a very large homeless population within Iraq. These people are not allowed to work in their host countries but most cannot afford to educate their children. The reasons that they are there is because frequently the men of the family were killed in Iraq by the US or the other faction in the Civil war. Shias and Sunnis who have been used to living peacefully under Saddam are now forced to compare their misfortunes now as compared to the better times under Saddam.
The massive refugee problem is just one side effect of a destroyed country. After 12 years of sanctions and 5 years of occupation and ravaging it is small wonder that the country is breathing. There are 5 million stories at the individual level each more harrowing than the other. The occupation of Iraq has been followed by the torture and displacement of Iraqis. If this does not constitute a war crime then what does?
“... There is a number of Iraqi women who are alone without families; whose husbands or families were killed and they remained alone, waiting to be re-settled. They face improper advances and molestation by this and that, looking towards a life more dignified and more settled, in some spot in this world.
At work, I daily receive women who were beaten and treated cruelly by their husbands. Poverty is the reason in most cases; or the frustration that befalls the man because of poverty and unemployment; they turn him into a wild, cruel, and aggressive creature. This is what happens to some Iraqi families here; the conditions of displacement, poverty, estrangement and degradation all put pressure on the men and the women and increase the rate of family violence…”
3. Loss of credibility in its belief in Democracy, Human Rights and other long held principles.
Reaction to elections in Algeria, Palestine, Pakistan and the continued support of Dictatorship in Egypt, and Saudi Arabia, has shown a US double standard to the world.
The torture of people not given a fair chance to prove their innocence. The mocking and violation of their religious and cultural beliefs.
The open contempt for the Geneva conventions.
Placing the US outside the purview of International law.
Resorting to a preemptive attack on a country which posed no threat to it and generally being bellicose about solving issues through the use of force has made people very skeptical about what the US believes in other than its own self interest.
The loss of moral authority has been one of the biggest casualties for the US image and no where is this more visible than in it’s handling of the Israel/Palestinian issue. Through not accepting the election results in Palestine and accepting illegal settlements, the US has become part of the problem rather than part of the solution.
4. Handing over power to the enemy
Removing Saddam has also meant removing Iran’s biggest enemy. This has promoted the Shia constituency in Iraq which has close ties to Iran. The successful defense of Lebanon by the Shia Hezbolla was also a plus for Iran.
Although Iran is regarded as US enemy number one, at every step The US appears to strengthen its hand. The US intelligence estimate shows that Iran abandoned its military Nuclear program in 2003, embarrassing all those who insist that Iran is a few years away fro a Nuclear bomb.
South America, once considered the back yard of the US has spun out of control. Left wing Governments in Venezuela, Argentina, Brazil, Bolivia have created leadership for the rest of South America and they want a lesser role for the US in the entire continent.
A resurgent Russia has taken advantage of the US preoccupation with the Middle East and feels emboldened to act in places like Georgia.
5. Lost opportunity to lead the world.
After the dismemberment of the Soviet Union, the US became the undisputed leader of the world. The victor of the cold war. It had a rare opportunity to become a non partisan arbiter of world policies and issues. Instead it chose to look after it’s own interests even if they were to the detriment of the rest of the world. It chose to pursue policies in International Law, Global warming , free trade, the UN and other common issues solely for the benefit of its own interests or those of the West and left the world in no doubt that it had to press forward not because of the US but inspite of it.
Sole Super Power status resulted in the Imperial Presidency and the tendency to use force as an arbiter of imposing solutions on people instead of an end to domination through power and a more consultative process.
The fact that the Obama candidacy was even more popular in Europe and the rest of the world speaks to the desire of the world to be led by the US and the failure of the US to lead it. There is a bright shining moment, with the Obama Presidency, when the leadership role can be assumed again or lost for ever.
6. Exposed Vulnerability to non conventional warfare.
Vietnam was the first exposure to guerrilla warfare but Iraq became the first encounter with the suicide bomber. The US was ill prepared and suffered heavy casualties and serious injuries. Like Vietnam, there is a strong commitment by so called insurgents to fight for their country while US troops suffer from doubts about what they are doing in Iraq in the first place. The extended tours of duty are compounded by the repeated exposure to civilians rather than another army. This impacts the morale of the American forces, who were ill prepared for this war and are likely to be haunted the rest of their lives by the senseless brutalities of their own acts.
Until such time as the US is able to deal with this type of war, their enemies in Iran, Afghanistan and elsewhere are emboldened by the prospect of creating a stalemate even if they cannot defeat them.
A stalemate simply bleeds America slowly and creates unpopularity at home.
“If the global war on terror has produced one undeniable conclusion, it is this: Estimates of U.S. military capabilities have turned out to be wildly overstated. The Bush administration's misplaced confidence in the efficacy of American arms represents a strategic misjudgment that has cost the country dearly. Even in an age of stealth, precision weapons, and instant communications, armed force is not a panacea. Even in a supposedly unipolar era, American military power turns out to be quite limited.
How did it happen that Americans so utterly over appraised the utility of military power? The answer to that question lies at the intersection of three great illusions.
According to the first illusion, the United States during the 1980s and 1990s had succeeded in reinventing armed conflict. The result was to make force more precise, more discriminating, and potentially more humane. The Pentagon had devised a new American Way of War, investing its forces with capabilities unlike any the world had ever seen. As President Bush exuberantly declared shortly after the fall of Baghdad in April 2003, "We've applied the new powers of technology… to strike an enemy force with speed and incredible precision. By a combination of creative strategies and advanced technologies, we are redefining war on our terms. In this new era of warfare, we can target a regime, not a nation."
According to the second illusion
The Weinberger-Powell principles expressed the military's own lessons taken from that war. Those principles also expressed the determination of senior officers to prevent any recurrence of Vietnam.
Henceforth, according to Weinberger and Powell, the United States would fight only when genuinely vital interests were at stake. It would do so in pursuit of concrete and attainable objectives. It would mobilize the necessary resources -- political and moral as well as material -- to win promptly and decisively. It would end conflicts expeditiously and then get out, leaving no loose ends. The spirit of the Weinberger-Powell Doctrine was not permissive; its purpose was to curb the reckless or imprudent inclinations of bellicose civilians.
According to the third illusion, In the wake of Operation Desert Storm, "the American people fell in love again with their armed forces." So, at least, General Colin Powell, one of that war's great heroes, believed. Americans could be counted on to "support the troops." Never again would the nation abandon its soldiers.
The All-Volunteer Force (AVF) -- despite its name, a professional military establishment -- represented the chief manifestation of this new compact. The AVF embodied the nation's claim to the status of sole superpower; it was "America's Team." In the wake of the Cold War, the AVF sustained the global Pax Americana without interfering with the average American's pursuit of life, liberty, and happiness. What was not to like?
An odd alliance that combined left-leaning do-gooders with jingoistic politicians and pundits succeeded in chipping away at constraints on the use of force. "Humanitarian intervention" became all the rage. Whatever restraining influence the generals exercised during the 1990s did not survive that decade. Lessons of Vietnam that had once seemed indelible were forgotten”.( Bacevich)
There is also the question of being in denial about the fantasy of being an unbeatable power. There can be no greater humiliation for the sole super power having the worlds strongest economy and the most awesome technologically advanced army to be thrashed for 7 years in one of the poorest countries in the world by a man sitting in a cave. The denial is so great that the US wishes at least in it's rhetoric to start another war. ( with Iran).
According to Dr. Roubini Professor of Economics at NYU, "US policy mistakes in economic, financial and foreign policies will steadily erode the power of the American Empire. This process will not be sudden and will take a couple of decades. But the trend is clear.”
Hawkish belligerence on the part of America which results in stalemates is the surest way of ensuring that the changes that take place in the world will be unfavorable to America.
Bibliography
Bacevich, The limits of Power.
Roubini Professor of Economics NYU
I am not just interested in what went wrong but why decisions go wrong. My talk therefore starts with some conceptual assumptions. I believe that important decisions which affect the lives of millions of people need to be taken in harmony with the environment. There is a cosmic plan that is in motion and if we are not in harmony with it there will be a backlash from the environment. When we violate nature, nature will react adversely. We see this in adverse reaction of nature in the form of global warming.
Let me give another example. When we swim in a river and if we do not take into account the current of the river then we may have to use more energy and we may still not get to where we wanted to go. In all the analyses of what went wrong with the Iraq War one statement that is made is that we needed more Military or in other words more energy.
On the other hand if we swim with the current behind us then we will be in harmony with the river and more likely to get to our destination and reach it with less energy.
This is a large part of why there are “unintended consequences.”
Introduction
Decisions taken in a digital environment tend to ignore the analogue consequences of those decisions.
The preference for short term fixes results from a lack of foresight and vision.
Also when solutions are imposed on people by force, they tend to be short lived because the people affected were never consulted.
The carve up of the world after the two world wars, are all backfiring. Iraq, Palestine the rest of the Middle East for that matter are unhappy with those solutions and a roll back is taking place.
Destiny is built into History but never recognized by any but the few. The coincidence that the major oil reserves of the world are in Islamic countries or that the haven to Al Qaida is a no mans land called Waziristan are no coincidences. Do we understand that unless we partner with the environment, we risk ending up in the opposite direction to the one we intended?
Do we understand that whether we are interested in the so called war on terror or not, the war on terror is interested in us.
1.The rise of Islam
Reaction to 9/11, the attack on Iraq and the continuing support of Israel at all odds has sent a strong anti Muslim message. Over a billion Muslims world wide are beginning to view the US as seeing Islam as an enemy. Even moderate Muslims are puzzled and upset by this stance.
The Muslims, if they were at all united, which they are not, have been discarded to the dustbin of History ( deservedly so). So far they have been reactive only. Although being proactive is a much better alternative but a people pretty much asleep for the last 100 years are only just waking up to their vulnerabilities. Had it not been for Oil no one except perhaps Israel would have bothered to wake them up. My thesis is that the Muslim countries will be forced to unify as a matter of self preservation, that in the process they will overthrow the governments imposed on them by the US and that they will look to Islam as their alternate whether Islamic ideology has been thought through or not, in the modern context.
There has been a growing interest among Muslims and non Muslims about Islam. Islam is talked about and read as never before. Moderate secularists want to know if Islam is being unjustly maligned. Secularist Muslims want to know more about their religion in order to defend it properly. The Quran has become a best seller. The general population in Muslim countries have become anti US and the mosques on Fridays all over the world are full as never before.
The steep increase in oil, helped by the US threat of attacking Iran has helped fill the coffers of Oil producing Islamic countries and Russia. These countries feel under pressure to defend a Religion under siege.
The word Jihad has become the best known Arabic name in the English Language without any one knowing what it really means except something negative.
Muslim Nations hitherto poor, colonized or dependant on Western largess are beginning to realize that the West does not have their best interest at heart.
Although the economic or military stranglehold that the US has over Islamic countries like Saudi Arabia, Egypt, Pakistan and Jordan remains intact, the public in these countries are ready to overthrow their Governments, the moment there is a free and fair election. The prospect of anti US governments in these countries will lead to the closing of these countries to American Influence and a greater leaning for Islamic countries to look to themselves as a pro Islamic bloc. This would not be dissimilar to events in South America.
Muslims in America are getting better organized in order to protect themselves from unfair discrimination and beginning to take an interest in standing for public office. Even as the deliberate demonization of Islam continues, there is now one Muslim in the US Congress.
2. 5 million refugees in Iraq
Conditions in Iraq have created a huge refugee problem. Syria, Jordan, Sweden have all pitched in to help but there is a very large homeless population within Iraq. These people are not allowed to work in their host countries but most cannot afford to educate their children. The reasons that they are there is because frequently the men of the family were killed in Iraq by the US or the other faction in the Civil war. Shias and Sunnis who have been used to living peacefully under Saddam are now forced to compare their misfortunes now as compared to the better times under Saddam.
The massive refugee problem is just one side effect of a destroyed country. After 12 years of sanctions and 5 years of occupation and ravaging it is small wonder that the country is breathing. There are 5 million stories at the individual level each more harrowing than the other. The occupation of Iraq has been followed by the torture and displacement of Iraqis. If this does not constitute a war crime then what does?
“... There is a number of Iraqi women who are alone without families; whose husbands or families were killed and they remained alone, waiting to be re-settled. They face improper advances and molestation by this and that, looking towards a life more dignified and more settled, in some spot in this world.
At work, I daily receive women who were beaten and treated cruelly by their husbands. Poverty is the reason in most cases; or the frustration that befalls the man because of poverty and unemployment; they turn him into a wild, cruel, and aggressive creature. This is what happens to some Iraqi families here; the conditions of displacement, poverty, estrangement and degradation all put pressure on the men and the women and increase the rate of family violence…”
3. Loss of credibility in its belief in Democracy, Human Rights and other long held principles.
Reaction to elections in Algeria, Palestine, Pakistan and the continued support of Dictatorship in Egypt, and Saudi Arabia, has shown a US double standard to the world.
The torture of people not given a fair chance to prove their innocence. The mocking and violation of their religious and cultural beliefs.
The open contempt for the Geneva conventions.
Placing the US outside the purview of International law.
Resorting to a preemptive attack on a country which posed no threat to it and generally being bellicose about solving issues through the use of force has made people very skeptical about what the US believes in other than its own self interest.
The loss of moral authority has been one of the biggest casualties for the US image and no where is this more visible than in it’s handling of the Israel/Palestinian issue. Through not accepting the election results in Palestine and accepting illegal settlements, the US has become part of the problem rather than part of the solution.
4. Handing over power to the enemy
Removing Saddam has also meant removing Iran’s biggest enemy. This has promoted the Shia constituency in Iraq which has close ties to Iran. The successful defense of Lebanon by the Shia Hezbolla was also a plus for Iran.
Although Iran is regarded as US enemy number one, at every step The US appears to strengthen its hand. The US intelligence estimate shows that Iran abandoned its military Nuclear program in 2003, embarrassing all those who insist that Iran is a few years away fro a Nuclear bomb.
South America, once considered the back yard of the US has spun out of control. Left wing Governments in Venezuela, Argentina, Brazil, Bolivia have created leadership for the rest of South America and they want a lesser role for the US in the entire continent.
A resurgent Russia has taken advantage of the US preoccupation with the Middle East and feels emboldened to act in places like Georgia.
5. Lost opportunity to lead the world.
After the dismemberment of the Soviet Union, the US became the undisputed leader of the world. The victor of the cold war. It had a rare opportunity to become a non partisan arbiter of world policies and issues. Instead it chose to look after it’s own interests even if they were to the detriment of the rest of the world. It chose to pursue policies in International Law, Global warming , free trade, the UN and other common issues solely for the benefit of its own interests or those of the West and left the world in no doubt that it had to press forward not because of the US but inspite of it.
Sole Super Power status resulted in the Imperial Presidency and the tendency to use force as an arbiter of imposing solutions on people instead of an end to domination through power and a more consultative process.
The fact that the Obama candidacy was even more popular in Europe and the rest of the world speaks to the desire of the world to be led by the US and the failure of the US to lead it. There is a bright shining moment, with the Obama Presidency, when the leadership role can be assumed again or lost for ever.
