Global Games: Farmer Suicides by the Tens of Thousands in India

“Publicly available statistics from the Indian government show that 166,304 farmers in India have committed suicide over the last ten years. The death rate has been increasing throughout the past decade, to the point where today there is a suicide every 30 minutes.  More shockingly, these figures are understated as they neglect the inclusion of women, who are not recognized as landowners and therefore not considered to be farmers.”

 Read more here.

Comment:

Problems in sanitation and water in India were my first interests when I began writing as a citizen journalist. But the farming crisis is something I don’t completely understand. Obviously the number of suicides among farmers, who constitute a sizeable proportion of the Indian population, would be high in a country with a population of a billion plus. What I need to research is the relationship they have to the rate of suicide in other segments of the population, in other states, and at other times.

Here is more on the subject from Sainath, an Indian journalist who has won international accolades covering the story. Sainath is a big critic of the neo-liberal growth oriented model of development in India between 1991 and today – the so-called “liberalization” of India.

Arguing the opposite, here is Jagdish Bhagwati, Columbia University professor, and a well-known advocate for liberalization, whose lucid and very well-written books I referenced for the chapters on globalization in “Mobs, Messiahs and Markets.”

I will be posting more as I read.

(An aside: This subject is not at all disconnected from my interests on the American political front, since the same players in the banking scandals – Goldman Sachs et. al.. – have been investing heavily in Indian real estate in agricultural areas.  That’s the plus side of being a generalist, in an age when specialization is the norm. You can connect the dots better and faster.  One example. The only reason I was able to see that the torture of women at Abu Ghraib  wasn’t an ‘Arab street rumor’ was because I had seen at first-hand how the American legal, medical, and carceral systems can operate when it comes to people without money or clout.  I say “can” because this is not a blanket indictment of the system, which still has safeguards and balances beyond what exists in most countries. In fact, given the sustained nature of the state’s assault on the tradition of individual liberty here, I’m surprised how well civil society still functions, however crippled and muffled by the federal government.

Back to India. The India “growth” story always had a good deal of varnish in it. Anyone who lives there or visits often knows the downside of having huge multinationals parked in your back yard – skyrocketing rents/land prices, water shortages, electricity “brown-outs” that go on for hours in the summer. There have some been good things too, of course. Jobs, more and better goods and services, better roads and communication. Nevertheless, growth is a much more complicated story than the investment community would have you believe. 

Madoff Funds Not To Be Disclosed Publicly

“THE US Securities and Exchange Commission, which sued Bernard Madoff last month for allegedly directing a $US50 billion ($71 billion) fraud, is to withhold public access to a list of his assets filed on Wednesday.

A federal judge ordered Madoff to provide the commission with an account of all investments, loans, lines of credit, business interests, brokerage accounts and other holdings. The court

did not authorise its public disclosure, said a commission spokesman, Andrew Calamari, who confirmed receipt of the list.

“I think one of the fears here is that much of this money may be in offshore funds,” said Professor John Coffee, of Columbia Law School, adding the commission wanted to keep the assets secret to protect them. “There is the danger that foreign regulators and foreign creditors may seek to seize that money if the names and sources are made public.”

More at The Sidney Morning Herald.

Zionism Versus Neo-Zionism

A useful distinction from philosopher Ted Honderich:

“By Zionism I mean the founding and actually necessary defence of the state of Israel in roughly its 1948 boundaries. It was justified by the Holocaust in the past and is justified by the existence of a Jewish homeland now. By neo-Zionism I mean the taking from the suffering Palestinians, the only indigenous people of historic Palestine, at least their autonomy in the last fifth of their homeland.

A decent humanity, the Principle of Humanity, ultimately justifies Zionism. It condemns neo-Zionism absolutely. There aren’t two sides to the story of a real rape….”

Are We In For George W. Obama?

Glenn Greenwald on bipartisan venality: 

“With passage of the Act, Democrats delivered to the Bush administration everything it wanted — and more. GOP Sen. Kit Bond actually taunted the Democrats in the Times for giving away the store: “I think the White House got a better deal than they even had hoped to get.” Making matters much worse, by delivering this massive gift to the White House, the House undid one of its very few good deeds since taking over in 2006: its galvanizing February 2008 refusal to succumb to Bush’s rank fear-mongering by allowing “The Protect America Act” to expire instead of following the Senate’s lead in making it permanent.

