Complete Rejection of Capitalist Syst...

Complete Rejection of Capitalist System Opens the Escape Route as Free Market Sinks in Nationalisation!  But Denationalisation Happens to be the Theme Song in Thirld World including Asia. In India, FINMIN and RBI Dance on LPG Tune quite naked and Play as Fire Fighters to Calm the BASTARD Finances.Biggest Downturn in Aviation Industry.Aravind Adiga: Debut Novelist Wins Man Booker Prize

Troubled Galaxy Destroyed Dreams: Chapter 86

Palash Biswas

India below sub-Saharan Africa in hunger index
15 Oct, 2008, 0149 hrs IST, ET Bureau

NEW DELHI: Despite robust economic growth in recent years, India’s record on hunger is worse than that of nearly 25 sub-Saharan African countries and
all of South Asia, except Bangladesh. The International Food Policy Research Institute (IFPRI)’s 2008 Global Hunger Index says that with over 200 million people insecure about their daily bread, Indian scenario is ‘alarming’ in terms of hunger and malnutrition.

The first ever India Hunger Index, released along with the Global Hunger Index on Monday, found that not a single state in India fell in the ‘low hunger’ or ‘moderate hunger’ categories. Madhya Pradesh had the most severe level of hunger in the country, followed by Jharkhand and Bihar. Punjab and Kerala scored the best on the Index.

The Index measured hunger by ranking countries on three indicators, prevalence of child malnutrition, rates of child mortality, and the proportion of people who are calorie deficient. Overall, India ranks 66 among 88 countries in the index.

When Indian states are stacked against countries in the 2008 Global Hunger Index, Madhya Pradesh ranks between Ethiopia and Chad. Punjab, the best-performing state, ranks below Gabon, Honduras, and Vietnam. India’s high levels of child malnutrition and calorie insufficiency are the primary reasons for its poor performance. India’s rates of child malnutrition are higher than most countries in sub-Saharan Africa.

However, the report points out that global poverty rate has fallen over three points to 15.2 points in 2008 hunger index from 18.7 points in 1990 index — due to progress in children’s nutrition.

According to IFPRI, the current financial crisis will complicate the picture. “It actually brings some short-term relief for hungry people as it contributes to reduced commodity prices. But the credit crunch makes access to capital difficult, including for agriculture, and that adds another obstacle for overcoming the food crisis,” the institute said.

“Hunger and malnutrition are often rooted in poverty,” IFPRI director in Asia Ashok Gulati said. “Part of the solution rests with increasing investments in agriculture and poverty reduction programs.” The Global Hunger Index was developed by IFPRI in 2006 as a comprehensive measure of hunger and malnutrition.
http://economictimes.indiatimes.com/News/PoliticsNation/India_below_sub-Saharan_Africa_in_hunger_index/articleshow/3596612.cms

How does a booming India look from the point of view of a have-not? Aravind Adiga’s The White Tiger is the story of a self-professed entrepreneur in India. Except he is a murderer. Balram Halwai has murdered his employer, Mr. Ashok and is now on the run. The White Tiger is both his story and the story of the faultlines in the “new India.” It just won Adiga the $100,000 Man Booker Prize. He spoke with New America Media editor Sandip Roy last month in Mumbai after the book was shortlisted for the prize.

Twelve Indian states have "alarming" levels of hunger while the situation is "extremely alarming" in the state of Madhya Pradesh, says a new report.
 
Madhya Pradesh's nutrition problems, it says, are comparable to the African countries of Ethiopia and Chad.
 
India has more people suffering hunger - a figure above 200 million - than any other country in the world, it says.
The report, released as part of the 2008 Global Hunger Index, ranks India at 66 out 88 countries.
'Scored worse'
The hunger index has been released by the International Food Policy Research Institute (IFPRI) along with Welthungerhlife and the University of California. It measures hunger on three indicators which include child malnutrition, rates of child mortality and the number of people who are calorie deficient.

Ronald reagan Must be turning Blind in his grave as Free market Champion, the
Unipolar Corporate Zionist United States nullified his Star Wars and the histroic Assassination of Socialism. Socialism is Ressurrected as phoenix in the land of capitalism and globalisation! socialism proves itself the Best survival strategy for the Capitalism, Marx would never have dreamt!

Looking to calm worries about the government’s purchase of equity in U.S. financial institutions, President George W. Bush said Wednesday that the emergency moves will be temporary and limited in scope.

Bush
“It’s very important for the American people to know that the program is designed to preserve free enterprise, not replace free enterprise,” Bush said ahead of a meeting with his cabinet.

The president sat next to Treasury Secretary Henry Paulson, the architect of the administration’s plan to inject $250 billion in banks.

“These are extraordinary measures — no question about it,” Bush said. “I am confident in the long run the economy will come back.” –Henry J. Pulizzi

Complete Rejection of Capitalist system opens the most sought after escape route as Free Market sinks in Nationalisation!Only on Monday, the Dow had registered its biggest points rise in history and its biggest rally in percentage terms since 1933 as markets around the world reacted to government intervention to tackle the financial crisis. What next followed, friends?Signs of renewed risk aversion surfaced on Wednesday with stocks pressured and gold rising as investors fret the global economy will not esc ape a recession even after bank bailouts, which have taken the edge off money market stress. Oil prices held near a one-year trough below $80 set on Friday, while the yen and government bonds climbed as fears about an imminent financial meltdown gave way to economic worries after trillions of dollars were pledged to boost the banking system.

Most Asian stock markets fell 1-3 per cent while gold rose on Wednesday on investor worries of lower corporate earnings in a weakening global economy, even as money markets continued to heal gradually. Major European share markets were expected to open as much as 2 per cent down, according to financial bookmakers, after the FTSEurofirst 300 index rose nearly 14 percent in the last two days.

The global economic crisis is a result of the "comprehensive failure of extreme capitalism," Australian Prime Minister Kevin Rudd said Wednesday as he took aim at bulging executive pay packets.

The centre-left Labor Party leader named greed and fear as the "twin evils" at the root of the financial sector collapse, which began in the United States and swept the world.

"What we have seen is the comprehensive failure of extreme capitalism -- extreme capitalism which now turns to government to prevent systemic failure," Rudd told the National Press Club in Canberra.

Governments around the industrialised world have pumped billions of dollars into their financial sectors to bail out institutions, leading to charges that capitalism privatises profits but socialises losses.

Rudd, who on Tuesday announced a 10.4 billion dollar (7.25 billion US) economic stimulus package designed to shield the vulnerable and boost economic activity, said fear was the first of the demons to be dealt with.

"Dealing with the greed which has caused the fear will come after that," he said, pointing to executive pay that rewarded short-term returns and excessive risk-taking.

Nevertheless, all over the Thirld world including Ancient Asia, Denationalisation  seems to be the Theme Song!

In India, FINMIN led by Chetia Chidambaram and RBI danceon LPG tune quite Naked bypassing democratic setup including parliament and Constitution of India! Meanwhile, India faces Biggest Downturn in Aviation industry!Indian Stock markets on Wednesday slipped into the negative territory again after two days of gaining, with the benchmark Sensex nosediving over 670 points to close below 11,000 level on across-the-board selling by funds and general investors.

The Reserve Bank of India, or RBI, has cut the CRR by 100 bps to 6.5% with effect October 11, reports CNBC-TV18. CRR is the amount that banks park with the central bank. The move will inject Rs 40,000 crore into the system.

The banks may borrow up to 50% of free Tier-I from foreign branches. The 0.5% NDTL Leeway on SLR will be in addition to 1% given since September 16. The additional leeway on SLR is purely a temporary measure to meet mutual funds’ cash needs. The central bank said it has been continuously monitoring the liquidity situation. The banks can borrow 0.5% more of NDTL at the special repo to lend to mutual funds. The rate ceiling on 1-3 year NRE(E)RA deposit will be Libor plus 100 bps. The higher FCNR(B), NR(E)RA deposit rates are effective immediately.

 

On October 10, RBI had cut the cash reserve ratio, or CRR, by 150 basis points to 7.5% to infuse liquidity into the system. This included a 50 bps CRR cut on October 6.The cut injected liquidity to the tune of Rs 60,000 crore into the system.

After Congress president Sonia Gandhi's rally at Rae Bareli was scuttled, Congress on Wednesday threatened that its workers would prevent Uttar Pradesh Chief Minister Mayawati's Bharat bhraman if she did not desist from "vendetta" politics.

On the other hand,Republican John McCain -- needing a dramatic turnaround to his waning White House hopes -- has vowed to unmask his rival Barack Obama as a radical sympathizer at their third and final debate in New York later Wednesday.

In Inida,Jet Airways on Wednesday said that 1,900 of the 13,000 staff were being given notices of seperation. Yesterday, Jet had announced that 850 cabin crew would be given the pink slip. Jet Airways chief Naresh Goyal on Wednesday made a call for consolidation in the Indian aviation industry, even as Civil Aviation Minister Praful Patel described the current downturn as the biggest that the Indian industry has ever faced. Goyal’s remarks came two days after Jet Airways and Vijay Mallya’s Kingfisher Airlines entered into an operational alliance to cut down on surging costs. Jet followed up on the development by laying off 1900 employees across all its operations. Goyal stressed that the layoff was necessary.

In the backdrop of the global financial crisis, West Bengal Finance Minister Asim Dasgupta Wednesday urged people not to keep their money in foreign banks and even in banks having significant foreign equity holdings.
 
 
”Please, don’t put money in foreign banks and even in Indian banks having significant holding of equity by foreign institutions, whose names I would not like to take,” Dasgupta said while inaugurating a branch of a rural bank at Barasat near Kolkata.

“Your money is safe only in public sector banks, cooperative banks and regional rural banks,” the minister said.

His statements came a day after the central committee of the Communist Party of India-Marxist (CPI-M) adopted a resolution, urging the United Progressive Alliance (UPA) government to take lessons from the US financial crisis.

“The CPI-M has consistently maintained that the finance-driven imperialist globalisation is unsustainable. The UPA government has been pushing for the very same policies, which have spelt ruin for the financial system in the US and many European countries,” it said.

“The government has been assiduously pushing for financial sector liberalisation in the past four years. The manner in which the US is trying to solve the crisis by bailing out the investment bankers and financers at the expense of the taxpayers will only worsen the situation,” it added.

Close on the heels of major liquidity infusions by central banks around the world, the Reserve Bank of India, on Wednesday, has decided to provide Rs 25,000 crores for lending to financial institutions. Out of this Rs 7,500 crores will be provided to commercial banks and Rs 17,500 crores to Nabard.

Announcing the move, Finance Minister P Chidambaram said the governmnet will provide farm loan waiver of Rs 250 billion to banks immediately.

The amount was being issued against the waiver of farm loans worth an estimated Rs 71,000 crore to bailout nearly four million small and marginal farmers across the country, he said.

He said the earlier limit on external commercial borrowings (ECB), which helps the corporate sector to access the financial markets overseas, was also being doubled to $6 billion.

Whose Money is this, MR Chidambarm? what return would get the nation, the tax Payers?

Latest US and European Rescue Plans fail miserably to tame the BEAR TIME in Global Markets! President Bush, British Prime Minister Gordon Brown, Markel, Sarkozy ..the cluster of Clowns, make the Capitalist System most Ridiculous in their speeches of complete surrender to global Hegemony intersests.Markets head Low despite short Covering and October is bound to see many more Down Slides!Even if EMs Establise, Currency Crunch remains and Cntral Rule by FED Banks bound to be failure despite Thousands of Corore pumpmping in Money Machine crushing the Masses worldwide! Extra Ordinary Volatile is the Global Market and it is Complete MESS! Whatever correction comes into the way, the DAMAGE is already done!

Omnipotent Americanism proves to the best Amusement in the Global Carnival reality show of Post Modern manusmriti and apartheid!

Gordon Brown declares,`Current global financial crisis roots in united states of America!’

Dear Prime Minister! Tell us why the rest of the world including United Kingdom of Britain should pay for this?

Brown, of course, told the Ultimate Truth,`Even in seventies, we used to have National Economies and European economy! Now  we have the GLOBAL ECONOMY but NO national economy, NO regional Economy!’

Who happens to be responsible for this most irresponsible act worldwide?

Gordon Brown has urged the European Union to follow through on current financial crisis measures by rebuilding global economic institutions, such as the International Monetary Fund and World Bank, on the same scale as after World War Two.

The Prime Minister, who is holding bilateral talks with European leaders and officials ahead of an EU summit later this afternoon, demanded a "stage two" response to tackle the roots of the financial crisis.

The current £1.7 trillion European action plan was modelled on Mr Brown's blueprint to save British banks through recapitalisation, guaranteeing inter-bank lending and injecting cash into frozen markets.

But his new message - unpalatable to some EU leaders - is that future financial reforms must be global rather than European. He also gave no signal that Britain would soften its longstanding hostility to more European regulation.

 

But those are not the speeches nor the quotes and unquotes which irritate the Global Psyche most. Newsflow remains very poor despite worldwide FDI and misinformation campaign, 3g 4g technologies, and Information Explosion!concrete datas and facts, informations go against Globalisation, Free market and capitalism!

US government buys shares of bank! Nine Major Banks agree to sell shares!

Nine big banks including Citigroup, JPMorgan Chase and Goldman Sachs agreed to give the US government equity stakes in exchange for new capital, under the first programme of its kind in the United States since the Great Depression, officials said.
US President George Bush today announced that his government would buy equity stakes in country's banks at a cost of 250 billion dollars as part of its mega rescue package for the financial sector.
This unprecedented move in US history would enable healthy institutions help overcome the crisis in the country.

After Bush's announcement, US Treasury Secretary Henry Paulson without naming the entities said nine large financial institutions have already agreed to participate in the program and would sell preferred shares to the government.

"These are healthy institutions, and they have taken this step for the good of the US economy. As these healthy institutions increase their capital base, they will be able to increase their funding to US consumers and businesses," the Secretary said in a statement.

On the much-talked about restrictions on executive pay of financial entities participating in the bailout package, Paulson said, "Institutions that sell shares to the government will accept restrictions on executive compensation, including a clawback provision and a ban on golden parachutes during the period that Treasury holds equity issued through this program." Paulson said the 250 billion-dollar plan is to make capital available on attractive terms to banks and thrifts, which in turn would help in injecting credit to the economy.

"From the USD 700 billion financial rescue package, Treasury will make USD 250 billion in capital available to US financial institutions in the form of preferred stock," the Secretary said in a statement.

In Asia, Japan and Korea, most industrialised, promise Unlimited Dollar supply!

Greatest Free Market Hub HONGKONG guarantees Bank Deposits.

It is, no doubt, Complete Calamity Tsunami against Free Market, Globalisation and capitalism. Ironically, Marxists and black Untouchables, Indigenous communities and aboriginal tribes and minorities are never united in resistance to thow out this bloody BaASTARD World Order! Indian Marxists specially have lost Faith and Vision and have transformed themselves into the best agencies of Capitalism. CPIM GS Prakash Karat and band as well as BRAND BUDDHA lead this antipeople Bunch most unwanted!

Consequences of the international economic rescue effort will not be felt for several months.  But African countries, which so far have only been indirectly shaken by the financial institution collapse, stand to lose long-term pledges of aid, which many international groups have fought long and hard to obtain. Jubilee USA Network director Neil Watkins heads an alliance of groups seeking to erase poverty and eliminate crushing debts in Africa and other developing regions. He says the pessimistic outlook can only be tempered by a resolve from the world community to live up to its pledges of the past several years to continue investing and promoting Africa’s economic growth.

- The global financial crisis threatens to worsen the plight of the world's hungry, particularly if rich nations renege on their pledges of aid, a U.N. agency said on Wednesday.

The world's wealthiest nations pledged billions of dollars at a U.N. food summit in June, following a spike in commodities prices that tipped 75 million more people into hunger last year.

But the U.N. Food and Agriculture Organisation (FAO) said very little of promised aid had been received so far, even though the outlook had darkened for the world's poorest.

"Borrowing, bank lending, official development aid, foreign direct investment and workers' remittances - all may be compromised by a deepening financial crisis," said FAO Director-General Jacques Diouf.

He also warned governments against introducing protectionist trade measures.

The FAO estimates the number of the world's hungry rose to about 925 million people by the end of 2007, up from 850 million before the 2007-2008 spike in food prices that sparked riots in some affected nations.

Food prices have since come off their highs, partly because of the slowing world economy. But FAO noted that this could prompt farmers to cut back plantings next year, setting up a return of record food prices in 2009.

The FAO said this would be "a catastrophe for millions who by then would be left with little money and no credit".

"Last year it was the pan. Next year could be the fire," Diouf said in a statement.

A World Bank report last week named 28 countries in Africa, Asia and the Middle East facing financial strains due to high food and fuel costs and now from a cascading credit crisis.

It warned higher food and fuel prices could push 100 million people deeper into poverty.

Diouf urged rich nations to honour their commitments of aid.

"The great uncertainty now enveloping international markets and the threat of global recession may tempt countries towards protectionism and towards reassessing their commitments to international development aid," Diouf said.

"It would be unfortunate if this were to be the case and the recently mobilized political will towards enhanced international support for developing country agriculture were to evaporate."

In India, the Reserve Bank and government on Wednesday agreed to take fresh measures immediately to infuse liquidity into the system, says Finance M
inister P Chidambaram.

"Government and RBI are agreed on the measures that have to be taken immediately," he told reporters here.

RBI Governor D Subbarao, the minister said, will work out the details of the measures agreed upon between the government and the central bank.

"I expect to be able to make a statement later in the afternoon," Chidambaram said.

He said Prime Minister Manmohan Singh yesterday reviewed the financial situation with particular reference to the liquidity position at a meeting with the RBI Governor, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia and senior officials of the ministry.

The developments and measures taken by other countries were also reviewed, the Finance Minister said.

Meanwhile, the Bombay Stock Exchange benchmark index Sensex was down by 345 points or three per cent in early trade.
 Prime Minister Manmohan Singh today reviewed the impact of the global financial crisis on the Indian economy and the steps taken hitherto
with key policy makers, including Finance Minister P Chidambaram and RBI Governor D Subbarao.

Planning Commission Deputy Chairman Montek Singh Ahluwalia and Finance Secretary Arun Ramanathan were also present at the meeting Singh at his residence here late this evening.

Earlier, Subbarao met Chidambaram to explore the options for handling the liquidity pressure and said: "We have reviewed the entire situation. The situation is quite comfortable.

"We believe everything is under control. I cannot tell you what measure are going to come. We have done everything that had to be done."

Apart from cutting the mandatory cash deposit requirements for banks by 1.5 per cent last week, RBI has also imparted an additional Rs 20,000 crore for mutual fund industry to enable it handle redemption pressure.

The collective efforts of the government and the RBI have stemmed the plunge in the stock markets, which for the second successive day ended on a positive note in tune with the trend in American, European and east Asian bourses.

The economy checked into the hospital suffering from a serious housing crisis. As doctors dealing with the patient administered treatments, other more troubling ailments appeared.

Now it is vital to focus on the liquidity-crisis fever in a comprehensive manner to prevent the disease from killing the patient. So far the treatments have been too narrow. Failure to deal with the fundamental asset issue will mean the patient might stay in the hospital for many years.

Waning confidence in the banking and payment systems might lead to the type of money destruction that was a cause of the Great Depression. The policy moves by the government — the purchase of troubled assets, the injection of capital into large banks and the direct purchase of commercial paper by the Federal Reserve — don’t address the issue of confidence that money put in a bank or money-market fund is safe.

This lack of confidence is forcing even the healthiest banks to hoard liquidity and cut back lending so they can be ready to respond to consumer and business demand for cash. Until this issue is addressed, every policy effort, such as buying certain companies’ commercial paper, will create the unintended consequence of drying up liquidity in another area.

Further, at a time when confidence and transparency from our government are critical, ad-hoc policies lead to questions of why some institutions are favored and others aren’t. The best way to fix the real issue is to declare a 180-day period during which the federal government will provide unlimited guarantees to all registered money-market funds and bank deposits. So called too-big-to-fail banks, money-market funds and other institutions shouldn’t be given any preference.

During this period the government must examine every money-market fund and bank. Those funds deemed to have excessive risk would be barred from accepting new funds and would be liquidated over a period of six months or so as their assets mature. Fundholders would be assured of receiving their entire principal by the Treasury. The Federal Deposit Insurance would use this same 180-day period to take a serious look at the riskiest banks.

The banks the FDIC determines won’t survive should be placed in conservatorship or receivership. Since all deposits would be guaranteed, the payment system could operate freely and no money would be destroyed. The key is to end doubts around the banking system. The FDIC needs to “shoot the wounded” quickly rather than expose public confidence to a drip-by-drip erosion as banks are closed over an extended period.

It is important that even our largest banks go through the process so that institutions can trade with each other with confidence. Some banks judged to be fundamentally healthy but in need of additional capital should be eligible for an infusion of cash in exchange for preferred stock and warrants under the Troubled Asset Relief Programme. The key is that at the end of the process, there are no question-mark banks.

After 180 days, federal insurance would no longer apply to money-market mutual funds, and bank-deposit insurance would revert to the $100,000 level. Market discipline could rationally take over. Under the plan, at the end of the 180 days the public could feel confident that all remaining institutions are credit-worthy, safe and sound.

"The panic may have been removed from the market, and financial system meltdown may have be averted by the compendium of measures, but the outlook for earnings ... and the global economy continues to look grim," said Daragh Maher, deputy Head of global FX strategy at Calyon.

Fuelling those concerns was a disappointing outlook from PepsiCo Inc, especially given that soft drink- and snack-makers are usually seen as holding up in tough economic times.

European stocks fell in early trade, with the FTSEurofirst 300 index shedding 2 percent, while Germany's DAX and Britain's FTSE both shed more than 2 per cent.

MSCI's main world stock index was down about 1 percent, as the two-day rebound from a five-year low fizzled.

"After the colossal gains achieved at the start of this week, it would seem that the hangover has kicked in and investors have sobered to the reality that recession is here," said Andrew Turnbull, senior sales manager at ODL Securities.

MSCI's measure of Asian stock markets excluding Japan slid 3.4 percent. Japan's Nikkei, however, rose 1.1 per cent after spending most of the session in negative territory.

A recent slew of negative euro zone economic indicators including Tuesday's data showing a bigger-than-expected fall in German investor sentiment about the outlook for Europe's largest economy were starting to bite.

Anyone looking for relief is likely to be disappointed with US.retail sales data due later in the session expected to show a decline for a third straight month. Forecasts centred on a 0.7 per cent fall.

Still, measures by governments and central banks aimed at restoring confidence between banks appeared to be helping to kick-start the healing process in money markets, which had literally gummed up after the collapse of Lehman Brothers last month.

Overnight dollar interbank rates were indicated at 1-1.5 per cent, slightly below early Tuesday's level, although three-month dollar rates remained around early Tuesday levels, indicated in wider 3.5-5.4 per cent range.

"The rescue packages around the world have laid the foundation for market confidence to return. However, experience has shown that confidence recovers only slowly," said Commerzbank analyst Antje Praefcke.

The yen benefited as investors turned risk averse. The dollar fell 0.9 per cent to 101.29 yen, while the euro lost 1.2 per cent to 137.70 yen.

Weakness in equity markets helped fuel demand for government bonds, driving yields lower. The euro zone 10-year bond yield slipped 3.5 basis points to 4.085 per cent, while the US 10-year yield eased 7.2 basis points to 4.013 per cent.

Meanwhile, US crude was little changed at $78.70 but not far off the one-year low of $77.09 a barrel plumbed on Friday, weighed by worries that a global recession would hurt demand.

Demand for gold, however, was firm, helping push the precious metal up more than 1 per cent to $846.