6. Exposed Vulnerability to non conventional warfare.
Vietnam was the first exposure to guerrilla warfare but Iraq became the first encounter with the suicide bomber. The US was ill prepared and suffered heavy casualties and serious injuries. Like Vietnam, there is a strong commitment by so called insurgents to fight for their country while US troops suffer from doubts about what they are doing in Iraq in the first place. The extended tours of duty are compounded by the repeated exposure to civilians rather than another army. This impacts the morale of the American forces, who were ill prepared for this war and are likely to be haunted the rest of their lives by the senseless brutalities of their own acts.
Until such time as the US is able to deal with this type of war, their enemies in Iran, Afghanistan and elsewhere are emboldened by the prospect of creating a stalemate even if they cannot defeat them.
A stalemate simply bleeds America slowly and creates unpopularity at home.
“If the global war on terror has produced one undeniable conclusion, it is this: Estimates of U.S. military capabilities have turned out to be wildly overstated. The Bush administration's misplaced confidence in the efficacy of American arms represents a strategic misjudgment that has cost the country dearly. Even in an age of stealth, precision weapons, and instant communications, armed force is not a panacea. Even in a supposedly unipolar era, American military power turns out to be quite limited.
How did it happen that Americans so utterly over appraised the utility of military power? The answer to that question lies at the intersection of three great illusions.
According to the first illusion, the United States during the 1980s and 1990s had succeeded in reinventing armed conflict. The result was to make force more precise, more discriminating, and potentially more humane. The Pentagon had devised a new American Way of War, investing its forces with capabilities unlike any the world had ever seen. As President Bush exuberantly declared shortly after the fall of Baghdad in April 2003, "We've applied the new powers of technology… to strike an enemy force with speed and incredible precision. By a combination of creative strategies and advanced technologies, we are redefining war on our terms. In this new era of warfare, we can target a regime, not a nation."
According to the second illusion
The Weinberger-Powell principles expressed the military's own lessons taken from that war. Those principles also expressed the determination of senior officers to prevent any recurrence of Vietnam.
Henceforth, according to Weinberger and Powell, the United States would fight only when genuinely vital interests were at stake. It would do so in pursuit of concrete and attainable objectives. It would mobilize the necessary resources -- political and moral as well as material -- to win promptly and decisively. It would end conflicts expeditiously and then get out, leaving no loose ends. The spirit of the Weinberger-Powell Doctrine was not permissive; its purpose was to curb the reckless or imprudent inclinations of bellicose civilians.
According to the third illusion, In the wake of Operation Desert Storm, "the American people fell in love again with their armed forces." So, at least, General Colin Powell, one of that war's great heroes, believed. Americans could be counted on to "support the troops." Never again would the nation abandon its soldiers.
The All-Volunteer Force (AVF) -- despite its name, a professional military establishment -- represented the chief manifestation of this new compact. The AVF embodied the nation's claim to the status of sole superpower; it was "America's Team." In the wake of the Cold War, the AVF sustained the global Pax Americana without interfering with the average American's pursuit of life, liberty, and happiness. What was not to like?
An odd alliance that combined left-leaning do-gooders with jingoistic politicians and pundits succeeded in chipping away at constraints on the use of force. "Humanitarian intervention" became all the rage. Whatever restraining influence the generals exercised during the 1990s did not survive that decade. Lessons of Vietnam that had once seemed indelible were forgotten”.( Bacevich)
There is also the question of being in denial about the fantasy of being an unbeatable power. There can be no greater humiliation for the sole super power having the worlds strongest economy and the most awesome technologically advanced army to be thrashed for 7 years in one of the poorest countries in the world by a man sitting in a cave. The denial is so great that the US wishes at least in it's rhetoric to start another war. ( with Iran).
According to Dr. Roubini Professor of Economics at NYU, "US policy mistakes in economic, financial and foreign policies will steadily erode the power of the American Empire. This process will not be sudden and will take a couple of decades. But the trend is clear.”
Hawkish belligerence on the part of America which results in stalemates is the surest way of ensuring that the changes that take place in the world will be unfavorable to America.
Bibliography
Bacevich, The limits of Power.
Roubini Professor of Economics NYU
Saturday, October 11, 2008
Capitalism at the expense of all life.
"There's no $700 billion plan to save the Earth - which sustains us all."
The 700 billion dollars is forever etched into the History of the world as an indicator of lost opportunities for the world we knew. For many it will evoke nostalgia of better times but for the vast majority it was a world full of untold nightmares.
The 700 billion dollars is the attempt to save a quality of life for the few. It is a decision of the ruling elite of the world ( the G7) to preserve a system whose utility has not been there for at least 28 years. It can be argued, with some justification, that if the system is not saved, it will result in a depression and mass unemployment and the people most hurt will be the people who are already on the margin.
For that reason I would have chosen an orderly transition, had I the choice, which I do not. Here is the choice that I and all of us do have. Let us jointly work on a replacement system before the forces of revolution bring turmoil and chaos. Let me first identify what has to be replaced;
The Capitalism of Greed
Secularism
Imperialism.
the destruction of the environment.
Imperialism
Imperialism is closely tied to the Capitalism of Greed but may be an easier and logical place to start. It already has a momentum. Worldwide protests for the withdrawal of all occupying forces from all areas but particularly Afghanistan, Pakistan and Iraq should take place. Again that is easier said than done. if America wants a graceful exit, that may no longer be possible. No where is the withdrawal of occupation more called for than Palestine and no where is that least likely than there unless America withdraws its aid to Israel. A renewal of the call to stop aid to Israel must take place with all force.
Imperialism does not stop at Military occupation. the Economic subjugation of Pakistan, Egypt and Jordan must stop. America must stop its support of Dictators and stand up for what it believes in, Democracy.
Secularism
The age of separating Politics from Religion has not worked. Religion gives us the values that we have always lived by. Let us stop demonising Religion by highlighting the acts of extremists. That is not what the majority believes. Making secularism a religion as in France OR Turkey does not take Religion out of politics it simply creates a man made Religion. Let us define the problem.
What is the problem?
Our problem is not that we sin but when we do not seek forgiveness;
Our problem is not when we seek forgiveness but when we do not mean it;
Our problem is not that we go astray but when we stop our search for the right path;
Our problem is not that we become too worldly but when in that process we lose our humanity;
Our problem is not when we are too arrogant to fear Hell and to be motivated by Paradise , our problem is when we are not humble enough to hold ourselves to accountability.
The line between good and evil is a moving line. It gets crossed frequently without our realizing it. Those that are good can become evil several times a day. Those that are humble can become arrogant several times a day. Those that are kind can lapse into unkindness. The problem is not that we cross this line, the problem is when we are not rendered sleepless by the thought of having done this.
The problem is not there is injustice in the world, the problem is when we do not speak up against it;
The problem is not that there is poverty, the problem is when we do not share our wealth with the poor;
We remain in contention for the tests of life as long as we are in a position to seek forgiveness and be forgiven. This will remain as long as we do not incur the permanent displeasure of God. This only happens when we lose our humility and achieve a level of arrogance that challenges God.
The problem is not that we are too arrogant, the problem is when we deny the existence of God;
I cannot say it more forcefully. Secularism may mean enlightened self interest but without God it is nothing more than selfishness. Religion is the conscience of Society, if it does nothing more than make us feel bad about being selfish, it will have brought back balance in a society that has lost its balance.
The Capitalism of greed
We want to restore free enterprise, innovation, productivity, free markets, real competition. What we have is a rigged system of monopolies ( price fixing, price gouging) , conflicts of interest, you scratch my back and I will scratch yours, Cronyism, special interest groups, the power of money to corrupt every one, muzzle the press, rig elections, racism, exclusion of the masses so as to include the privileged few, an increasing income gap between rich and poor.
Within a system like this it is no longer possible to elect a leader who dares to say that we have gone far far away from the America we were proud of. It is no longer possible in the system for a man or woman to say we have gone in the opposite direction to where we meant to to go and be elected President. The over riding influence of money in every thing has meant that our values can be purchased.
The destruction of the environment
When America has become used to consuming the majority of the worlds resources, it is only so that it citizen can enjoy a standard of life far higher than any other on the planet. Americans do not need what they consume. They therefore waste valuable resources which could have gone to the more needy. The biggest waste is that of energy. The American Auto Industry would rather go bankrupt than not build Gas Guzzling SUVs. Overheated and overcooled American homes, Offices and Malls consume millions of megawatts of electricity while half the world goes with out any. The American people would much rather become grossly overweight and become diabetic than have normal portions of food while half the world lives on one meal a day. Every day large portion of uneaten food is thrown into American garbage's while a large part of the world scratches around in garbages to eke out a living.
America is not alone in this race to consume at the cost of the many and most importantly at the cost of the Environment but America leads the way and America is the most in denial that it is a real problem for Humanity. In the Western world, the idea of human influence on climate has gained wider public acceptance in Europe than in the United States.[The selfishness of Secularism teaches us that even if the rest of the world becomes a hell hole somehow we will be all right and that is all that matters.
This is my blue print for the start of an alternate system. Believe me I have a lot more detail
for each of these ideologies but I can no longer see Injustice done in the name of America just as as I cannot see intolerance done in the name of Islam. I want peoples help to work on this alternate. We need a just Society. We need a Society that is Politically just, Economically Just and Racially Just.
Let us also recognise what we have and cannot lose. The value given to Education must continue to be uppermost. The value given to free speach must continue to be uppermost. The value of hard work must continue to be uppermost. This land was built by immigrants and we should never forget that.
Last but not least , please read the excellent article which gave me an excuse to say what I have said. Thank you Zareen for sending it.
Khusro
In the battle of the powerful against the powerless, the powerful cannot win because God is on the side of the powerless. KE
Friday, October 10, 2008, 1:57 AM
All so true!! Its high time that we let go of this kind of Capitalism where money making (at whatever cost) becomes the only way and purpose of life. Let the infected system die - no need for bail outs - may be we need to redefine the new rules of the game and take a fresh start. The bail outs, in any case, will probably not benefit the common person on the street. It seems the foundation of the system was not sound in the first place. There needs to be a human and moral dimension to it as well. Zareen
Financial Black Holes: Capitalism's Event HorizonDate: Fri, 10 Oct 2008 10:24:26 +0500
The Killing Horizon: Capitalism At The Expense Of All Life
By Juan Santos
The bottom line is profit. Profit and the lust for it is capitalism’s event horizon. Like the boundary of a black hole – which is roughly what the term “event horizon” means in the theory of general relativity, any energy, information or meaning that passes the threshold of a consciousness driven by profit disappears into the super-gravitational field of the black hole itself – never to be seen or heard of again.
Nothing can be seen once it enters this realm, and nothing, having entered, ever escapes. No light, no sign, no dawn of understanding can re-emerge. Anything, any light, any object, any thought, any meaning, purpose, or any human feeling is swallowed and for all practical purposes, obliterated there.
No communication can transpire between inside and outside.
The event horizon of profit-consciousnes s functions as an inviolate barrier between what appear to be mutually exclusive worlds. Those of us on this side of the event horizon can only guess, but never really know, what happens on the other side. What we know of what is inside the black hole of the capitalist consciousness can only be inferred from what seems to happen at its horizon. We are left to assume that what happens there is annihilation, or its equivalent. It seems that the only thing that can enter that realm is money- life stripped of all meaning except a numerical designation, like a concentration camp inmate with a serial number tattooed on her forearm.
There are things we can infer from this side of the horizon about what happens on the other side, in the black hole of the capitalist mentality - things that show up outside that tell us something about what happens within it. Things like the concentration camp victim, like the mass graves in Guatemala, the unearthed Mayan corpses left by death squads… they seem to emerge from the black hole and give us a glimpse of what is inside: and, beyond that, sometimes we almost get real glimpses in. We get glimpses of Guantanamo, Abu Ghraib, of someone’s recollection of headless frogs spewing blood after the psychopathic child, George W. Bush, has lit a firecracker he’s inserted in their mouths and hurled them through the air. We know these things – we glimpse them, those of us who are paying the strictest kind of attention. But, mostly, nothing escapes, or that which seems to escape the pull of the black hole for a moment is immediately sucked back in to the realm of oblivion as if it never happened.
But, as often as not, we can tell what matters to those in the center of civilization’ s black gravity – its centers of “power”, by what doesn’t happen out here in the real world - on this edge of the horizon -as much as by what does happen.
Notice. Notice what is taken “seriously” by the denizens of the dark center of “power” – if anything beyond the next quarterly profit and loss statement can be said to be taken seriously at all.
Notice where the $700 billion in “bailout” money is going. The black hole people feared would swallow the Earth when the CERN particle accelerator was launched in Europe didn’t appear there. It appeared thousands of miles away – on Wall Street - and the $700 billion is going into that black hole, never to be seen again.
It’s going to fix problems that have no real existence, that are tied to values that have no real existence. Down the rabbit hole, the black hole, into the land of illusion, the land of swindles, the land of lies, of the selling of the negation of values, of mirrors upon mirrors, into the unreal land of black magic, where it will impact nothing but the “faith” of capitalist financiers and wizards in their ability to live on - and to sustain themselves with - lies and illusion in a system that is fundamentally not sustainable. They call this psychic trick- this denial - “faith” in the markets, liquidity and credit (and to give credit, of course, means nothing but to put faith or belief in something or someone) – even as the credit markets are drying up. They are drying up because no one who is sane can any longer believe the lie. The whole thing is incredible, unbelievable. Such faith is nothing more or less than faith in a lie. The whole thing is based on what Ayn Rand – the late high priestess of capitalism, cruelty, arrogance, free markets and the “virtue” of selfishness, called, ironically enough, given the context, the “blank out.”
All it takes is one stroll down Wall Street to get that Wall Street is “America’s” temple district – The sense of being on “holy” ground is palpable - and all it takes is one glance to get that none of the financial wizards really knows what’s going on… they know not what they have wrought, they know not whom they have robbed; they have invented a house of lies so complex that they themselves can no longer follow the plot or the floor plan. What we know – and what they know, and what Bush knows and Obama and McCain - what they all know- is that the $700 billion is going to cover the lie, is going to keep their asses out of prison, is going to prevent revolt against their system, which profits at the expense of all of us. It’s not going to so-called “Main Street,” and - even if it did - who’s on Main Street, if not merely the junior, local and regional versions of the players on Wall Street – the ones getting their hands dirty – the ones that exploit us face to face, rather than from the remote heights of the now-obliterated World Trade Center?
Yes, who’s on Wall Street, who’s on Main Street, who’s on ghetto streets and barrio streets, and who, after all is on Skid Row, or on a dirt street in a third world village, living on $2 a day - $2, not $700 billion – not even $200 billion, not even $200 or a twenty dollar bill. 2 dollars. A day. Or less.
Of course, outside the black hole, outside the house of mirrors, it’s plain to see. All profit comes at someone else’s expense. They have robbed the poor blind – that’s why they are poor. They have gutted the Earth of its soil, plant life, energy, forests and water tables: we are left with deserts and a $700 billion black hole. That’s why the Earth is dying. They profit, as the traditional Hopi elders told us, at the expense of all life. That’s where the limos, and the mansions (whether its one mansion like Obama’s or 13 of them like McCain’s) come from: at the expense of all life. That’s what happens.
