US Lost CREDIT Rating and Double Dip Depression Becomes Hard Reality as NIGHTMARE for Global Post Modern Zionist Brahaminical Hegemony Darkened. NO PRANAB Statement or Brahaminical Economics May Bail Out Free Sensex Market Economy! Production System Destroyed and US War Economy Linked Indian Economy has NO ESCAPE Route as Dollar Hegemony to be BROKEN and EUROZONE Inflicted!Risilience means EXCLUSION and ETHNIC Cleansing, Nothing Else. Come Forward all Marxists and Ambedkarites! Black Economics and LPG Mafia Rule have to be BLASTED for the Sustenace of ABORIGIN, INDIGENOUS, EXCLUDED and Rural AGRARIAN Mulnivasi India!
Nation-Wise people's movement is the only remedy for solving our Basic Problems.
India's Economy Can Withstand Global 'Negative Sentiments,' Mukherjee Says
Indian Holocaust My Father`s Life and Time - SEVEN HUNDRED THREE
Palash Biswas
http://indianholocaustmyfatherslifeandtime.blogspot.com/
http://basantipurtimes.blogspot.com
US Lost CREDIT Rating and Double Dip Depression Becomes Hard Reality as NIGHTMARE for Global Post Modern Zionist Brahaminical Hegemony Darkened. NO PRANAB Statement or Brahaminical Economics May Bail Out Free Sensex Market Economy! Production System Destroyed and US War Economy Linked Indian Economy has NO ESCAPE Route as Dollar Hegemony to be BROKEN and EUROZONE Inflicted!Risilience means EXCLUSION and ETHNIC Cleansing, Nothing Else. Come Forward all Marxists and Ambedkarites! Black Economics and LPG Mafia Rule have to be BLASTED for the Sustenace of ABORIGIN, INDIGENOUS, EXCLUDED and Rural AGRARIAN Mulnivasi India!
I am NOT Amused as I have been Consistingly Opposing Free Market Economy !What I have written in my Novel AMERICA SE SAVDHAN, just after the First Gulf War, comes True, I am NOT Surprised. Meanwhile, Bharat Mukti Morcha Launched Liberation Struggle Countrywide against the Goreign Rooted Zionist Brahaminical LPG Hegemony Corporate! Let us Stand UNITED!
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Sending shock waves through America, credit rating agency Standard & Poor's has downgraded its top notch credit rating, stripping the world's largest economy of its prized AAA status. Obama administration officials called it "a facts-be-damned decision," saying S&P admitted to an error that inflated US deficits by $2 trillion.
President Barack Obama urged lawmakers on Saturday to set aside partisan politics after a fierce debt battle, saying they must work to put America's fiscal house in order and refocus on stimulating its stagnant economy.
Obama issued the appeal in his weekly radio address recorded just hours before the United States lost its top-notch AAA credit rating from Standard & Poor's on concerns about its deficit woes, a move that could have costly repercussions.
The president, whose 2012 re-election could hinge on his ability to reduce stubbornly high unemployment, called on Congress to back measures to give tax relief to the middle class, extend jobless benefits and pass long-delayed international trade pacts.
But at the same time, Obama -- who was briefed in advance on S&P's downgrade announcement -- challenged fellow Democrats and Republicans alike to follow through on the deal struck in Washington this week that averted the threat of crippling debt default.
"Congress reached an agreement that's going to allow us to make some progress in reducing our nation's budget deficit," he said. "And through this compromise, both parties are going to have to work together on a larger plan to get our nation's finances in order."
"In the long term, the health of our economy depends on it," he said.
Obama also stressed, however, that "in the short term, our urgent mission has to be getting this economy growing faster and creating jobs."
He is seeking to overcome partisan rancor after a $2.1 trillion deficit-reduction deal reached with Republicans just before the government was due to run out of money to pay all of its bills.
* GETTING PAST PARTISAN RANCOR:
But that fell short of the $4 trillion in savings over 10 years S&P said was needed to put the world's most powerful economy on sounder fiscal footing and avoid a ratings cut.
S&P also cited the political brinkmanship that played out in Washington over raising the United States' $14.3 trillion debt limit as a source of uncertainty for future policymaking.
The downgrade, which the U.S. Treasury denounced as based on a "flawed" analysis, could raise borrowing costs for the government, firms and consumers at a time when some economists fear the United States could slip back into recession.
Against this backdrop, the Labor Department reported on Friday that unemployment in July edged down to 9.1 percent from 9.2 percent, but that was not enough to dispel investors' concerns about the fragile economy.