Adding the final insult to this constitutional injury, Barack Obama infamously violated his emphatic pledge, made during the Democratic primary, to filibuster any bill containing telecom immunity. With the Democratic nomination fully secured, Obama blithely tossed that commitment aside, instead joining his party’s leadership in voting for cloture on the bill — the opposite of a filibuster — and then in favor of the bill itself. The photographs of the celebratory, bipartisan signing ceremony that followed at the White House — where an understandably jubilant George Bush and Dick Cheney were joined by a grinning Jay Rockefeller, Jane Harman and Steny Hoyer — was the vivid, wretched symbol of what, in 2008, became the fully bipartisan assault on America’s basic constitutional guarantees and form of government.”

On The Smartness Of Bombs

“…one man was killed in a strike in the Jebaliya refugee camp in northern Gaza. Separate airstrikes killed five other Palestinians — including a young teenage boy east of Gaza City and three children — two brothers and their cousin — who were playing in southern Gaza, according to Health Ministry official Moaiya Hassanain. One of the three reportedly was decapitated…”

That’s MSNBC.

Notice that this information is buried in the center of a long column, in paragraph 12, long after a casual reader’s eye has wandered away.

What does the reader retain?

1. The headline:  

Israel lets 300 with foreign passports exit Gaza –

Airstrikes hit mosque, Hamas homes; troops await possible ground assault

(Comment: Obviously the airstrikes also hit civilians and children, but that doesn’t make it to the headlines. And that tag about waiting for a ground assault lets you know implicitly that whatever is going on now is NOT an assault. 

2. Paragraph one:

“Israel bombed a mosque it claimed was used to store weapons and destroyed homes of more than a dozen Hamas operatives Friday, but under international pressure, the government allowed hundreds of Palestinians with foreign passports to leave besieged Gaza…”

Notice the word “claim,” which sounds even-handed; it makes you think the piece is neutral. Then, notice the use of the phrase “Hamas operative” that is also repeated in the body several times before the civilians deaths are described. 

Now here’s Die Welt‘ s opening paragraph: 

“Israel killed a senior Hamas leader in an air attack on his home on Thursday, striking its first blow against the top ranks of the Islamist group in a offensive that has claimed more than 400 Palestinian lives. Nizar Rayyan, a cleric widely regarded as one of Hamas’s most hardline political leaders, had called for renewed suicide bombings inside Israel.

“The deadliest conflict in the Gaza Strip in four decades has killed at least 412 Palestinians and wounded some 1,850. About a quarter of the dead were civilians, the U.N. estimates….”

It also doesn’t mention the casualties today at the top, but at least it tries to provide some context for the story.

There has to be a better way than this.  So much for our obsession with “IQs”, “quants”, “geeks”, “rocket science”, “smart bombs” (like the 2000 pounder dropped on Gaza earlier this week). We’ve had a year where all this high-powered intelligence, delinked from common-sense and conscience, turned out to be as sub-prime as any of the debt it was sending out to the four corners of the globes.

We have more technology and science at our finger tips than any civilization in history – so much as we know of it.

But when it comes to conflict resolution (a poli sci term I detest), we’re back to the mindless world of carnivores and sharks.

Over 60,000 Muslims protested the attacks on Gaza, in countries ranging from Turkey to Egypt, Jordan, Aghanistan, and Indonesia.

They were joined by protestors in Switzerland.

Meanwhile, Omar Barghouti provides the context for the media disinformation on the assault on Palestine:

 “An Israeli army spokeswoman went further stating. “Anything affiliated with Hamas is a legitimate target.” Given that, in the ghetto of Gaza, Hamas is effectively the “ruling” party  — it was democratically elected, after all — and its network of social and charitable organizations are the largest provider of social services to the impoverished and besieged population, all of Gaza’s civilian infrastructure, public schools, hospitals, universities, law and order organs, traffic police, sewage treatment and water purification stations, ministries providing vital services to the public, mosques, public theatres and many non-governmental institutions can technically be considered “affiliated” with Hamas. Lest the reader feels that this is an exaggeration, today, in the first hours of the first day of the new year, the Israeli air force already bombed the following “targets” in Gaza: the Palestinian Legislative Council, the Ministry of Education and the Ministry of Justice. Earlier, several mosques were pulverised to the ground. So were main buildings in the Islamic University of Gaza, which serves 20,000 students. Ambulances and private homes were not spared either…..”
 

ISI Falls To Thirty Year Lows

From AP:

“Manufacturing activity fell more than expected in December, hitting the lowest reading in 28 years as new orders and employment continue to decline.

The Institute for Supply Management, a trade group of purchasing executives, said Friday its manufacturing index fell to 32.4 in December from 36.2 in November. Wall Street economists surveyed by Thomson Reuters had expected the reading to fall to 35.5.

Component readings of the index hit historic lows. New orders fell to their lowest level on records going back to 1948. Prices fell as the number of respondents saying they had paid more in December than in November sank to its lowest monthly reading since 1949.