RBI cuts CRR by 100 basis points
The Reserve Bank of India on Wednesday cut the Cash Reserve Ratio (CRR) further by 100 basis points to 6.5 per cent of NDTL with effect from the current reporting fortnight that began on October 11, 2008. This measure will release additional liquidity into the system of the order of Rs.40,000 crore.

On Tuesday, October 14, 2008, the RBI decided to conduct a special 14 day Repo at 9 per cent per annum for a notified amount of Rs 20,000 crore with a view to enabling banks to meet the liquidity requirements of mutual funds. Rs 3,500 crore of this facility was utilised by banks yesterday.

Further, the Reserve Bank announced this morning that this 14 day repo facility will now be conducted every day until further notice upto a cumulative amount of Rs 20,000 crore for the same purpose. Banks obtain liquidity from the Reserve Bank under the Liquidity Adjustment Facility (LAF) against the collateral of eligible securities that are in excess of their prescribed Statutory Liquidity Ratio (SLR).

It has been decided, purely as a temporary measure, that banks may avail of additional liquidity support exclusively for the purpose of meeting the liquidity requirements of mutual funds to the extent of up to 0.5 per cent of their NDTL. This additional liquidity support will terminate 14 days from the closure of this special term repo facility announced on October 14, 2008. This accommodation will be in addition to the temporary measure announced on September 16, 2008 permitting banks to avail of additional liquidity support to the extent of up to 1 per cent of their NDTL.

RBI instituted a mechanism of Special Market Operations (SMO) for public sector oil marketing companies in June-July 2008 taking into account the extraordinary situation then prevailing in the money and forex markets. RBI will institute a similar facility when oil bonds become available.

Under the Agricultural Debt Waiver and Debt Relief Scheme Government had agreed to provide to commercial banks, RRBs and co-operative credit institutions a sum of Rs.25,000 crore as the first instalment. At the request of the Government, RBI has agreed to provide the sum to the lending institutions immediately. This liquidity support will be provided by the Reserve Bank of India under Section 17(3b) and Section 17(4E) of RBI Act to scheduled banks and NABARD respectively.

African finance ministers blame global financial crisis on IMF

African ministers of finance have said that the International Monetary Fund must take part of the blame for the lapses that led to the ongoing global financial turmoil.

The ministers also said at the ongoing World Bank/International Monetary Fund autumn meetings in Washington, DC, United States, that a common currency was not an immediate need in Africa.

The Acting Kenyan Minister of Finance, Mr. John Michuki, and the Secretary of State for Finance and Economic Affairs, The Gambia, Mr. Mousa Balla-Gaye, spoke for their colleagues at the autumn meetings on Saturday.

Michuki, who spoke on the global financial crisis, argued that the IMF failed to apply surveillance mechanism that should maintain discipline in markets and institutions in some of its member nations.

He said the Bretton Wood institution owed the world an explanation for the current crisis since it was the custodian of proper markets.

The minister said, “Looking forward, there is this global financial crisis that some of us do not believe has come that suddenly because it is not possible to disorganise the world financially and economically within a matter of hours.

“On the political front, the world imposes sanctions on countries that look ‘delinquent’ I deliberately used the world delinquent. Is there any more serious issue in the world than we are experiencing?

“Who is going to compensate the innocent countries that will likely suffer the debacle that will follow this crisis? Is there any more serious issues than what we are experiencing? We should go home with the proper explanations and answers so that we can brief our people.”

Michuki said that since the global financial crisis did not have an “African origin, ”African nations needed to understand it first before they could decide on how to confront it.

On his part, Bala-Gaye said Africa must first be able to produce adequate goods and services that would engender growth before talking about a common currency.

Acknowledging that the current crisis was a lesson for African countries to be self-reliant, he explained that trade is the basis for a single currency.

“If you can’t develop trade, a single currency will serve little purpose,” the minister said.

The ministers argued that Africa had remained at the mercy of developed economies because of its dependence on food imports.

West African countries had been working towards achieving monetary and currency integration by introducing a common currency throughout the West African Monetary Zone.

Experts had, however, attributed the delay in the adoption of the common currency regime to bottlenecks in the convergence criteria – monetary and fiscal policy convergence by individual countries as a result of the credibility and stability requirements of the introduced currency.

For the common currency to be credible and stable, it should be guided by solid, predictable and sustained economic performance by participating countries, they said.

UN chief alarmed by impact of crisis on poor countries
UN chief Ban Ki-moon expressed alarm on Monday about the impact of the global financial crisis on poor nations and called for urgent multilateral action in support of the UN’s anti-poverty agenda.

“I am deeply concerned about the impact of this crisis on the developing world, particularly on the poorest of the poor and the serious setback this is likely to have on efforts to meet major goals,” he said in a statement.

Ban added that while initiatives by the World Bank and the IMF to provide new emergency liquidity provisioning to poor nations could help them counteract some of the effects of the crisis, “more needs to be done.”

On Sunday, World Bank president Robert Zoellick said the financial crisis, the worst since the 1929 market crash, underscored the need for coordinated action to build a better multilateral system.

Zoellick announced that the International Finance Corporation, the World Bank’s private sector lending arm, was exploring the possibility of a fund to help recapitalize banks in the developing world.

Experts say poorer countries could be hit twice by the crisis — finding it more difficult to get access to funding and as their exports fall because the crisis undercuts demand.

With donor aid programs under pressure during the financial crisis, the World Bank estimates that up to 100 million people are at risk of falling into poverty because of higher food and energy prices.

In his statement on Monday, the UN secretary general also stressed the need “to consider urgent multilateral action to alleviate the impact of recent events on the development agenda of the organization.”

He singled out the implementation of anti-poverty Millennium Development Goals (MDGs) by a 2015 deadline, the food and energy crises as well as the challenges of climate change.

Last month, a UN summit on how to reduce global poverty ended with pledges from donors of roughly US$16 billion. But the financial turmoil has raised fears that the promises may not be kept.

Ban noted that the finance for development conference scheduled for next month in Doha “provides us an important opportunity to review developments and to ensure that the current financial difficulties do not undermine commitments already undertaken to provide more aid and other financial resources for the achievement” of the MDGs.

The Doha Round of trade liberalization talks, orchestrated by the WTO, was launched in the Qatari capital seven years ago but has been deadlocked because of disputes between the rich developed world and poorer developing nations on trade in farm and industrial products.

The MDGs include eradicating extreme poverty and hunger, achieving universal primary education, promoting gender equality, reducing child mortality, improving maternal health, combating diseases such as HIV/AIDS, ensuring environmental sustainability and creating global partnerships for development.
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World recession fears mount after financial crisis!!

Fears grew on Wednesday that the financial crisis will mutate into a worldwide recession with leaders calling for new global action against a slowdown.

As EU leaders gathered for a summit devoted to the financial turmoil, a top US central bank official said the United States appeared to be already in recession.

Janet Yellen, president of the San Francisco Federal Reserve, said "virtually every major sector of the economy has been hit by the financial shock."

She said recent data indicated there was "essentially no growth at all" in the world's biggest economy and "growth in the fourth quarter appears to be weaker yet, with an outright contraction quite likely."

Japan's Prime Minister Taro Aso has already said he has "huge fears" for the future of the second biggest economy and German Chancellor Angela Merkel said the third economic giant faces a major test of its strength.

"We must prepare ourselves for a weakening of growth in Germany. But I'm convinced that the slowdown will not prove a long-lasting one," Merkel said as she urged the German parliament to pass a 480-billion-euro (655-billion-dollar) bank rescue package.

"Germany is strong. But Germany is going to go through a difficult period," she warned.

Merkel said the Group of Eight world industrial powers would hold a special summit on the crisis before the end of the year with leading developing nations also present.

In Brussels, British Prime Minister Gordon Brown urged fellow EU leaders to unite against the underlying problems behind the financial crisis.

The first phase of the crisis has been ended with the stabilisation of the financial system, Brown said. "I believe we must now move to stage two ... to make sure that problems that develop in financial systems, problems we know originated in America, do not occur again."

Brown called for a complete overhaul of global financial regulations and institutions, such as the International Monetary Fund (IMF), as the world's economy was now far more interdependent than ever before.

"It becomes obvious now that we are dealing with global financial markets... what we do not have is anything other than national or regional supervision," he said.

Governments announced more measures Wednesday to douse the financial storm.

-- The European Commission proposed that minimum state guarantees on bank deposits should be lifted within one year to 100,000 euros (136,000 dollars) from 20,000 euros currently in a new bid to strengthen confidence.

-- Greece announced government cash injections and loan guarantees of 28 billion euros (38.6 billion dollars) for banks.

-- Spanish Prime Minister Jose Luis Rodriguez Zapatero said mergers are likely in the country's banking sector, which has so far escaped the worst of the crisis.

-- Iceland's central bank cut its key interest rate by 3.5 percentage points to 12 percent in a move hurried forward because of the storm that has hit the country's banks and left the country fighting national bankruptcy.

European Union nations have already committed more than 1.8 trillion euros (2.4 billion dollars) to fighting the crisis by buying bank shares and providing loan guarantees to keep credit markets moving.

The United States has a 700 billion dollar rescue plan and the administration announced Tuesday that 250 billion dollars from that would be used to take stakes in nine major banks.

"This is an essential short-term measure to ensure the viability of America's banking system," President George W. Bush said. Acknowledging misgivings over the move, Bush said the government intervention was "not intended to take over the free market, but to preserve it."

Recession is typically defined as two consecutive quarters of negative growth. The US economy grew 2.8 percent in the second quarter, and third-quarter data are not expected until the end of October.

Worries about a worldwide slowdown and the crisis in the money markets have given global stock markets a battering this year. While there have been wild swings, all the main markets have suffered significant losses in 2008.

Share markets fell Wednesday though Tokyo was a bright spot, closing up 1.06 percent after Tuesday's record 14 percent surge. But Hong Kong closed down 5.0 percent and in midday trade, London slid 2.95 percent, Frankfurt lost 2.07 percent and Paris was down by 2.18.

"After the early burst of euphoria on stock markets over the rescue packages launched worldwide... the dust slowly seems to be settling and the last few days' roller coaster is being followed by a kind of morning-after sentiment," said Commerzbank analyst Antje Praefcke.

Govt provides Rs 25K cr to financial institutions

1,900 staff are being given notice of separation: Jet
15 Oct, 2008, 1748 hrs IST, ECONOMICTIMES.COM
http://economictimes.indiatimes.com/News/News_By_Industry/Jobs/1900_staff_are_being_given_notice_of_separation_Jet/articleshow/3599410.cms
MUMBAI: Jet Airways on Wednesday said that 1,900 of the 13,000 staff were being given notices of seperation. Yesterday, Jet had announced that 850 cabin crew would be given the pink slip.

Jet and Kingfisher, along with their acquired airlines, have a combined strength of 19,000 employees, a fleet of 189 aircraft serving 1,009 daily flights, of which 82 are on international routes.

According to industry sources, this was the third time in recent months that Jet had cut its workforce. Some 1,200 employees were given the pink slip after the carrier acquired Air Sahara last year followed by a separation pact with another 700 a couple of months ago.

Kingfisher, too, had initiated similar moves, albeit at a much truncated level.

The tremors brought about by the worst downturn yet in the airline industry were felt on Tuesday itself, hours before the first Jet Airways flight of the day took off. Said a crew member, “About three and a half hours before a flight, the office transport reaches your home to pick you up. In the wee hours of Tuesday morning, hundreds of cabin crew members in Mumbai who were rostered for early morning flights waited in their uniforms to be picked up.’’ When the worried flight attendants started calling up the airline dispatch office they were told they had been derostered till further notice.
Vijay Mallya on Tuesday refused to answer questions on who-whether he or Jet owner Naresh Goyalhad initiated the dialogue leading to their ‘historic’ alliance. He also told TOI he would not like to comment on whether Sharad Pawar or Praful Patel had a role to play. “It might add colour to your copy but I have no desire to land myself in trouble,’’ he said. He did say Kingfisher would save nearly Rs 1,500 cr a year.

Low-cost flying is truly over now after this operational alliance. Both Mallya and Goyal have in the past scoffed at the concept of LCCs in India as all carriers have to pay the same charges. Calling LCCs low-fare airlines , Jet and Kingfisher had raised fares of the LCCs they had taken over-Sahara (now JetLite) and Air Deccan (now Kingfisher Red).

Aravind Adiga: Debut Novelist Wins Man Booker Prize
http://news.newamericamedia.org/news/view_article.html?article_id=fdba0c297d97c442677b325d4921c38d

How does a booming India look from the point of view of a have-not? Aravind Adiga’s The White Tiger is the story of a self-professed entrepreneur in India. Except he is a murderer. Balram Halwai has murdered his employer, Mr. Ashok and is now on the run. The White Tiger is both his story and the story of the faultlines in the “new India.” It just won Adiga the $100,000 Man Booker Prize. He spoke with New America Media editor Sandip Roy last month in Mumbai after the book was shortlisted for the prize.

MUMBAI, India. The constant talk these days is of the glitzy new India with 8 percent growth rate and then also the "real" India that is being left out of it. Where do you think Balram Halwai your main character, fits in this?

First of all both Indias are real. Neither is false. The past few years have created a spectacular amount of wealth in the middle class. And that’s real. But the other India of 400 million people is also real. Many people are trying to make the transition from the poor India to the shining India and Balram Halwai, my protagonist is one of them. He grows up in a village in Gaya in Bihar, one of India's poorest states. And like so many thousands of others he has made the trip to Delhi in search of a better life.

So what's interesting about these two Indias, this successful India and the India of the darkness, are the people trying to make the jump from one to the other. Making the transition is very difficult because those in the poorer India don't have the basics of education, healthcare or employment to make the jump. You are leaping by yourself without any help from anyone else from the 19th century to the 21st century.

In India you see this plethora of how-to-succeed books. Every pavement bookseller has them. So this drive to succeed is not just limited to those who went abroad to study. It's much more all-pervasive.

The drive and the desire to succeed is all pervasive. But the question is the capacity. Everyone has this ideal. But that's both great and troubling because I don't think many of the poorer people have the basic foundation that they need to actually achieve that success. A basic requirement of the entrepreneur today is education and education in English. And if you don't have this, as many of the poorer Indians don't, you'll find quickly enough there's not a whole lot you can do. And once your dreams get thwarted that leads to frustration and potentially to social disruption. That's the danger to me that we have of the myth of entrepreneurial success being sent out to all India, which is great and stimulating and getting all sections of society restless. But we haven't provided the foundations to large numbers of Indians to make that dream into reality. What happens when these poor Indians realize its not that easy to succeed?

Well hopefully what happens is not that you kill your employer as Balram Halwai does. The image of the loyal family servant, who sees all and knows all, but serves unflinchingly, is hallowed in India. But given this yawning gap between classes isn't it surprising more servants have not killed their masters?

The book is called The White Tiger which is meant to be a metaphor for an exceptional individual. My character keeps reflecting on the fact that more servants don't kill their masters. The very fact that he does makes him stand out. I am using it as a thought experiment, this image of the white tiger, the servant who takes on the master to explore the bigger question.

Middle class Indians are paranoid about crime but the data suggests there is very little crime in India. South Africa with 40 million people has more crime than India with 1.1 billion. It's extraordinary. So I got to thinking what keeps servants honest and is there any danger the system could break down.

The White Tiger is an exploration of what are the social conditions? (It) ultimately comes down to India's strong sense of family, clan and caste, that keeps servants tied to their masters, even when they have the opportunity on a daily basis to rob and to do worse, to their masters. The servant's sense of identity, being tied into his village, his family, is what keeps him honest. While my character Balram is very unusual, it's possible that things are starting to change in India and things may come to a stage where my character may be more common unless things change and conditions improve for the poor.

Would you say there is an undercurrent of resentment that India's new elite ignores at it's own peril, like the French aristocrats from 200 years ago?

It's not just an undercurrent. You have this gigantic Maoist rebellion in India. When I was a boy, there was a (Maoist) rebellion in India that seemed to be dying out. One of the surprising things was that in the mid-1990s even as the great economic boom began, at a time when Communism vanished from most parts of the world, it took on a second birth in India and has been spreading ever since. So in large parts of the country the government cannot claim it actually exercises full control. After dark you can't go through certain parts of India.

A new kind of resentment is being born in India as I felt as I traveled across the country (writing) for Time magazine. The Indian media is focused on certain divides in the country like the religious divide between Hindus and Muslims, or caste divides. But there is a new, very primordial, class divide between people who feel they have and people who feel they have not. And it has to be acknowledged and addressed.

Why have you said this book is indebted to Ralph Ellison and James Baldwin?

Ralph Ellison wrote The Invisible Man right after the Second World War. It's a book that suggests the metaphor of invisibility as a way of understanding the African American experience of that time where the central character feels he is invisible just because the white people around him don't see him as a human being.

When I came back to India after a long stint in the United States, I was struck by how many invisible men are around us in India. When you are in a car in New Delhi, there is invariably a chauffeur. The person who owns the car is almost never driving it. And he conducts a conversation with you in the backseat in which he can discuss all kinds of things about his private life and there is another man in the car, the servant who can understand what is being said, but he's almost not there. He's part of the machinery and there are so many invisible men in India today.

There are three writers - Richard Wright, Ralph Ellison and James Baldwin, who dealt with race and class along with racial issues, and they form a template that can be moved onto India today. Our poor are almost invisible in a way that African Americans were invisible then. And also a lot of rich Indians think of the poor as a distinct race in a sense. The poor in India tend to be darker, leaner, physically different. The difference between the haves and have nots is almost a physical, corporeal, racial difference in India.

Has anyone ever come up to you at a party and said "You are so right. You just can't trust the servants these days."

There is an increasing anxiety about servants in India. People who have read my book and are from outside India ask me if servants are taking to crime. And I say you are asking the wrong question. You are focusing on the servants. What has changed is the masters are increasingly paranoid because they are the ones who realize that this can't continue. Paranoia is the first sign of a change that is to come.

I don’t think middle class Indians are fundamentally bad. I don't think they want to treat their servants badly. But if you have 7 or 8 people who are prepared to work for you for 100 dollars a month, why would you say no to that? The greatest luxury of all is to have human beings wait upon you. But even while doing that you can be conscious that the system is not good. Many middle class and rich Indians are happy to enjoy the system while it lasts. But many tell me they want things to change. I hope one of the things that comes across in the book is that the master, Mr. Ashok, the middle class person, is also in a sense entrapped by the system.

Ashok, the master, is not a bad man. He has come back from abroad, is fairly liberal and has twinges of conscience.

The middle class are aware things are not going well but when they are in trouble the system works to their advantage. When a middle class person commits a crime against a poorer person the system lets him get away with it. When he doesn't pay his taxes, the system lets him get away with a small bribe to the tax commissioner. Many middle class people are aware the system needs to be fixed. But while they are liberal they don't have the conviction to carry reform through.

The servant here is telling the story from his point of view. You never really get to hear the master's point of view. I didn't want an evil master or sentimental exploited servant. The poor in India are increasingly taking their destiny into their own hands. This does not mean they are doing things that are to their own benefit. They are voting in the wrong politicians such as supporting ultra-Communist rebellions. But they are increasingly agents of their own destiny.

When (you ask) servants what keeps them from taking their master's money and running, one of the responses you get is 'If I take the money, I'll have to leave my family and what kind of life would I have without my aunt and my uncle?' Their sense of self is still fixated on the family.

As the sense of thinking of yourself as an individual grows, one of the things that is likely to increase is the temptation to crime. The idea of cutting yourself off from your past and starting again becomes feasible. And it means you can be an entrepreneur or a criminal.

Following is text of the inaugural speech by the President of India, Smt. Pratibha Devisingh Patil, at the inauguration of the new CAG Office Building and the XXIVth Accountants General Conference on 14 October, 2008 at New Delhi:

“I am very happy to be here for the inauguration of both the 24th Conference of Accountants General, as well as the new office building of the Comptroller and Auditor General of India.

A person no less than the architect of the Constitution of our country, Dr. B.R. Ambedkar, visualized the CAG as one of the most important institutions in our democratic set up. As an impartial and independent evaluator of the functioning of the Government, its role was to infuse accountability in the governance framework. The institution of the CAG has had a distinguished history in India. Its role since independence in public financial accountability and probity have been widely recognized and appreciated.

Our national agenda seeks an inclusive and broad-based growth process so that its benefits, in terms of income and employment, are adequately shared by the poor, weaker and vulnerable sections of our society. As a stakeholder in development and good governance, the CAG should align its audit priorities with the current and strategic priorities of the Government. Schemes targeted for the welfare of specified groups of the country are being implemented such as the National Rural Health Mission, the Rural Employment Guarantee Programme and such others, which contribute to the improvement of human development indicates of our country. The success of these schemes, the efficiency of their delivery mechanisms and effective monitoring of the actual benefits reaching the targeted population is vital for progress of the country.
Auditors should partner the Government and pay specific heed to social sector programmes to ensure that the objectives of social justice and equity are met. I understand that the CAG is conducting performance audits of many development schemes. I would like it to assess the impact of these schemes on the living standard of the people. Similarly, issues relating to gender disparity, access to healthcare and quality education, rural development, employment and social security must be highlighted in audit reports. The aim of the audit should be to add value through constructive recommendations for improving performance and accountability. To take a case, I am told that the performance audit of education development of SCs and STs (2007) disclosed that the occupancy in hostels for girls was considerably high in comparison to capacity, indicating over-crowding in hostels and lack of adequate accommodation. For policy makers this is an important pointer for adopting a policy that encourages the setting up of more hostels for girls so that they can pursue their education.

One of the biggest challenges is the leakages in delivery systems. These need to be plugged. Sometimes, instead of real achievement on ground, there are “paper achievements”. Such tendencies can be curbed by and effective audit and monitoring system. Auditors should see how the outcome budgeting process, which has been adopted by the Government, where the effectiveness of the financial outlays is measured against specific outcomes and targets, can be made effective. Benchmarking and indices of performance to measure and assess quality of implementation can make this process result oriented. The Planning Commission has placed renewed emphasis on the role of the CAG and recommended the strengthening of its watchdog role. I am glad that this Conference of Accountants General will reflect on how best the institution of CAG can be strengthened so as to ensure transparency, accountability and probity in public finance, and better value for every rupee spent from the public exchequer.

The CAG reports must be submitted in a timely fashion and put up before Parliament so that their recommendations can be acted on and delays in implementation can be avoided. This Conference should seriously look at ways to reduce the time gap. The CAG could also look at maintaining a dialogue with the concerned Ministries during the implementation stage of projects and schemes. This could enable them to give their inputs at every stage for correcting aberrations in the implementation process.

The delay in implementation of the infrastructure projects is a matter of concern. There are projects that have time over-runs or remain incomplete or abandoned halfway, which deny the fruits of public investment to the nation. The CAG should appraise these projects and recommend the way forward in respect of these “blocked investments”. For this, it is necessary that auditors have the expertise for preparing reviews on issues relating to infrastructure projects.

Economic reforms over the last few years have resulted in an increasing role of the private sector as a partner with the Government in the development process. In view of the investment deficit in infrastructure, the Government has been involving private partners through Public-Private Partnership ventures. Such ventures are meant not only to bridge the investment gap, but also improve the quality of infrastructure services to meet international standards. This is an area where the CAG could make a difference and tell the Government whether value for money is being received, the delivery systems are functioning and whether the public is getting the envisaged high quality services. Good examples can be highlighted so that others can draw lessons from them.