Wall Street equities closed out their worst week in more than two years, reflecting frustration with a stumbling U.S. recovery and with politicians' halting responses to debt troubles in Europe and the United States.
Still, Obama's options for boosting growth are limited. Republicans, who control the U.S. House of Representatives, oppose further stimulus spending.
"While deficit reduction has to be part of our economic strategy, it's not the only thing we have to do," Obama said. "We need Democrats and Republicans to work together to help grow this economy. We've got to put politics aside."
"We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA'," S&P said Friday in a stunning blow to the country, that has enjoyed the top rating for 70 years, and its political leadership.
US Treasury officials received S&P's analysis Friday afternoon and alerted the agency to the error, CNN cited an unnamed senior administration official as saying.
The agency acknowledged the mistake, but said it was sticking with its decision to lower the US rating from a top score of AAA to AA+. "This is a facts-be-damned decision," the official was quoted as saying. "Their analysis was way off, but they wouldn't budge."
The White House is now in wait-and-see mode, hoping the decision and the S&P analysis face outside scrutiny, he added. "A judgment flawed by a $2 trillion error speaks for itself," a Treasury Department spokesperson said.
John Chambers, head of sovereign ratings for S&P, admitted there was an error in a CNN interview Friday night, saying "we agree with the Treasury's position on this and our figures reflect that". But he also said the error "doesn't make a material difference. it doesn't change the fact that your debt-to-GDP ratio ... will continue to rise over the next decade."
S&P has not spelled out what the US has to do to regain its AAA rating. However, Chambers said "it's going to take a while to get back to AAA".
Meanwhile, in the midst of the blame game, analysts said the downgrade of the US AAA credit rating will apply even greater pressure on Congress to follow through on plans to tame the nation's debt. In its downgrade announcement Friday, S&P said it could "stabilise" the US rating if the work of a proposed new bipartisan 12-member "super committee" helps lead to debt-reduction measures "beyond the minimum mandated."
Earlier this week, Congress instead passed a plan to reduce the debt by at least $2.1 trillion. In July, S&P, one of the three major agencies that assign grades the credit of companies and governments, placed the US rating on "CreditWatch with negative implications" as the debt ceiling debate devolved into partisan bickering.
To avoid a downgrade, S&P said the US needed to not only raise the debt ceiling, but also develop a "credible" plan to reduce the federal debt by at least $4 trillion over the next decade.
In its report Friday, S&P ruled that the US fell short: "The downgrade reflects our opinion that the ... plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilise the government's medium-term debt dynamics."
S&P also cited dysfunctional policymaking in Washington as a factor in the downgrade. "The effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges."
The other rating agencies, Moody's and Fitch, have said they have no immediate plan to downgrade the US credit rating, giving the government more time to make progress on debt reduction.
The split verdict limits the impact of the S&P downgrade as many consequences would be set off only by a reduction by two agencies, the New York Times said. But the lowering of the country's rating could rattle confidence and raise borrowing costs for the government and consumers, impeding the already fragile recovery, it said.
The announcement by S& P came after a week of turmoil on Wall Street not seen since the days of the financial crisis. After plunging around 5 percent Thursday, stocks bounced up and down Friday and closed relatively flat.
The Indian stock market is likely to witness heavy bouts of volatility when it resumes trading on Monday due to downgrading of sovereign credit rating of the US by the Standard & Poor's, experts said on Saturday.
"Markets are likely to see heavy volatility with a negative bias, but there would not be a crash kind of a situation," said Ashika Stock Brokers Research Head Paras Bothra.
Edelweiss Securities in a research note said: "Overall, risk assets, specially emerging market equities will continue to face painful bouts of volatility owing to the debt impasse in Europe and US. This will, in all probability, affect market sentiments in India as well."
Rating agency Standard & Poor's downgraded the US government's 'AAA' sovereign credit rating, a development that will lead to investors losing confidence in the American economy.
"Market will be under pressure and there will be a negative bias in the short-term but it will not crash when it opens for trading on Monday," WellIndia Group Managing Director Rajiv Agarwal also said.
Giving a different view, some experts said that the situation might prove to be a boon for Indian markets in the long-term, as India is fundamentally stronger among its peers and attracts more international inward financial flows. Besides, the strengthening of the Indian currency against the US dollar will help act as a trigger.