Now, notice what doesn’t happen.
Humanity faces a real crisis - one that threatens not only Wall Street, but all life on Earth. Call it Global Warming, call it Peak Oil, call it running out of water on a global scale, call it the collapse of industrial agriculture. call it fisheries collapsing, call it mass extinction. Call it the potential of planetary death. Call it what is inside the Black Hole made visible, palpable in its meaning. Call it the real event horizon. Call it the Killing horizon. It’s every bit as complex in all of its intersections as the financial “crisis,” but, unlike the financial “crisis,” it’s real.
And what happens?
Nothing. No significant action. At all.
There's no $700 billion plan to save the Earth - which sustains us all.
The only thing that has ever mattered to the rulers of this empire – and of every other empire- is profit, and profit, we will recall, always comes at someone’s expense – ours, the indigenous peoples in every corner of the planet whose lands and lives have been usurped,
at the expense of the enslaved, from Babylon to the USA, at the expense of Polar Bears, Wolves, Buffalo, Dolphins, Bears – and now even the Chimpanzee faces extinction, along with Whales, and as much as 50% of all living species before this century – and this system - is finished with them. Profit. At the expense. Of all life.
The capitalists can’t look at the meaning of it. They can’t bear to see the meaning and impact of their lives and how they live them. Blank out. They don’t know and can’t know, any more than George W. Bush can really afford to know what was happening when he stuck firecrackers in frog’s mouths and sent them sailing through the air with the fuse sparkling (that, after all, is why he drinks – not to know.) Maybe he imagined as a boy that the frogs were B24 bombers in WW2, and that when the firecracker exploded, it was flak hitting the nose of the plane, right where the navigator sat, and that the blood was the navigator’s blood. Maybe he couldn’t bring himself to look at the shattered skulls, the exposed spines, the blood, and know what he had done. Or maybe he looked, and delighted in what he saw. We’ll never know. It’s lost in the black hole. Maybe the financial wizards think of derivatives and scam mortgages like Bush thought of frogs. The thrill, the drama of making a kill, of scamming, lying, getting over on others less powerful – the nobodies - the frog people - like you and me, the frog people who live on Elm Street, on ghetto and barrio streets, on Skid Row, on dirt streets, and along trails in the Amazon jungle and paths in the high Andes of Bolivia. I say probably so – that the financiers see us just that way.
But, maybe we’ll never know. It seems to have disappeared in the black hole of denied memory, impossibility and lies, just as Bush’s childhood memories lay hidden in the dense black hole of unresolved alcoholism. But we know this; for them, regular people - and animals, forests, polar bears, wolves and glaciers – are invisible. We’re on the other side of their event horizon, and they don’t care what happens to us. They are pulling us all inexorably into the gravity well from which no light escapes. They call the collapse of their house of financial lies a “crisis.” In the U.S., people like the Republican vice presidential candidate call the Killing horizon – the potential of planetary death - a “hoax.”
But, on a planetary scale, as everything unravels and is thrown into increasingly radical imbalance, people are starting to understand that what we see is what we get. And they are starting to see what has remained hidden in the realms of dark gravity and power. The event horizon, the Killing horizon, is drawing ever nearer.
And people are starting to decide for themselves what constitutes a hoax and what is, in fact, an actual crisis. We are deciding what and who needs and deserves a rescue –a “bailing out” – It's not the wizards and merchants of death; it's the frogs, lizards, plants, forests, beavers, bears, and human children.
You decide who and what nurtures us all and who and what destroys us. You decide. Is it saner to hug a tree, a cold stone building on Wall Street, or a stock certificate? Look at it. You decide. Everything that matters to you depends on the nature of your decision.
The 700 billion dollars is forever etched into the History of the world as an indicator of lost opportunities for the world we knew. For many it will evoke nostalgia of better times but for the vast majority it was a world full of untold nightmares.
The 700 billion dollars is the attempt to save a quality of life for the few. It is a decision of the ruling elite of the world ( the G7) to preserve a system whose utility has not been there for at least 28 years. It can be argued, with some justification, that if the system is not saved, it will result in a depression and mass unemployment and the people most hurt will be the people who are already on the margin.
For that reason I would have chosen an orderly transition, had I the choice, which I do not. Here is the choice that I and all of us do have. Let us jointly work on a replacement system before the forces of revolution bring turmoil and chaos. Let me first identify what has to be replaced;
The Capitalism of Greed
Secularism
Imperialism.
the destruction of the environment.
Imperialism
Imperialism is closely tied to the Capitalism of Greed but may be an easier and logical place to start. It already has a momentum. Worldwide protests for the withdrawal of all occupying forces from all areas but particularly Afghanistan, Pakistan and Iraq should take place. Again that is easier said than done. if America wants a graceful exit, that may no longer be possible. No where is the withdrawal of occupation more called for than Palestine and no where is that least likely than there unless America withdraws its aid to Israel. A renewal of the call to stop aid to Israel must take place with all force.
Imperialism does not stop at Military occupation. the Economic subjugation of Pakistan, Egypt and Jordan must stop. America must stop its support of Dictators and stand up for what it believes in, Democracy.
Secularism
The age of separating Politics from Religion has not worked. Religion gives us the values that we have always lived by. Let us stop demonising Religion by highlighting the acts of extremists. That is not what the majority believes. Making secularism a religion as in France OR Turkey does not take Religion out of politics it simply creates a man made Religion. Let us define the problem.
What is the problem?
Our problem is not that we sin but when we do not seek forgiveness;
Our problem is not when we seek forgiveness but when we do not mean it;
Our problem is not that we go astray but when we stop our search for the right path;
Our problem is not that we become too worldly but when in that process we lose our humanity;
Our problem is not when we are too arrogant to fear Hell and to be motivated by Paradise , our problem is when we are not humble enough to hold ourselves to accountability.
The line between good and evil is a moving line. It gets crossed frequently without our realizing it. Those that are good can become evil several times a day. Those that are humble can become arrogant several times a day. Those that are kind can lapse into unkindness. The problem is not that we cross this line, the problem is when we are not rendered sleepless by the thought of having done this.
The problem is not there is injustice in the world, the problem is when we do not speak up against it;
The problem is not that there is poverty, the problem is when we do not share our wealth with the poor;
We remain in contention for the tests of life as long as we are in a position to seek forgiveness and be forgiven. This will remain as long as we do not incur the permanent displeasure of God. This only happens when we lose our humility and achieve a level of arrogance that challenges God.
The problem is not that we are too arrogant, the problem is when we deny the existence of God;
I cannot say it more forcefully. Secularism may mean enlightened self interest but without God it is nothing more than selfishness. Religion is the conscience of Society, if it does nothing more than make us feel bad about being selfish, it will have brought back balance in a society that has lost its balance.
The Capitalism of greed
We want to restore free enterprise, innovation, productivity, free markets, real competition. What we have is a rigged system of monopolies ( price fixing, price gouging) , conflicts of interest, you scratch my back and I will scratch yours, Cronyism, special interest groups, the power of money to corrupt every one, muzzle the press, rig elections, racism, exclusion of the masses so as to include the privileged few, an increasing income gap between rich and poor.
Within a system like this it is no longer possible to elect a leader who dares to say that we have gone far far away from the America we were proud of. It is no longer possible in the system for a man or woman to say we have gone in the opposite direction to where we meant to to go and be elected President. The over riding influence of money in every thing has meant that our values can be purchased.
The destruction of the environment
When America has become used to consuming the majority of the worlds resources, it is only so that it citizen can enjoy a standard of life far higher than any other on the planet. Americans do not need what they consume. They therefore waste valuable resources which could have gone to the more needy. The biggest waste is that of energy. The American Auto Industry would rather go bankrupt than not build Gas Guzzling SUVs. Overheated and overcooled American homes, Offices and Malls consume millions of megawatts of electricity while half the world goes with out any. The American people would much rather become grossly overweight and become diabetic than have normal portions of food while half the world lives on one meal a day. Every day large portion of uneaten food is thrown into American garbage's while a large part of the world scratches around in garbages to eke out a living.
America is not alone in this race to consume at the cost of the many and most importantly at the cost of the Environment but America leads the way and America is the most in denial that it is a real problem for Humanity. In the Western world, the idea of human influence on climate has gained wider public acceptance in Europe than in the United States.[The selfishness of Secularism teaches us that even if the rest of the world becomes a hell hole somehow we will be all right and that is all that matters.
This is my blue print for the start of an alternate system. Believe me I have a lot more detail
for each of these ideologies but I can no longer see Injustice done in the name of America just as as I cannot see intolerance done in the name of Islam. I want peoples help to work on this alternate. We need a just Society. We need a Society that is Politically just, Economically Just and Racially Just.
Let us also recognise what we have and cannot lose. The value given to Education must continue to be uppermost. The value given to free speach must continue to be uppermost. The value of hard work must continue to be uppermost. This land was built by immigrants and we should never forget that.
Last but not least , please read the excellent article which gave me an excuse to say what I have said. Thank you Zareen for sending it.
Khusro
In the battle of the powerful against the powerless, the powerful cannot win because God is on the side of the powerless. KE
Friday, October 10, 2008, 1:57 AM
All so true!! Its high time that we let go of this kind of Capitalism where money making (at whatever cost) becomes the only way and purpose of life. Let the infected system die - no need for bail outs - may be we need to redefine the new rules of the game and take a fresh start. The bail outs, in any case, will probably not benefit the common person on the street. It seems the foundation of the system was not sound in the first place. There needs to be a human and moral dimension to it as well. Zareen
Financial Black Holes: Capitalism's Event HorizonDate: Fri, 10 Oct 2008 10:24:26 +0500
The Killing Horizon: Capitalism At The Expense Of All Life
By Juan Santos
The bottom line is profit. Profit and the lust for it is capitalism’s event horizon. Like the boundary of a black hole – which is roughly what the term “event horizon” means in the theory of general relativity, any energy, information or meaning that passes the threshold of a consciousness driven by profit disappears into the super-gravitational field of the black hole itself – never to be seen or heard of again.
Nothing can be seen once it enters this realm, and nothing, having entered, ever escapes. No light, no sign, no dawn of understanding can re-emerge. Anything, any light, any object, any thought, any meaning, purpose, or any human feeling is swallowed and for all practical purposes, obliterated there.
No communication can transpire between inside and outside.
The event horizon of profit-consciousnes s functions as an inviolate barrier between what appear to be mutually exclusive worlds. Those of us on this side of the event horizon can only guess, but never really know, what happens on the other side. What we know of what is inside the black hole of the capitalist consciousness can only be inferred from what seems to happen at its horizon. We are left to assume that what happens there is annihilation, or its equivalent. It seems that the only thing that can enter that realm is money- life stripped of all meaning except a numerical designation, like a concentration camp inmate with a serial number tattooed on her forearm.
There are things we can infer from this side of the horizon about what happens on the other side, in the black hole of the capitalist mentality - things that show up outside that tell us something about what happens within it. Things like the concentration camp victim, like the mass graves in Guatemala, the unearthed Mayan corpses left by death squads… they seem to emerge from the black hole and give us a glimpse of what is inside: and, beyond that, sometimes we almost get real glimpses in. We get glimpses of Guantanamo, Abu Ghraib, of someone’s recollection of headless frogs spewing blood after the psychopathic child, George W. Bush, has lit a firecracker he’s inserted in their mouths and hurled them through the air. We know these things – we glimpse them, those of us who are paying the strictest kind of attention. But, mostly, nothing escapes, or that which seems to escape the pull of the black hole for a moment is immediately sucked back in to the realm of oblivion as if it never happened.
But, as often as not, we can tell what matters to those in the center of civilization’ s black gravity – its centers of “power”, by what doesn’t happen out here in the real world - on this edge of the horizon -as much as by what does happen.
Notice. Notice what is taken “seriously” by the denizens of the dark center of “power” – if anything beyond the next quarterly profit and loss statement can be said to be taken seriously at all.
Notice where the $700 billion in “bailout” money is going. The black hole people feared would swallow the Earth when the CERN particle accelerator was launched in Europe didn’t appear there. It appeared thousands of miles away – on Wall Street - and the $700 billion is going into that black hole, never to be seen again.
It’s going to fix problems that have no real existence, that are tied to values that have no real existence. Down the rabbit hole, the black hole, into the land of illusion, the land of swindles, the land of lies, of the selling of the negation of values, of mirrors upon mirrors, into the unreal land of black magic, where it will impact nothing but the “faith” of capitalist financiers and wizards in their ability to live on - and to sustain themselves with - lies and illusion in a system that is fundamentally not sustainable. They call this psychic trick- this denial - “faith” in the markets, liquidity and credit (and to give credit, of course, means nothing but to put faith or belief in something or someone) – even as the credit markets are drying up. They are drying up because no one who is sane can any longer believe the lie. The whole thing is incredible, unbelievable. Such faith is nothing more or less than faith in a lie. The whole thing is based on what Ayn Rand – the late high priestess of capitalism, cruelty, arrogance, free markets and the “virtue” of selfishness, called, ironically enough, given the context, the “blank out.”
All it takes is one stroll down Wall Street to get that Wall Street is “America’s” temple district – The sense of being on “holy” ground is palpable - and all it takes is one glance to get that none of the financial wizards really knows what’s going on… they know not what they have wrought, they know not whom they have robbed; they have invented a house of lies so complex that they themselves can no longer follow the plot or the floor plan. What we know – and what they know, and what Bush knows and Obama and McCain - what they all know- is that the $700 billion is going to cover the lie, is going to keep their asses out of prison, is going to prevent revolt against their system, which profits at the expense of all of us. It’s not going to so-called “Main Street,” and - even if it did - who’s on Main Street, if not merely the junior, local and regional versions of the players on Wall Street – the ones getting their hands dirty – the ones that exploit us face to face, rather than from the remote heights of the now-obliterated World Trade Center?
Yes, who’s on Wall Street, who’s on Main Street, who’s on ghetto streets and barrio streets, and who, after all is on Skid Row, or on a dirt street in a third world village, living on $2 a day - $2, not $700 billion – not even $200 billion, not even $200 or a twenty dollar bill. 2 dollars. A day. Or less.
Of course, outside the black hole, outside the house of mirrors, it’s plain to see. All profit comes at someone else’s expense. They have robbed the poor blind – that’s why they are poor. They have gutted the Earth of its soil, plant life, energy, forests and water tables: we are left with deserts and a $700 billion black hole. That’s why the Earth is dying. They profit, as the traditional Hopi elders told us, at the expense of all life. That’s where the limos, and the mansions (whether its one mansion like Obama’s or 13 of them like McCain’s) come from: at the expense of all life. That’s what happens.
Now, notice what doesn’t happen.
Humanity faces a real crisis - one that threatens not only Wall Street, but all life on Earth. Call it Global Warming, call it Peak Oil, call it running out of water on a global scale, call it the collapse of industrial agriculture. call it fisheries collapsing, call it mass extinction. Call it the potential of planetary death. Call it what is inside the Black Hole made visible, palpable in its meaning. Call it the real event horizon. Call it the Killing horizon. It’s every bit as complex in all of its intersections as the financial “crisis,” but, unlike the financial “crisis,” it’s real.