Any reading for the overall index above 50 signals growth, while a reading below 50 indicates contraction.”

The New York Times On Why Indian Banks Didn’t Go Down

“Unlike Alan Greenspan, who didn’t believe it was his job to even point out bubbles, much less try to deflate them, Mr. Reddy saw his job as making sure Indian banks did not get too caught up in the bubble mentality. About two years ago, he started sensing that real estate, in particular, had entered bubble territory. One of the first moves he made was to ban the use of bank loans for the purchase of raw land, which was skyrocketing. Only when the developer was about to commence building could the bank get involved — and then only to make construction loans. (Guess who wound up financing the land purchases? United States private equity and hedge funds, of course!)

Then, as securitizations and derivatives gained increasing prominence in the world’s financial system, the Reserve Bank of India sharply curtailed their use in the country. When Mr. Reddy saw American banks setting up off-balance-sheet vehicles to hide debt, he essentially banned them in India. As a result, banks in India wound up holding onto the loans they made to customers. On the one hand, this meant they made fewer loans than their American counterparts because they couldn’t sell off the loans to Wall Street in securitizations. On the other hand, it meant they still had the incentive — as American banks did not — to see those loans paid back.

Seeing inflation on the horizon, Mr. Reddy pushed interest rates up to more than 20 percent, which of course dampened the housing frenzy. He increased risk weightings on commercial buildings and shopping mall construction, doubling the amount of capital banks were required to hold in reserve in case things went awry. He made banks put aside extra capital for every loan they made. In effect, Mr. Reddy was creating liquidity even before there was a global liquidity crisis….”

More at the New York Times on how India avoided a crisis.

Comment:

This is a very interesting piece, as much for what it says, as for what it doesn’t say.

Look at the first paragraph:

“What has taken a number of us by surprise is the lack of adequate supervision and regulation,” Rana Kapoor was saying the other day. “This was despite the fact that Enron had happened and you passed Sarbanes-Oxley.”

Nowhere does the writer, Joe Nocera, or his editor, qualify this quote. The reader would be left with the idea that there are no regulations in the US banking system. He would think it was all the fault of one man, Alan Greenspan, the chairman of the Federal Reserve Bank, who didn’t do what he should have.

Well, Greenspan didn’t. But there were regulations on the books alright. The problem is not lack of regulation, it’s the existence of a banking cartel and a its PR wing in the financial press.

  What’s more, the Fed is NOT a central bank in the same way as the Indian bank. The Fed system is a private-public system.

What’s the overall effect of the piece? To leave people with the impression that all that’s needed is to replace our financial czar and expand his role.  All we need to do is put in an anti-Greenspan, who can jack up interest rates to 20%. That’s Paul Volcker, on Obama’s team. I am all for interest rates at 20% and a tougher application of the laws. 

But as long as the people who monitor the laws are drawn from the same industry, don’t call it a free market.

At least, the Times admitted that none of this means that the Indian economy isn’t taking a hit. Of course, it is…..

The Silence of the Swiss..

“Have you ever heard of the elections in Switzerland?
Have you ever heard of any Swiss political party?
Do you know the name of any Swiss political leader?

They are a true democracy in this vital sense: politics does not consume their lives.

Democracy there sings the “sounds of silence.”

Indeed, when I attended the Geneva Auto Show, I made it a point to ask any Swiss citizen I met the name of their great country’s president. I am proud to report that not a single one of them – and I must have asked hundreds – knew the name of their president…

 ….Some years ago I reviewed Sumantra Bose’s great book on Kashmir; a book that reads as a thriller. Anyone who wants to know about Kashmir should read the book – and also visit the state, as I did in 2002.

During that visit I had a chance to meet the then minister of finance of the J&K government. He said that 90 per cent of his budget expenditure comes from New Delhi.

Wake up all you dunderheads!

This is not Democracy.

This is Political Clientelism. ”

More by Sauvik Chakravarti.

Global Games: World Markets Contracting

From Reuters: 

“For Chinese policymakers worried about social stability the most alarming news may have been the employment sub-index, which showed factories shedding jobs at the fastest pace on record.

Russia’s PMI showed a contraction in manufacturing deeper than the slump during its 1998 financial crisis.

In India, factories cut jobs for the first time in the survey’s 3- year history to reduce costs. The central bank slashed its two key short-term interest rates by 100 basis points to try to stimulate the economy.

In all three countries, factories reported slumping export orders with recession chilling demand in their largest markets — the United States, Japan and Europe.”

and outside BRIC, other world markets are struggling:

” South Korea, which ships a fifth of its exports to China, said export growth this year would be about 1 percent, the weakest since 2001.