"In case there is any nervousness in the market, as happened in 2004 and 2008, it will be another opportunity for all classes of investors to make aggressive buying," Geojit BNP Paribas Financial Services MD C J George said.
"Whether this is a temporary panic sell-off or a deeper correction is anybody's guess," IIFL's Head of research Amar Ambani said. "Amid the worldwide bloodbath, there is reason to rejoice; the steep fall in crude oil prices lately is good for countries like India," he added.
Stock market across the world had declined sharply yesterday on fears of recession in the US and debt crisis in some euro-zone nations. The Bombay Stock Exchange 30-share Sensex yesterday tanked more than 700 points before closing at 17,305.87, down 387.31 points or 2.19 per cent.
The US stock markets closed on a flat note on Friday, after it witnessed wild swings, trading in a range of 400 points during the day.
In a bid to calm the market, Finance Minister Pranab Mukherjee said: "This is nothing domestic. It is substantially due to external factors. Stock markets fell due to global factors like weak recovery in US and spread of debt burden in euro zone. The current volatility is temporary."
Finance Minister Pranab Mukherjee today described the downgrading of the US government by credit rating agency as a "grave situation" and said it has to be analysed.
"We will have to analyse it. It will require some time. Situation is grave and there is no gain in making off-the-cuff remarks," he told reporters on the sidelines of a function here.
In an unprecedented move, Standard & Poor's downgraded the US government's 'AAA' sovereign credit rating - a development which raises concerns that investors will lose confidence in its economy.
This comes a day after a bloodbath was witnessed in the global markets including those in Asia. In india, the BSE sensex plunged more than 700 points before recovering partially with investors selling across the board.
Seeking to allay domestic fears, Mukherjee had yesterday said that the market fall was due to external factors.
"This is nothing domestic. It is substantially due to external factors. Stock markets fell due to global factors like weak recovery in US and spread of debt burden in Eurozone. Current volatility is temporary," he had said.
Market regulator Sebi said it was watching the situation closely. "... And our belief is that everything is perfect and right in our market. There is nothing for the people to worry," said Sebi Chairman U K Sinha.
"Our risk management system is working perfectly. All the settlements are taking place," he added.
The Reserve Bank, however, had said that India will have to learn to live with volatility in the global economy.
U.S. Loses AAA Rating on Concern About Debt Cuts
Q
By John Detrixhe - Aug 6, 2011 4:44 PM GMT+0530Standard & Poor's downgraded the U.S.'s AAA credit rating for the first time, slamming the nation's political process and criticizing lawmakers for failing to cut spending or raise revenue enough to reduce record budget deficits.
S&P lowered the U.S. one level to AA+ while keeping the outlook at "negative" as it becomes less confident Congress will end Bush-era tax cuts or tackle entitlements. The rating may be cut to AA within two years if spending reductions are lower than agreed to, interest rates rise or "new fiscal pressures" result in higher general government debt, the New York-based firm said yesterday.
Lawmakers agreed on Aug. 2 to raise the nation's $14.3 trillion debt ceiling and put in place a plan to enforce $2.4 trillion in spending reductions over the next 10 years, less than the $4 trillion S&P had said it preferred. Even with the specter of a downgrade, demand for Treasuries surged as investors saw few alternatives amid concern global growth is slowing and Europe's sovereign debt crisis is spreading.
"The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics," S&P said in a statement late yesterday after markets closed.
U.S. Response
The U.S. immediately lashed out at S&P, with a Treasury Department spokesman saying the firm's analysis contains a $2 trillion error. The spokesman, who asked not to be identified by name, didn't elaborate, saying the mistake speaks for itself.
Moody's Investors Service and Fitch Ratings affirmed their AAA credit ratings on Aug. 2, the day President Barack Obama signed a bill that ended the debt-ceiling impasse that pushed the Treasury to the edge of default. Moody's and Fitch also said that downgrades were possible if lawmakers fail to enact debt reduction measures and the economy weakens.
"This move should not be much of a surprise to markets, though the timing is at a point where market sentiment is fragile after the drop in stocks this week," said Ajay Rajadhyaksha, a managing director atBarclays Capital in New York. "What really matters is whether the markets are willing to 'downgrade' the U.S. bond market. As this week's move showed, U.S. Treasuries remain the flight-to-quality asset of choice."