And what happens?
Nothing. No significant action. At all.
There's no $700 billion plan to save the Earth - which sustains us all.
The only thing that has ever mattered to the rulers of this empire – and of every other empire- is profit, and profit, we will recall, always comes at someone’s expense – ours, the indigenous peoples in every corner of the planet whose lands and lives have been usurped,
at the expense of the enslaved, from Babylon to the USA, at the expense of Polar Bears, Wolves, Buffalo, Dolphins, Bears – and now even the Chimpanzee faces extinction, along with Whales, and as much as 50% of all living species before this century – and this system - is finished with them. Profit. At the expense. Of all life.
The capitalists can’t look at the meaning of it. They can’t bear to see the meaning and impact of their lives and how they live them. Blank out. They don’t know and can’t know, any more than George W. Bush can really afford to know what was happening when he stuck firecrackers in frog’s mouths and sent them sailing through the air with the fuse sparkling (that, after all, is why he drinks – not to know.) Maybe he imagined as a boy that the frogs were B24 bombers in WW2, and that when the firecracker exploded, it was flak hitting the nose of the plane, right where the navigator sat, and that the blood was the navigator’s blood. Maybe he couldn’t bring himself to look at the shattered skulls, the exposed spines, the blood, and know what he had done. Or maybe he looked, and delighted in what he saw. We’ll never know. It’s lost in the black hole. Maybe the financial wizards think of derivatives and scam mortgages like Bush thought of frogs. The thrill, the drama of making a kill, of scamming, lying, getting over on others less powerful – the nobodies - the frog people - like you and me, the frog people who live on Elm Street, on ghetto and barrio streets, on Skid Row, on dirt streets, and along trails in the Amazon jungle and paths in the high Andes of Bolivia. I say probably so – that the financiers see us just that way.
But, maybe we’ll never know. It seems to have disappeared in the black hole of denied memory, impossibility and lies, just as Bush’s childhood memories lay hidden in the dense black hole of unresolved alcoholism. But we know this; for them, regular people - and animals, forests, polar bears, wolves and glaciers – are invisible. We’re on the other side of their event horizon, and they don’t care what happens to us. They are pulling us all inexorably into the gravity well from which no light escapes. They call the collapse of their house of financial lies a “crisis.” In the U.S., people like the Republican vice presidential candidate call the Killing horizon – the potential of planetary death - a “hoax.”
But, on a planetary scale, as everything unravels and is thrown into increasingly radical imbalance, people are starting to understand that what we see is what we get. And they are starting to see what has remained hidden in the realms of dark gravity and power. The event horizon, the Killing horizon, is drawing ever nearer.
And people are starting to decide for themselves what constitutes a hoax and what is, in fact, an actual crisis. We are deciding what and who needs and deserves a rescue –a “bailing out” – It's not the wizards and merchants of death; it's the frogs, lizards, plants, forests, beavers, bears, and human children.
You decide who and what nurtures us all and who and what destroys us. You decide. Is it saner to hug a tree, a cold stone building on Wall Street, or a stock certificate? Look at it. You decide. Everything that matters to you depends on the nature of your decision.
What Is the problem ?
What is the problem?
Our problem is not that we sin but when we do not seek forgiveness;
Our problem is not when we seek forgiveness but when we do not mean it;
Our problem is not that we go astray but when we stop our search for the right path;
Our problem is not that we become too worldly but when in that process we lose our humanity;
Our problem is not when we are too arrogant to fear Hell and to be motivated by Paradise , our problem is when we are not humble enough to hold ourselves to accountability.
The line between good and evil is a moving line. It gets crossed frequently without our realizing it. Those that are good can become evil several times a day. Those that are humble can become arrogant several times a day. Those that are kind can lapse into unkindness. The problem is not that we cross this line, the problem is when we are not rendered sleepless by the thought of having done this.
The problem is not there is injustice in the world, the problem is when we do not speak up against it;
The problem is not that there is poverty, the problem is when we do not share our wealth with the poor;
We remain in contention for the tests of life as long as we are in a position to seek forgiveness and be forgiven. This will remain as long as we do not incur the permanent displeasure of God. This only happens when we lose our humility and achieve a level of arrogance that challenges God.
The problem is not that we are too arrogant, the problem is when we deny the existence of God;
Khusro
Our problem is not that we sin but when we do not seek forgiveness;
Our problem is not when we seek forgiveness but when we do not mean it;
Our problem is not that we go astray but when we stop our search for the right path;
Our problem is not that we become too worldly but when in that process we lose our humanity;
Our problem is not when we are too arrogant to fear Hell and to be motivated by Paradise , our problem is when we are not humble enough to hold ourselves to accountability.
The line between good and evil is a moving line. It gets crossed frequently without our realizing it. Those that are good can become evil several times a day. Those that are humble can become arrogant several times a day. Those that are kind can lapse into unkindness. The problem is not that we cross this line, the problem is when we are not rendered sleepless by the thought of having done this.
The problem is not there is injustice in the world, the problem is when we do not speak up against it;
The problem is not that there is poverty, the problem is when we do not share our wealth with the poor;
We remain in contention for the tests of life as long as we are in a position to seek forgiveness and be forgiven. This will remain as long as we do not incur the permanent displeasure of God. This only happens when we lose our humility and achieve a level of arrogance that challenges God.
The problem is not that we are too arrogant, the problem is when we deny the existence of God;
Khusro
Thursday, October 9, 2008
Future prospects for the US Economy
Stiglitz was SVP and Chief Economist of the World Bank. His greater claim to fame is as winner of the Nobel prize for Economics. He has also computed the cost of the Iraq War are $ 3 trillion and has documented it in a whole book.
He is the only person whose analyses of the current economic situation makes sense to me.
I like the format in his recent lecture given in Geneva ( Oct 5, 2008) and I will use it to consolidate the views that I have expressed over the past few months.
I travel a path different than his but basically end up with similar conclusions.
Stiglitz proposed four parts to his one-hour lecture:
· Diagnosis of the crisis: what went wrong?
· Why the bailout package is doomed to fail
· What should have been done instead
· The prospects for the US and Europe
What went wrong
Khusro
Capitalism as practiced in the US is broken.
Greed has become the overall driving force of society
Every one is on the take and there is no recognition of conflict of Interest.
Stiglitz
During the last decade, financial markets have generated 30% of all corporate profits in the US, there was little value for society,
Government runs a 9.3$ trillion deficit while household savings are close to zero.
The real track record of Wall Street being unable to allocate capital. Stiglitz admitted that today, the problem was larger and more systematic.
Wall Street was only concerned with maximizing resources, There was no innovation in a way that was actually beneficial to society.
Transparency was lost and we ended up with a number of extremely complex financial instruments that no one understood, not even the banks (what Warren Buffet called “the weapons of mass destruction of the financial system).
predatory lending. All the while, house prices went up and income for the average American went down during the past 8 years.
flawed probability models, as bankers only accounted for the statistical values of the past 20 or so years, completely disregarding history and thus having little understanding of the tales of probability distribution.
non-recourse mortgages
rating agencies were essentially paid by he same people who were supposed to be rated, thus creating a conflict of interest and a race to the bottom
The entire incentive structure was favoring an excessive risk taking scheme and a short term asymmetric compensation scheme
Inadequate regulations, which was in turn fuelled by a deeper macroeconomic problem: markets were flooded with liquidity by the FED, because the underlying macroeconomic fundamentals were faulty and based on the flawed ideology
Why the bail out will not work
Khusro
The people who caused the problem are in charge of the bail out. The conflict of interest problem continues.
There is no recognition that the Political system is also broken. The special interest groups that resist real reform will resist them again and make it impossible for the right solution to emerge.
Stiglitz
Underlying ideology. This ideology presumed a trickle-down effect and stipulates that by infusing Wall Street with cash, the wealth would somehow trickle down to the people.
The plan didn’t address the root of the problem, the foreclosures,
The bill didn’t propose an effective stimulus package for the real economy.
What should have been done.
Khusro
The current Administration is not in a position to do anything except play for time, which is what they have done.
It is the next Administration who will inherit the mess.
Stiglitz
The acknowledgement of the importance of nation states to bail out financial institutions
The need for a strong stimulus package that stops worrying about inflation (which was a concern of the past) and instead focuses on stimulating the real economy
A need to effectively address the foreclosure problem
A reversal of the tax reduction scheme
But the most essential aspect for Stiglitz was a restoration of confidence.
Future prospects
Khusro
The days of the US as sole super power are over. Military defeats in Iraq, Afghanistan and Lebanon mean that weak nations are able to resist occupation. Without the power to exploit others, the entire definition of productivity will change.
The US is in denial about it’s lost status and will therefore be unable to come to terms with the real solution, which is an orderly withdrawal from trying to impose it’s solutions on the world. The Economic outlook is therefore very poor.
Stiglitz
The prospects are bleak both in the US and in Europe, according to Stiglitz. However, Stiglitz ended on a positive note, mentioning that we are not necessarily headed towards a recession/depressio n, if, but only if, we used our knowledge of the past wisely.
Khusro
Wednesday, October 8, 2008
Letter to my son
"Never trust America. You make it your ally at your peril. You believe it at your risk. It is a standing hazard."
Humayun Gauhar's father, Altaf Gauher was a brilliant man but nevertheless became an American stooge. The sad reality is that America at it's peak was irresistible and Pakistan became one of it's biggest victims. India was able to resist successfully.
Will it take a full American attack on Pakistani soil to unite Pakistan? I am afraid it will take nothing short of that. Will it take the destruction of another few Muslim countries to unite Muslims. I am afraid it will take nothing short of that. My scenario of the upcoming blood bath of Muslims is exactly this. It is not a prescription that I recommend. It is simply inevitable. It is the nature of the American beast.
The denial within America that it is no longer Number one is complete. The Muslims cling to past glories even after 1400 years, how can the American forget while their buildings and highways are still intact? The danger of this denial is acts of desperation in wanting to attack Iran and Pakistan never mind the Economic cost to America or the cost in lives of Iranians and Pakistanis.
One million Pakistanis will die in the coming years. That is almost certain. The only question is will they die in vain. Will those who survive have learned a lesson never to be forgotten? Do they need to die for others to learn?
Khusro
Subject: LETTERS TO MY SON:Humayun Gauhar
Date: Tue, 16 Sep 2008 06:02:53 +0000
Subject: LETTERS TO MY SON THE NATION Sunday, 14th September 2008
Humayun Gauhar
The Americans boots are coming , an event long predicted. Prepare
yourself.
Humayun Gauhar
My dear Ali:
You have been bombarding me with questions about the US and NATO attack
on us. Look, son, they attacked us a long time ago. The only difference
is that now they have escalated and exacerbated the situation by
actually putting boots on our soil. Given Admiral Mullen's remorseless
statement, its entirely possible that this will happen again. Given
Bush's statement that the next president's biggest challenge would be
Pakistan and if there were another 9/11 it would come from FATA, it is
certain. Given General Kiyani's admirable response, it is also entirely
possible that Pakistan will retaliate. Then America may escalate from
helicopter gunships to F-16s or even stealth bombers. I hope this
doesn't happen, for it spells near total destruction for us, or at
least part of our country, all of which are equally dear to us. The
situation is so dangerous that apparently European NATO has distanced
itself from it, except Britain. They know that P
akistan will make Iraq
look like a picnic and Afghanistan like a massage parlour. The New York
Times, which reflects the US establishment' s thinking, claims that Bush
authorized entry of American military personnel into Pakistan. To
discredit Kiyani, whom they were lionizing only a few days ago, they
also claimed that he knew about the bombing of the Indian embassy in
Kabul, allegedly by the ISI.
Can we stand up to them, you ask, and cite the example of Iran? I have
told you that Iran has the most potent weapon in the world. It's called
Unity. They demonstrated it in their war with America's puppet Saddam's
Iraq. They are undefeatable. So were the Vietnamese for exactly the
same reason. Unity is one of the three words of our national motto, the
others being faith and discipline. We have none of them. But if we can
forge unity in our ranks, faith and discipline will inevitably follow.
Then no power on earth can defeat us. Though we seem incapable, an
American attack might do just that: bring us together as a nation like
nothing ever has. I told you I am an incorrigible optimist in even the
bleakest situations. So should you be. So should all young men and
women.
If we cannot forge unity, then we will face a situation far more
dangerous than in 1971 when our country was rend asunder. We refused to
respect the verdict of the people, lost a war against India and half
our country with it
. Why? Because we attacked our own people for the
'crime' of having voted for their choice so they were not with us when
war came. Then India was backed by a the Soviet Union, while our great
friend and ally the United States stood by twiddling its thumbs. Now we
are being attacked directly by the sole and strongest-ever superpower,
our old friend and ally America. And again the people of the Frontier
may not be with us for the grievous harm that has been caused them.
There is still time to reclaim their emotional allegiance.
General Kiyani's statement was the voice of the people, just what they
wanted to hear. They have become skeptical over the years, and who can
blame them? If American soldiers set foot in Pakistan again and
Kiyani's words become bullets, the people will be galvanized
instantaneously. It will then be for the government to mobilize a
galvanized people, unify them and fire them with nationalist zeal. It
will have to open many other fronts, diplomatic and media especially.
Which means it will have to open the strategic communications front to
manage perceptions in our favour before they are formed against us. The
war will be won. So, finally, will real independence, for we would have
paid a price for it. And that is when we will treasure Pakistan as more
precious than our lives, not precious because it has been good to live
off for a few. If we fail, then we are staring certain sl
avery in the
face.
Let's get down to brass tacks. The US wanted five things from
Musharraf. When he wouldn't comply they engineered his removal.
One: They want to distance us from our best and true friend China,
especially from our strategic relationship with it, like Gwadar Port.
Gwadar is a deep-sea port that can house nuclear submarines and is
closest to the mouth of the Straits of Hormuz, the main shipping lane
on which oil from the Middle East and the Caspian Basin goes to the
world. Musharraf didn't agree. Result: every new prime minister of ours
first goes to China on an official visit and Saudi Arabia on a
religious visit to underline Pakistan's close relationship with these
two countries. The new prime minister hasn't been to China yet on an
official visit (the one to the Olympics opening ceremony was last
minute and forced, when Musharraf couldn't go) and there seems to be no
urgency to undertake one. Zardari said he would go to China immediately
after taking oath as president. That has been cancelled and he is going
to the UK instead, the country which started the rot. But China is
mature and wise. It knows that this is an aberration caused by
ideological confusion and lack of identity, purpose and direction. In
any case, it will not simply stand by and watch Pakistan go down the
drain and let its encirclement be complete after investing so much in
it.
Two: They want to
question Dr. A. Q. Khan and through him 'persuade'
the UN Security Council to pass a resolution asking America to bring
our nuclear assets under International Atomic Energy Agency (read US)
supervision and control. They want to defang our nuclear programme.
Musharraf didn't agree. The new government's slain leader had already
said that she would allow the IAEA to question Dr. Khan under certain
conditions.