Consistent with the philosophy of devolution of powers, the role of local self-government institutions was strengthened under constitutional amendments in 1993. Panchayati Raj Institutions and Urban Local Bodies are involved in the implementation and monitoring of development schemes, and maintenance of public assets at the level of Gram Panchayats and Gram Sabhas. The CAG can support these bodies in financial accountability by working out a simple framework for audit purposes. Today, there are 1.2 million women who have been elected to Panchayats and urban local bodies. Sometimes, it happens that due to lack of full comprehension of issues and illiteracy, these women are simply made to put their thumb impressions on documents and later they find themselves in difficult situations. The CAG should look at how these women can be acquainted with proper accounting procedures, by sensitizing local audit teams to contribute to capacity building.

The philosophy of auditing should respond to the changing times and should be reflected at the operational levels . As the Supreme Audit Institution of India, the CAG should keep in touch with new international methodologies and techniques of audit, so that if these are useful, they can be adopted appropriately to keep pace with the rapid socio-economic changes that are taking place in the country.

I am happy to note that the CAG’s team received the Prime Minister’s award for Excellence in Public Administration for its pioneering work in the field of Information Technology Auditing. This is very much in line with the country’s robust world-wide reputation in the field of Information Technology and the Government’s move towards e-facilitation in the provision of various public services.

Internationally also, the CAG has been playing a very significant role and is the External Auditor for UN agencies like World Health Organisation and Food and Agriculture Organisation.

I conclude by emphasizing that an office building is not just a concrete structure. It also personifies the spirit and strength of the organization it houses. I hope that the new office building will further the zeal and renew the commitment of the CAG and his institution towards redefining their role from ‘accountability officers’, to partners in the progress of the nation.

With these words, I inaugurate the new office building of the CAG of India and declare the 24th Conference of Accountants General Open.”

BSC/SS/GN-258/08

Millions are back in poverty trap due to crisis: Chidambaram

Washington:India on Monday warned that millions of people have sliped back into poverty because of the impact of global financial crisis, thereby severely denting efforts to eliminate impoverishment.

"After five years of high growth, the world economy is now on a sharply decelerating trend. More than 100 million people may have slipped back into poverty, and our efforts to eliminate poverty have suffered a setback by about seven years," Finance Minister P Chidambaram said in a statement at the Joint Annual Discussion of the Fund and the Bank.

Chidambaram is not attending this year's meeting to tackle the situation at home which may arise as a fallout of global financial crisis. His statement was read by Economic Affairs Secretary Ashok Chawla.

The Minister also said the crisis should be used an opportunity to quickly analyse what went wrong and take corrective action.

"Nevertheless, crises do give us an opportunity to quickly take stock of what went wrong and to act in a concerted fashion - not just to alleviate the immediate effects of the crisis but to create a better world especially for its poor," Chidambaram said.

Saying that recessionary trend has almost set in motion, the Minister said "the current crisis and the attempts at its resolution have raised a number of concerns.

"In developed countries, risk management and supervisory practices have lagged behind the pace of financial market innovations and new business models. I am afraid, there will be substantial fiscal costs with attendant implications," he added.

"The global food crisis is not a natural catastrophe. It is man-made. The fall in world cereal production, low food stock levels and crop diversion for the bio-fuel sector have played a major role," Chidambaram said in the statement.

"Add to these, the role of speculation and financialisation of commodities, and we have an unprecedented crisis. Some laudable international efforts are underway. However, we need urgent action on rationalising the biofuels policy.

"We should also quickly reach agreement on removal of agricultural subsidies; arrive at a successful conclusion of the Doha Development Round; and create the conditions for a more efficient and fair global food trade," the Minister said.

On the role of the International Monetary Fund in the wake of global financial crisis, he said, "The Funds principal mandate is to provide the global public good of financial stability. The Fund attempts to deliver this mandate through two key tasks assigned to it surveillance and providing the comfort of readily available financing to members.

"Separate efforts are already underway in several fora. It would be more appropriate to organize the fragmented efforts on a global scale under the inclusive umbrella of the IMF," he added.

As pointed out in his Statement to the Development Committee yesterday, he maintained that the ongoing Voice and Participation reform process at the Bank is a great opportunity to make a far reaching reform of its governance structures so that it continues to play a vital developmental role in global economic affairs.

Commenting on the need to address climate change, Chidambaram emphasised that issues relating to finance and technology were fundamental to the success of any global strategy to address climate change. New and additional resources that do not detract from the ODA must be provided by the developed countries.

"It is equally important to transfer clean, environment friendly technology to the developing countries at affordable prices," Chidambaram said.

He, however, assured that India is committed to evolve and pursue a strategy of environmentally sustainable development.

"We have formulated our National Action Plan on Climate Change and are committed to ensure that our per capita carbon emissions will never exceed the average of the per capita emissions of developed countries," the Minister said

CITU seeks grounding of Jet flights till it revokes sack order
15 Oct, 2008, 1620 hrs IST, PTI

NEW DELHI: Terming the dismissal of 1,000 employees by Jet Airways as "illegal and atrocious", CITU on Wednesday sought government's intervention in 
the matter and said the all flights of the company should be grounded pending withdrawal of the order.

In a statement, CITU said it was surprising that the company resorted to such an action without consulting the ministry or any other tri-partite machinery.

"These dismissals are illegal and unwarranted...The CITU demands that the Labour Ministry to direct the company for immediate withdrawal of the these dismissal orders.

"The CITU further demands that pending such withdrawal of dismissal orders, government issue orders for grounding all flights of Jet Airways," the statement said.

The CITU also said the decision was "atrocious and unheard" in the recent history of industrial relation in the country resorting to dismissal in a such a mass scale.

The Jet Airways has last night laid off up to 1,000 employees to rationalise its operations. The entire force of unconfirmed staff is being laid off on a 30-day compensation package, a top Jet Airways had official said.

FM takes more steps to combat crisis; inject additional cash
NEW DELHI: Continuing the fight against the ripple effects of the global financial meltdown, the Finance Minister, Mr P Chidambaram on Wednesday announced more steps to inject cash into the system and strengthen the banking sector, while doubling FIIs in vestment limit in the corporate bond market.

“At the request of government, RBI has agreed to provide a sum of Rs 25,000 crore to lending institutions immediately (against the farm debt waiver scheme),'' he said in a statement minutes after the stock market closed with losses of nearly 700 points, reversing the two-day positive trend.

While maintaining that Indian banks were well capitalised with a CRAR (capital and assets banks are required to maintain against risks) of more than 10 percent, he said:

“Nevertheless, the government has decided to provide the banks access to finance in order to raise CRAR that are now between 10-12 per cent to reach 12 per cent by a suitable date in future. The details of the capitalisation scheme are being worked out.' '

He pointed out CRARs of Indian banks were well above the BASEL norm of 8 per cent and RBI-stipulated norm of 9 percent.

In the face of the flight of capital from the stock markets, a major factor that led to a meltdown at the bourses, Chidambaram doubled the investment limit for FIIs in corporate bond market to $6 billion.

Following is the text of statement made by the Finance Minister, Mr P Chidambaram here on Friday:

“After identifying liquidity as the main problem that has constrained the financial system, a number of measures were taken between October 6, 2008 and today. These measures have infused considerable additional liquidity into the market. After extensiv e consultations, it is proposed to take the following additional measures:

(i) Under the Agricultural Debt Waiver and Debt Relief Scheme, Government had agreed to provide to the commercial banks, RRBs and cooperative credit institutions, a sum of Rs 25,000 crore as the first instalment. It is felt that this money should be prov ided immediately. Hence, at the request of Government, RBI has agreed to provide a sum of Rs 25,000 crore to the lending institutions immediately. The money will be made available to the commercial banks (Rs 7,500 crore) and to NABARD (Rs17,500 crore). There will be no requirement of providing collateral.

(ii) The limit of FII investment in corporate bonds will be raised from US$ 3 billion to US$ 6 billion. [SEBI has informed me that it will address any requests for relaxation in the proportion of investment in equity and debt required to be maintained by an FII under current regulations.]

(iii) Our banks are well capitalised. Their CRARs are well above the Basel norm of 8 per cent and the RBI stipulated norm of 9 per cent. No bank has a capital adequacy of less than 10 per cent. Nevertheless, Government has decided to provide the banks ac cess to finance in order to raise the CRAR of banks that are now between 10 to 12 per cent to reach the level of 12 per cent by a suitable date in the future. The details of the capitalisation scheme are being worked out.

(iv) RBI has already issued an advisory to the banks to enable smooth flow of credit to borrowers of term loans as well as working capital. Government is also issuing an advisory to public sector banks impressing upon the banks the need to: - ensure easy drawdown against sanctioned limits; - appraise, promptly, requests for enhancement of credit limits; and - continue to participate actively in the inter-bank call money market. I have been informed that RBI will release a statement shortly on certain measures that the RBI intends to take.'' - PTI

India logs high growth, but lags in prosperity
15 Oct, 2008, 0217 hrs IST, ET Bureau
 MUMBAI: Though India has recorded one of the highest economic growth rates in the world, it continues to lag in economic prosperity, according to a r
eport by UAE-based Legatum Institute.

Despite the recent gains from liberalisation and its relative independence from foreign aid, India still ranks poorly in promoting overall prosperity, according to the 2008 Legatum Prosperity Index released on Tuesday. Ranked 70th, India is comparatively lower than the other emerging markets giants of China, Brazil and Russia, but ranks higher than its neighbours Pakistan and Bangladesh which are ranked 85 and 89, respectively.

The Prosperity Index assesses 104 nations around the world by measuring 44 different indicators of both economic competitiveness and livability. The Index defines prosperity as a holistic combination of material wealth and life satisfaction, and measures how well nations are promoting both economic growth and quality of life.

According to the Legatum, the index indicates that India’s growth has been affected due to its lack of economic openness, primarily in areas of policies promoting trade freedom, foreign trade and investments. While India’s political system encourages political freedom, it has also obstructed progress towards free markets and open trade.

With regards to livability, India falls short on average income per person, poor health services and lack of freedom and opportunity for women despite strong beliefs in the social supporting system. Given the country’s booming economy, however, improvement in each of these areas is possible.

On economic competitiveness, China leads Brazil, Russia and India, but on measures of livability, India and Brazil are on par with and ahead of China and Russia. India may be lagging behind China in terms of economic growth or becoming a global manufacturing hub, but is equal in creating the greatest number of jobs among BRIC nations. The Index also indicates the significant under-employment in all four countries, especially among women in Brazil and India.

 

Fear is the word at IIMs too
15 Oct, 2008, 1240 hrs IST,Sreeradha D Basu , ET Bureau
http://economictimes.indiatimes.com/News/News_By_Industry/Jobs/Fear_is_the_word_at_IIMs_too/articleshow/3598170.cms

KOLKATA: The global financial crisis seems to be sparing no one—not even the golden kids at the premier Indian Institutes of Management (IIMs). As s
ummer placements loom around the corner and final placements come up in just a few months time, for IIM students there are apprehensions aplenty.

Fewer offers, lower salaries and lesser foreign jobs are just some of the problems these students are likely to face as they gear up for what IIM circles fear could be one of the worst years in terms of placements after the dot-com bust.

“We could be looking at a 15-20 % fall in the number of offers,” IIM Lucknow placement incharge Sushil Kumar said.

“The situation will not be that bad in the summers but overall, pay packages are likely to be affected, though everyone will get a job. We will definitely not be seeing the 18-20 % growth in highest salaries which we see every year,” Mr Kumar added.

The financial sector, of course, is set to be the worst hit. “Lehman Brothers has withdrawn pre-placement offers (PPOs) at most locations, except New York. Merrill Lynch is yet to confirm. PPOs offered by other investment banks still hold but we are apprehensive in case some are withdrawn later,” said IIM-C external relations secretary Debtosh Mishra.

According to Mr Mishra, pre placement offers are still coming in, but they have slowed down somewhat. However, he added that summer placements are likely to be impacted marginally as most companies have already come in for the pre-placement talks (PPTs).

While IIM circles are confident that they, of all b-schools , are likely to be least affected by the slowdown, they nonetheless anticipate a drop in the number of offers per student. They feel a lot of companies will be coming to campus to maintain the relationship they have with the institutes but will be hiring in smaller numbers.

“We are weighing more options this time around. Usually, we call about 70-80 of the 500-odd companies who want to come during the final placements. But this time, we plan to call around 100-110 ,” said IIM Kozhikode’s Sashank Malakapalli of corporate relations cell.

“As expected, students are a bit apprehensive seeing the current market scenario. But at the same time, everyone knows that recruiting might not be severely affected. However, there is still likely to be a 14-15 % drop in the number of offers per student as compared to the 2.7 offers per student we had last year. Foreign jobs too, might take a 20-30 % hit,” he said.

Falling prey

Premier b-schools may see 15-20 % fall in the number of offer in the coming placements.

Lehman Brothers has already withdrawn pre-placement offers (PPOs) at most locations.

This year, IIMs don’t expect 18-20 % growth in highest salaries seen every year.

Job offers in the financial sector, of course, will be the worst hit.

Summer placements, however, are likely to be impacted marginally as most companies have already come in for the pre-placement talks.

Govt provides Rs 25K cr to financial institutions
15 Oct, 2008, 1730 hrs IST, ECONOMICTIMES.COM
NEW DELHI: Close on the heels of major liquidity infusions by central banks around the world, the Reserve Bank of India, on Wednesday, has decided to provide Rs 25,000 crores for lending to financial institutions. Out of this Rs 7,500 crores will be provided to commercial banks and Rs 17,500 crores to Nabard.

Announcing the move, Finance Minister P Chidambaram said the governmnet will provide farm loan waiver of Rs 250 billion to banks immediately.

The amount was being issued against the waiver of farm loans worth an estimated Rs 71,000 crore to bailout nearly four million small and marginal farmers across the country, he said.

He said the earlier limit on external commercial borrowings (ECB), which helps the corporate sector to access the financial markets overseas, was also being doubled to $6 billion.

The fund will focus primarily on Japan, China, South Korea and India, with Australia and Southeast Asia of secondary consideration, the US bank said in a statement.

It represents Merrill's first fund dedicated to real estate investment in Asia.

``We see exceptional opportunities in Asian real estate over the medium and longer term,'' said Tim Grady, a managing director who heads commercial real estate in Asia.

Investors include pension funds, endowments, foundations and private individuals from around the world, the company said.

RBI cuts CRR by 100 basis points to 6.5 per cent.  
Realty players face moment of truth
13 Oct, 2008, 0032 hrs IST,Sanjeev Choudhary & Rajesh Unnikrishnan, ET Bureau
 http://economictimes.indiatimes.com/articleshow/3587641.cms
 EW DELHI/MUMBAI: The fresh wave of liquidity crunch is set to worsen problems for the Indian real estate sector. The sector is already facing a cash 
crunch on account of diminishing sales, expensive and largely unavailable credit and drying up of private equity funding. And if an economic downturn sets in as feared, many developers may go out of business and others may be forced to drastically cut prices.

Property consultancy firm Cushman & Wakefield estimates that real estate activity in the current fiscal is not likely to be more than half of what it was in the previous year. “If market fears actually come true, we will see a number of small and medium real estate players exiting the business,” says Cushman & Wakefield joint MD Sanjay Dutt.

“SBI has stopped overdraft facility and many banks are not disbursing sanctioned loans. All companies, including those from real estate, will face serious problems,” says DLF CFO Ramesh Sanka. He was also not very sanguine about the prospects of investors shifting their funds from the stock markets to the property market. “Where is the money? Money is getting eroded every day,” he said.

Developers feel liquidity is a must for companies to survive. “RBI had put in restrictions on banks on lending to real estate, fearing an asset bubble. We feel asset bubble is under control and it is time that RBI relaxed lending norms,” says Unitech MD Sanjay Chandra. Adds Mr Sanka: “Ultimately, RBI will have to release cash through relaxation in CRR and SLR.” Parsvnath Developers chairman Pradeep Jain hopes that the RBI will cut repo rate by 150-200 bps.

The biggest challenge for realty firms today is to boost demand for property. And many of them know price cuts are perhaps the only way to do that. “Consumer sentiments are down in the market. We have cut prices by around 20% last week in our two projects. We hope it will revive sales,” a senior executive of Mumbai-based Orbit Corporation said.
At the prestigious Maharashtra Chamber of Housing and Industry property fair, developers offered attractive discounts to woo buyers. While this did lead to the number of enquiries and bookings going up, they were much less compared to the demand that existed last year. “The gloomy news from across the world has made people apprehensive. That’s why, even festive season offers haven’t had great impact on them,” says Parsvnath’s Mr Jain.

Cushman & Wakefield’s Mr Dutt says prices have already corrected by 20-30% in most markets and may see a further correction of 20-30%. As sales refuse to pick up, developers are putting projects on hold and focusing only on a few projects mainly in metro cities, which may over a period of time generate sales.

Taking SEZ forward: Address crucial issues
14 Oct, 2008, 0411 hrs IST, ET Bureau
NEW DELHI: The policy of special economic zones (SEZs) has unravelled the persistent strife between the thin upper layer of Indian polity and the thi
ck lower stratum. On the one hand, state governments of all political hues are making all-out bids to net as many SEZs as possible and on the other, farmers and agriculture workers are raising their voice in protest. In a way, the society is witnessing a raging tug-of-war between the ‘elected masters’ at the top and the ‘foot-soldiers ’ at the base over the development paradigm called SEZ.

The Singur-Sanand bumpy ride of Nano offers an illustrative view of this disconnect. Basically what is being seen is the dichotomy between the lure of the promise of future prosperity being made by the industry leaders and the enduring power of emotions that farmers have invested in their farm lands.

After their messy exit from Singur, it took just three days for the Tatas to find a suitable parking-place for the Nano project in Sanand in Gujarat. In Singur, hundreds of farmers determinedly waged a battle to reject both the political might of the Left Front government and the credibility tag of the Tatas. In contrast, Sanand saw the jubilant chief minister Narendra Modi whisk the project away, drubbing other states. The episode was choreographed by India Inc as much as Ahmedabad’s ruling establishment.

Going by the conventional political wisdom, the state governments would have kept away from the project given the manner Singur presented—an opportunity for the main Opposition to rally farmers against the well-entrenched Left Front government just months ahead of Lok Sabha polls. Yet, Mr Ratan Tata has had to gloss over frantic invites by over a dozen chief ministers before settling for Mr Modi’s tempting offer.

Every chief minister, including the ‘winner’ Modi, the ‘loser’ Buddhadeb and the ‘rejected’ dozen, are united in their conviction that the Nano project, like many other SEZs, is nothing but a golden goose that will bring huge investments, jobs and prosperity in any state lucky to get it.

Undeterred by the bloody Nandigram-Singur episodes, which even made the Left government bend for the first time in over three decades, practically every state government is still working overtime to conceive and execute new SEZs as the panacea for the economic ills of their states. On their part, the investors are criss-crossing the country, looking for long stretches of land and conducive atmosphere for setting up SEZs.

But the enthusiastic governmentindustry tango for SEZs has also triggered a series of determined agitations by farmers in many parts. The simmering protests against the SEZs in Raigad in Maharashtra, Dadri in UP, the one against the pharma SEZ in Mehaboobnagar of AP, the anti-Posco agitation in Orissa, the farmers’ movements in Haryana’s Jhajjar and in Punjab’s Barnala region are among them.

The aftershocks of West Bengal’s Nandigram-Singur episodes have already led to division in Kerala’s Left Front government too, over formulating its SEZ policy. Despite the Nano-driven jubilant mood in Gujarat government, reports from the margins talk about tensions among the farmers of Sanand.

Though the die-hard supporters of SEZ and ‘development’ predict that Mamata Banerjee will be at the “receiving end of the public mood in West Bengal’ after the pullout of Tatas, they are yet to explain why the farmers in Singur and Nandigram defied the Left Front government’s organisational and administrative might to give Mamata her first success, in decades, in sustaining a protest movement.

The unique referendum conducted by the Maharashtra government among the farmers agitating against the proposed Reliance SEZ in Raigad should be seen as a reflection of the mood of the people at large, some thing Mamata seemed to have read correctly. Around 6,000 land-owning farmers of 20 odd villages of the region overwhelmingly voted against the proposed SEZ despite `handsome’ compensation being offered for acquiring lands. After the Raigad experiment, interestingly , no other state came forward with offers of similar ventures.

But then if there is an in-built economic and administrative merit in creating SEZs, it should be done by sincerely addressing the grievances of those who will be required to give up their land for the proposed islands of prosperity. If in the name of development, special laws can be enacted to offer the very ‘champions of free market’ , the ‘advocates of level-playing fields’ and ‘critics of any form of reservation and concessions’ , the platforms for SEZs, which will function as islands, insulated from ‘competition’ and ’protected’ by ‘special exemptions and rights’ , then those marginal farmers who are being asked to prepare the ground for SEZs also deserve a special treatment.

The farmers’ agitation against many SEZs demonstrate the mismatch between compensation offered for land-acquisition and the gains of promoters. Despite the periodical reports about how many farmers became millionaires overnight courtesy SEZ-driven land acquisition, the movement of resistance is only growing. It is this realisation that has prompted UPA chairperson Sonia Gandhi to tell farmers at a gathering last week that that government will bring a new legislation on land acquisition in the coming Parliament session to address the problems of SEZ-hit farmers.

To ensure a shared interest among industry, the political establishment and the farmers in promoting SEZs, the proposed legislation will have to address some basic issues crying for attention for a long time. To start with, the government will have to examine the relevance and rationale of the archaic land acquisition Act given the present-day realities , especially since the ongoing farmers’ agitations are also a direct revolt against the state’s unilateral right to acquire any land in the name of public interest.

The issue of what holds public interest will have to be settled in a democratic manner where all the concerned parties have equal rights to present their cases. The compensation for acquiring land needs urgent redefinition . First there has to be a well-laid out policy direction as to whether arable farmland can be taken over for industrial purposes and, whether acquisition of a particular land can be done without the majority support of the local people.

The rate of compensation is a matter of contention with farmers refusing to settle for the ‘market rates’ with demands growing for making them stake-holders in the SEZ by making provisions for employment and share in the future profits and value-addition .

Only a comprehensive law that offers a credible and fool-proof compensation pattern with a sensitive response to the socio-economic grievances and aspirations on the ground can help a smooth ride ahead for the SEZs. 

Paulson Plans to Invest in `Thousands' of U.S. Banks (Update3)

By Rebecca Christie and Robert Schmidt

 Oct. 14 (Bloomberg) -- Treasury Secretary Henry Paulson urged banks getting $250 billion of taxpayer funds to channel the money to customers quickly to halt a credit freeze that's threatening to bankrupt companies and hammer the job market.

``Leaving businesses and consumers without access to financing is totally unacceptable,'' Paulson said in Washington. He rolled out the emergency program after a crisis of confidence in the financial system last week spurred the biggest stock sell- off since 1933. Paulson told companies getting the government funds to ``deploy'' the money in loans.

The Treasury chief was forced to change tack from an initial plan to buy distressed assets from banks after the financial panic caused banks to hoard cash and send money market rates to record levels. In its biggest effort yet to halt the 14-month credit rout, officials will also offer guarantees on new bank debts and start purchasing commercial paper in two weeks.

Previously announced auctions to buy distressed securities will still proceed, said David Nason, the Treasury's assistant secretary for financial institutions. ``We're still planning to go forward,'' he said in an interview with Bloomberg Television.

This means the Treasury is likely to call on more of the $700 billion than the initial $250 billion allotment. Under the law, the administration is able to access the rest of the money through a series of congressional notifications.

Fragile Banks

The Treasury also said it is working on another element of its plan that will specifically address banks that may be on the brink of failure. Those banks will face different guidelines than healthier firms who take part in the asset-buying and capital injection programs.