Singapore’s government cut its economic forecast to a range between a decline of 2 percent and growth of 1 percent in 2009. Citigroup said that forecast was still too optimistic.

“If we are correct, 2009 will mark the most severe recession in Singapore’s history, surpassing the Asian Financial Crisis and the 2001 tech recession,” said Citigroup economist Kit Wei Zheng.

There were also signs of the slowdown biting in Africa, where some had hoped their less developed economies would be more isolated.

Tanzania cut growth forecasts and put off plans for a sovereign bond. Mauritius cut its 2009 growth forecast, fearing the global impact on its textile factories and the number of tourists visiting its Indian Ocean island beaches. …”

Comment:

That’s the end of “decoupling,” the theory that emerging markets, especially BRIC (Brazil, Russia, India and China) would decouple from a slowdown in Europe and the US.  Right now, they seem to be taking a bigger hit than what the “decouplers” anticipated.

On the other hand, it would be foolish to rush to the conclusion that a global slow-down will work itself out in the same way across the board. Export dependency varies, and in each country the domestic market has a different relationship to the export sector. Singapore, for instance, is more dependent on export demand than India.

Full disclosure: I have a very small holding in the Malaysia country ETF  (EWM) and it  is down about 30%.  MTE (Mahanagar Telecom), the only Indian stock I hold is down about 40%. But my global agricultural and water funds are down only 2% and 3 % each, giving me a total loss of under 5% – mainly from having tried to trade the GLD ETF.

(And, had I not been blogging, I would probably have sold those at the right time too. So, you dear reader, should not gripe too much at me, since doing my public duty at this blog is actually costing me. I daresay, I shall have to look to the Pearly Gates for any reward…unless they’ve been hit too…).

Antal Fekete On the Destruction Of Capital

 “Economists have failed to analyze the effect of open market operations on bond speculation. “See no evil, hear no evil, speak no evil.” I leave the problem to future researchers to find out whether economists made an error of omission, or whether they knowingly became accomplices to the conspiracy of the Treasury and the Fed in a scheme to the aggrandize the power of the federal government….”

That’s Professor Antal Fekete, refusing to mince his words. 

          “Here is what happens when the Federal Reserve resorts to open market operations to buy government bonds as the preferred means to increase the money supply. Bond speculators are very much alive to the need of the Fed to make periodic trips to the open market to buy the bonds. They lie in wait for the Fed. They want to preempt it; they want to buy the bonds first. Later, they would dump them in the lap of the Fed, making risk-free profits in the process at the expense of the public. The Fed does not mind being ambushed. It condones the risk free profits of the bond speculators. It all comes to the same thing: lower interest rates by hook or crook.

Destruction of bank capital

With the open market operations of the Fed providing a dependable tail-wind, the sails of speculators are bulging. The unison bullish response to monetary policy by the speculators has the effect of steadily driving down the rate of interest. The Fed could report to the boss: “mission accomplished”.

          Nobody bothered to investigate the question whether the symbiosis of the Fed and bond speculators (mostly banks) might somehow have a detrimental effect on the economy. It certainly looked like a brilliant scheme of creating positive value out of nothing — nay, out of negative value! Nobody has raised the objection that there “ain’t no free lunch”, that in our world strict conservation laws govern and draw a line between what is possible and what is not. In particular, it is not possible to create value out of nothing. Any appearance to the contrary must involve the destruction of value somewhere else.

          Indeed, creating bond values out of nothing has coincided with the destruction of capital. Capital consumption is an insidious process. It has no obvious symptoms. If anything, like narcotics, it has a euphoric effect on the economy. Its role is to desensitize the victim before picking his pockets. It may fatten the wage envelope, widen profit margins, jack up managerial compensation, but all that is charged to the capital account. As long as there is a capital account, that is. Trouble bursts on the economic scene when the bottom of the capital barrel has been scraped clean. Of course, by that time it is too late. Nothing can be done to stop the rot.

          This is what we have experienced in the fateful year of 2008. While the capital of the banking industry was eroding, there was a feeling of euphoria, a sense of weightlessness, the exhilaration of levitation as capital consumption has given banking operations an extra lift in defying gravity. But no sooner had the last crumbs of consolidated capital disappeared than gravity came back with a vengeance and the banking industry fell out of the sky. All banks, at the same time. It was not a consequence of local mismanagement. It was not primarily a consequence of too lenient lending standards, it was not primarily a consequence of reckless risk-taking. It would have been a statistical oddity if all banks had bankrupted themselves at the same time. There was a common cause: the erosion and ultimate destruction of capital…..”

Here’s more on the details of open market operations.