Three: They want to castrate our ISI and place it indirectly under
their control and then too our army in the war on terror. Musharraf
didn't agree. Result: the new government tried to place the ISI under
the control of the interior ministry. There was a hue and cry. The
notification has still not been rescinded. Remember, a handful of
British controlled India through intermediaries, the class of Indians
they had created, basically us, which was English in every respect
except for the colour of their skins.
Four: They want to be 'invited' to enter Pakistani territory to hunt
down terrorists. Musharraf didn't agree. Result: come the new
government and they have already landed in three helicopter gunships in
Pakistan's Angoor Adda, targeted a particular house and blown up part
of it, and killed 20 civilians, women and children included. And while
our foreign minister was fulminating and our corps commanders were
meeting, their missile attacks continued.
In short, they want to occupy Pakistan without bothering to
conquer it
and put a puppet government here to do it's bidding, as they have in
Afghanistan and Iraq. Musharraf is gone and the popular perception is
that the US has finally managed to install a government of its choice
under the garb of democracy, its latest weapon, shamelessly forgetting
how they used to support dictatorships to fighting communism. The
re-visitation of its earlier weapons, the IMF and the World Bank with
their inhuman conditions, through which America creates perpetual
economic dependence, is already upon us. Soon food will also become a
weapon: Kissinger said years ago, 'Control the food and you control the
nations.' Is it symbolically significant that the running dog of US
neo-imperialist capitalism was chief guest at the new President's
oath-taking ceremony?
Lets stop lamenting and blaming others and ask: what lesson do I learn
from this?
One: Never trust America. You make it your ally at your peril. You
believe it at your risk. It is a standing hazard. It has every right to
ask you to do things that are in its interest. You should agree if and
only if it is in your interest too, not otherwise. More importantly,
never agree on the basis of IOUs: get what you have to get first, or
simultaneously, and then go ahead. They use us. That is their right. We
get used. That is our stupidity. Learn to use them. That is our right.
Israel does it to perfection, not because America lov
es it but because
it fears as many as three million of them. They're brilliant.
Two: Every single government in Pakistan has committed suicide. They
are like Lemmings. They have a death wish. They don't work with
pragmatism, consensus or wisdom. They always take things to breaking
point.
Three: Learn this most important of all lessons. It's all very well to
blame others for your woes, but no one will help you, not even the
Almighty, unless you start helping yourself first. No one will put your
house in order for you. You have to do it yourself. Pakistan is
crawling with extremists, militants and terrorists of all hues and many
nationalities. Our compatriots in the Frontier give them refuge under a
misplaced sense of 'hospitality' . We have millions of Afghans. Send
them back now that their country has been 'liberated' and they are
enjoying the joys of 'democracy'. There are many others too, westerners
included. Get rid of them also. Pakistan is rived with CIA agents
everywhere, deeper and wider than you can imagine. Clean up your
country in your own interest, not anyone else's. If you can't, or
don't, please spare us the bellyaching.
Abba
Humayun Gauhar's father, Altaf Gauher was a brilliant man but nevertheless became an American stooge. The sad reality is that America at it's peak was irresistible and Pakistan became one of it's biggest victims. India was able to resist successfully.
Will it take a full American attack on Pakistani soil to unite Pakistan? I am afraid it will take nothing short of that. Will it take the destruction of another few Muslim countries to unite Muslims. I am afraid it will take nothing short of that. My scenario of the upcoming blood bath of Muslims is exactly this. It is not a prescription that I recommend. It is simply inevitable. It is the nature of the American beast.
The denial within America that it is no longer Number one is complete. The Muslims cling to past glories even after 1400 years, how can the American forget while their buildings and highways are still intact? The danger of this denial is acts of desperation in wanting to attack Iran and Pakistan never mind the Economic cost to America or the cost in lives of Iranians and Pakistanis.
One million Pakistanis will die in the coming years. That is almost certain. The only question is will they die in vain. Will those who survive have learned a lesson never to be forgotten? Do they need to die for others to learn?
Khusro
Subject: LETTERS TO MY SON:Humayun Gauhar
Date: Tue, 16 Sep 2008 06:02:53 +0000
Subject: LETTERS TO MY SON THE NATION Sunday, 14th September 2008
Humayun Gauhar
The Americans boots are coming , an event long predicted. Prepare
yourself.
Humayun Gauhar
My dear Ali:
You have been bombarding me with questions about the US and NATO attack
on us. Look, son, they attacked us a long time ago. The only difference
is that now they have escalated and exacerbated the situation by
actually putting boots on our soil. Given Admiral Mullen's remorseless
statement, its entirely possible that this will happen again. Given
Bush's statement that the next president's biggest challenge would be
Pakistan and if there were another 9/11 it would come from FATA, it is
certain. Given General Kiyani's admirable response, it is also entirely
possible that Pakistan will retaliate. Then America may escalate from
helicopter gunships to F-16s or even stealth bombers. I hope this
doesn't happen, for it spells near total destruction for us, or at
least part of our country, all of which are equally dear to us. The
situation is so dangerous that apparently European NATO has distanced
itself from it, except Britain. They know that P
akistan will make Iraq
look like a picnic and Afghanistan like a massage parlour. The New York
Times, which reflects the US establishment' s thinking, claims that Bush
authorized entry of American military personnel into Pakistan. To
discredit Kiyani, whom they were lionizing only a few days ago, they
also claimed that he knew about the bombing of the Indian embassy in
Kabul, allegedly by the ISI.
Can we stand up to them, you ask, and cite the example of Iran? I have
told you that Iran has the most potent weapon in the world. It's called
Unity. They demonstrated it in their war with America's puppet Saddam's
Iraq. They are undefeatable. So were the Vietnamese for exactly the
same reason. Unity is one of the three words of our national motto, the
others being faith and discipline. We have none of them. But if we can
forge unity in our ranks, faith and discipline will inevitably follow.
Then no power on earth can defeat us. Though we seem incapable, an
American attack might do just that: bring us together as a nation like
nothing ever has. I told you I am an incorrigible optimist in even the
bleakest situations. So should you be. So should all young men and
women.
If we cannot forge unity, then we will face a situation far more
dangerous than in 1971 when our country was rend asunder. We refused to
respect the verdict of the people, lost a war against India and half
our country with it
. Why? Because we attacked our own people for the
'crime' of having voted for their choice so they were not with us when
war came. Then India was backed by a the Soviet Union, while our great
friend and ally the United States stood by twiddling its thumbs. Now we
are being attacked directly by the sole and strongest-ever superpower,
our old friend and ally America. And again the people of the Frontier
may not be with us for the grievous harm that has been caused them.
There is still time to reclaim their emotional allegiance.
General Kiyani's statement was the voice of the people, just what they
wanted to hear. They have become skeptical over the years, and who can
blame them? If American soldiers set foot in Pakistan again and
Kiyani's words become bullets, the people will be galvanized
instantaneously. It will then be for the government to mobilize a
galvanized people, unify them and fire them with nationalist zeal. It
will have to open many other fronts, diplomatic and media especially.
Which means it will have to open the strategic communications front to
manage perceptions in our favour before they are formed against us. The
war will be won. So, finally, will real independence, for we would have
paid a price for it. And that is when we will treasure Pakistan as more
precious than our lives, not precious because it has been good to live
off for a few. If we fail, then we are staring certain sl
avery in the
face.
Let's get down to brass tacks. The US wanted five things from
Musharraf. When he wouldn't comply they engineered his removal.
One: They want to distance us from our best and true friend China,
especially from our strategic relationship with it, like Gwadar Port.
Gwadar is a deep-sea port that can house nuclear submarines and is
closest to the mouth of the Straits of Hormuz, the main shipping lane
on which oil from the Middle East and the Caspian Basin goes to the
world. Musharraf didn't agree. Result: every new prime minister of ours
first goes to China on an official visit and Saudi Arabia on a
religious visit to underline Pakistan's close relationship with these
two countries. The new prime minister hasn't been to China yet on an
official visit (the one to the Olympics opening ceremony was last
minute and forced, when Musharraf couldn't go) and there seems to be no
urgency to undertake one. Zardari said he would go to China immediately
after taking oath as president. That has been cancelled and he is going
to the UK instead, the country which started the rot. But China is
mature and wise. It knows that this is an aberration caused by
ideological confusion and lack of identity, purpose and direction. In
any case, it will not simply stand by and watch Pakistan go down the
drain and let its encirclement be complete after investing so much in
it.
Two: They want to
question Dr. A. Q. Khan and through him 'persuade'
the UN Security Council to pass a resolution asking America to bring
our nuclear assets under International Atomic Energy Agency (read US)
supervision and control. They want to defang our nuclear programme.
Musharraf didn't agree. The new government's slain leader had already
said that she would allow the IAEA to question Dr. Khan under certain
conditions.
Three: They want to castrate our ISI and place it indirectly under
their control and then too our army in the war on terror. Musharraf
didn't agree. Result: the new government tried to place the ISI under
the control of the interior ministry. There was a hue and cry. The
notification has still not been rescinded. Remember, a handful of
British controlled India through intermediaries, the class of Indians
they had created, basically us, which was English in every respect
except for the colour of their skins.
Four: They want to be 'invited' to enter Pakistani territory to hunt
down terrorists. Musharraf didn't agree. Result: come the new
government and they have already landed in three helicopter gunships in
Pakistan's Angoor Adda, targeted a particular house and blown up part
of it, and killed 20 civilians, women and children included. And while
our foreign minister was fulminating and our corps commanders were
meeting, their missile attacks continued.
In short, they want to occupy Pakistan without bothering to
conquer it
and put a puppet government here to do it's bidding, as they have in
Afghanistan and Iraq. Musharraf is gone and the popular perception is
that the US has finally managed to install a government of its choice
under the garb of democracy, its latest weapon, shamelessly forgetting
how they used to support dictatorships to fighting communism. The
re-visitation of its earlier weapons, the IMF and the World Bank with
their inhuman conditions, through which America creates perpetual
economic dependence, is already upon us. Soon food will also become a
weapon: Kissinger said years ago, 'Control the food and you control the
nations.' Is it symbolically significant that the running dog of US
neo-imperialist capitalism was chief guest at the new President's
oath-taking ceremony?
Lets stop lamenting and blaming others and ask: what lesson do I learn
from this?
One: Never trust America. You make it your ally at your peril. You
believe it at your risk. It is a standing hazard. It has every right to
ask you to do things that are in its interest. You should agree if and
only if it is in your interest too, not otherwise. More importantly,
never agree on the basis of IOUs: get what you have to get first, or
simultaneously, and then go ahead. They use us. That is their right. We
get used. That is our stupidity. Learn to use them. That is our right.
Israel does it to perfection, not because America lov
es it but because
it fears as many as three million of them. They're brilliant.
Two: Every single government in Pakistan has committed suicide. They
are like Lemmings. They have a death wish. They don't work with
pragmatism, consensus or wisdom. They always take things to breaking
point.
Three: Learn this most important of all lessons. It's all very well to
blame others for your woes, but no one will help you, not even the
Almighty, unless you start helping yourself first. No one will put your
house in order for you. You have to do it yourself. Pakistan is
crawling with extremists, militants and terrorists of all hues and many
nationalities. Our compatriots in the Frontier give them refuge under a
misplaced sense of 'hospitality' . We have millions of Afghans. Send
them back now that their country has been 'liberated' and they are
enjoying the joys of 'democracy'. There are many others too, westerners
included. Get rid of them also. Pakistan is rived with CIA agents
everywhere, deeper and wider than you can imagine. Clean up your
country in your own interest, not anyone else's. If you can't, or
don't, please spare us the bellyaching.
Abba
Saturday, October 4, 2008
Calling for a new Economic Order
"There is an element of an unnaturally high level of living standard and national expenses and other unhealthy materialism at the expense of others and the environment that is coming home to roost in all these events. With or without this bail-out we are arguably headed off an economic cliff in the near future."
These are all sensible comments and they are in line with what I have been saying. My main theme is the battle of the powerful against the powerless. This is the war that is going on. The concept of Justice in one case comes from the justice of the powerful and is based on the assumption of Human Power while in the other case the concept of Justice is the Justice of the powerless and it is based on the assumption of Divine power.
Economic Justice can only come from the powerless as long as they are not greedy. It can seldom come fro the powerful as they are inclined to be both greedy and arrogant. Greed and Arrogance create injustice.
Thanks for sharing.
Khusro--- On Thu, 10/2/08,
Namaskar Madhusudanaji,
I don't see a metamorphosis of capitalism into PROUT as much as a transfer of wealth from American taxpayers to prop up, to socialize the costs of the failures of capitalism's predatory excesses, much as had been done during previous bubble bursting periods such as the late 1980's Savings and Loans bailouts... In this case there is an additional ingredient of a type of state capitalist intervention to protect foreign investment in US markets so as not to scare away those all important international lenders who have infused 3 trillion dollars into the economy in recent years and fund the governent, and trade imbalances. Rather than run financial services as a state run industry locally regulated as needed to meet local needs to bolster principles of self-sufficiency and economic democracy/sovereign ty, fiscal responsibility geared toward actual social needs in a rational fashion for the purpose of the welfare of all, this bailout is largely meant to save the current state of affairs of heavy reliance on foreign investors, to insulate from the possibility of a run on the banking system as a whole (internationally) , and spur the movement of credit. In this case, it seems the Paulson plan even if it was to take a sharehold in various institutions in the name of the US taxpayers, which may be profitable for the state perhaps, the intent is to reserve the profits to the private sector by limiting the profitable return of taxpayer 'investment' while socializing the risk, limiting public return. I know that with AIG the government took a majority share of the failed company, but its not clear that the Congressional plan which may likely be passed will plan to just purchase majority control of the companies, or may just be a supply of emergency credit via the Fed. I haven't checked the details yet and suspect that the US gov will not be a controlling stakeholder in the institutions it bails out.
You're right that we don't want capitalism to fail in the sense of utterly collapsing so that people are without essential items, without jobs, etc., and hurt people's ability to survive, etc. But we do want a fundamental altering of our economic, social, spiritual collective lives which requires the demise of capitalism as an old shirt which must come off to make way for the new shirt to be put on. There is an element of an unnaturally high level of living standard and national expenses and other unhealthy materialism at the expense of others and the environment that is coming home to roost in all these events. With or without this bail-out we are arguably headed off an economic cliff in the near future.
"The movement for economic democracy will never come from Washington DC or from Wall Street. That's got to come from grass roots movements to develop the concept of local economies. That's where I think the effort of PU should be."
Absolutely. Its time to be the change.