The Treasury's stock buying program will begin with nine banks, which it didn't name. People briefed on the matter said $125 billion will be disbursed in days: Citigroup Inc., Wells Fargo & Co., JPMorgan Chase & Co. and a combined Bank of America Corp./Merrill Lynch & Co. each will get $25 billion, while Morgan Stanley and Goldman Sachs Group Inc. will get $10 billion each. Bank of New York Mellon Corp. said it will receive about $3 billion and State Street Corp. said it's getting $2 billion.

`Healthy' Companies

``These are healthy institutions, and they have taken this step for the good of the U.S. economy,'' Paulson said. ``These institutions, along with thousands of others to come, will have enhanced capacity to perform their vital function of lending,'' President George W. Bush's working group on financial markets said in a separate statement.

Bush today said ``this is an essential short-term measure to ensure the viability of the U.S. banking system,'' after meeting with Paulson, Federal Reserve Chairman Ben S. Bernanke and other members of the working group, which includes the Securities and Exchange Commission and Commodity Futures Trading Commission.

Stocks rose around the world on expectations the rescue will help alleviate the credit crisis. The Standard & Poor's 500 Index rose as much as 4.1 percent today, after an 11.6 percent surge yesterday. The index lost 18 percent last week. Japan's Nikkei jumped 14.2 percent as trading resumed following yesterday's public holiday.

With the equity purchases, Paulson is using more than a third of the $700 billion in government support Congress gave him the authority to use on Oct. 3.

Executive Pay Restrictions

Participating banks will need to accept limits on executive pay and so-called golden parachute payments. They also will need to give the Treasury warrants for an amount equal to 15 percent of the senior preferred investment, with a strike price determined by the bank's share price at the time of issuance.

The senior preferred shares will pay a dividend of 5 percent for the first five years and 9 percent after that, the Treasury said. The purchase price of the stock will be the market price of the banks' common shares at the time of the transaction. Companies will be able to buy back the equity at par after three years.

The government expects to purchase equity in the nine banks within days and to use the full $250 billion by year-end, a Treasury official told reporters on condition of anonymity. While banks would not be forced to cut existing dividends, there would be some restrictions on raising them, the official said.

The Treasury does not plan to exercise any voting rights IN acquiring the shares.

Europe's Lead

The U.S. initiative followed an announcement that France, Germany, Spain, the Netherlands and Austria committed $1.8 trillion to guarantee bank loans and take stakes in lenders.

Banks have struggled to regain the confidence of investors, counterparties and clients after bad loans caused $637 billion of writedowns and losses across the industry.

A Treasury official urged banks to use the funds to increase lending.

``It's in their economic interest,'' Nason said. ``When you give them a stronger capital position and you also provide a certain amount of government backstop to their funding sources, it's incumbent upon them to go out and continue to lend.''

Last week, the International Monetary Fund estimated that banks around the world would need $675 billion in fresh capital over the next several years to recover. The IMF also said Oct. 7 that financial losses would total $1.4 trillion, an almost 50 percent increase from a prediction in April.

Commercial Paper

Under the plans announced today, the FDIC said it would fully guarantee newly issued, senior unsecured debt and non- interest bearing deposits. The expanded coverage applies to all senior unsecured debt issued on or before June 30, 2009, and deposits in FDIC-insured banks until Dec. 31, 2009.

The Fed said in a separate statement that its previously announced program to buy commercial paper will start on Oct. 27. Officials haven't indicated a limit for the total size of the fund.

Financial firms participating in the U.S.'s so-called voluntary capital purchase program will need to step up their efforts to stem mortgage foreclosures, Paulson said today. That targets the original spark of the crisis, caused by lax lending terms on subprime home loans.

``The needs of our economy require that our financial institutions not take this new capital to hoard it, but to deploy it,'' the Treasury chief said.

About 100 or fewer of the 7,000 U.S. banks with less than $10 billion in assets may consider taking advantage of the program, said Camden Fine, president of the Independent Community Bankers of America, a Washington trade group representing about 5,000 banks.

``The headline in the local paper that everybody's going to read is, `Local Bank Seeks Government Assistance,''' Fine said in an interview. ``That doesn't look real good to the folks in the local towns.''

To contact the reporter on this story: Rebecca Christie in Washington at Rchristie4@bloomberg.net; Robert Schmidt in Washington at rschmidt5@bloomberg.net.

Last Updated: October 14, 2008 18:59 EDT
http://www.bloomberg.com/apps/news?pid=20601068&sid=ay09Vm6BF.vw&refer=home

Weighing in on the rescue
Oct 15, 2008 04:30 AM
Olivia Ward
Foreign Affairs Reporter

ARLINGTON, Va.–While the U.S. stock market spins – from the biggest rebound in history to a slide at closing time yesterday – politicians on the campaign trail are spinning faster to catch up.

Both Democrats and Republicans threw out life preservers to ordinary Americans swamped by the economic tsunami.

With the end of U.S. President George W. Bush's tenure looming, he reversed a lifetime of non-intervention into financial markets yesterday, announcing "unprecedented and aggressive" measures to restore confidence in the economy.

The U.S. government will inject $250 billion into at least nine major banks by buying preferred shares: an effort to put the rocky financial system back on an even keel.

"This new capital will help healthy banks continue making loans to businesses and consumers," Bush said in a televised address from the White House. "This new capital will help struggling banks fill the hole created by losses during the financial crisis so they can resume lending and help support job creation and economic growth."

Bush, struggling to rescue his tattered legacy, stressed he was backing the Treasury Department's plan as a last resort, and "these measures are not intended to take over the free market but to safeguard it."

Republican presidential candidate John McCain, lagging in the polls, delivered a pension and family security plan promising to create jobs, use tax cuts to expand employment, and protect the life savings of ordinary Americans.

McCain said Bush's plan to buy shares in the nation's leading banks – advance word of which helped stocks soar on Monday – should be short-term and last only until the institutions are reformed and put on a sound footing again.

"When that is accomplished," McCain said, "government will relinquish its interest in these private companies.

"We're going to get the government out of the business of bailouts and equity stakes and back in the business of responsible regulation."

Distancing himself from Bush, he added: "I will begin by making certain that the $700 billion already committed to economic recovery is not used to further enrich the very people and institutions that invited these troubles with their own reckless conduct."

Democratic presidential candidate Barack Obama, whose lead over McCain has widened during the crisis, called for an emergency session of Congress immediately after the Nov. 4 election to pass an additional $60 billion in tax breaks and benefits to the ones laid out in his plan for jump-starting the economy.

Obama told reporters he wants to see limits on the salaries of top executives at the banks that accept the money. He also says taxpayers must get the same ownership and protections as other investors in the banks.

The plan stresses job creation through a temporary tax credit for companies that hire new workers, along with a 90-day freeze on foreclosure for homeowners who are making "good faith efforts" to meet mortgage payments, and a moratorium on taxing unemployment insurance benefits.

Obama applauded Washington's plan to invest in banks, saying it gives taxpayers a better opportunity of getting their money back.

The government's program for bank relief is aimed at trickling down new credit opportunities to lenders and borrowers across the country, at a time when many businesses have ground to a halt.

And it gives a direct nod to Main Street America, with a widened guarantee for small businesses struggling to make ends meet with non-interest bearing current accounts. The Federal Deposit Insurance Corporation would provide a safety net by guaranteeing transaction accounts.

 

With file from Associated Press
http://www.thestar.com/News/World/article/517436

US government reluctantly adopts Brown's bank rescue blueprintAndrew Clark in New York and Elana Schor in Washington guardian.co.uk, Tuesday October 14 2008 18.57 BST
http://www.guardian.co.uk/business/2008/oct/14/useconomy-marketturmoil-georgebush-hankpaulson
The Bush administration has reluctantly followed Britain's lead by pumping $250bn (£143bn) into shares in leading banks after a stockmarket meltdown scotched earlier efforts to shore up crumbling confidence in the financial system.

Under a programme described by President George Bush as "unprecedented and aggressive", the US treasury will initially buy minority stakes in America's nine leading banks including Goldman Sachs, JP Morgan, Bank of America and Citigroup. Thousands of community banks will be eligible to follow.

Many of Wall Street's top banks were unwilling to take the money, fearing it would be seen as an admission of weakness, but they were given little choice by the treasury secretary, Henry Paulson.

In a televised address from the White House, President Bush stressed the measures were temporary and banks would buy back the government's shares once the economy recovered: "These measures are not intended to take over the free market, but to preserve it."

He said the new capital would help healthy banks continue to provide loans to businesses, while aiding struggling banks to resume loans to support job creation: "This is an essential short-term measure to ensure the viability of America's banking system."

To further kickstart lending, the US treasury will guarantee loans issued by banks, the Federal Reserve will become a buyer of last resort for unwanted commercial debt and the Federal Deposit Insurance Corporation will provide a broader guarantee for small businesses' bank accounts.

Although the treasury disclosed no figures, an industry source said the biggest investments of $25bn each would be in JP Morgan, Citigroup and Bank of America. About $20bn will go into Wells Fargo, while $10bn each will be injected into Morgan Stanley and Goldman Sachs. A smaller sum of $3bn apiece will go to State Street and Bank of New York.

All the banks involved in the programme will be required to curb executive pay. So-called "golden parachutes" for departing bosses will be banned, as will bonus programmes viewed as encouraging excessive risk taking.

There will also be an end to tax relief for banks on payouts of more than $500,000.

Banking chiefs were given little option. An insider said Paulson dictated the terms after summoning chief executives to the treasury on Monday: "It wasn't a debate."

The plan was greeted warmly on Wall Street, where shares traded higher. Building on Monday's record surge of 936 points, the Dow Jones Industrial Average rose by 115 points to 9,503 during the morning session in New York.

Buying banks' shares amounts to a U-turn for the embattled US treasury secretary, who initially wanted to spend a $700bn emergency fund by simply picking out distressed assets from banks' balance sheets.

Paulson told Congress last month that "the right way to do this is not going around and using guarantees or injecting capital", arguing that Japan had limited success with such a policy during a banking crisis in the 1990s.

Last week's stock market meltdown forced Paulson to take a more radical approach - but he made it clear he was doing so with distaste. Speaking in the treasury's ornate Cash Room, he said: "Government owning a stake in any private US company is objectionable to most Americans - me included. Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable."

The programme means the US government will be the biggest owner of banking shares in the country. The treasury will be granted preferred shares without the usual voting rights and will not be involved in day-to-day management decisions.

The shares will carry a 5% dividend for taxpayers, rising to 9% after five years, and banks will be banned from raising dividends for ordinary investors for three years.

Leading financiers expressed optimism that the measures would thaw out the frozen credit markets. Stephen Schwarzman, the chief executive of the private equity firm Blackstone, said it could be the action that "breaks the back of the credit crisis".

Speaking at a conference in Dubai, Schwarzman said: "We will be looking today to an absolute sea change in the global financial system in terms of liquidity."

Deutsche Bank's chief US economist, Joseph Lavorgna, said he believed the US stockmarket had bottomed out and a fear of systemic banking failure had subsided.

"The government is essentially saying there are certain institutions we won't allow to fail, that they won't fail and that we're putting money behind it," Lavorgna said.

The US government's actions are similar to measures adopted in Europe which were discussed at a meeting of G7 finance ministers at the weekend. Britain's government has won praise for taking a swift lead from economists including the Nobel Prize winner Paul Krugman.

On the floor of the New York Stock Exchange, market strategist Peter Cardillo of Avalon Partners said the government plan had begun to "penetrate the core of the problem" but he warned the market still faced the prospect of a lengthy recession.

"There will be a point in time where the euphoria of the bailout plan begins to wear off and the market begins to face reality," Cardillo said.

The Bush administration's actions won support from both sides of the US political fence. The Democratic presidential candidate, Barack Obama, said the plan was the right one - but he called for additional help for homeowners battling foreclosure.

"We must make sure this plan is implemented in a way that helps homeowners and does not enrich Wall Street CEOs at the taxpayers' expense," said Obama.

Internationally coherent actions urged as financial crisis threatens global economy 
 
 
www.chinaview.cn  2008-10-14 13:23:38 

Backgrounder: U.S. Financial Crisis

    WASHINGTON, Oct. 13 (Xinhua) -- The International Monetary Fund(IMF) and the World Bank concluded their annual meetings here Monday, calling for internationally coherent and decisive actions to restore confidence in the global financial system and bolster economic growth.

    WORLD ECONOMY TO SLOW SHARPLY

    The world economy will slow down sharply this year and next, with the United States and some other advanced economies likely in recession already, reflecting mounting damages from the most dangerous shock in mature financial markets since the Great Depression in the 1930s.

    According to the IMF's latest projections, the global economy, which grew by 5 percent last year, will lose a considerable speed, slowing to 3.9 percent in 2008 and weakening even more to just 3 percent, the worst showing since 2002, next year.

    In the United States, the epicenter of the financial meltdown, the economy is projected to moderate from last year's 2 percent to just 0.1 percent in 2009, the worst showing since 1991.

    The U.S. economy is now slowing fast and "is likely to contract in the current quarter and into early 2009," said the IMF in its semi-annual World Economic Outlook report. Contraction in two straight quarters meets a classic definition of recession.

    The IMF also forecast a "significant slowdown" in activity across western Europe and that growth in Japan will cool to 0.7 percent this year from 2.1 percent in 2007.

    "The major advanced economies are already in or close to recession," said the IMF.

    Meanwhile, growth in emerging and developing economies is expected to decelerate, falling somewhat below trend during the second half of 2008 and early 2009.

    "With a recession now looking increasingly likely, the key questions are, how deep will the downturn be, when will a recovery get under way and how strong will it be," the IMF noted.

    INTERNATIONALLY COHERENT ACTIONS URGED AND BEING TAKEN

    While the crisis, sparked by the U.S. subprime home loan collapse, is affecting the main advanced economies most acutely, emerging and developing countries are not immune from the global financial stress.

    And with the credit markets frozen, the financial crisis is now spreading into the wider economy.

    This extraordinary situation was a focus of attention at the annual meetings of the two international financial institutions.

    Realizing from experiences in the past months that individual or unilateral actions alone can not stem the crisis from deteriorating, top financial officials from both developed and developing world put international cooperation top priority to restore financial and economic stability.

    "The international community should make correct judgment on the situation and strengthen cooperation to jointly maintain world economic stability," said Li Yong, Chinese vice finance minister.

    At same time, actions are being taken.

    Leaders of the 15 eurozone nations agreed in Paris Sunday on a joint strategy to bolster market confidence by underwriting inter-bank loans and safeguarding financial institutions from collapse.

    Last Friday, the Group of Seven major rich countries announced a plan of action to jointly fight the crisis, pledging "to continue working together to stabilize financial markets and restore the flow of credit, to support global economic growth."

    In a rare coordinated move, the U.S. Federal Reserve, the European Central Bank and four other major central banks from around the world slashed interest rates last Wednesday in an attempt to prevent the financial crisis from becoming a global economic meltdown.

    AVOIDING HUMAN CRISIS WHILE BATTLING FINANCIAL CRISIS

    As the financial crisis threatens to undo economic progress made by developing countries, the international community has been urged not to forget problems faced by developing countries, the poorest ones in particular, while rich nations focus on their own problems.

    At the meetings, officials from developing countries pointed out that the plight of poor countries has been "largely forgotten" even though their recent development gains are at risk as the crisis bites.

    "The developing countries will suffer for no fault of theirs. They did not cause the contagion. Many are not well-equipped to face the consequences," Indian Finance Minister Palaniappan Chidambaram told the Development Committee of the IMF and the World Bank.

    "The large surge in food and energy prices, and an associated rise in inflation, present major policy challenges for most countries, further compounded by the uncertain global conditions as the financial crisis unfolds," an update for the Development Committee also said.

    In this regard, IMF Managing Director Dominique Strauss-Kahn warned last Saturday that it would be a mistake to forget the other crisis of soaring food prices and aid cutbacks faced by developing countries.

    World Bank President Robert Zoellick also called for more attention to be paid to vulnerable countries in the world.

    "Some 28 countries are already fiscally highly vulnerable from the twin shocks of food and fuel," he said last Thursday. "Currently, these countries, on average, are set to receive no increase in project and program aid."

    Some 44 million additional people will suffer from malnutrition this year as a result of high food prices, the World Bank estimated. Zoellick urged major advanced countries to increase their aid, fulfilling the commitments they have made.

    "We cannot let a financial crisis become a human crisis," the president stressed.

 Financial inclusion's here, no-frill a/cs jump 30 times
15 Oct, 2008, 0219 hrs IST, ET Bureau
MUMBAI: Financial inclusion has gone up significantly after the central bank issued a directive asking banks to open ‘no-frill’ accounts. The number 
of such accounts has gone up by at least 30 times in the past two years, according to the Reserve Bank of India.

RBI will soon release a report based on credit counselling, which will help the unbanked to easily access banking services. Speaking at the launch of National Financial Literacy Drive by the Indian School of Microfinance for Women (ISMW) and Citi, P Bijendran, general manager, the rural planning and credit department of the Reserve Bank of India, said that no-frill accounts have gone up from 0.5 million in 2006 to 15 million in 2008. This is not an apt indicator of financial inclusion, he added.

RBI noted, in a recent report, that the level of financial inclusion may be gauged from the extent of financial exclusion. The All India Debt and Investment Survey dwells on the percentage of unbanked households. Financial literacy has assumed importance in light of the developments in the past two weeks, Mr Bijendran said. Interestingly, many organisations in the United States offered financial literacy programmes to help the youth in handling their personal finances.

All the stake holders, including the government, regulator, banks and the NGOs, can play a complementary role in ensuring financial inclusion. Banks face a major challenge in terms of the high account maintenance costs, according to Mr Bijendran. It is difficult to get collaterals. Lenders need to assess the cash flows and devise products accordingly.
Microfinance institutions can play a major role in this regard.

In its mid-term review of the Annual Policy for 2007-08, the central bank had called for a concept paper on Financial Literacy and Counselling Centres. Speaking on the occasion, Jayashree Vyas, managing trustee of ISMW, dwelt on plans to educate one million women over the next two years.

Wall Street crisis: Implications for India
15 Oct, 2008, 0000 hrs IST,Kiran Karnik,
http://economictimes.indiatimes.com/Opinion/Wall_Street_crisis_Implications_for_India/articleshow/3596251.cms

The 9/11 of financial markets, one may well call it. Ground zero is, once again, the tip of Manhattan in New York; on Wall Street, instead of just of
f it. Once again, the ripples of a crumbling edifice — a virtual one, in place of the twin towers — have their impact way beyond the United States.

Once again, it’s a cataclysmic event that is likely to change the global order in a radical way, with repercussions which are yet unclear. Bear Sterns, Lehman Brothers, Merrill Lynch, AIG: towering edifices of the financial world have bitten the dust. Certainly, nothing like this has been seen in the US since the stock market crash of 1929.

The meltdown in the US financial markets, beginning with the subprime crisis and rapidly accelerating to affect an ever-wider circle of major institutions, has been unprecedented in its ferocity and impact. Like a tsunami, the tall waves resulting from this earthquake have breached the defences a continent away. In Europe, banks and financial institutions are tottering, many all but set to collapse. Frantic efforts are underway to prop them up and, hopefully, most will weather the storm.

In India, we have been far more fortunate, thanks mainly to the slowness of financial reforms, the slower dismantling of regulatory constraints, and the cautious approach to permitting foreign investments. Though much criticised, this apparent lethargy has turned out to be a virtue in the present context.

As a result, the Indian financial system had only marginal exposure to “toxic assets” and their derivatives, and is well positioned to weather the global storm.

The unprecedented bailout package of $700 billion has finally been passed by the US Congress; it will, hopefully, begin to stabilise the markets and infuse confidence amongst investors and consumers. Some months ago, many had hoped that the Thanksgiving to Christmas season would see increased buying, giving a boost to the consumer spending-driven US economy.

Now, there is little hope of an immediate revival, and even optimists are talking in terms of a few quarters, not a few months. Recovery in Europe is, by all accounts, likely to be even slower, given the more rigid labour markets and the inherent delays in multi-country decision-making. It does seem that even the first half of 2009 will continue to see a general global economic slowdown.

The long-term impact of all this is bound to be serious, with repercussions that go way beyond the financial markets. For India, the immediate effects include large sales of holdings by FIIs on the stock exchanges and a general reduction in forex inflows for investments. Also, industries with a large global (particularly US) market — the IT industry, for example — will have a difficult year, as demand in the US and Europe contracts, and companies cut back on their spending.

 

It is, however, the broader policy and geo-political impact that is more interesting. The US has, in effect, “nationalised” some of the major financ
ial institutions: is this the beginning of a more socialistic economic structure? Despite Fukuyama’s pronouncement of the “End of History”, signifying the triumph of market capitalism, is the shoe, in fact, on the other foot? After all, a cap on CEO compensation, government ownership in major financial companies, constraints in the market and greater regulation: to most, these actions in the US seem like socialism, even if of a mild form.

Beginning with the Enron issue some years ago, the growing demand for more regulation and tighter control on companies has greatly intensified in the last few weeks. Is this taking the US towards more bureaucratic control and oversight of the corporate sector? Already, the role of government in business has increased, with government-induced corporate take-overs, being one example. Will this tilt the scales and reverse the traditional influence of business on US policy, including trade and foreign policy?

The last question is of special relevance to India (and, indeed, the rest of the world). So far, business interests have dominated and dictated US policy with regard to international trade, ensuring a more open trade regime, with few tariff and non-tariff barriers. With the waning influence of business, a more populist protectionist approach on trade is likely. A Democratic President is likely to be less business-friendly and adopt a more protectionist policy. This has serious implications for India, particularly for high-profile services.

The possibility of a similar protectionist fallout in Europe is, if anything, higher. Yet, in both Europe and US, countervailing pressures against protectionism are high. The need to be globally competitive will mean more off-shoring by companies striving to find their feet after recent events.

In Japan and Europe, the demographics — with a rapidly ageing population — will mean serious labour shortages, especially of technical talent. The only solutions are permitting large-scale immigration, with attendant social problems, or off-shoring work (or an astute combination of the two). Protectionism will, therefore, collide with economic well-being. The latter will, doubtless, be the ultimate winner.

Within India, proponents of rapid de-regulation of the financial sector and the dismantling of all controls have, quite wisely, become silent. A cautious, step-by-step approach towards integrating with the global financial systems has paid off. Free-marketers and neo-conservatives, elated by the government’s independence from the Left, dreamt of big-bang reforms before the next election; now, not only are their dreams shattered, but one may see more caution and more regulation.

After a few centuries, the economic pendulum is swinging back to Asia and it is clear that Indian business needs to increase its focus on markets in China, West Asia, Africa and — most importantly — in India, even as we continue to tap markets in the west. India — with its advantages in demographics, technology, talent and culture — must promote globalisation, which is beneficial for it.

Ironically, we may soon see a socialist US and a capitalist India! If so, hopefully India will espouse compassionate capitalism: a new, humane, non-exploitative and fraternal mutant of the greed-driven model that has brought about the present crisis.

(The author is former president, Nassscom and an adviser on policy and strategy) 
 
Ignorance of the extent of US crisis may fail bailout
15 Oct, 2008, 0213 hrs IST,H Chander, 

Merrill bets on Asian property with $2.65 bn fund
14 Oct, 2008, 1933 hrs IST, AGENCIES
http://economictimes.indiatimes.com/Opinion/Ignorance_of_the_extent_of_US_crisis_may_fail_bailout/articleshow/3597082.cms

The Emergency Economic Stabilization Act of 2008 (EESA) has become the law in the United States. Before the legislation was passed, speaker after spe
aker in the House of Representatives and the Senate spoke about the dire need of this $700-billion package to stabilise the US economy.