Ananta
----- Original Message -----
From: Madhusudana
To: Ananta Alex J
Sent: Wednesday, October 01, 2008 9:24 AM
Subject: Re: [PRI-USA] thoughts on current happenings
Namaskar Anantaji,It could be argued that if the government acquires an ownership stake in the companies it bails out, that this is a step towards government ownership of large financial institutions, which is part of PROUT. Could it be that we are beginning to see the metamorphosis of capitalism into PROUT? Then what would be necessary is the transformation of the political system. I'm of the belief that if PROUT is to be the successor to capitalism, then we don't want capitalism to "fail", because that would make the job of PROUTists that much more difficult in rebuilding the economy. Rather we should try for the transformation of the economic and political structures. If that fails, then revolution would be the likely outcome.The movement for economic democracy will never come from Washington DC or from Wall Street. That's got to come from grass roots movements to develop the concept of local economies. That's where I think the effort of PU should be.In Him,MadhusudanaAlex J wrote:
Namaskar,
It had appeared to me that the current crisis of the banking industry, with major banks failing one after another and not all at once seemed to be somewhat of an orchestrated series of events...to avoid the panic of a collective collapse all at once so as to space them out some and a more scheduled collapse which could be 'managed' at each point, be met with the perception of meaningful government intervention. The major US banks have been failing at a rate of about one a week for 5-6 weeks, and each time the government had had a plan to take care of the events in advance even while the Treasury has a list of another 115 banks on the verge of failing or in trouble. Each time the public announcements have been on weekends with markets closed giving the Fed/Treasury opportunity to announce the corresponding 'plan' to meet the problems. Last week we had the largest banking failure in the history of the world with the demise of Washington Mutual, and more seem to be on the way and certainly there must be much that the public isn't being told yet as part of the plan of maintaining certain levels of perception to avoid panic. It seemed to be a very orderly demise, and the perception of the government intervening to protect credit and some of the larger companies seemed equally to assuage the panic and consternation of foreign 'investors', etc...check out http://www.politico .com/news/ stories/0908/ 13690.html .
One question we might ask is well, should the bail-out be supported... a bailout of over 1 trillion dollars (315 billion already), costing most Americans a few thousand dollars per woman, child, and man? I think that as Proutists we could argue that a bail-out of the financial sector, the commercial centers and some of the largest and most wealthy corporations must be avoided in favor of securing some protections of the economy of jobs, housing, access to minimum necessities of life (including heating assistance), etc. What we are witnessing is a going to be a deflation of the dollar as the Fed will have to inevitably print money for a bailout of one of the most wealthy sectors of the economy...socialism for the very rich while socialism for the lower classes is denied.
Of course, its a complex issue of what strategy should be used to ease the stress of people during a period when the economic bubble is finally beginning to pop.Yet the numbers we have already had to swallow --1.2 trillion dollars of the federal budget is related directly or indirectly to military expenditure and entitlements, another 30% of the 2 trillion national government budget goes to paying barely more than just the interest on the national debt also mostly caused by military expenditures largely during the Reagan years, with only 10-15% of every taxed dollar going to some aspect of the welfare state or discretionary national spending. With these bail outs the deficit this year will already be over a trillion dollars even without a 700 billion dollar bailout...all this when according the the UN about 60 billion dollars would help to alleviate the worst of world poverty! Most of the strategies being discussed, essentially revolve around trying to save the system of international globalization linked directly to the US economy and US domestic consumption which may be largely impacted with a collapsing credit market for both businesses and consumers. If there is a downturn in the US economy the whole international capitalist system may collapse, and along with it the dollar. It seems we have finally arrived at the beginning of an unavoidable breaking point....
Ananta
I have been predicting the decline of America for a year now but I must say that I have been taken by surprise at the speed of events. The combination of Military, Political and Economic decline seem to have come together right at the end of the Bush Presidency although the rot started well before him.
I agree with Dr. Omar that this is nothing to celebrate as the domino affect on the world will be felt by the weakest and vulnerable the most. Unfortunately the nature of the animal is such that at whatever time this happened it would not be an orderly transition. It would not be orderly because the Americans are in denial that they are no longer a super power and it does not help that they stutter around the world behaving as if they are. They can make the transition orderly or they can make it worse. They seem to have chosen to make it worse.
For the time being we are transitioning from a unipolar world to a multipolar world. Life without a super power would be very good if a group of countries like the Bric Countries, the Gulf countries and the US and the G7 joined forces to fill the vacuum.
The US is not even ready to take responsibility that it is the cause today of causing the break up of countries and the dislocation of millions of people. It is not ready to take responsibility that it is the cause today of world Economic turmoil. Bush admits to no mistakes even while he plots to destabilize Russia.
I have therefore given up any hope of an orderly transition. Incidentally I had also predicted that
the fall of the US will be accompanied by widespread chaos and bloodletting. When things are not allowed to evolve there has to be a revolution and this is what we are witnessing. The US with it's insistence on solving singlehandedly all the worlds problems as they see them and solving them by force gives no chance to evolution and literally invites a revolution.
For the first time in the History of the world, this revolution is difficult to comprehend because it is faceless. There is no emerging power waiting in the wings to pick up the pieces, there is no heir apparent but the age of super powers is over. It is not just the US which is in denial, all of us who lead comfortable lives ( at the cost of millions) are in denial about the threat to our way of life.
I wish I had the authority to come up with recommendations that would make a transition orderly and relatively painless but I do not. I do have the clarity to warn people of the coming events. Noah's floods will look like filling a bath tub with water in comparison to the events which will unfold before our eyes. A month ago, people could have fairly accused me of gloom and doom even though I am an optimist by nature but I have to tell you that in my scenario what was supposed to happen in 2018 is happening in 2008.
The question is no longer whether the catastrophe is upon us ( it is), the question is what happens next. The question is no longer whether it can be stopped or resolved, the question is which side of justice are we on. In the battle of the powerful against the powerless, the powerless will win but at a huge cost to both sides.
Khusro
These are all sensible comments and they are in line with what I have been saying. My main theme is the battle of the powerful against the powerless. This is the war that is going on. The concept of Justice in one case comes from the justice of the powerful and is based on the assumption of Human Power while in the other case the concept of Justice is the Justice of the powerless and it is based on the assumption of Divine power.
Economic Justice can only come from the powerless as long as they are not greedy. It can seldom come fro the powerful as they are inclined to be both greedy and arrogant. Greed and Arrogance create injustice.
Thanks for sharing.
Khusro--- On Thu, 10/2/08,
Namaskar Madhusudanaji,
I don't see a metamorphosis of capitalism into PROUT as much as a transfer of wealth from American taxpayers to prop up, to socialize the costs of the failures of capitalism's predatory excesses, much as had been done during previous bubble bursting periods such as the late 1980's Savings and Loans bailouts... In this case there is an additional ingredient of a type of state capitalist intervention to protect foreign investment in US markets so as not to scare away those all important international lenders who have infused 3 trillion dollars into the economy in recent years and fund the governent, and trade imbalances. Rather than run financial services as a state run industry locally regulated as needed to meet local needs to bolster principles of self-sufficiency and economic democracy/sovereign ty, fiscal responsibility geared toward actual social needs in a rational fashion for the purpose of the welfare of all, this bailout is largely meant to save the current state of affairs of heavy reliance on foreign investors, to insulate from the possibility of a run on the banking system as a whole (internationally) , and spur the movement of credit. In this case, it seems the Paulson plan even if it was to take a sharehold in various institutions in the name of the US taxpayers, which may be profitable for the state perhaps, the intent is to reserve the profits to the private sector by limiting the profitable return of taxpayer 'investment' while socializing the risk, limiting public return. I know that with AIG the government took a majority share of the failed company, but its not clear that the Congressional plan which may likely be passed will plan to just purchase majority control of the companies, or may just be a supply of emergency credit via the Fed. I haven't checked the details yet and suspect that the US gov will not be a controlling stakeholder in the institutions it bails out.
You're right that we don't want capitalism to fail in the sense of utterly collapsing so that people are without essential items, without jobs, etc., and hurt people's ability to survive, etc. But we do want a fundamental altering of our economic, social, spiritual collective lives which requires the demise of capitalism as an old shirt which must come off to make way for the new shirt to be put on. There is an element of an unnaturally high level of living standard and national expenses and other unhealthy materialism at the expense of others and the environment that is coming home to roost in all these events. With or without this bail-out we are arguably headed off an economic cliff in the near future.
"The movement for economic democracy will never come from Washington DC or from Wall Street. That's got to come from grass roots movements to develop the concept of local economies. That's where I think the effort of PU should be."
Absolutely. Its time to be the change.
Ananta
----- Original Message -----
From: Madhusudana
To: Ananta Alex J
Sent: Wednesday, October 01, 2008 9:24 AM
Subject: Re: [PRI-USA] thoughts on current happenings
Namaskar Anantaji,It could be argued that if the government acquires an ownership stake in the companies it bails out, that this is a step towards government ownership of large financial institutions, which is part of PROUT. Could it be that we are beginning to see the metamorphosis of capitalism into PROUT? Then what would be necessary is the transformation of the political system. I'm of the belief that if PROUT is to be the successor to capitalism, then we don't want capitalism to "fail", because that would make the job of PROUTists that much more difficult in rebuilding the economy. Rather we should try for the transformation of the economic and political structures. If that fails, then revolution would be the likely outcome.The movement for economic democracy will never come from Washington DC or from Wall Street. That's got to come from grass roots movements to develop the concept of local economies. That's where I think the effort of PU should be.In Him,MadhusudanaAlex J wrote:
Namaskar,
It had appeared to me that the current crisis of the banking industry, with major banks failing one after another and not all at once seemed to be somewhat of an orchestrated series of events...to avoid the panic of a collective collapse all at once so as to space them out some and a more scheduled collapse which could be 'managed' at each point, be met with the perception of meaningful government intervention. The major US banks have been failing at a rate of about one a week for 5-6 weeks, and each time the government had had a plan to take care of the events in advance even while the Treasury has a list of another 115 banks on the verge of failing or in trouble. Each time the public announcements have been on weekends with markets closed giving the Fed/Treasury opportunity to announce the corresponding 'plan' to meet the problems. Last week we had the largest banking failure in the history of the world with the demise of Washington Mutual, and more seem to be on the way and certainly there must be much that the public isn't being told yet as part of the plan of maintaining certain levels of perception to avoid panic. It seemed to be a very orderly demise, and the perception of the government intervening to protect credit and some of the larger companies seemed equally to assuage the panic and consternation of foreign 'investors', etc...check out http://www.politico .com/news/ stories/0908/ 13690.html .
One question we might ask is well, should the bail-out be supported... a bailout of over 1 trillion dollars (315 billion already), costing most Americans a few thousand dollars per woman, child, and man? I think that as Proutists we could argue that a bail-out of the financial sector, the commercial centers and some of the largest and most wealthy corporations must be avoided in favor of securing some protections of the economy of jobs, housing, access to minimum necessities of life (including heating assistance), etc. What we are witnessing is a going to be a deflation of the dollar as the Fed will have to inevitably print money for a bailout of one of the most wealthy sectors of the economy...socialism for the very rich while socialism for the lower classes is denied.
Of course, its a complex issue of what strategy should be used to ease the stress of people during a period when the economic bubble is finally beginning to pop.Yet the numbers we have already had to swallow --1.2 trillion dollars of the federal budget is related directly or indirectly to military expenditure and entitlements, another 30% of the 2 trillion national government budget goes to paying barely more than just the interest on the national debt also mostly caused by military expenditures largely during the Reagan years, with only 10-15% of every taxed dollar going to some aspect of the welfare state or discretionary national spending. With these bail outs the deficit this year will already be over a trillion dollars even without a 700 billion dollar bailout...all this when according the the UN about 60 billion dollars would help to alleviate the worst of world poverty! Most of the strategies being discussed, essentially revolve around trying to save the system of international globalization linked directly to the US economy and US domestic consumption which may be largely impacted with a collapsing credit market for both businesses and consumers. If there is a downturn in the US economy the whole international capitalist system may collapse, and along with it the dollar. It seems we have finally arrived at the beginning of an unavoidable breaking point....
Ananta
I have been predicting the decline of America for a year now but I must say that I have been taken by surprise at the speed of events. The combination of Military, Political and Economic decline seem to have come together right at the end of the Bush Presidency although the rot started well before him.
I agree with Dr. Omar that this is nothing to celebrate as the domino affect on the world will be felt by the weakest and vulnerable the most. Unfortunately the nature of the animal is such that at whatever time this happened it would not be an orderly transition. It would not be orderly because the Americans are in denial that they are no longer a super power and it does not help that they stutter around the world behaving as if they are. They can make the transition orderly or they can make it worse. They seem to have chosen to make it worse.
For the time being we are transitioning from a unipolar world to a multipolar world. Life without a super power would be very good if a group of countries like the Bric Countries, the Gulf countries and the US and the G7 joined forces to fill the vacuum.
The US is not even ready to take responsibility that it is the cause today of causing the break up of countries and the dislocation of millions of people. It is not ready to take responsibility that it is the cause today of world Economic turmoil. Bush admits to no mistakes even while he plots to destabilize Russia.
I have therefore given up any hope of an orderly transition. Incidentally I had also predicted that
the fall of the US will be accompanied by widespread chaos and bloodletting. When things are not allowed to evolve there has to be a revolution and this is what we are witnessing. The US with it's insistence on solving singlehandedly all the worlds problems as they see them and solving them by force gives no chance to evolution and literally invites a revolution.
For the first time in the History of the world, this revolution is difficult to comprehend because it is faceless. There is no emerging power waiting in the wings to pick up the pieces, there is no heir apparent but the age of super powers is over. It is not just the US which is in denial, all of us who lead comfortable lives ( at the cost of millions) are in denial about the threat to our way of life.
I wish I had the authority to come up with recommendations that would make a transition orderly and relatively painless but I do not. I do have the clarity to warn people of the coming events. Noah's floods will look like filling a bath tub with water in comparison to the events which will unfold before our eyes. A month ago, people could have fairly accused me of gloom and doom even though I am an optimist by nature but I have to tell you that in my scenario what was supposed to happen in 2018 is happening in 2008.
The question is no longer whether the catastrophe is upon us ( it is), the question is what happens next. The question is no longer whether it can be stopped or resolved, the question is which side of justice are we on. In the battle of the powerful against the powerless, the powerless will win but at a huge cost to both sides.
Khusro
Tuesday, September 30, 2008
Paulson is wrong
Time will tell whether I am right but so far for at least a year, I have been saying that apart from following a disastrous Foreign Policy, the US Economic System is broken, There is now unanimity that this is so. I have been saying that it is broken because of greed. There is almost a consensus that this is so. I have been saying that this is unlike any other crisis that the US has faced. There is unanimous consensus that this is so. I have been saying that we cannot look to the past to resolve this. There is some agreement on this but not unanimity. I have been saying that checks and balances are also broken. There is now a grudging consensus on this. I have been saying that the system is unrepairable most certainly by the people who created it. There is very little acceptance of this and I will say in a little while why it is important to accept this.
If my analysis is correct then we will see a series of band aids and will lurch from crisis to crisis. I agree with Kamal that because of the position that the US enjoys, it is a matter of concern for the whole world except that the whole world is not being consulted as to its solutions.
With the attitude of the US as it is, which is a denial that Capitalism as they practice it ( combined with secularism or self interest), is the reason for this state of affairs, there is in my opinion little hope that we have the luxury of waiting for an alternative before we scrap this system. We have been living with a corrupt system for some time now and some have benefited from it hugely. The majority have been exploited. I am amongst the people who have benefited from it, yet I cannot turn my back and deny the mass of humanity whom I have indirectly exploited.