But this package could fail to achieve the purpose, for simple reasons. The chief being the denial to recognise the nature and the extent of the problem, its geographies and the number of entities affected by the crisis. By now, reams of newsprint have been used to write that the crisis is not confined to mortgages, rather it stems from the paying/buying capacities of the users of loans and may get extended to retail loans. It may even spur credit card defaults.

Firstly, EESA authorises the Treasury Secretary to establish Troubled Asset Relief Program (TARP) to buy troubled assets from any financial institution. Troubled asset means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability and any other financial instrument purchase of which would achieve the same purpose.

The problem with this is that it’s called TARP, while it should have been Troubled Assets Stabilisation Program (TASP). The troubled financial institutions need capital and not relief which would not shore up their capital and the relief to the entire system comes from the stabilisation of the troubled assets and not from foreclosures.

Secondly, the term financial institution means any institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the US or any state.

The implications of these two terms constitute the second reason for which the package might fail. The economists have already established that most of the troubled financial institutions are unlikely to get the much-needed capital from this package excepting those who had made aggressive provisions against the troubled assets. Further, due to the inclusive nature of the definition of the term financial institution , the amount might get distributed to hundreds or thousands institutions thus not benefiting the system.

There is an urgent need to recognise the depth of the problem. Homeowners’ cashflows are under pressure and therefore the relief has to reach to them, so that the economy might pick up. EESA already provides that the government shall implement a plan that seeks to maximise assistance for homeowners and encourages the servicers of the underlying mortgages, considering net present value to the taxpayer, to take advantage of the HOPE for Homeowners Program to minimise foreclosures.

In addition, the government plans to use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures. The order of the things should be as follows. The government should identify Critical Troubled Financial Institutions(CTFIs) considered vital for providing the stability of economy and must confine the term financial institution to CTFIs under EESA. Then, the government should provide capital support to CTFIs and simultaneously take off the troubled assets from their books by issuing non interest bearing securities to the extent of their real value.

Troubled assets should be restructured keeping in view the cashflows of the homeowners. The recoveries made from the troubled assets should be used to redeem the securities issued to CTFIs. In the event of recoveries being more than the acquisition value of the Troubled Assets the same goes to the Government for the benefit of the taxpayers. The timeframe for complete resolution of the troubled assets would be anywhere between three and seven years and certainly not two years as envisaged in EESA. The Indian government in the past had successfully implemented a project on the same lines though at a much smaller scale. This kind of approach can really not only become HOPE for Homeowners, but also for the US economy.

(The author is an IDBI Bank general manager. Views are personal)

PIL against Guj govt for giving agriculture land to Tata
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Agencies
Posted: Oct 15, 2008 at 1650 hrs IST

Ahmedabad, October 15: A Public Interest Litigation was filed on Wednesday challenging the Gujarat government’s decision of giving agriculture land for Tata’s dream car project ‘Nano’ in Sanand taluka of the state.
The PIL filed by the Gandhinagar-based Rashtriya Kisan Dal (RKD) contended that land of the Anand Agriculture University (AAU), which was meant for agriculture purpose, was converted into an industrial land and it was wrong to give the plot for the Nano Car Project.

The PIL also said that the farmers who are original landowners of the agriculture land have not been given adequate compensation by the state government.

It also demanded that the farmers be given adequate compensation.

A division bench of Chief Justice R K Radhakrishnan and Justice Aquil Qureshi, asked the petitioner to come back to the court within three days after the PIL was translated from Gujarati language.

The state government has given 1,100 acres of land near Charodi village in Sanand taluka on the outskirts of the city to Tata’s for the relocation of their Nano Car Project from Singur in West Bengal.

An agreement was signed between the state government and the Tata’s last week for setting the small car project in Gujarat.

Farmers of Bod, Khoda and Sanand village have said that the land given to Tata’s belonged to their forefathers and was acquired on 99 years lease by British Government. They have demanded adequate compensation for the land, the RKD leaders said.

Indian banking sector faces growth risks from domestic, not global factors: Crisil
15 Oct, 2008, 0222 hrs IST, ET Bureau

MUMBAI: Contrary to the stance taken by authorities, ratings major Crisil has said domestic, not global factors are responsible for the current chall
enges facing the banking sector.

In a statement issued on Tuesday, the ratings agency has said: “Crisil believes that the Indian banking system is relatively insulated from factors leading to the turmoil in the global banking industry.” The statement goes on to add that the recent tight liquidity in the Indian market is also qualitatively different from the global liquidity crunch, which was caused by a crisis of confidence in banks lending to each other.

Crisil managing director and chief executive officer Roopa Kudva said: “While the main causes of global stress are less relevant here, Indian banks do face increased challenges due to domestic factors. The banking sector faces profitability pressures due to higher funding costs, mark-to-market requirements on investment portfolios, and asset quality pressures due to a slowing economy.” But the strong capitalisation of Indian banks is a positive feature in the current environment.

Crisil has tried to analyse the problems separately both at global and domestic levels. Problems of global banks arose, mainly due to exposure to subprime mortgage lending and investments in complex collateralised debt obligations whose values have eroded sharply over the past few months, it has said. Globally, the crisis of confidence among banks that has also been affected by the freeze in the inter-bank lending market.

On both counts, Indian banks have limited vulnerability. Indian banks’ global exposure is relatively small, with international assets at about 6% of total assets. Even banks with international operations have less than 11% of their total assets outside India. The reported investment exposure of Indian banks to distressed international financial institutions of about $1 billion is also very small.

The mark-to-market losses on this investment portfolio, will, therefore, have only a limited financial impact. Indian banks’ dependence on international funding is also low.

The reasons for tight liquidity conditions in the Indian market in recent weeks are quite different from the factors driving the global liquidity crisis. Some reasons include large selling by foreign institutional investors (FIIs), and subsequent Reserve Bank of India (RBI) interventions in the foreign currency market, continuing growth in advances, and earlier increases in cash reserve ratio (CRR) to contain inflation.

RBI’s recent initiatives, including the reduction in CRR by 150 basis points from October 11, 2008, cancellation of two auctions of government securities, and confidence-building communication, have already begun easing
liquidity pressures.

India, Brazil, South Africa meet to discuss financial crisis
15 Oct, 2008, 1040 hrs IST,

NEW DELHI: Leaders from emerging economic powers India, South Africa and Brazil were meeting here on Wednesday for an annual summit set to be domina
ted by the global financial crisis, food and fuel prices.

Indian Prime Minister Manmohan Singh is hosting Brazilian President Luiz Inacio Lula da Silva and South African President Kgalema Motlanthe for the third annual India-Brazil-South Africa (IBSA) conference.

"The summit will provide leaders an opportunity to exchange views on international and regional issues... I have no doubt that this will include the global financial crisis and food and energy security issues," Indian foreign ministry official Nalin Surie told reporters.

IBSA, which came into existence in 2003, groups some of the largest economies in Asia, Africa and South America.

The three countries, which have a combined population of 1.3 bn, believe they can best achieve results on issues such as World Trade talks and push through UN Security Council reforms by working together.

IBSA member states are also eyeing permanent seats at the UN Security Council.

The trilateral trade target among IBSA member states has been set at 15 bn dollars by 2010, up from around 10 bn dollars a year ago.

Surie said IBSA member countries would sign up to seven agreements and action plans to further cement ties in trade, investment and the environment.

"IBSA is developing well and gaining salience. It is our intention to further strengthen this unique forum of three very large developing country democracies from three different continents," Surie said.

Global stock markets slump on recession fears
15 Oct, 2008, 1813 hrs IST, AGENCIES

LONDON: World stock markets mostly slumped on Wednesday, with London shedding almost three percent and Hong Kong down five percent, as a rally lost momentum amid growing fears of recession in the biggest economies.

Investors took profits in Asia and Europe after stocks ended lower overnight on Wall Street, despite news that Washington would inject up to $250 billion into ailing banks to help end the worst financial crisis since the 1930s.

One bright spot was Tokyo, which ended up 1.06 percent, building on Tuesday's record 14 percent surge. But Hong Kong closed down 5.0 percent, Seoul slid 2.0 percent and Sydney ended 0.9 percent lower.

In midday European trade, London slid 2.95 percent, Frankfurt lost 2.07 percent and Paris was down by 2.18. Madrid declined 1.54 percent and Zurich dropped 1.92 percent.

"After the early burst of euphoria on stock markets over the rescue packages launched worldwide... the dust slowly seems to be settling and the last few days' roller coaster (higher) is being followed by a kind of morning-after sentiment," said Commerzbank analyst Antje Praefcke.

A top US central banker said Tuesday that the United States "appears to be in a recession." There are also growing fears Japan and Europe are heading for a spell of economic stagnation or recession.

The German economy is heading for a slowdown, but the downturn will not be a long-lasting one, Chancellor Angela Merkel said Wednesday.

"We had a couple of good days (on stock markets) and it's not surprising to see some profit-taking," said Nomura Australia markets strategist Eric Betts.

Financial crisis hits global poverty battle

PA
Monday, 13 October 2008

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 Efforts to eradicate global poverty have come under threat as governments grapple with the financial crisis, international development secretary Douglas Alexander said.

Mr Alexander warned there was a risk developing countries could be forgotten amid the turmoil on the money markets.

Speaking at the World Bank's annual general meeting yesterday, Mr Alexander said the effects of the credit crunch were starting to ripple through emerging economies and slow economic growth.

He urged governments and the International Monetary Fund and the World Bank to act together to help developing countries cope with the twin shocks of the financial crisis and high food and energy prices.

The World Bank has identified 28 countries vulnerable to hikes in food and fuel costs and estimates 44 million more people will suffer from malnutrition as a result.

Mr Alexander said: "There is a real risk that efforts to eradicate global poverty will be undermined by the global financial and commodity price crises, threatening the progress made on meeting the UN's Millennium Development Goals to make poverty history.

"The World Bank is forecasting that a sharp deceleration in the growth rate of developing countries - from 6 per cent to 4 per cent - could have a similar impact to a recession.

"We are right to focus on the impact of the economic crisis on our own countries but we cannot ignore the rights of every person on this planet to health, education, shelter and security."

He added: "In this interdependent world, co-ordinated action from governments, the IMF and the World Bank is not only a moral imperative but in our self-interest."

Mr Alexander said despite the financial crisis, investment in education, health care and sanitation must be kept up to ensure the Millennium Development Goals (MDGs) are met.

And he urged the World Bank to "use its strong financial base to provide additional resources as other sources of capital dry up".

The World Bank has set up a $1.2bn programme and a new energy initiative for the poor in response to food and fuel price increases.

It also agreed to give poor countries more say on how it is run by allowing sub-Saharan African nations a third seat on its governing board and selecting the bank's next president through a transparent and competitive process.

Mr Alexander said: "Earlier this year, World Bank Governors agreed with the UK and other countries that it must reform to be effective. I welcome its agreement to start this by increasing the voting power of developing countries, giving a third seat to Sub-Saharan Africa and agreeing to an open and transparent, competitive selection process for president."
http://www.independent.co.uk/news/business/news/financial-crisis-hits-global-poverty-battle-959593.html

Climate change slips down on global priorities
14 Oct 2008, 0748 hrs IST,IANS

WASHINGTON: You might call it the fourth crisis. While collapsing financial institutions plunge wealthy nations into recession and developing countri
es grapple with surging food and energy costs, the once urgent need to fight global warming seems to have taken a back seat.

Just last year, nearly every global and regional summit put climate change at the top of its agenda. Now it seems to have become an afterthought.

Gathered for the annual meetings of the International Monetary Fund and World Bank, the world's finance ministers promised over the weekend in Washington to do everything they could to stabilise financial markets.

IMF Managing Director Dominique Strauss-Kahn warned wealthy nations not to forget about "the other crisis".

About 100 million people have been plunged back into poverty because of higher food and petrol prices, which have prompted riots in dozens of countries over the last year.

All this leaves the issue of climate change out in the cold.

World Bank president Robert Zoellick acknowledged there was a "risk of distraction" and wryly noted that the current global credit crunch might have been averted if people heeded the financial clouds on the horizon only a few years ago.

"One of the lessons of today's crisis is that you have to get ahead of these things," Zoellick told reporters.

"There's no doubt that climate change is a problem today and will be a problem tomorrow."

The financial crisis, which began with the bursting of the bubble in US housing prices, has spread to all corners of the globe and is already having an impact on the climate sector, too.

Private investors, suddenly fearful of all risky investments, are now pulling out of climate and energy projects in the developing world.

"International sources of financing for emerging markets has definitely decreased," said Rashad Kaldany, vice president of infrastructure for the International Finance Corporation, the World Bank's private investment arm.

Interest from the world's commercial banking giants - some of which are dealing with a chronic lack of capital from exposure to crumbling US mortgage securities - has "decreased very substantially" in recent weeks, Kaldany said.

Just how much and for how long the financing will dry up is anybody's guess. The impact on clean energy and climate projects is as uncertain as everything else in the current financial crisis.

Meanwhile, the World Bank hopes that two new climate funds might help bridge the gap.

The bank's policy-setting Development Committee Sunday formally endorsed the Climate Investment Funds, which officials hope can help poorer countries invest in clean technologies and build up their defences against climate change.

Mexican Finance Minister Agustin Calleri, who chairs the committee, said that ministers still acknowledged the "sense of urgency" in halting global warming and addressing some of its already visible effects.

The World Bank's funds have collected about $6.1 billion in pledges from governments so far. The bank also boosted its own budget for clean energy projects by more than 80 percent.

Even with public funding, Kaldany said it is only "realistic" that some initiatives would be cut in the coming months. There simply isn't as much money available from the private sector, which the World Bank estimates will have to bankroll about 86 percent of all clean energy and climate projects in future.

Yet the dangers of global warming have, if anything, become more urgent since last year, when climate change was the world's top concern.

The Intergovernmental Panel on Climate Change warned in a series of reports last year that governments have until 2015 to begin reversing the trend of rising greenhouse gas emissions to avert the worst consequences of global warming.

"Climate change isn't going to wait for the financial crisis to get resolved," said J. Warren Evans, director of the World Bank's environment department. "We need to step up and increase our efforts to help on adaptation, not slow it down."

Global Financial Crisis:Free Market Advocates have NOT taken Cover!
By James Shikwati
Feature Article | Wed, 15 Oct 2008

http://www.modernghana.com/newsp/186295/1/pageNum1/global-financial-crisisfree-market-advocates-have-.html

In his postcard Where are the Free Market Advocates? Tajudeen Abdul-Raheem (Director, Justice Africa) questions why a Capitalist country such as the United States of America opts to bail out the rich (greedy bankers) and yet does not agree to have the state protect poor people. One can defend the state's role of facilitating a free environment that enables individuals to generate wealth thereby migrating from poverty.

Free Market principles advocate for the empowering of individuals to engage in private undertakings and for the state (governments) to engage in enterprises that are beyond the scope of private enterprise. It is wrong for Tajudeen to insinuate that when individuals engage in private enterprise; they do not take care of the interests of the poor, marginalized, and the sick. The state ought to ensure (through sound regulation) that private enterprise does not harm the interests of individual citizens. For example, matatu owners; boda boda taxis, airlines, bakers, hospitals, Agro-veterinary services, car manufacturers, cellphone service providers and bankers among others offer services to everyone at a fee.

By so doing, they help improve People's living standards.After collecting the payments from their customers, they pay taxes to the state. The state in turn uses the taxes to offer services (public goods) that ideally no private enterprise may engage in for profit. In other words, the state acts like a soccer referee. If the referee gets compromised and engages in fraudulent officiating of the game, it would be wrong to conclude that the soccer sport in itself is a bad thing. Change the referee!

He (Tajudeen) argues: "For decades we are told the state is 'useless', 'inefficient', 'parasitic', 'anti-enterprise' yet when the wheelers and dealers are in trouble they fall back on the same state to bail them out with freebies!" I do agree in part with this sentiment in so far as the methodology rich nations and their agencies such as the World Bank and IMF have always sought to drive the free market message to poor countries (especially in Africa and Latin America). For example, forcing poor nations to privatize service delivery in order to ensure that companies from wealthy nations take over such services is anti-free market principle. In other words, one need not engage in regime change and bomb out governments to enforce the 'market forces.'

The free market principle recognizes the importance of a 'referee' (regulator) and can never refer to such an important entity in the market as 'useless.' Perhaps what we need to explore here is the role (or absence) of a global referee. Wealthy nations are known to preach free markets but they do not allow poor countries to access their markets. Wealthy nations should not be made synonymous to the free market principle. If anything, they violate this principle with impunity and we, in our quest for foreign aid, allow them to ride roughshod on us.

The state has no 'freebies' to offer anyone apart from what it collects from the very capitalists who generate wealth. As to whether the state ought to bail out collapsing companies, the free market answer to that is no! Bailing out failure is an anti-market principle, since it will only perpetuate and gloss over the causes of financial crisis. We ought to scrutinize whether the U.S.A for example is bailing out the rich or the poor who saved in a collapsing private enterprise. The financial crisis is a pointer to the fact that one cannot cheat the market - not for long! (We see it here in our own Nairobi Stock Exchange when attempts to cover up broker failures come to the surface)

My friend Tajudeen must be deliberately out to distort facts about pro-market arguments or was simply sharing his disappointment on how America's 'socialist' solution is indeed further evidence that socialism does not work. In his own words; "The market, we are deceived into believing is no respecter of anybody and its immutable logic will fix things." Clearly this is not a deception. The market respects no one. It punishes individual, corporate or government failure with equal force.

In a socialist system, no one would ever have discovered that the collapsed companies in America had a problem, taxpayers' money would have kept them artificially in operation. It is precisely because of the market system that the World was made aware that the companies were in trouble.

Finally, we have points of convergence with Tajudeen as Africans: we should not expect others to be our messiahs but rather be our own liberators. We should stop ridiculing ourselves by talking about our problems to those who pretend to be out to help Africa. Yet again, I agree that we should not 'parrot' ideologies but interrogate them.

We are witnessing a new chapter in global history, but we shall not go beyond the market - because African indigenous enterprises are yet to make a mark in the global market. Let us learn from the American mistakes and push for high productivity and sane and sound regulation.

By James Shikwati
Mr. Shikwati is the Director of Inter Region Economic Network

DEVELOPMENT: A Billion Hungry People Need Rescue Plan Too
By Wolfgang Kerler

Sudanese youth scavenge for food and clothing in a municipal garbage dump in Juba on Sep. 4, 2008.

Credit:UN Photo/Tim McKulka 

UNITED NATIONS, Oct 14 (IPS) - Relief for the world's hungry remains a distant prospect, with this year's "Global Hunger Index" (GHI) attesting that even before the ongoing food crisis, 33 countries had "alarming" or "extremely alarming" levels of hunger.

India, home to the world's largest food insecure population, launched its own India State Hunger Index Tuesday.

"Although we found several success stories, there was no across-the-board success," Marion Aberle, a spokesperson for Welthungerhilfe (formerly known as German Agro-Action), told IPS about the recent GHI.

She added that "it is simply a scandal that almost one billion people worldwide are still suffering from hunger."

Together with the International Food Policy Research Institute (IFPRI) and Concern Worldwide, on Tuesday Welthungerhilfe launched GHI 2008, an index ranking 88 developing and transitional countries using the most recent available data from 2001 to 2006.

"The rankings do not reflect the current crisis of rising food prices, but they do highlight which countries could be most vulnerable to the crisis," IFPRI said in a statement released simultaneously with the GHI.

The dramatic rise of food prices since 2006 has marked a major setback in the fight against malnutrition, as the countries most severely affected by hunger overwhelmingly are net-importers of cereals and other food.

"Although their agricultural sectors have the potential to feed their population," Aberle added.

She stressed that "the only way to effectively eradicate hunger is to boost agricultural production in developing countries". Additionally, an increase in food aid was needed for those who are currently hungry.

Three leading indicators -- the proportion of undernourished, the prevalence of underweight children under five, and the under-five mortality rate -- are combined into the GHI with a 100-point scale, 0 and 100 being best and worse, respectively.

Overall, the GHI fell by almost a fifth from 18.7 in 1990 to 15.2 in 2008, mostly due to progress in children's nutrition. Improvement was scant in under-five mortality and the proportion of undernourished.

"The world has made only slow progress in reducing hunger in past decades, with dramatic differences among countries and regions," said Joachim von Braun, IFPRI director general.

While the GHI decreased by almost 40 percent in Latin America, by about 30 percent in Southeast Asia and about 25 percent in South Asia, it shrunk by only 11 percent in Sub-Saharan Africa.

"Deterioration has been most dramatic in the Democratic Republic of Congo (DRC)," Aberle said. With a GHI of 42.7 -- up from 25.5 in 1990 -- the country is now scoring worst.

In DRC, all common characteristics for states heavily affected by hunger can be found: war, violent conflict and political instability, high prevalence of HIV/AIDS, inequality and a lack of general freedom.

Other countries with "extremely alarming" levels of hunger (a GHI over 30 points) are Eritrea, Burundi, Niger, Sierra Leone, Liberia and Ethiopia.

With the exception of Haiti, the 26 countries with an "alarming" level of hunger -- described as a GHI between 20 and 29.9 -- are all located in Sub-Saharan Africa, South and Southeast Asia.

As regions, Sub-Saharan Africa and South Asia are scoring worst on the 2008 GHI, with 23.3 and 23.0 respectively.

The most success could be seen in Kuwait and Peru: Both countries have managed to decrease their GHI by about 70 percent -- "examples showing that progress is possible", said Aberle.

Since 1990, only a handful of countries made significant progress. About a third of the countries made modest progress -- defined as a reduction of GHI between 25 and 50 percent.

Among those countries is India, whose GHI declined from 32.5 in 1990 to 23.7 in 2008 -- ranking 66 on the GHI. With more than 200 million people, India is home to over one-fifth of the world's hungry -- hence, IFPRI decided to produce an India State Hunger Index (ISHI).

"We felt it was time to develop an India-specific index, but also one that would be comparable with the GHI," Purnima Menon, a research fellow at IFPRI, told IPS.

The ISHI 2008 scores for the 17 major states in India whose hunger levels were calculated range from 13.6 for Punjab to 30.9 for Madhya Pradesh -- showing that not a single state falls in the "low hunger" or "moderate hunger" categories, and representing the substantial differences between the regions.

In almost all the states, underweight children contribute most to the ISHI -- but there are some where calorie deficiency has the largest contribution.

"The other interesting comparisons are the links between economic indicators and the hunger index," Menon said. "Not all states that have high economic growth are doing well on hunger."

To eradicate hunger in India, similar actions are needed: strengthening of agriculture, social protection, poverty reduction and the distribution of essential nutrition and health interventions to women and children in the period of pregnancy and the first two years of life.

Referring to the hundreds of billions of dollars being spent to solve the current financial crisis, Aberle from Welthungerhilfe said: "We would love to see similarly strong-willed action to fight the world food crisis."

(END/2008)
http://ipsnews.net/news.asp?idnews=44263

Global financial crisis threatens food security

Published on 13/10/2008
By Samson Ntale, in Kampala

The burgeoning world financial crisis has pushed the attention of policymakers away from the threat of rising food prices, but the global food shortage is far from over, Mr Joachim von Braun, the Director General, International Food Policy Research Institute(IFPRI) has said.

"It continues to threaten the food and nutrition security of poor people around the globe," Braun states in an emailed response to the current credit crunch that has hit the world’s leading economies.

The financial crisis has reduced demand and speculative activity, leading to lower food prices, and this may provide some relief to poor consumers.

The credit crunch is preventing accelerated flow of capital to long-term investments in sectors such as agriculture, just as this investment is urgently needed, undermining production growth toward a more resilient global food system.

"The pattern of low global investment in agricultural research and development has contributed to slower growth in agricultural productivity," Braun warns. "Unless the world addresses these challenges, the livelihoods and food security of millions of poor people, as well as the economic, ecological, and political situation in many developing countries, will remain at risk"

"Progress in achieving development goals, such as cutting hunger and poverty in half by 2015, is slipping."

"The number of hungry people increased by at least 75 million, from 2004 to last year, and probably by even more this year." Braun suggests that these challenges will require significant increases in public spending. Studies show that investments in agricultural research have extremely high rates of return in terms of growth and poverty reduction.

But what specific investments should be scaled up, and where?

Agricultural research

According to an analysis by the IFPRI, doubling spending on public agricultural research over five years would significantly raise agricultural output and reduce poverty.

But targeting different regions would yield different benefits. Allocating more investment to East and Southeast Asia would raise agricultural output growth the most and reduce the number of people living on less than US$1 a day by 204 million by 2020.

Spending more in Sub-Saharan Africa and South Asia would have less impact on agricultural growth, but would lift more people—about 282 million—out of poverty by 2020.

The IFPRI boss says progress is constrained by a lack of funds.

"While the investments required might seem large by the standards of agricultural research, they are small compared with other general development expenditures."

http://www.eastandard.net/InsidePage.php?id=1143996865&cid=14&j=&m=&d=

Global financial turmoil diverts attention from food, agriculture
October 12, 2008 by Voice of South
Credit crunch, caused by international financial turmoil, prevents accelerated capital flow to long-term investments in sectors like agriculture despite their urgent needs, undermining growth towards a more resilient global food system, says a global report.

The burgeoning global financial crisis has pushed aside policymakers’ attention from the threat of rising food prices though the global food crisis is far from over, observes the International Food Policy Research Institute in its analysis.

“It continues to threaten the food and nutrition security of poor people around the globe.”

The pattern of low global investment in agricultural research and development has contributed to slower growth in agricultural productivity, reads the report, styled “Responding to the twin global crises of food and financial markets: Best bets for reducing poverty and hunger”.

The Washington-based research organisation in the report released on Friday cautioned that the livelihoods and food security of millions of poor people as well as the economic, ecological, and political situation in many developing countries would remain at risk if the world did not addresses these challenges.

It also acknowledged that the financial crisis had reduced demand and speculative activity, leading to lower food prices and it might provide some relief to the poor consumers.

However, the number of hungry people actually increased by at least 75 million from 2004 to 2007, and probably increased by even more in 2008, said the report adding that progress in achieving development goals “such as halving global poverty and hunger by 2015” is slipping.

Referring to studies the IFPRI mentioned that investments in agricultural research had extremely high rates of return in terms of growth and poverty reduction.

Also, it said doubling spending on public agricultural research over five years would significantly raise agricultural output and reduce poverty. “Spending more in Sub-Saharan Africa and South Asia would have less impact on agricultural growth, but would lift more people ‘about 282 million’ out of poverty by 2020,” the report pointed out.

The IFPRI research further suggested investment in creating farm productivity and production of healthy food for the poor, sustainable use of natural resources and biodiversity for improving their livelihoods and mobilisation of science and technology for stimulating institutional innovation targeting pro-poor agricultural growth.

Author: Khawaza Main Uddin, New age
http://voiceofsouth.org/2008/10/12/global-financial/

Uganda People News: Experts warn of financial crisis impact on food

First published: 20081012 11:21:23 AM EST

The Director Genera of the International Food Policy Research Institute (IFPRI), Joachim von Braun has expressed concern that the growing world financial crisis has pushed aside the attention of policymakers from the threat of rising food prices, but the global food crisis is far from over.

In a media statement issued today, Von Braun says the food crises continue to threaten the food and nutrition security of poor people around the globe.

He says that the financial crisis is likely to have more adverse effects on the availability of food for many people actress the world.

Von Braun says that the credit crunch prevents accelerated flow of capital to long-term investments in sectors such as agriculture, which undermines production growth toward a more resilient global food system.

He says the pattern of low global investment in agricultural research and development has contributed to slower growth in agricultural productivity.

Von Braun says that unless the world addresses these challenges, the livelihoods and food security of millions of poor people, as well as the economic, ecological, and political situation in many developing countries, will remain at risk.

Studies show that investments in agricultural research have extremely high rates of return in terms of growth and poverty reduction. Scientists and researchers from the Consultative Group on International Agricultural Research (CGIAR) have called for creation and acceleration of sustainable increases in productivity and production of healthy food by and for poor people.

The group also says helpful agricultural must conserve, enhance, and sustainably use natural resources and biodiversity to improve the livelihoods of the poor and respond to climate change.

The scientists also want more technology to stimulate institutional innovation and enabling policies for pro-poor agricultural growth that meets the needs and situations of men and women.

http://www.ugpulse.com/articles/daily/news.asp?about=Experts%20warn%20of%20financial%20crisis%20impact%20on%20food&ID=6859

Food crisis causes malnourishment for 967m people: World Bank

 

The World Bank has said that rising food and fuel prices will increase the number of malnourished people around the world in 2008 by 44 million.

The report said the situation will cause malnutrition for 967 million people.

A copy of the report titled: ``Rising food and fuel prices: Addressing the risks to future generations"", said the effect of the crisis would be life-long on some families.

The report was presented at the 2008 Annual Meeting of the World Bank/IMF at the weekend in Washington D.C. by Word Bank President, Robert Zoellick, to the Development Committees.

An executive summary of the report, made available to the News Agency of Nigeria (NAN), said the impact of the crisis would be felt more on the health of some growing children.

The report said many children would not be able to grow into adults due to poor nourishment, except urgent steps were taken to intervene in the crisis.

``Malnourished children cannot develop into healthy adults and become productive members of society who can contribute to the growth needed to lift themselves and their country out of poverty, '' it said.

The report said priority should be given to a series of targeted measures, which include making existing targeted cash transfer programs more generous, adding that allocating the necessary amount of budget to finance an expansion of safety net programs might require pruning less-priority spending in other areas.

The report said well-designed safety net programs did not have to be prohibitively expensive to be effective.

``Some of the most successful programs in the world cost well under one percent of Gross Domestic Products,'' it added.

According to the report, investing in safety net programs now will give governments new tools to address not just the current crisis, but future ones as well.

It explained that most people in the developed countries were more focused on the financial crisis, forgetting that a human crisis was rapidly unfolding in developing countries.

``It is pushing poor people to the brink of survival,"" he said.

Zoellick said the financial crisis would only make it more difficult for the developing countries to protect their most vulnerable people from the impact of rising food and fuel costs.

The World Bank president said about 28 countries were most hit by the global food and fuel crisis, including some African countries.

Although the crisis had thrown so many African countries into conflict, Nigeria 's Finance Minister, Dr Shamsudeen Usman and CBN Governor, Prof. Chukwuma Soludo, said the economy was proofed.

Soludo, who led the Nigerian delegation to the World Bank/IMF meeting, said 11 countries had already consulted the CBN on Nigeria's secret to having a strong economy.

(Source: leadershipnigeria.com)

http://www.tehrantimes.com/index_View.asp?code=180113

The U.S. is widely criticized in the financial crisis
COMMENTARY | October 14, 2008
The Overseas Press: A Japanese official says, “We made a mess of solving our banking crisis in the 1990s…Washington carefully studied what we did and made a bigger mess.” And in Tehran, there is some gloating.

 
 
 
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By Lauren Drablier
lauren.drablier@sciences-po.org

PARIS—News concerning the financial crisis has taken over newspapers and Internet pages around the world and the international media have been quick to say a geopolitical power shift is taking place. Some predict the end of U.S. hegemony and the rise of a ‘new multi-polar global economic order,’ according to the Tehran Times.

Some national papers focus mainly on the local effects of the financial crisis but critiqued the United States for being the cause of the crisis and for still being unable to resolve it.

A lot of attention has been concentrated on emerging economies and the question remains to what their position will be; whether they can help ease the burden, or if they will be hit just as hard as the US and Europe. 

In ‘World Bank chief economist says China could weather through financial crisis,’ Xinhua focuses on how the financial crisis will affect China:

“World Bank Chief Economist Justin Lin said on Saturday that China could work through the current financial crisis, the most serious since the Great Depression in the 1930s.

"However, China may be able to weather through this crisis in a much better shape than many other developing countries," said Lin, a leading Chinese economist who was named as the chief economist and senior vice president for Development Economics at the World Bank in February.

“Lin said his confidence comes from three reasons. "First, China has such large foreign reserves; and secondly, China has capital controls, so China in a way can insulate itself by building a firewall against the contagion," he said.

In ‘Signs of a 'nonpolar' world emerging amid financial crisis’ Japan’s Ashai Shimbun paints a dark picture for the US and also predicts a geopolitical power shift towards the east:

“The American people will no longer be able to enjoy consumption patterns well in excess of their incomes that were made possible by an expanding credit line.

“It will become increasingly difficult for the United States to sustain its current account deficit--disparagingly referred to as a "deficit without tears"--by simply printing more dollars.

“Bank of Japan Governor Masaaki Shirakawa warned, "The liquidity of the dollar is now in a situation of near exhaustion."

“The situation is so grave that the U.S. government may have to take action to rescue the automobile industry.

“Although then U.S. President Ronald Reagan caused the eventual collapse of the Soviet Union and its communist ideology in the late 1980s, the United States 20 years later now faces both a quagmire in Iraq and Afghanistan--and the collapse of Reaganomics.

“The financial crisis triggered in the United States has inadvertently revealed that the world may have entered into a ‘nonpolar’ era brought on by both globalization and the accompanying weakening of nations' control functions.

“The Western media has played up a ‘Japan-is-back’ image.

“There had been signs of a geopolitical power shift from the West to Asia. The financial crisis and economic stagnation in the West will accelerate that trend.”

Pakistan’s Dawn highlights the shift in the global economic power balance in ‘Financial meltdown dissected’:

“The year 2008 may go down in history as the year in which the Anglo-Saxon financial model collapsed and global economic power shifted from the West to the East.

“Asian stock markets have not been immune to the crisis and have fallen sharply reflecting slower growth forecasts. However, according to the IMF, the Chinese economy is still likely to grow by 9.3 per cent, Russia’s by 5.5 per cent and India’s by 6.9 per cent.

“Japan and China are the two largest foreign creditors of the US: Japan holds $593bn of US treasury bills, followed by China with $519bn. The US is now completely dependent on Asia for financing its losses and deficits and hugely dependent on the Middle East and Venezuela for meeting its oil needs.

“The shift in the global economic power balance, once a matter of long-term projections, has been dramatically accelerated by what has been described as the fall of Anglo-Saxon financial capitalism as we knew it for a long time.”

In ‘Easy credit and financial crisis’ the Times of Malta draws attention to the dominance the US has had over the markets.  The Times also explores what the crisis means for Europe and especially for Malta and urges for tighter regulation on credit and loans:

“More often than not America holds they key to financial stability (and thereby instability) around the world.

“It is said that when America sneezes the rest of the world catches a cold.

“We can see these repercussions around us as famous banking and insurance institutions around the world, including those in Europe, are reeling under the effects of the tidal wave coming from America with governments coming out of the cold to rescue them with huge bailouts.

“EU countries which up to a few months ago were being cited for their impressive economic performances are on the verge of a recession - notable amongst these being Ireland and Spain.

“Here in Malta we are being told that all these global happenings will have a moderate effect on us and that our economy is resilient enough to withstand such rebuffs.

“Have not our banks made it too easy for anyone to obtain a whole range of loans from a bank with too few strings attached to them and too little safeguards?

“Is it not time, therefore, for The Malta Financial Services Authority (MFSA) to look into the matter and ensure that sound financial systems are being applied before a financial crisis becomes a reality in this country also?”

The UK’s Telegraph focuses on international reactions and how European countries are dealing with the crisis in ‘Financial crisis: firemen look to douse the worldwide panic’.  The Telegraph also provides an in-depth analysis of the weeks events and highlights China’s position:

“A Japanese official arrived tittering. “We made a mess of solving our banking crisis in the 1990s,” he said. “Washington carefully studied what we did and made a bigger mess.”

“…the Group of Seven communique put together by financial leaders was bolder than pessimists had forecast. But it stopped short of offering a convincing, coordinated, quantifiable plan, leaving markets once again to reopen this week in a state of tense uncertainty.

“Germany and France balked at joining the US in copying Britain’s plan to invest directly in banks as a way of easing their debt burdens.

“Any hope of region-wide co-ordination was overtaken by the unilateral actions of Ireland, Iceland, Greece and Germany to save their banking systems.

“Andrew Smithers of London consultancy Smithers & Co, predicts the stock market will continue to fall this week. But, he says, shares have been overvalued for 20 years and they should fall.

“The stock market falls may be an advance signal that we’re heading into recession,” said Liberal Democrat shadow chancellor Vince Cable. “But in contrast to what happened in the 1930s, Asian growth is holding up and we have not seen economic nationalism. As long as these two things hold, I think we’ll be all right.”

“It is the distortion in trade and financial flows between the US and China that lies at the root of the current financial panic, bankers say.

“The West sought to sustain an unsustainable standard of living by going ever deeper into debt, according to Sir Steve Robson, a former Treasury official and non-executive director in the City.

“Robson sees the collapse of the banking system under a mountain of debt as a symptom not the cause of what is going on.

“Any ultimate resolution of the financial crisis, he believes, must involve a rebalancing of trade and financial flows between the world’s ageing and emerging superpowers.

“Dominique Moisi, founder of France’s Institute for International Relations, goes a step further. “It may turn out that when the dust finally settles on the financial crisis, the most important aspect of its resolution may be what China did not do,” he said. In the face of panic “it did not sell its dollar reserves”.

In ‘The biggest bet in the world’ the UK’s The Guardian criticizes US leadership, the shifting focus of the IMF and World Bank, and the increasing power of emerging economies:

“The President has repeated his mantra that if they work together, the West's biggest economies would get through the crisis. For the first time since the turmoil entered a new and dangerous phase, Bush's remarks did not send share prices tumbling - but only because the market was closed for the weekend.

“For 50 years, America has been the global economy's uncontested superpower, preaching open markets, financial liberalization and free trade. Washington confidently believed it had the answer to the world's economic problems, if only the unconverted would listen. But last week showed that the US has no magic recipe to assuage the violent fear that had seized Wall Street, let alone offer a blueprint for other governments to follow.

“For the past decade, World Bank and IMF meetings have been dominated by the problems of the world's poorest countries.  … belief that the only real issue was how to help poverty-stricken countries in Africa catch up. This year, the mood had changed: Africa barely merited a mention, as the West concentrated exclusively on preventing its home-grown crisis dragging the entire world into a slump.

“The IMF said the world economy had been allowed to run above its 'speed limit' for too long.

“Iceland may yet be forced to turn to the IMF for an emergency loan, but the fact that it was given direct financial support first by the Russian government underlines the power that countries which have built up huge financial surpluses - including Russia, but also China and many Middle Eastern economies - could wield in the years ahead.”

The Australian discusses the financial effects on Australia and also highlights how panic is driving the crisis and failure of US leadership in ‘Panic wreaks havoc’:

“The truth is that Australia's fate is beyond its hands. It is being decided in financial systems offshore and in the wisdom of the Group of Seven ministers and central bankers. The issue now is how far and how long the loss of global confidence extends. The issue for Australia is whether the irrational contagion can be contained before it smashes our defenses.

“Achieving this depends on the meeting of G7 ministers in Washington this weekend producing a new, credible action plan that halts the stampede. The G7's track record is unimpressive. But collapsing stock markets on Friday affirm the urgency for coordinated and dramatic action. The global downturn, if sufficiently severe, will drive Australia into recession despite all our strengths.

“The feature of the crisis is now panic.

“The failure of US leadership and governance is without precedent for nearly 80 years. The ignominious lesson bequeathed by the Bush administration is the world cannot function properly with such US ineptitude. The upshot, surely, will be a decisive victory for Barack Obama in the presidential election and the demise of this dismal Republican era.”

As the title states, ‘Centre of the financial universe could soon be shifting east’, Canada’s Globe and Mail discusses what the current financial crisis means for emerging economies:

“Seeking to profit from the U.S. credit crisis, other capitals of finance such as Shanghai, Singapore, Hong Kong, Mumbai and Dubai are bidding to usurp New York's status as the place to go to raise money, trade stocks or get financial advice.

“Wall Street's crisis could serve to quicken that evolution, moving financial power away from its old capitals in New York and London and shifting it to new hubs in Asia and the Middle East.

"A lot of parts of the world are going to start thinking, 'Hey, we're not that dependent on the U.S. any more. Ready or not, here we come.’

“Asian and Middle Eastern rivals, by contrast, find themselves in fighting shape. Flush with oil wealth or earnings from vast manufacturing exports, their central banks and government-controlled sovereign wealth funds control about $7-trillion (U.S.) in assets, 14 times the value of the major U.S. investment banks in their glory days.”

In ‘World Top Financiers Start Thinking Global’ the Middle East Times commended financial institutions for working together to try and come up with a solution but criticized politicians:

“At last the world's top finance officials, including those in China, have started thinking globally. This week's coordinated interest rate cuts suggest that the central banks are at last working together. Governments, legislatures and cartels have yet to learn the same lesson.

“Bahrain's Investcorp has launched a $1 billion fund to buy up cheaply the toxic loans and mortgages that cannot find a market, knowing that there are gems buried in that dung heap. It will help the U.S. economy if someone buys them up, and help Investcorp's investors when recovery comes and they show a profit.

“The question is whether the U.S. Congress and the European and Japanese parliaments understand this and stop making cheap political capital out of the cry that foreigners are buying the family jewels. Too many economic illiterates like Ohio Congresswoman Marcy Kaptur have blustered "Will we sit back and let the [sovereign wealth funds] of the world fire at will, claiming our assets and extirpating our businesses?"

“The ball is now in the court of Western governments and politicians. Can they coordinate their rescue policies as well as the central banks? Will they rout their own xenophobic populists and welcome foreign capital without offensive conditions? Are they ready to whatever it takes to save the system?”

Iran’s Tehran Times highlights the ‘incompetence of the Bush administration’, predicts an end to US hegemony and the rise of a ‘new multi-polar global economic order’ in ‘Twilight of U.S. economic supremacy?’:

“Many economists believe that Bush’s $700 billion bailout plan will be a short-term fix saving only banks and investment institutes but not benefiting ordinary people, although the final version of the rescue package does include points that are meant to resolve the financial problems of smaller businesses.

“If current trends continue, advances in emerging economies like China and structural problems in the U.S. economy will gradually lead to the twilight of U.S. economic hegemony.

“Russian Prime Minister Vladimir Putin said the crisis is the United States’ fault. European Commission spokesman Johannes Leitenberger said that the U.S. is directly responsible for the global economic crisis, while Banque de France Governor Christian Noyer said that French and European bank systems face numerous problems, adding, ‘In such a sensitive situation we must keep our calm and take measures to prevent the financial crisis from spreading to European countries.’

“Back in the U.S., ever growing numbers of citizens are coming to the realization that the incompetence of the Bush administration is the cause of the country’s economic and political bankruptcy, which is a view shared by supporters and opponents of the economic rescue plan.

“The events of the past few weeks show that in the near future, the United States will no longer be the economic superpower that it has been over the past 60 years and that a new multi-polar global economic order is taking shape.”

Finally, in ‘Next President Will Have To Deal With World Anger At US Over Financial Fallout’ Germany’s DW-World points to the political consequences in the US:

“Add another item to the list of world grievances with the United States the next president will have to deal with: Blame for the expanding global economic crisis.

“The Bush years, I learn anew every time I travel to another country and talk to people there, have made the rest of the world hostile toward America.

“And yet the fact remains: The next president is inheriting a world standing that has declined in recent weeks from the low, low point it was at, and that’s almost assuredly going to make it harder for the United States to call in favors even from its allies, be it on Afghanistan or any other foreign policy front.”

 Lauren Drablier is a graduate student in International Affairs at Sciences Po Paris and currently works for the World Association of Newspapers.
E-mail: lauren.drablier@sciences-po.org
http://niemanwatchdog.org/index.cfm?fuseaction=background.view&backgroundid=00292

Bangladesh's Yunus says global financial meltdown to hit poor
2 days ago

DHAKA (AFP) — Bangladeshi economist and Nobel laureate Muhammad Yunus has warned his country is likely to be badly hit by the global financial crisis.

Speaking at a seminar late Sunday, Yunus said the world was being hit by a "financial tsunami" that would not spare impoverished Bangladesh.

"We are having a crisis at hand. The format of global financial system is going down. And we will not be able to escape it," he said.

"The financial crisis will hit us soon and the poorest people will suffer the most. I hope we are prepared to face the heat," Yunus said.

The former economics professor said Bangladesh faced a squeeze on its garment exports to the United States and Europe as well as on remittances sent by its over five million overseas workers.

In the 2007-8 financial year ended in June, Bangladesh exported 10.7 billion dollars of garments -- 76 percent of the country's annual exports. More than 90 percent of garments were shipped to the US and the European Union.

The country, where more than 40 percent of the 144 million population live below poverty line, is also heavily dependent on the money sent by its army of overseas workers. In the 2007-8 financial year, they sent home nearly eight billion dollars, or 12 percent of the country's Gross Domestic Product (GDP).

Yunus and his Grameen Bank were honoured with the Nobel peace award in 2006 for efforts to lift people out of extreme poverty by giving them small loans.

 

http://energybangla.com/index.php?mod=article&cat=BanglaReport&article=1077

 Bangladesh Ranked 70th among 88 in Global Hunger Index

Tuesday, 10.14.2008

 

Bangladesh, which is among the countries with the most worrisome hunger status, has been ranked 70th among 88 nations in the Global Hunger Index.
The country suffers from an alarming level of hunger while Burundi, Congo, Eritrea, Ethiopia, Liberia, Niger and Sierra Leone — standing at the bottom of the list — are plagued by an extremely alarming level of hunger.
Bangladesh has made some progress in raising its status by reducing the hunger score to 25.2 in 2008 from 32.3 in 1990, according to the index that was launched throughout the world on Tuesday. It ranks countries according to their level of hunger and spotlights where progress in reducing hunger is and is not being made.
 
‘From January 2007 to June 2008, one-third of all the countries, for which 2008 GHI [Global Hunger Index] was calculated, suffered from a violent or non-violent protest, with multiple occurrences in Bangladesh,’ observed the report, prepared by the International Food Policy Research Institute. German Agro-Action and Concern Worldwide collaborated in releasing the index, only the third of its kind, compiled by IFPRI.
 
 The report referred to urban dwellers’ reactions — strikes, protests or even riots — to the increased inflation of food prices in recent times.
Mauritius, Jamaica , Moldova , Cuba , Peru , Trinidad and Tobago , Algeria , Albania , Turkmenistan and El Salvador are the top 10 performers in the index.
 
 The hunger index of 2008 reflects data from 2001 to 2006, not the actual hunger situation in 2008, and in view of the price situation the countries ranked were unlikely to have achieved drastic improvements in their hunger situation between 2006 and 2008.
 
The Global Hunger Index is a multidimensional approach to measuring hunger and malnutrition, combining indicators such as the proportion of undernourished people, prevalence of underweight children and rate of infant mortality.
 
‘The world has made slow progress in reducing food insecurity since 1990, with dramatic differences among regions and countries,’ observed the report. ‘Hunger is closely tied to poverty, and countries with high levels of hunger are overwhelmingly low- or low-middle-income countries,’ said the report.
 