If the US were to admit that this system has outlived its usefulness then we can all work towards an orderly transition from this to a better one. If the US were to admit that we are living in an interconnected world then it will seek the counsel of others to come up with suggestions. The US is not about to do this. The US is interested in creating a civil war in Pakistan after creating one in Iraq and Afghanistan. The US is interested in attacking Iran. The US wants to confront Russia in it's own backyard. The US is not interested in resolving the Israel/Palestine issue except on terms dictated by Israel. The US is in denial that the world is sick of Empires and their vain attempts to enforce their writ by force.
Since we cannot work towards an orderly transition, we will have a chaotic transition. The only other way to have an orderly transition is for the rest of the world to get together and say to the US enough is enough, stop destroying our planet or we will pull the rug from under you by asking for our money back, unless you behave. The world is in a position to do that. The US owes Trillions of dollars to every one but a lot of it to China, Japan, the Gulf Arabs.
An alternative system will only emerge if the US stops pushing a broken system on to the world and the only people who can make them to do it is the rest of the world. The US is incapable of coming out of this morass all by themselves. As long as the world does not suffer chaos there is no chance that they will have the guts to stand up to The US. So I am not advocating chaos, I point to it's inevitability.
This is not idle Email chatter, it is educating people to look at a point of view which they are reluctant to look at. The forces of status quo are too strong to move away from the beaten path. The world has entered a chaotic phase because serious imbalances have been created between rich and poor, justice and injustice, peace and armed conflict, the US and the rest of the world.
I am an optimist by nature and do not look at the dark side and therefore six months ago I could not have predicted that two huge Investment banks will go bankrupt and the worlds largest Insurance company and the worlds largest Mortgage facilitators will be nationalized, that oil will cross $150 and that the US Economy will be facing the most serious crisis since the 30s but I have to be a realist and one year ago I did predict that the Dow will slump to 11,000.
The writing that is on the wall is for all to see and for all to deny at their own peril. Incidentally, I have written as to why the Economy is broken but people better than me have also written about it. Read Kevin Phillips Bad money: Reckless Finance,Failed Politics and the Global crisis of American Capitalism. The title says it all.
A solution will emerge but not until all parties agree to sit at a table to discuss it. The US is incapable of resolving this one by itself
Khusro
There is a massive problem and an even worse potential problem. Glib solutions or sniping will certainly not provide the answer. Urgent action is needed even if it is not perfect.There is no alternative to a huge bailout package, i.e. a massive injection of liquidity not only in the US but else where as well.Even George Soros says belowNow that the crisis has been unleashed a large-scale rescue package is probably indispensable to bring it under control. Rebuilding the depleted balance sheets of the banking system is the right way to goHis criticisms are about who will implement (not Paulson alone) and who will be the beneficiaries. These are very reasonable points for debate. But these are very different conclusions to saying that the bailout package is doomed.He and many commentators also talk about the complex problems in the financial systems as a whole which should be addressed. These are issues that have to be tackled, but not in a hurry, because the cure is complex and long term.There are others who say the whole system is flawed that there is no solution but to change it all and introduce something else. What new system? Is this real talk or idle drawing room (email!) chatter?I for one am not so disillusioned with the system as to totally discount its self correcting mechanism. Many crises have, come all different from the others, and the system has coped, albeit not perfectly. However imperfect, the present system will have to do until something better comes along ( and none is visible to me). As a practical matter, I believe we should concentrate on improving its imperfections rather than destroying it.
RegardsKemal Shoaib
Khusro,
Your meat-packing industry analogy is precisely right (if somewhat unappetizing) . The bailout plan is insane on its face but the issues are so tangled, particularly to those (most Americans, actually) who have not been paying attention, that figuring out whether one or another alternative is preferable is beyond the capabilities of most of us. The only certainty is that we will be stuck holding the bag.Particularly galling is the demand for unchecked Treasury discretion and unaccountability. But we are talking about the Bush Regime, which has elevated the "fox in the henhouse" approach to the level of policy. Having an independent panel chaired by, say, Stiglitz, come up with an workable plan is not something to even be considered.
Mary Fox
I have been saying for some time that the Capitalist is no longer in charge. They serve at the alter of Capitalism and can only behave according to it's dictates. Paulson and Congress are bound to act in ways that are destructive to them without realising it.This is a mouthful since they are supposed to be amongst the smartest people in the world but greed makes us stupid. If they were so smart how come we are in this mess?
There is unprecedented conflict of Interest in the system. The top management of Fannie and Freddie have received favorable mortgages, all from Country wide the biggest hawker of sub prime mortgages. A lot more graft and mutual back scratching has yet to come to light.
No one is focussed on the real issue. Mortgages have been given to people with no ability to repay them. The problem is not that Real Estate prices have come down ( according to Bush), the problem is that loans were made that should never have been made. The way to make these loans good is to look at each one of them and renegotiate the terms according to the ability of the borrower to repay. Some may just have to be written off but not all. No one wants to do the hard work. Every one is looking at a formula. The customer is just a number and will either fit into a formula or not.
Banking has deteriorated from my time. The branch manger does not know his/her borrower. The transactions are done by faceless call center employees with faceless numbered individuals. Banking is no different today then the meat packing Industry. Parts of the animal are sliced and diced and packed in bundles of a certain weight and then sold as just meat. The shoulder, the thigh, the shank are all mixed up and no one knows the quality of the meat. Mixed in is meat from young animals, old animals and some downright stale animals. There is a lot of meat in there unfit for human consumption. No wonder there is such a stink around.
There needs to be a bailout but not one authored by the people who created the problem in the first place. The package presented by Paulson and Bernanke is an insult to Congress. It is long on Dollars and short on specifics and it asks for the fox to be appointed incharge of the chicken.
I will not repeat the arguments given by experts and let you read them. This package, if accepted, in it's present form will postpone the problem for a very short while, it will not resolve it. In fact it has all the makings of making it worse. My recommendation would be to get out of the stock market as fast as you can, if you have not already done it. This is not a bottom, there is worse to come. As a nation we have become addicted to living on credit. We are now borrowed to the hilt and the tax payer is being asked to lend ( give) money when no one else wants to.
Khusro
If my analysis is correct then we will see a series of band aids and will lurch from crisis to crisis. I agree with Kamal that because of the position that the US enjoys, it is a matter of concern for the whole world except that the whole world is not being consulted as to its solutions.
With the attitude of the US as it is, which is a denial that Capitalism as they practice it ( combined with secularism or self interest), is the reason for this state of affairs, there is in my opinion little hope that we have the luxury of waiting for an alternative before we scrap this system. We have been living with a corrupt system for some time now and some have benefited from it hugely. The majority have been exploited. I am amongst the people who have benefited from it, yet I cannot turn my back and deny the mass of humanity whom I have indirectly exploited.
If the US were to admit that this system has outlived its usefulness then we can all work towards an orderly transition from this to a better one. If the US were to admit that we are living in an interconnected world then it will seek the counsel of others to come up with suggestions. The US is not about to do this. The US is interested in creating a civil war in Pakistan after creating one in Iraq and Afghanistan. The US is interested in attacking Iran. The US wants to confront Russia in it's own backyard. The US is not interested in resolving the Israel/Palestine issue except on terms dictated by Israel. The US is in denial that the world is sick of Empires and their vain attempts to enforce their writ by force.
Since we cannot work towards an orderly transition, we will have a chaotic transition. The only other way to have an orderly transition is for the rest of the world to get together and say to the US enough is enough, stop destroying our planet or we will pull the rug from under you by asking for our money back, unless you behave. The world is in a position to do that. The US owes Trillions of dollars to every one but a lot of it to China, Japan, the Gulf Arabs.
An alternative system will only emerge if the US stops pushing a broken system on to the world and the only people who can make them to do it is the rest of the world. The US is incapable of coming out of this morass all by themselves. As long as the world does not suffer chaos there is no chance that they will have the guts to stand up to The US. So I am not advocating chaos, I point to it's inevitability.
This is not idle Email chatter, it is educating people to look at a point of view which they are reluctant to look at. The forces of status quo are too strong to move away from the beaten path. The world has entered a chaotic phase because serious imbalances have been created between rich and poor, justice and injustice, peace and armed conflict, the US and the rest of the world.
I am an optimist by nature and do not look at the dark side and therefore six months ago I could not have predicted that two huge Investment banks will go bankrupt and the worlds largest Insurance company and the worlds largest Mortgage facilitators will be nationalized, that oil will cross $150 and that the US Economy will be facing the most serious crisis since the 30s but I have to be a realist and one year ago I did predict that the Dow will slump to 11,000.
The writing that is on the wall is for all to see and for all to deny at their own peril. Incidentally, I have written as to why the Economy is broken but people better than me have also written about it. Read Kevin Phillips Bad money: Reckless Finance,Failed Politics and the Global crisis of American Capitalism. The title says it all.
A solution will emerge but not until all parties agree to sit at a table to discuss it. The US is incapable of resolving this one by itself
Khusro
There is a massive problem and an even worse potential problem. Glib solutions or sniping will certainly not provide the answer. Urgent action is needed even if it is not perfect.There is no alternative to a huge bailout package, i.e. a massive injection of liquidity not only in the US but else where as well.Even George Soros says belowNow that the crisis has been unleashed a large-scale rescue package is probably indispensable to bring it under control. Rebuilding the depleted balance sheets of the banking system is the right way to goHis criticisms are about who will implement (not Paulson alone) and who will be the beneficiaries. These are very reasonable points for debate. But these are very different conclusions to saying that the bailout package is doomed.He and many commentators also talk about the complex problems in the financial systems as a whole which should be addressed. These are issues that have to be tackled, but not in a hurry, because the cure is complex and long term.There are others who say the whole system is flawed that there is no solution but to change it all and introduce something else. What new system? Is this real talk or idle drawing room (email!) chatter?I for one am not so disillusioned with the system as to totally discount its self correcting mechanism. Many crises have, come all different from the others, and the system has coped, albeit not perfectly. However imperfect, the present system will have to do until something better comes along ( and none is visible to me). As a practical matter, I believe we should concentrate on improving its imperfections rather than destroying it.
RegardsKemal Shoaib
Khusro,
Your meat-packing industry analogy is precisely right (if somewhat unappetizing) . The bailout plan is insane on its face but the issues are so tangled, particularly to those (most Americans, actually) who have not been paying attention, that figuring out whether one or another alternative is preferable is beyond the capabilities of most of us. The only certainty is that we will be stuck holding the bag.Particularly galling is the demand for unchecked Treasury discretion and unaccountability. But we are talking about the Bush Regime, which has elevated the "fox in the henhouse" approach to the level of policy. Having an independent panel chaired by, say, Stiglitz, come up with an workable plan is not something to even be considered.
Mary Fox
I have been saying for some time that the Capitalist is no longer in charge. They serve at the alter of Capitalism and can only behave according to it's dictates. Paulson and Congress are bound to act in ways that are destructive to them without realising it.This is a mouthful since they are supposed to be amongst the smartest people in the world but greed makes us stupid. If they were so smart how come we are in this mess?
There is unprecedented conflict of Interest in the system. The top management of Fannie and Freddie have received favorable mortgages, all from Country wide the biggest hawker of sub prime mortgages. A lot more graft and mutual back scratching has yet to come to light.
No one is focussed on the real issue. Mortgages have been given to people with no ability to repay them. The problem is not that Real Estate prices have come down ( according to Bush), the problem is that loans were made that should never have been made. The way to make these loans good is to look at each one of them and renegotiate the terms according to the ability of the borrower to repay. Some may just have to be written off but not all. No one wants to do the hard work. Every one is looking at a formula. The customer is just a number and will either fit into a formula or not.
Banking has deteriorated from my time. The branch manger does not know his/her borrower. The transactions are done by faceless call center employees with faceless numbered individuals. Banking is no different today then the meat packing Industry. Parts of the animal are sliced and diced and packed in bundles of a certain weight and then sold as just meat. The shoulder, the thigh, the shank are all mixed up and no one knows the quality of the meat. Mixed in is meat from young animals, old animals and some downright stale animals. There is a lot of meat in there unfit for human consumption. No wonder there is such a stink around.
There needs to be a bailout but not one authored by the people who created the problem in the first place. The package presented by Paulson and Bernanke is an insult to Congress. It is long on Dollars and short on specifics and it asks for the fox to be appointed incharge of the chicken.
I will not repeat the arguments given by experts and let you read them. This package, if accepted, in it's present form will postpone the problem for a very short while, it will not resolve it. In fact it has all the makings of making it worse. My recommendation would be to get out of the stock market as fast as you can, if you have not already done it. This is not a bottom, there is worse to come. As a nation we have become addicted to living on credit. We are now borrowed to the hilt and the tax payer is being asked to lend ( give) money when no one else wants to.
Khusro
Sunday, September 28, 2008
The one state solution
In a one state solution, the Jews get a world recognized homeland, the Palestinians get their land back, the wall can be demolished, Jerusalem does not have to be divided, apartheid can be dismantled, there will be an end to suicide bombing and the demolition of Palestinian homes. The Jews and Palestinians can set an example to the rest of the world that human beings can coexist peaceful and democracy will get a boost.
That the solution is so obvious and yet unlikely to happen is one of the tragedies of our time.
It is one that the US will not support and it is one that Israel will not support on the flimsy pretense that the Jews will be in a minority. If the Jews are in a minority they will be no different than the Muslims in India or the Christians in Lebanon.
The US will not support it because the Israelis will not support it which shows how much the US political system has been hijacked by the Israel Lobby. The Israelis will not support it because it will not allow them to practice the racialism that they want to practice against the Palestinians. They feel a majority will practice the same discriminatory policies that they (The Jews) are following against the Palestinian Minorities within Israel. The low standards practiced by Israel need not be those that need be followed by a successor Constitution.
The fact that this solution will bring peace to the Middle East, be a beginning to ending terrorism or the root cause of terrorism and at the same time save face for every one does not seem to motivate either party.At the moment so sensitive is this subject that any one who talks of a one state solution runs the risk of being called an anti Semite.
Khusro
That the solution is so obvious and yet unlikely to happen is one of the tragedies of our time.
It is one that the US will not support and it is one that Israel will not support on the flimsy pretense that the Jews will be in a minority. If the Jews are in a minority they will be no different than the Muslims in India or the Christians in Lebanon.
The US will not support it because the Israelis will not support it which shows how much the US political system has been hijacked by the Israel Lobby. The Israelis will not support it because it will not allow them to practice the racialism that they want to practice against the Palestinians. They feel a majority will practice the same discriminatory policies that they (The Jews) are following against the Palestinian Minorities within Israel. The low standards practiced by Israel need not be those that need be followed by a successor Constitution.
The fact that this solution will bring peace to the Middle East, be a beginning to ending terrorism or the root cause of terrorism and at the same time save face for every one does not seem to motivate either party.At the moment so sensitive is this subject that any one who talks of a one state solution runs the risk of being called an anti Semite.
Khusro
Thursday, September 25, 2008
Why Paulson is wrong
If you have more interest also read the article from www.Chicagogsb. edu/igm which says that it is time to save Capitalism from the Capitalist.
I have been saying for some time that the Capitalist is no longer in charge. They serve at the alter of Capitalism and can only behave according to it's dictates. Paulson and Congress are bound to act in ways that are destructive to them without realising it.
This is a mouthful since they are supposed to be amongst the smartest people in the world but greed makes us stupid. If they were so smart how come we are in this mess?
There is unprecedented conflict of Interest in the system. The top management of Fannie and Freddie have received favorable mortgages, all from Country wide the biggest hawker of sub prime mortgages. A lot more graft and mutual back scratching has yet to come to light.
No one is focussed on the real issue. Mortgages have been given to people with no ability to repay them. The problem is not that Real Estate prices have come down ( according to Bush), the problem is that loans were made that should never have been made. The way to make these loans good is to look at each one of them and renegotiate the terms according to the ability of the borrower to repay. Some may just have to be written off but not all. No one wants to do the hard work. Every one is looking at a formula. The customer is just a number and will either fit into a formula or not.
Banking has deteriorated from my time. The branch manger does not know his/her borrower. The transactions are done by faceless call center employees with faceless numbered individuals. Banking is no different today then the meat packing Industry. Parts of the animal are sliced and diced and packed in bundles of a certain weight and then sold as just meat. The shoulder, the thigh, the shank are all mixed up and no one knows the quality of the meat. Mixed in is meat from young animals, old animals and some downright stale animals. There is a lot of meat in there unfit for human consumption. No wonder there is such a stink around.
There needs to be a bailout but not one authored by the people who created the problem in the first place. The package presented by Paulson and Bernanke is an insult to Congress. It is long on Dollars and short on specifics and it asks for the fox to be appointed incharge of the chicken.
I will not repeat the arguments given by experts and let you read them. This package, if accepted, in it's present form will postpone the problem for a very short while, it will not resolve it. In fact it has all the makings of making it worse. My recommendation would be to get out of the stock market as fast as you can, if you have not already done it. This is not a bottom, there is worse to come. As a nation we have become addicted to living on credit. We are now borrowed to the hilt and the tax payer is being asked to lend ( give) money when no one else wants to.
Khusro
Paulson’s plan was not a true solution to the crisis
By Martin Wolf
Published: September 23 2008 19:38 Last updated: September 23 2008 19:38
Desperate times call for desperate measures. But remember, no less, that decisions taken in haste may shape the financial system for a generation. Speed is essential. But it is no less essential to get any new regime right.
EDITOR’S CHOICE
Economists’ forum - Nov-16
Every week, 50 of the world’s most influential economists discuss Martin Wolf’s articles on FT.com
No doubt, the crisis has long passed the stage when governments could leave the private sector to save itself, with just a little help from central banks. For the US, the rescue of Bear Stearns was the moment when that option evaporated. But the events of the past two and a half weeks – the rescues of Fannie Mae and Freddie Mac, the failure of Lehman Brothers, the sale of Merrill Lynch, the rescue of AIG, the flight to safety in the markets and the decisions by Morgan Stanley and Goldman Sachs to become regulated bank holding companies – have made a comprehensive solution inevitable.
The US public expects action. The question is whether it will get the right action. To answer it, we must agree on the challenge the US financial system faces and the criteria for judging how it should be met.
What then is the challenge? The answer given by Hank Paulson, the all-action US Treasury secretary, last Friday, in announcing his “troubled asset relief programme”, is that “the underlying weakness in our financial system today is the illiquid mortgage assets that have lost value as the housing correction has proceeded. These illiquid assets are choking off the flow of credit that is so vitally important to our economy.” The core challenge, then, is viewed as illiquidity, not insolvency. By creating a market for the toxic assets, Mr Paulson hopes to halt the spiral of falling prices and bankruptcies.
I suggest we should take a broader view of events. The aggregate stock of US debt rose from a mere 163 per cent of gross domestic product in 1980 to 346 per cent in 2007. Just two sectors of the economy were responsible for this massive rise in leverage: households, whose indebtedness jumped from 50 per cent of GDP in 1980 to 71 per cent in 2000 and 100 per cent in 2007; and the financial sector, whose indebtedness jumped from just 21 per cent of GDP in 1980 to 83 per cent in 2000 and 116 per cent in 2007 (see charts). The balance sheets of the financial sector exploded, as did the sector’s notional profitability. But leverage, alas, works both ways.
Since US net international debt was 39 per cent of GDP at the end of 2007, virtually all of this debt is an asset of another domestic entity and would net out to zero. But when the gross debt stock is huge and economic conditions difficult, the chances that many entities are bankrupt is high. When people fear mass insolvency, lenders stop lending and the indebted stop spending. The result can be the “debt deflation”, described by the American economist, Irving Fisher, in 1933 and experienced by Japan in the 1990s.
Given the recent explosion in leverage, the challenge is unlikely to be one of mispricing of the toxic mortgage-backed securities alone. Many people and institutions made leveraged bets that have since gone sour. Their debt cannot be repaid. Creditors are responding accordingly.
Now turn to the criteria to be used in judging the intervention. First, it would deal with the systemic threat. Second, it would minimise damage to incentives. Third, it would come at minimum cost and risk to the taxpayer. Not least, it would be consistent with ideas of social justice.
The fundamental problem with the Paulson scheme, as proposed, is then that it is neither a necessary nor an efficient solution. It is not necessary, because the Federal Reserve is able to manage illiquidity through its many lender-of-last resort operations. It is not efficient, because it can only deal with insolvency by buying bad assets at far above their true value, thereby guaranteeing big losses for taxpayers and providing an open-ended bail-out to the most irresponsible investors.
Furthermore, these assets are illiquid precisely because they are so hard to value. The government risks finding its coffers stuffed with huge amounts of overpriced junk even if it tries not to do so. Also objectionable, though more in design than in the fundamentals, were the unchecked powers for the Treasury. Such a fund should be operated professionally, under independent oversight. Finally, if the US government is to bail out incompetent investors it should surely also provide more help to the poor and often ill-informed borrowers.
Yet, above all, a scheme for dealing with the crisis must be able to remedy the looming decapitalisation of the financial system in as targeted a manner as possible. A fascinating debate on how to do this is under way in the economists’ forum on FT.com. To the contributions, including Tuesday’s Comment page article by Dominique Strauss-Kahn, managing director of the International Monetary Fund, I would add one by Luigi Zingales of Chicago University’s graduate school of business.*
The simplest way to recapitalise institutions is by forcing them to raise equity and halt dividends. If that did not work, there could be forced conversions of debt into equity. The attraction of debt-equity swaps is that they would create losses for creditors, which are essential for the long-run health of any financial system.
The advantage of these schemes is that they would require not a penny of public money. Their drawback is that they would be disruptive and highly unpopular: banking institutions would have to be valued, whereupon undercapitalised entities would have to adopt one of the ways to improve their capital positions.
If, as seems plausible, a scheme that imposes such pain on the financial sector would be rejected out of hand, the next best alternative would be injection of preference shares by the government into decapitalised institutions, on the lines proposed by Charles Calomiris of Columbia University. This would be a bail-out, but one that constrained the behaviour of beneficiaries, not least on payment of dividends. That would make it far better than dropping benefits on the unworthy, via mass purchases of overpriced toxic paper.
What then do I conclude? Yes, there may well be a place for intervention in the market for toxic securities. But this is a costly and ineffective way of meeting today’s deepest challenge. What is needed, still more, is a clear and effective way of deleveraging and recapitalising the financial sector, ideally without using taxpayer funds. If such funds are to be used, they must also be injected in as carefully targeted and controlled a way as possible. Comprehensive action is essential, as Mr Paulson has decided. But let the US take the time to make that comprehensive action right.
*Why Paulson is wrong, www.chicagogsb. edu/igm
martin.wolf@ ft.com
Copyright The Financial Times Limited 2008
I have been saying for some time that the Capitalist is no longer in charge. They serve at the alter of Capitalism and can only behave according to it's dictates. Paulson and Congress are bound to act in ways that are destructive to them without realising it.
This is a mouthful since they are supposed to be amongst the smartest people in the world but greed makes us stupid. If they were so smart how come we are in this mess?
There is unprecedented conflict of Interest in the system. The top management of Fannie and Freddie have received favorable mortgages, all from Country wide the biggest hawker of sub prime mortgages. A lot more graft and mutual back scratching has yet to come to light.
No one is focussed on the real issue. Mortgages have been given to people with no ability to repay them. The problem is not that Real Estate prices have come down ( according to Bush), the problem is that loans were made that should never have been made. The way to make these loans good is to look at each one of them and renegotiate the terms according to the ability of the borrower to repay. Some may just have to be written off but not all. No one wants to do the hard work. Every one is looking at a formula. The customer is just a number and will either fit into a formula or not.
Banking has deteriorated from my time. The branch manger does not know his/her borrower. The transactions are done by faceless call center employees with faceless numbered individuals. Banking is no different today then the meat packing Industry. Parts of the animal are sliced and diced and packed in bundles of a certain weight and then sold as just meat. The shoulder, the thigh, the shank are all mixed up and no one knows the quality of the meat. Mixed in is meat from young animals, old animals and some downright stale animals. There is a lot of meat in there unfit for human consumption. No wonder there is such a stink around.
There needs to be a bailout but not one authored by the people who created the problem in the first place. The package presented by Paulson and Bernanke is an insult to Congress. It is long on Dollars and short on specifics and it asks for the fox to be appointed incharge of the chicken.
I will not repeat the arguments given by experts and let you read them. This package, if accepted, in it's present form will postpone the problem for a very short while, it will not resolve it. In fact it has all the makings of making it worse. My recommendation would be to get out of the stock market as fast as you can, if you have not already done it. This is not a bottom, there is worse to come. As a nation we have become addicted to living on credit. We are now borrowed to the hilt and the tax payer is being asked to lend ( give) money when no one else wants to.
Khusro
Paulson’s plan was not a true solution to the crisis
By Martin Wolf
Published: September 23 2008 19:38 Last updated: September 23 2008 19:38
Desperate times call for desperate measures. But remember, no less, that decisions taken in haste may shape the financial system for a generation. Speed is essential. But it is no less essential to get any new regime right.
EDITOR’S CHOICE
Economists’ forum - Nov-16
Every week, 50 of the world’s most influential economists discuss Martin Wolf’s articles on FT.com
No doubt, the crisis has long passed the stage when governments could leave the private sector to save itself, with just a little help from central banks. For the US, the rescue of Bear Stearns was the moment when that option evaporated. But the events of the past two and a half weeks – the rescues of Fannie Mae and Freddie Mac, the failure of Lehman Brothers, the sale of Merrill Lynch, the rescue of AIG, the flight to safety in the markets and the decisions by Morgan Stanley and Goldman Sachs to become regulated bank holding companies – have made a comprehensive solution inevitable.
The US public expects action. The question is whether it will get the right action. To answer it, we must agree on the challenge the US financial system faces and the criteria for judging how it should be met.
What then is the challenge? The answer given by Hank Paulson, the all-action US Treasury secretary, last Friday, in announcing his “troubled asset relief programme”, is that “the underlying weakness in our financial system today is the illiquid mortgage assets that have lost value as the housing correction has proceeded. These illiquid assets are choking off the flow of credit that is so vitally important to our economy.” The core challenge, then, is viewed as illiquidity, not insolvency. By creating a market for the toxic assets, Mr Paulson hopes to halt the spiral of falling prices and bankruptcies.
I suggest we should take a broader view of events. The aggregate stock of US debt rose from a mere 163 per cent of gross domestic product in 1980 to 346 per cent in 2007. Just two sectors of the economy were responsible for this massive rise in leverage: households, whose indebtedness jumped from 50 per cent of GDP in 1980 to 71 per cent in 2000 and 100 per cent in 2007; and the financial sector, whose indebtedness jumped from just 21 per cent of GDP in 1980 to 83 per cent in 2000 and 116 per cent in 2007 (see charts). The balance sheets of the financial sector exploded, as did the sector’s notional profitability. But leverage, alas, works both ways.
Since US net international debt was 39 per cent of GDP at the end of 2007, virtually all of this debt is an asset of another domestic entity and would net out to zero. But when the gross debt stock is huge and economic conditions difficult, the chances that many entities are bankrupt is high. When people fear mass insolvency, lenders stop lending and the indebted stop spending. The result can be the “debt deflation”, described by the American economist, Irving Fisher, in 1933 and experienced by Japan in the 1990s.
Given the recent explosion in leverage, the challenge is unlikely to be one of mispricing of the toxic mortgage-backed securities alone. Many people and institutions made leveraged bets that have since gone sour. Their debt cannot be repaid. Creditors are responding accordingly.
Now turn to the criteria to be used in judging the intervention. First, it would deal with the systemic threat. Second, it would minimise damage to incentives. Third, it would come at minimum cost and risk to the taxpayer. Not least, it would be consistent with ideas of social justice.
The fundamental problem with the Paulson scheme, as proposed, is then that it is neither a necessary nor an efficient solution. It is not necessary, because the Federal Reserve is able to manage illiquidity through its many lender-of-last resort operations. It is not efficient, because it can only deal with insolvency by buying bad assets at far above their true value, thereby guaranteeing big losses for taxpayers and providing an open-ended bail-out to the most irresponsible investors.
Furthermore, these assets are illiquid precisely because they are so hard to value. The government risks finding its coffers stuffed with huge amounts of overpriced junk even if it tries not to do so. Also objectionable, though more in design than in the fundamentals, were the unchecked powers for the Treasury. Such a fund should be operated professionally, under independent oversight. Finally, if the US government is to bail out incompetent investors it should surely also provide more help to the poor and often ill-informed borrowers.
Yet, above all, a scheme for dealing with the crisis must be able to remedy the looming decapitalisation of the financial system in as targeted a manner as possible. A fascinating debate on how to do this is under way in the economists’ forum on FT.com. To the contributions, including Tuesday’s Comment page article by Dominique Strauss-Kahn, managing director of the International Monetary Fund, I would add one by Luigi Zingales of Chicago University’s graduate school of business.*
The simplest way to recapitalise institutions is by forcing them to raise equity and halt dividends. If that did not work, there could be forced conversions of debt into equity. The attraction of debt-equity swaps is that they would create losses for creditors, which are essential for the long-run health of any financial system.
The advantage of these schemes is that they would require not a penny of public money. Their drawback is that they would be disruptive and highly unpopular: banking institutions would have to be valued, whereupon undercapitalised entities would have to adopt one of the ways to improve their capital positions.
If, as seems plausible, a scheme that imposes such pain on the financial sector would be rejected out of hand, the next best alternative would be injection of preference shares by the government into decapitalised institutions, on the lines proposed by Charles Calomiris of Columbia University. This would be a bail-out, but one that constrained the behaviour of beneficiaries, not least on payment of dividends. That would make it far better than dropping benefits on the unworthy, via mass purchases of overpriced toxic paper.
What then do I conclude? Yes, there may well be a place for intervention in the market for toxic securities. But this is a costly and ineffective way of meeting today’s deepest challenge. What is needed, still more, is a clear and effective way of deleveraging and recapitalising the financial sector, ideally without using taxpayer funds. If such funds are to be used, they must also be injected in as carefully targeted and controlled a way as possible. Comprehensive action is essential, as Mr Paulson has decided. But let the US take the time to make that comprehensive action right.
*Why Paulson is wrong, www.chicagogsb. edu/igm
martin.wolf@ ft.com
Copyright The Financial Times Limited 2008
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