According to the UN Food and Agriculture Organization, almost 923 million people in the world go hungry every, 907 million of whom live in developing countries.
 
 In the context of higher food prices, said the report, the prospects for improving food and nutrition security do not appear favourable, given that at least 800 million people suffered from food insecurity even before the food price inflation hit the world.
 
 Sub-Saharan Africa and South Asia are found to be the regions with the highest GHI scores and the highest poverty rates. Whereas South Asia has made rapid progress in combating hunger, Sub-Saharan Africa has made only marginal progress, said the report, adding that for hungry and malnourished people in these regions the rising food prices pose a serious threat.
 
 However, the number of subjacent poor in South Asia actually increased between 1990 and 2004, but there was a significant decrease in the number of medial and ultra poor.

World Hunger: By the Numbers

Tomorrow, Oct. 16, is World Food Day, a day designated by the U.N. Food and Agriculture Organization (FAO) in 1979 to bring attention to world hunger and food (in)security.

Flash forward nearly 30 years, and the world is facing not just a credit crisis (as we watched the Dow tank last week), but an ongoing food-price crisis that is proving catastrophic, particularly in the developing world, a crisis that is causing riots and deepening the wounds of mass starvation.

In lieu of attempting to dissect the hows, whys and what-ifs of the world’s hunger crisis, I’m going to paint this gargantuan, mind-boggling and dire picture with numbers instead. It won’t solve anything, but it will get us talking, and maybe even get us thinking and doing and creating -- who knows – some itty bitty shred of change.

6.7 billion: The current world population (based on July 2008 estimates from CIA World Factbook

923 million: the world’s “undernourished” as defined by the FAO (consuming less than the minimum calories necessary to maintain minimum bodily functions.)

907 million: undernourished in the developing world (source: FAO)

1.4 billion: people living on $1.25 a day or less, according to the World Bank

300 million: U.S. population in 2006

29 million: food stamp recipients as of July 2008

7: dollars, the maximum daily allotment for a family of four on food stamps for 2008-2009 (Supplemental Nutrition Assistance Program or SNAP)

72 million: obese people in US, 2005-2006, according to the Centers for Disease Control and Prevention (CDC)

33: percentage of Americans who are obese (source: CDC, 2005-2006)

$3.16: 2 2-liter bottles of Coca-Cola Classic *

$6.29: One gallon organic milk*

$.79: Cinnamon “crispy puffed corn” twists on the Why Pay More Value menu at Taco Bell

$5.89: 18-ounce box of Cheerios*

*Prices for grocery items were found on amazon.com

When was the last time you figured out just how much you spend on food every day? I know I’m in the dark on that front. Maybe instead of eating on a food stamp budget, the challenge here is to eat ourselves out of house and home before buying another crumb of food at the supermarket and making do with what we have.

http://voices.washingtonpost.com/mighty-appetite/2008/10/world_hunger_by_the_numbers.html

India, Brazil, SAfrica slam rich nations over credit crisis
8 hours ago

NEW DELHI (AFP) — Leaders from emerging economic powers India, South Africa and Brazil Wednesday slammed rich nations over what they said is a self-made financial crisis.

Brazilian President Luiz Inacio Lula da Silva said many developing countries had become "victims of the global financial crisis generated by the rich countries."

He said it was unfair that poorer nations had "to pay for the irresponsibility of speculators who have transformed the world into a gigantic casino."

Indian Prime Minister Manmohan Singh is hosting Lula and South African President Kgalema Motlanthe for the third annual India-Brazil-South Africa (IBSA) conference.

Motlanthe was equally damning, saying the "ill-conceived decisions of a few have brought the international financial system to the brink of collapse."

He said both developed and developing nations needed to address "what really went wrong" and caused "an unmitigated disaster."

"As the developing world, we must accept that one-size-fits-all solutions prescribed to us by the developed world must be approached with a great deal of caution," Motlanthe said.

Addressing a press conference at the end of the day-long summit, Singh said IBSA countries had instructed their finance ministers and central bank governors to "establish a coordinating mechanism" on the global financial crisis.

Lula warned that the crisis could affect the economies of developing countries "if there is a recession in the European Union and the US" because "they are the buyers and we are the sellers."

A summit declaration said it had taken serious note of the "unprecedented turbulence in the global financial markets... that threatens global prosperity."

"The explosion of new financial instruments unaccompanied by credible systemic regulation has resulted in a major crisis of confidence for which those responsible should be held accountable," it said.

Demanding a new international initiative to solve the problem, the declaration said it must take into account "the fact that ethics must also apply to the economy."

Reforms must include "stronger systems of multinational consultations and surveillance."

The IBSA, which came into existence in 2003, groups some of the largest economies in Asia, Africa and South America.

The three countries, which have a combined population of 1.3 billion, believe they can best achieve results on issues such as world trade talks and push through UN Security Council reforms by working together.

From: Travis
Subject: The Second American Civil War Is Underway: Christopher Cook
Date: Tuesday, October 14, 2008,

http://www.modernconservative.com/metablog_single.php?p=2342
 
 October 13, 2008 
 
The Second American Civil War Is Underway

By Christopher Cook

Friends, conservatives, countrymen,
It's time to recognize a basic fact: We are in a civil war. It is obviously not the civil war of pitched battles and 600,000 dead. It is a low-grade—but omnipresent—political and social conflict, and though it is not an open war, it does involve violence.  
Of course, only one side is fighting it as a war. The left sees every area of society as a battleground, and they will use any and every tactic at their disposal—including violence—to achieve their aims.
This is, of course, nothing new, and before we can talk about recent violence and other criminal events—and the possibility of a dramatic escalation thereof—we have to take a quick look at history.

Using a bird's-eye view of American history, one sees a disturbing trend: The Democrats and the left (once different, now synonymous) have been waging a civil war against Republicans since the end of the last one in 1865.
Granted, the violence was worse during Reconstruction.
Granted, it had ebbed and flowed: it tends to calm down a bit when the Democrats/left have power. Thus, from 1932 until 1994, there was less of it.

(Recall that in the 1960s, that violence was not directed at us so much as it was directed at society in general; it's effect was to finalize the conversion of the Democrats from a racist, proto-progressive party into a transnational neoliberal party. On either side of that long transformation, though, there was still a violent ethos.)
Granted, since 1994 (when the left lost the near-hegemonic control of Congress they'd enjoyed in an almost unbroken streak since 1932), the violence has been sporadic, but it is on the increase.

By 2004, the trend was well-established. Shots were being fired into GOP headquarters. Thugs were breaking into offices and physically assaulting the workers therein. Vandalism was widespread, threats were common, and battery was on the rise.
Looking at this trend required this author to ask a question: Was there an equivalent coming from our side?
I did some research—admittedly cursory at first, and then more thoroughly. I will readily confess that I did not have the time to perform the kind of research that, say, someone like John Lott would perform to get a complete statistical picture in pursuit of a book on the subject (though this is something that Modern Conservative will be doing soon.) Nonetheless, I was unable to find any coherent trend of political violence directed from the right at the left. Plenty the other direction, though, which led to my first exploration of this subject, titled Democrats are more violent. In fact, there's no comparison.
Research continued, and it led to more discoveries. Among them was that this violence was nothing new; it has its roots in Reconstruction and the (first) Civil War.
Indeed, I learned that Democrat anger at the election of Republicans—and their willingness to use physical street violence and destruction of property to express that anger—goes all the way back to the election of Lincoln. The election of the very first Republican president was an occasion for street thuggery on the part of the Democrats, and little appears to have changed.
During Reconstruction, we saw the worst massacres in American history—perpetrated by Democrats against Republicans. Hundreds of Republicans, whites and blacks, were slaughtered by Democrats for the crime of being Republicans. Thus, it was greatly frustrating to hear the Virginia Tech massacre, horrific though it was, described as "the worst massacre in American history." It wasn't even close, and saying it was was either the result of laziness or revisionism—not surprising, given the fact that media, nearly all Democrats, certainly would not want to call attention to their bloodthirsty history.
More research led to shocking realizations about presidential assassinations and attempts, and about just how low some lefty thugs feel compelled to go.
Again, this research is less than 100% comprehensive. Nonetheless, the record is disturbing. The Democrats/left display an ongoing willngness to use violence against Republicans. No appreciable equivalent appears to come from Republicans.

Enter 2008.

Added to all this history is a new phenomenon: The left has a new quasi-messianic figure, around whom a crazed and cultish movement is growing. As a part of this developing cult of personality, several trends have arisen which, when added to the low-grade civil war we are discussing, offer disturbing possibilities for the future. There is even a vibe developing that is chillingly reminiscent of the rise of 20th century fascists like Mussolini and Hitler.
Added to that are other activities and trends that make for the possibility of a grim ride for America—and specifically for those who oppose Barack Obama—in the near future. Quoting from the afore-linked article:
Barack Obama has terrorist friends (at home and abroad) and communist front groups working on his behalf. 

He has allies at every layer of society who are willing to change rules, break laws, and flout procedures in order to bring him to power.

He has a media that is working on his behalf every bit as reliably as "Pravda" reported the party line in the USSR.

He is using state power to silence his critics.

He has requested that his followers "get in the faces" of his detractors, and he is getting his wish.

He has a vote fraud operation working on his behalf in states across America. This operation is aided by laws passed by his allies in Congress and supported by his allies in various states.
And now, Obama Youth groups are being formed.

Recently, Republican rage at this trendline—and at the notion that a candidate who appears to be nothing more than a creation of the radical left is actually ahead in the polls—has boiled over into a few comments at a few McCain-Palin rallies. A few comments. A few times.
Of course, the media has seen this and decided to suggest that a rage-fueled right wing fascism is about to swamp the country. Meanwhile—and without any shame whatsoever—they ignore ACTUAL violence, threats, crime, and intimidation coming from the left. They ignore the fact that while John McCain is trying to decry what little is coming from his supporters, Barack Obama appears to be tacitly encouraging much worse behavior from his.

This situation is being discussed with great intensity right now in the dextrosphere. Rather than attempt to repeat what is already being said—and said brilliantly and with citation and sourcing—we will aggregate some of those discussions here. Read them. Familiarize yourself with what is really going on:
As always, Michelle Malkin is the cream of the crop:
Crush the Obamedia narrative: Look who's "gripped by insane rage"
Vandals strike York County GOP headquarters
Libs Threaten to Beat & Kill Sarah Palin... Media Silent

"Thou hypocrite, first cast out the beam out of thine own eye; and then shalt thou see clearly to . . ."
You may know someone who doesn't think William Ayers matters.
NO JUSTICE, NO PEACE?
Hope, Change and Molotov Cocktails
How's that reaching out working, John?

James Joyner: "McCain Supporters Angry! Mean! Scary!" Or Did He Mean Obama Supporters?
Obama supporters call Palin a "c*nt." Where is the media?
On the Ownership of Gored Oxen
Memo to Leftist Elitists: Look at Hatred Within
Which party is the party of rage?
Are the Angry GOP Protesters Just More of the Same-- Leftist Tools?
MORE ON THOSE "ANGRY, RACIST GOP MOBS"
Obama Rallies Turn Ugly
And a reminder from 2006 . . .
It's Time to Act

Look at the links above regarding recent trends. Read the analysis and historical information linked earlier. Put it all together with what you are seeing with your own eyes here in 2008. Is it a full-blown, hot war? No. But look at the trends. Look at who does what to whom. Look how it is reported, and look who is tacitly calling for more.

Now . . .

Imagine a scenario where Obama loses a close election. You think violence will end at that point, or increase?
Worse still, imagine a scenario where Obama wins, and the margin of his victory is ACORN's vote fraud. When we go into the street to protest this fraud—and we would—what do you think will happen to us? And who will the media portray as the perpetrators and the victims?

No matter what happens, we're looking at trouble with a capital T.

 
To all decent Americans (especially those in the "middle"):
Please recognize the truth of this. I know that the media, Hollywood, and academia have woven a fog so thick that the truth is barely discernible. But please, try to peer through the mist and see that this is not a two-sided situation. While there is the occasional incident from the right, all evidence is pointing to the idea that the ratio of the left as perpetrators of political violence to the right as perpetrators is 100 to 1. (The same appears to be the case for voter fraud, by the way, but that is another issue.)
Is this what you want in America? A political climate with one side using violence, crime, and threats against the other side? A media that works, shills, and lies for one side rather than just reporting the facts?

 
To the media, who aid and abet everything the left does—who covers for their every criminal, violent, and threatening act, while fibricating™ a reality where Republicans are the culprits:
What, you think they won't come for you eventually?
You think that just because you're on the left and you want the left to have more power, that you won't end up on their target list when that power has sufficiently expanded?
You think it was just an isolated anomaly that the Senate threatened ABC's broadcast license because it was about to air something they didn't like? Think again. Get them more power, and that'll be just the beginning.

 
To the left:
We're on to you. While we have no interest in being like you, we will not sit idly by any more while you use threats, vandalism, and assault and battery as a mode of political "speech."
 . . . while you fire shots into our campaign headquarters.
 . . . while you punch handicapped girls in wheelchairs because you disagree with her parents' politics.
 . . . while you throw molotov cocktails at our homes, cut our brake lines, and threaten our children.
 
. . . and while your presidential candidate uses subtle code to endorse a climate where these attacks become a tool in his campaign and his vision for America.
 

To conservatives and Republicans:

Make no mistake, this is a war.
Since they're going to say we're the bad guys whether we fight back or not, we might as well fight back.
Since those who "buy ink by the barrel" have already picked a fight with us—and are waging that fight with extreme prejudice—we might as well fight the media too (are you listening, GOP candidates and elected officials?).

They'll punch you in the nose, huck a molotov cocktail on your lawn, and then call you a racist and a fascist for complaining about it. They'll perpetrate violence upon you and then say you're the violent one. Only one question remains:
Are you going to sit back and take it?

We are not like the left. We are not perfect, but we are not like them. This means that we do not behave like them, even in the face of this unremitting, low-level onslaught. Yes, we have the occasional miscreant, the occasional deviation from decency, and to those among our ranks who perpetrate such acts, we say please, check yourselves before you wreck yourselves.
But for every one of ours like that, there are 100 or more of theirs. Their acts have tacit official endorsement and gain cover from the media. It's very likely to get worse, and if we don't start responding, it will serve as an invitation for more. Use every tool at your disposal—short of violence (unless your health and safety are directly threatened)—to respond. 
The Founders did not their lives, their fortunes, and their sacred honors to create an America that looks like this.

Conservatives, this has to be a call to arms. You didn't start this fight, but by God, you can finish it.

U.S. sales retail drop by the most in three years, mounting job
losses, plunging home prices rattled consumers.

By Bob Willis

 Oct. 15 (Bloomberg) -- Sales at U.S. retailers dropped in September
by the most in three years as mounting job losses, plunging home
prices and the deepening credit crisis rattled consumers.

Purchases fell 1.2 percent, more than forecast, following a 0.4
percent decline the prior month, the Commerce Department said today in
Washington. Excluding autos, sales fell 0.6 percent, also more than
anticipated.

The biggest decline in stock prices in at least seven decades last
week may further undermine confidence, prompting consumers to cut back
on non-essentials like new cars and vacations that will deepen the
economic slump. Stock-index futures retreated.

``Consumers are hunkering down,'' said Brian Bethune, chief financial
economist at Global Insight Inc. in Lexington, Massachusetts. ``The
fourth quarter is guaranteed to be terrible.''

The Labor Department reported separately that prices paid to U.S.
producers fell 0.4 percent in September, the second consecutive
decline. So-called core producer prices that exclude fuel and food
increased 0.4 percent. The Federal Reserve Bank of New York's Empire
State manufacturing index fell to minus 24.6 in October, the most
since the survey began in 2001, from 7.4 in September.

Three-Month Slide

September's drop, the largest since August 2005, extended declines in
retail sales to three consecutive months, the first time that's
happened since comparable records began in 1992.

Sales are slowing just as merchants prepare for the holiday selling
season, which may account for as much as 35 percent of a retailer's
revenue.

The median forecast of 75 economists surveyed projected purchases
would drop 0.7 percent following a previously reported 0.3 percent
decline the prior month. Estimates ranged from a fall of 1.5 percent
to a 0.1 percent gain.

Sales excluding automobiles decreased 0.6 percent after falling 0.9
percent the prior month. They were forecast to drop 0.2 percent from
the prior month, according to the survey median.

Eleven of the 13 main categories tracked by Commerce showed a drop in
demand last month, led by a 3.8 percent slump at auto dealers.
Carmakers see little relief in sight.

Little Relief Seen

``We continue to see the trend of the past couple of months,'' Ford
Motor Co. North American chief Mark Fields said in the Ford plant in
Dearborn, Michigan.

GMAC LLC, the lender once owned by General Motors Corp., said this
week it will grant financing only to buyers with credit scores of at
least 700, who represent about 58 percent of U.S. consumers.

Industry figures earlier this month, which are the ones used to
calculate gross domestic product, showed cars and light trucks sold at
a 12.5 million annual pace in September, the fewest since 1993.
October sales may drop to an 11 million pace, the first time the rate
has dropped below 12 million since April 1983, according to an
estimate by an analyst at Deutsche Bank AG.

Sales at furniture stores dropped 2.3 percent, the most since February
2003, and purchases at clothing outlets decreased by the same amount,
the most this year. Americans cut back on visits to restaurants and
bars, where sales dropped 0.5 percent, the most since January 2007.

Gap, Macy's

Weakening demand at merchants such as Gap Inc., J.C. Penney Co. and
Macy's Inc. also hurt total purchases, signaling retailers may be
heading for the worst holiday shopping season in six years.

Terry Lundgren, chief executive officer at Macy's, the second-biggest
U.S. department-store chain, forecast a recovery in sales won't begin
until the second half of next year.

``The most important issue for us is jobs,'' Lundgren said in an Oct.
10 telephone interview. ``That's what has to stabilize. If you lose
your job, that affects everything.''

Excluding autos, gasoline and building materials, the retail group the
government uses to calculate GDP figures for consumer spending, sales
dropped 0.7 percent, after a 0.4 percent decrease in August. The
government uses data from other sources to calculate the contribution
from the three categories excluded.

The only categories registering gains last months were service
stations, with a 0.1 percent increase, and health and personal care
stores, where sale rose 0.4 percent.

Expansion Ends

Consumer spending fell at an annual rate of 2 percent in the third
quarter, bringing to a halt a record expansion that began in 1992,
according to the median estimate of economists surveyed in the first
week of October. Purchases will probably drop at a 0.9 percent pace in
this quarter and be unchanged in the first three months of 2009, the
projections also showed.

The U.S. has lost 760,000 jobs in the first nine months of the year
and the jobless rate was unchanged at a five-year high of 6.1 percent
in September, the Labor Department reported earlier this month.

The government passed a $700 billion bank rescue package this month to
thaw credit markets frozen by mounting losses on mortgage-backed
securities. The plan will include direct cash infusions government
purchases of preferred stock in the nation's biggest banks, and
guarantees on new debt.

The Fed, as part of a concerted effort with other central banks, cut
the target on its benchmark rate by a half point last week and
Chairman Ben S. Bernanke signaled policy makers are ready to lower
borrowing costs again showed the markets not stabilize.

To contact the reporter on this story: Bob Willis in Washington at
bwillis@bloomberg.net

From: Travis
Date: Tue, Oct 14, 2008
Subject:  The Timing of the Financial Crisis & Peak Oil

 

 

The Timing of the Financial Crisis & Peak Oil
October 13, 2008
http://www.jeffvail.net/2008/10/timing-of-financial-crisis-peak-oil.html
 
Here is the big topic that needs to be developed over the next several weeks and months: the interrelationship between peak oil/peak energy and the financial crisis/global economy.
 
In my opinion, it's necessary to take a deeper look at the impact of the financial crisis on our economy--because it is not clear at this point that "financial crisis" is the same as "general economic crisis." The financial crisis is like a falling soufle--you pump enough air into something by way of what I've called "financial wizardry," and eventually it will pop and deflate. But it isn't like a balloon--when the derivative-driven froth is blown off the pint of beer, there's still beer underneath. It's a question of how much...
 
I'll stop with the metaphors (for now). It's undeniable that the implosion of global credit and derivatives markets has very real effects--both on the global demand for oil and for general economic activity.  However, the recent tumble in oil prices is, in my opinion, more due to the aggressive pricing into the market of a long global recession than it is of an actual change in the supply and demand situation.  It's worth noting that the IEA just revised their projection for the next year's oil demand growth from 0.8% to 0.5%.  Note that is still growth, a very real 350,000 barrels per day or so.   What is also undeniable is that, even if global credit locks down permanently, there are very real prospects for economic activity and growth. At one extreme, if the credit markets lock down, you can't buy a $800,000 house with nothing down, no credit, and no verification of income. That hurts the housing price bubble. On the other hand, even with no credit market at all, the Adam Smith-style economic opportunities still exist: you can still grow vegetables and sell them, you can still assemble raw materials into a value-added product you can still provide services for money or barter, you can still build furniture, buy houses, etc. Every "real" economic activity that can be done with credit can be done without. There is, of course, a huge catch here: you can't do it the same WAY.
 
You can buy a house with a frozen credit market--you just have to save up the cash purchase price first. Novel approach, I realize, but there you have it. Believe it or not, people used to do this fairly frequently.
 
You can still manufacture complex products. But, rather than getting a loan to buy the capital equipement, materials, and pay the labor, then give it to the customer, get them to pay you, and repay the loan, now you need to 1) get the customer to pay you, or 2) maintain enough cash reserves to carry this cost until payment. This means that either the customer or the producer  needs to save up the money for the end product first, rather than pay later. This also has a dramatic impact on business models--the 'get big first, then figure out how to profit' model advanced by Amazon.com and others simply doesn't work. All these changes really shake up the rate of throughput while System B reverts back to System A.
 
Of course, it's also worth pointing out that our credit markets are nowhere near frozen. They just aren't quite as artificially lubricated as they recently were. As with most things in life, when it comes to credit today you can get anything you want, but most likely not everything you want.
 
So back to the froth on the beer. Most of that froth is going away. The question is how much beer is left underneath. When the economic fantasy land of recent credit-driven excess falls back down to earth, there will still be a very vibrant agricultural sector, a vibrant market for cheap, energy efficient transport, a vibrant market for clothes, homes, etc. just as there always has been. It might be more potatoes and less Cabernet. It might be more renting and less owning a 4,000 square foot home on a $50k/year salary. It might be more buses and light rail and fewer Escalades. And make no mistake--there will still be plenty of excess, plenty of luxury, plenty of waste. But, to the degree that things change, this is opportunity for economic activity and profit. The economies of specialization and centralization haven't gone away (though the energy cost of distribution from a centralized facility must be considered).  But the traditional economies of scale and place will be in increasing competition with what I've termed the "anti-economies."  Whether you're a farmer, an accountant, a furniture maker, or a nurse, you still perform an important economic function.
 
And that's the point: When the froth is gone, there is still a very vibrant economy hiding underneath. In fact, and this is where I start to get concerned, to the degree that we refocus our efforts away from keeping the froth full of air, we'll start to focus more of our effort to revving up the fundamental economic engine that sits beneath it. And so will the rest of the world, which brings me to the other half of the equation: Peak Oil.
 
It seems likely that it takes a few years to fully sort out the frothy mess we're currently in. But when this is sorted out, we'll still have 5 billion people in the developing world who want home heating and air conditioning, want to drive a car, want to eat more meat, want hot water on demand, etc. And there's no fundamental problem with our underlying economics that will prevent them from demanding these things. Except Peak Oil. The next two or three years of focus, budget, and effort fixing the financial crisis are two or three years where we aren't using oru rapidly dwindling supply of high net-energy surplus oil and gas to invest in a renewble energy infrastructure or to restructure our economy away from the demand for continual growth. In fact, the short-term drop (or at least fear thereof) in commodity consumption is likely to depress prices enough that there's no financial incentive to even invest in keeping production steady.
 
We're setting ourselves up for the perfect storm. Resurgent global demand for energy will hit just about the time that our energy supplies (especially our net energy supplies) begin to rapidly decline. As I've said in jest many times on this blog, the Mayan prophecies about 2012 may not be that far off the mark--at least as far as timing is concerned. This topic--the interrelationship (and political disconnect) between finance and energy, and what we can do about it--will be a frequent topic going forward...
 
From: Travis
Date: Tue, Oct 14, 2008
Subject:  From the Subprime Crisis to the Financial Meltdown, Peak Oil the Hidden Responsible

 

 

From the Subprime Crisis to the Financial Meltdown, Peak Oil the Hidden Responsible
October 12, 2008
http://www.ireport.com/docs/DOC-112467
 

In a recent article Joseph Stiglitz, Nobel Prize laureate in Economics, argued the current financial crisis was caused both by "dishonesty on the part of financial institutions, and incompetence on the part of policymakers" [1]. Others like the Australian Prime-Minister add that widespread greed is to blame for the current events [2]. While these explanations manage to explain the evident excesses of our financial system, they do not say how the system which used to run roughly well suddenly stopped working.
 
Everyone would agree that the financial crisis started once the banking sector got into troubles. The banking sector for its part, finds the causes of its difficulties in the subprime crisis. To go back further in the events timeline, we acknowledge that the subprime crisis happened once borrowers became unable to pay back their mortgages.
 
So yes, it was a serious mistake to lend money to people who could not afford it, but why did these people abruptly become unable to pay? The reason is most important and commentators of the crisis systematically fail to discuss and analyze it. In 2006, interest rates were raised in the USA, so the monthly bill, usually poor borrowers of subprime mortgages had to pay, rose dramatically, until they could no longer pay it and saw their houses confiscated; thus contributing to the housing market plunge.
Finally, interest rates were increased in order to fight rising inflation, which started with the dramatic surge in oil prices the world faced over the past few years. So yes, the financial crisis finds its roots in the oil crisis and nobody seems to care about it.
 
The current events that nobody saw coming, were already announced in as early as 2006 by Dr. Colin Campbell, a geologist, former Vice-President of Fina Oil Company and founder of the nowadays respected ASPO (Association for the Study of Peak Oil). On a video interview [3] available on YouTube, he declared:

"Expansion becomes impossible without abundant cheap energy. So I think that the debt of the world is going bad. That speaks of a financial crisis, unseen, probably equalling the Great Depression of 1930; it's probable we face the Second Great Depression. It would be a chain reaction, one bank would fail, and another one would fail, industries will close…"
For people who are not aware of the Peak Oil theory, and sadly they are still the vast majority today, this theory advanced by a wide range of energy experts argues the world is going to face, in the near future, a permanent and irreversible decline in global oil production. While it would be too long to present in details the theory, the following quote from Dr. Schlesinger, the former US Secretary of Energy, Secretary of Defence and CIA Director tell us how seriously the theory is taken at the highest levels of decision-making:

"It's no longer the case that we have a few voices crying in the wilderness. The battle is over. The peakists have won." [4]
 
Nowadays, we only found three leading and loud opposing voices to Peak Oil in the energy market, namely the OPEC, ExxonMobil and the CERA consulting group. As we can see, neither OPEC nor ExxonMobil are renowned for their scientific integrity and objectivity. Regarding CERA, their predictions in the evolution of oil prices made since 2002, were wrong seven times in a row [5]. In light with these appalling projections, the legitimacy and strength of CERA's denial of an imminent peak are at best mistrustful.
 
Before going further, aren't their any alternatives? Hydrogen, ethanol or electric cars? Well here the problem comes from timing, as the decline in oil production is expected to happen in 2008 according to the ASPO. A report requested by the US Department of Energy, known as the "Hirsch Report", concludes:

"Over the past century, world economic development has been fundamentally shaped by the availability of abundant, low-cost oil. Previous energy transitions (wood to coal, coal to oil, etc.) were gradual and evolutionary; oil peaking will be abrupt and revolutionary… The world has never faced a problem like this. Without massive mitigation at least a decade before the fact, the problem will be pervasive and long lasting." [6]
 
Unfortunately, we don't have ten years and world leaders do not even understand the crisis. From this point how is the situation going to evolve? Michael Meacher, a British Labour MP and former Environment Minister identifies the Peak Oil crisis as "an apocalyptic scenario" [7]. A Deutsche Bank paper on oil depletion goes in the same direction:

"The end-of-the-fossil-hydrocarbons scenario is not a doom-and-gloom picture painted by pessimistic end-of-the-world prophets, but a view of scarcity in the coming years and decades that must be taken seriously." [8]
 
To come back to the financial crisis, we have witnessed an impressive fall in oil prices over recent weeks under fears of an imminent global recession. However, the massive US bailout plan and similar European supports to the banking sector are likely to maintain an artificial growth at high costs and to the detriment of states' debts. Once we realize oil demand will not decline and will even continue to grow, as mentioned last week by the IEA [9], oil prices will once again surge. Regrettably, when facing the next crisis which is likely to be unprecedented, the world will no longer afford an emergency plan. In fact, the US bailout makes an emergency plan to develop alternatives to oil improbable. We have used our last bullets, and missed the target.

Recent events have showed us how officials and mainstream commentators failed to forecast the current crisis. It is time to finally take the Peak Oil movement seriously, failing to do so would result in a nightmare scenario, Dr. Campbell and others have been desperately warning for too long.

 

[1] http://www.guardian.co.uk/commentisfree/2008/sep/16/economics.wallstreet
[2] http://www.radioaustralia.net.au/news/stories/200810/s2382783.htm?tab=latest
[3] http://uk.youtube.com/watch?v=71Y2yAAHHRw
[4] http://www.odac-info.org/sites/odac.postcarbon.org/files/TIME31-3-08colourC.JPG
[5] http://home.entouch.net/dmd/cera.htm
[6]
http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf
[7]
http://www.petroapocalypsenow.com/film.html
[8]
http://www.dbresearch.de/PROD/DBR_INTERNET_DE-PROD/PROD0000000000181487.PDF
[9]
http://www.bloomberg.com/apps/news?pid=20601087&sid=a9gBHHeTGzmU&refer=home
__._,_.___
Socialism vs. the government bailout of capitalism
By Tom Eley
15 October 2008
Use this version to print | Send this link by email | Email the author

The breakdown of the US financial system and the government bailout of
Wall Street have seriously discredited the ideological justifications
of capitalism.

Worship of the “free market” has long been something of a secular
religion in the US. Capitalist ideology has proclaimed that the
market’s “invisible hand” will best advance the interests of
historical progress, that taxes on the rich and regulations on big
businesses must be reduced because only the “risk-takers” know where
resources can best be allocated, that any sort of government
intervention to improve the living conditions of workers, the poor,
the elderly and jobless youth creates a “climate of dependency,” that
government cannot simply “throw money” at problems, etc., etc.

All these shibboleths now stand exposed as rank hypocrisy, as the
biggest financial institutions belly up to the public trough. Yet
amidst this historic crisis of the capitalist system, some of those
opposed to Treasury Secretary Henry Paulson’s Wall Street bailout have
claimed that the measures employed are “socialist.”

Suddenly—17 years after the Soviet Union’s collapse and the supposed
“death of socialism”—the “S” word is being bandied about by American
politicians and media pundits.

Charges that the Wall Street bailout is socialism have come most
frequently from the far right wing of the Republican Party. To note a
few examples, Congressman Jeb Hensarling, a Texas Republican, claimed
that Paulson’s plan may put the US on, “the slippery slope to
socialism.” Representative Sam Johnson, also of Texas, warned, “As a
relentless supporter of free enterprise, I fear we are rushing
headlong into socialism.” Senator Jim Bunning of Kentucky called
Paulson’s measures, “financial socialism” and “un-American.”
Congressman Thaddeus McCotter of Michigan even compared the bailout to
the Bolshevik Revolution of 1917.

The claim that the Wall Street bailout is a socialist measure is
absurd on its face. Paulson, the former CEO of Goldman Sachs, who has
an estimated personal fortune of $700 million and is a member of the
most right-wing administration in US history, has authored a bill that
will ultimately divert trillions of dollars to the coffers of the
biggest banks in the land. This is socialist?

Such claims display a combination of stupidity and deceit. Those who
make them rely on the low level of historical knowledge and political
understanding among the American people, for which the population is
not to blame. It is the product of the decades-long promotion of
political reaction and celebration of the most backward ideologies and
conceptions—including hostility toward science—along with the gutting
of public education.

A central component of this debasement of political and intellectual
life has been the promotion of anti-communism, based largely on the
false identification of socialism and Marxism with their political
opposite, Stalinism.

The Socialist Equality Party, at its recent founding congress,
explained concisely what socialism is in its Statement of Principles.

“Socialism portends the greatest and most progressive transformation
of the form of man’s social organization in world history—the ending
of society based on classes and, therefore, of the exploitation of
human beings by other human beings.”

“The key industrial, financial, technological and natural resources
must be taken out of the sphere of the capitalist market and private
ownership, transferred to society and placed under the democratic
supervision and control of the working class. The organization of
economic life, on the basis of the capitalist law of value, must be
replaced with its socialist reorganization on the basis of democratic
economic planning, whose purpose is the fulfillment of social needs.

“New forms and structures of genuine participatory democracy—arising
in the course of revolutionary mass struggles and representative of
the working class majority of the population- must be developed as the
foundations of a workers’ government; that is, a government of the
workers, for the workers, and by the workers. The policy of such a
government, as it introduces those measures essential for the
socialist transformation of economic life, would be to encourage and
actively promote a vast expansion of the democratic working class’
participation in, and control over, decision-making processes.”

The bailout measures are being enacted not by the working people, but
are being imposed behind the backs of the people by the most powerful
bankers, through their political representatives in both parties.
Ownership and control of the financial levers of economic life remain
entirely in the private hands of the richest people in the country.
Those who have presided over the failure of private firms are
dictating the terms of their own rescue at the expense of the people.

The social interests that are being defended are determined by the
class nature of the state power that is formulating and enacting the
measures. The events of the past month have demonstrated as never
before that the American government and the US two-party system are
political instruments not of the people, but rather of a financial
oligarchy.

For their part, the right-wing Republicans initially opposed the
bailout from the standpoint of “free market” capitalism. They are not
against government intervention into the market per se. Rather, they
oppose government action that in any way constrains the activities of
the most powerful sections of finance capital.

They label as “socialism” any government measure that limits the
ability of the major banks and corporations to maximize their profits,
including such things as the minimum wage, restrictions on hours of
work, health and safety regulations, environmental regulations, etc.
They oppose tax increases for the wealthy and denounce as “big
government” any and all government-run social programs.

Because the Democrats, along with their presidential candidate,
Barrack Obama, served as the bailout’s most enthusiastic supporters
and its principal legislative midwives, Republicans were able to make
a demagogic pretense of opposing Wall Street. What this shows is not
that the Republicans have converted themselves into the unlikely
defenders of the common man, but how far to the right the US political
establishment as a whole has moved. The Democratic Party, having long
since repudiated any policy of social reform, has openly identified
itself with the financial aristocracy.

What would a socialist approach to the financial crisis look like?
Emergency measures would be taken to transform the great banks, hedge
funds, insurance companies and financial houses into public utilities.
They would be placed under the democratic control of the working
class, with safeguards for the savings of small depositors. Their
resources would be used for productive and socially useful purposes
and to alleviate the suffering of the population.

Trillions of dollars would be allocated to rebuild the infrastructure,
provide new and high-quality housing, improve education, provide
universal health care and access to higher education, and clean up the
environment. Everyone would be guaranteed a job and a decent wage. The
workweek would be reduced, with no loss in pay, and wages would be
fully indexed to account for inflation.

The tax burden would be shifted from the working class to the richest
10 percent of the population.

There would be a full and public investigation into the activities of
the banks and financial firms and the books of all major corporations
would be opened to public inspection.

The wealth of financial industry executives and large stockholders
would be appropriated, and they, along with their servants among the
political elite, would face criminal investigation for the plundering
of the economy that has led to the current crisis.

In order to fight for this socialist perspective, working people must
break with the two parties of big business and build an independent
political party that has, as its primary aim, the reorganization of
the economy to meet social needs, rather than the profit interests of
the financial elite. In the November election, only the Socialist
Equality Party and its presidential and vice presidential candidates,
Jerry White and Bill Van Auken, are advancing this socialist
alternative. We urge readers of the World Socialist Web Site to
support our campaign, vote for Jerry White and Bill Van Auken, and
join the SEP.

BARACK'S BRILLIANT PLAN

Obama's Economic Rescue Package So On The Mark It Would Be A True Game
Changer, In A Good Way
by

Ben F. Terton
 October 14, 2008 –   Half a decade.  That's how long I've waited to
write this article.

 

For half a decade the only articles I've been able to write were the
ones that explained that, despite "expert" commentary to the contrary,
the nation was headed toward a major economic collapse.  And then that
the collapse was beginning.  And then to repeat, yes, really, there's
going to be a collapse.  And then, finally, I guess now you see what I
meant.

 

The reason I've been able to predict exactly what was going to happen
to the economy half a decade ahead of time was not because I'm
psychic.  It was because during that period, with Republican
conservatives in control of the government, there were no significant
changes of policy.  And so the disastrous course that was set
beginning with the first round of Bush tax cuts just trickled on and
on, like a slow motion bullet headed toward the nation's heart but
with the nation pinned there by the GOP, blindfolded by media
nonsense, and so doomed by an easily escapable problem.

 

Any significant change of policy during that time could have headed
off this disaster.  But neither Republican nor Democrat ever really
hit the mark.

 

Until now.

 

Senator Obama's plan was shocking for many reasons.  So far ahead in
the race, it was unexpected that he would release such a bold,
detailed plan.  But more than that, it was truly shocking to see, for
the first time in a generation, a politician hit a mark so directly on
the head.  Delivering exactly to the true middle class, rather than to
either the poorer people or the richer, Obama's simple, relatively
cheap economic rescue plan, if enacted, would immediately and
significantly alter the course of the American economy for the better.

 

Here's why this plan blows all previous ones away.

 

The first part is pretty simple and only somewhat significant.  His
offer of tax cuts directly tied to the creation of new jobs - offering
$3000 per new job created in America.  For years one of the things I
pointed out as a flaw in the conservative dogma was that they claimed
giving tax cuts to businesses would create jobs, but they never
attached any mechanism to the cuts that made it so.  They simply
handed money to companies, which could decide to use the money for
bonuses for their CEO's - which is what they did - rather than create
jobs.  If they truly wanted to use tax cuts to business to create
jobs, I wrote for years, there had to be something in the cuts that
required them to be used for hiring.

 

Obama's plan does exactly that.  And notice the last part of his plan
- "$3000 per new job created in America."  Previous cuts allowed
companies to spend their cash overseas.  Obama explicitly stops this.

 

What you see here is a fundamental shift - Obama is actually looking
out for America and for the American people.  The Republicans were not
stupid.  They knew if you just handed cuts to businesses without
specifying what the money had to be used for, it would go to bonuses
and overseas projects.  They just didn't care.  They were the rich
CEO's and they just wanted companies to get richer.

 

What Obama proposes in this part is simple, but massively different.
For the first time in years, the American people are not having their
hands tied behind their back while the government spits directly in
their face.  No lies, no games, no looking the other way.  Barack
Obama knew what needed to be done, but didn't put his trust in
businesses, as conservatives do.  He, in effect, instituted oversight
and regulation all within a tax cut.  And with that he got at the
fundamental flaw of the conservative economic scheme:  the idea that
businesses act with America's best interest in mind, rather than for
the profit of their executives and stock holders, which we all know is
actually the case.

 

This part of Obama's plan is very nice.  But what he came up with next
was not only brilliant, but the most significantly positive step one
could have imagined to immediately fix what is broken in the American
economy - and in such a way that it has no real downside.

 

Barack's plan would allow people to withdraw 15% of their retirement
funds, up to $10,000, in 2008 and again in 2009.

 

Now why is this such a big deal?  And when I say big deal, I mean so
big this could single-handedly save the American economy and head off
depression and collapse.

 

Here's the rub:  the average American family currently owes just under
$10,000 in credit card debt.

 

What was destroying the American economy - and going to continue to
destroy it for years - was that the American people weren't just spent
out, they were overspent.  After decades of spending more than they
actually had thanks to easy credit, not only were they going to have
to cut spending to get back to what they could afford, but all across
the nation, people were completely slamming the door on spending to
focus on trying to pay down all the debt they had accumulated.

 

Now with the numbers we've been hearing lately, $10,000 might not seem
that much.  But for your average middle class family, to pay that off
while still getting by would literally mean years - two to five years
- of eliminating virtually all non-essential spending.  Cars,
vacations, even going out to dinner, all things big and little were
getting cut from household budgets left and right.  With 2/3 of the
American economy consumer spending, this was the problem that was
destroying our nation.

 

Now look at Barack's plan.  A family can, without penalty, immediately
take $10,000 from their IRA and, instantly - instead of crimping and
cutting for 4 years - have that debt be gone.  And for those a little
deeper in, they could do it a second time right after January, since
it's allowed in 2008 and 2009.

 

There are a number of very important things to notice about this
plan:  unlike a tax cut stimulus plan, this doesn't cost the
government a massive amount of money the nation would have to borrow.
This plan allows people to help themselves get out of the mess they
made.  And, at the same time, it both:  1)1 injects a bunch of cash
into the economy, particularly helping fend off bank collapses by
having people be able to pay off their debts - all without government
borrowing - and, 2)  gets people instantly out of the holes they are
in, enabling them to begin spending again, and so instantly reviving
every layer of the economy, from the corner pizza store to the car
dealer.

 

The best part of this again, like with the first part of Barack's
plan, is that more than just being a new policy, it is an important
change of philosophy and a more advanced, doubly positive solution.
Rather than the government bailing out those in trouble, this allows
people to be bailed out but instead by themselves.  Beyond this being
better for the nation's economy, it is the philosophy of self-reliance
and responsibility.

 

Most notably, this plan, unlike previous plans offered by Democrats,
which helped only the poorer among us, or by Republicans, which helped
only the richer among us, this plan directly hits the mark of helping
the one group that always gets missed:  the true middle class.  If you
are poor, this part of the plan won't help you at all.  You won't have
much of a 401(K), if any, and so won't have any funds to draw on.  And
if you are rich, $10,000 won't mean much one way or another.

 

But for the hard working people in the middle, people earning
typically from the $30K's all the way up to $200K, this will be a
lifesaver and game changer for each and every household.  Even for
families that can only withdraw $2000, that would still be years worth
of paying down credit cards, since families with less would be able to
pay less each month, and would be caught in the credit card interest
cycle.  Suddenly, boom, $2000 gone in 2008, another $2000 in 2009.
Back in the game.

 

And for the others who can take more, they can either knock out credit
card debt or, for those who mortgage woes, use that $10,000 a year to
stay afloat for a while - $10,000 can buy a lot of time for a mortgage
holder.

 

And again, since the funds are personal funds and not a tax handout,
it is like a massive stimulus program and bank rescue program combined
with no real cost to the nation whatsoever.

 

That is true brilliance.

 

This part of the plan could put people back on their feet in an
instant and save countless banks and lenders by enabling people who
would have otherwise gone bust to meet their obligations.

 

The only question anyone could have about this plan would be won't it
hurt at retirement time?  But truly, if everyone keeps crimping their
spending for years to pay down this debt instead of doing it the way
Barack's plan does, so many people would lose their jobs due to
economic retraction that they would be far worse off come retirement
time.

 

It's been a long time since I've been able to write an article that
had any positive economic news in it.  It's been a long run of dire
and dark.  But now there is hope.  If this plan is enacted, combined
with Obama's claim that he would launch an all out drive to build a
new alternative energy economy, not only can America avoid a massive
depression, but America could pull out of this recession in rather
short order and, even better, climb to economic heights never seen
before by bringing home all the wealth that's been going over to the
Middle Eastern oil cartels, Russia, and Venezuela.

 

The third part of Obama's plan is also very sharp.  State and local
governments are in dire straights.  Declining property tax, etc are
sending numerous of them toward bankruptcy.  Obama's plan would set up
an emergency loan agency just for state and local governments.  You
know where they've had to go before?  To a company called AIG - yes,
that one we've had to bail out twice now, while it spends half a
million on posh retreats.  No more would local governments have to go
to AIG - nor go bankrupt.

 

Again, philosophically, Obama is ending the era of putting America's
trust in business.  No more trusting AIG to back our governments.  We
are instead going to trust our government over the businesses.  A
fundamental shift, and not a moment too soon.

 

The last part of Obama's plan is a bit of a snoozer - a 90-day freeze
on foreclosures.  Not something too exciting one way or another.  But
it does buy some time for the other parts of the plan to be enacted,
as well as for people to make plans for dealing with their mortgage
situations.

 

It can not be overstated how important and miraculous this plan rolled
out by Barack Obama is.  And for a candidate who was far enough ahead
in the polls that he could have played it safe and avoided putting any
plan out there, it was a brave move, and much to the nation's benefit.

 

Politically, by truly putting tangible economic turnaround out there
for the entire American middle class - pending the election of Obama
and Democrats so they can pass this bill right after the election -
Obama has won the pocketbooks, and likely the hearts and minds of
millions of middle class voters.  They say people always vote their
pocketbooks.  For millions, this plan would lift misery and stress and
replace it with a return to normal life, with no bill left to pay down
the road.  With a vote for Barack meaning $10,000 will instantly be
put in their pockets, it is hard to imagine anything but an even more
massive swing toward Obama's candidacy by middle class voters.  Look
for a possible bluing of many currently red states, from the plain
states to parts of the south.

 

I don't know where this idea came from for Obama - if it was Warren
Buffet or another advisor who gave it to him.  But for Obama to choose
the plan that exactly hit the mark, and in the gentlest, smartest
possible way, he has shown in one of America's most desperate moments
ever that he has the vision and leadership to right the nation's ship
amidst the wildest storm.

 

Bravo.  And thank you, Barack, for at last allowing me to write an
article about a potential positive development for the American
economy.

 

 

http://www.moderateindependent.com/v6iOCT142008Baracksplan.htm

Why Financial Fascism Instead of Communism?
Posted by Thomas DiLorenzo at 10:08 AM

"Private ownership of savings . . . can be socially controlled. The social abuses connected with savings are encountered mainly in the mechanics of investment and financial management by the large banks, savings institutions, and insurance companies which handle savings. It is a relatively easy matter for the State to preserve the present de facto rights and interests of small savers while completely nationalizing the financial institutions which now administer their savings."

"It cannot be repeated too often that what prevents adequate public regulation is liberal norms of law or constitional guarantees of private rights. There is no need to expropriate private ownership of . . . savings . . . in order to maintain adequate social control . . . . The fascist State can easily convert the . . . large corporations into State-controlled enerprises, the present owners and creditors of which will receive income bonds . . . . There is no real difference between being a yes-man official of a billion dollar bank and being an official of a State bureaucracy . . ."

From the pro-fascist American author Lawrence Dennis, in his 1936 book, The Coming American Fasicsm, p. 176, in the chapter entitled "Why Fascism Instead of Communism?".

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Private Sector Loans, Not Fannie or Freddie, Triggered Crisis
Sunday 12 October 2008
by: David Goldstein and Kevin G. Hall, McClatchy Newspapers
   Washington - As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.
    Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.
    Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.