Asian Investors
Asian investors are likely to retain their Treasuries holdings for now, with options limited by the region's foreign- exchange rate policies.Japan, the second-largest international investor in American government debt, sees no problem with trust in the securities, a Japanese government official said on condition of anonymity.Policy makers from China to Japan to Southeast Asia are lured to Treasuries as a result of efforts to stem gains in their currencies against the dollar, which would impair export competitiveness. China has accumulated $1.16 trillion in the securities and the nation's official Xinhua News Agency said in a commentary that the U.S. must cure its "addiction" to borrowing.
"They won't be happy about it, but Asian central banks will just have to hold on and stick it out," said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. "There is pressure on them to hold on to liquid assets and there is nothing more liquid than the Treasury market. At least Treasuries have been doing well and they aren't holding on to distressed assets."
U.S. Economy
S&P's action may hurt the U.S. economy over time by increasing the cost of mortgages, auto loans and other types of lending tied to the interest rates paid on Treasuries. JPMorgan Chase & Co. estimated that a downgrade would raise the nation's borrowing costs by $100 billion a year. The U.S. spent $414 billion on interest expense in fiscal 2010, or 2.7 percent of gross domestic product, according to Treasury Department data.
"It's a reflection of the fact that we haven't done enough to get our fiscal house in the order," Anthony Valeri, market strategist in San Diego at LPL Financial, which oversees $340 billion, said in an interview before the cut. "Sovereign credit quality is going to remain under pressure for years to come."
The agreement between Republicans and Democrats raised the nation's debt ceiling until 2013 and threatens automatic spending cuts to enforce the $2.4 trillion in spending reductions over the next 10 years.
Even with the accord, S&P said the U.S.'s debt may rise to 74 percent of gross domestic product by year-end, to 79 percent in 2015 and 85 percent by 2021.
S&P also changed its assumption that the 2001 and 2003 tax cuts enacted under President George W. Bush would expire by the end of 2012 "because the majority of Republicans in Congress continue to resist any measure that would raise revenues."
American Policymaking
"More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating," S&P said.S&P put the U.S. government on notice on April 18 that it risked losing the AAA rating it had since 1941 unless lawmakers agreed on a plan by 2013 to reduce budget deficits and the national debt. It indicated last month that anything less than $4 trillion in cuts would jeopardize the rating.
"There was still a very narrow cross section of common ground between the parties and we don't think that this agreement really changes that equation," David Beers, a managing director of sovereign credit ratings at S&P said in a Bloomberg Television interview.
Capital Weightings
The treatment of Treasuries and other securities backed by the U.S. in terms of risk-based capital weightings for banks, savings associations, credit unions and bank and savings and loan companies won't change, the Federal Reserve and bank regulators said in a statement following the downgrade.Obama has said a rating cut may hurt the broader economy by increasing consumer borrowing costs tied to Treasury rates. An increase in Treasury yields of 50 basis points would reduce U.S. economic growth by about 0.4 percentage points, JPMorgan said in a report, citing Fed research and data.
"The minute you start downgrading away from AAA, you take small steps toward credit risk and that is something any country would like to avoid," Mohamed El-Erian, chief executive and co- chief investment officer at Pacific Investment Management Co., said in a Bloomberg Television interview before the announcement.
Treasury Yields
Ten-year Treasury yields fell to as low as 2.33 percent in New York yesterday, the least since October. Yields for the nine sovereign borrowers that have lost their AAA ratings since 1998 rose an average of two basis points in the following week, according to JPMorgan.Treasury yields average about 0.70 percentage point less than the rest of the world's sovereign debt markets, Bank of America Merrill Lynch indexes show. The difference has expanded from 0.15 percentage point in January.
Investors from China to the U.K. are lending money to the U.S. government for a decade at the lowest rates of the year. For many of them, there are few alternatives outside the U.S., no matter what its credit rating.
"Yields are low in the face of a downgrade because there is nowhere else for people to go if they don't buy Treasuries because they want to be in safe dollar assets," Carl Lantz, head of interest-rate strategy at Credit Suisse Group AG, one of 20 primary dealers that trade directly with the Fed, said before the announcement.
Bond Dealers
The committee of bond dealers and investors that advises the U.S. Treasury said the dollar's status as the world's reserve currency "appears to be slipping" in quarterly feedback presented to the government on Aug. 3.The U.S. currency's portion of global currency reserves dropped to 60.7 percent in the period ended March 31, from a peak of 72.7 percent in 2001, data from the International Monetary Fundin Washington show.
"The idea of a reserve currency is that it is built on strength, not typically that it is 'best among poor choices'," page 35 of the presentation made by one member of the Treasury Borrowing Advisory Committee, which includes representatives from firms ranging from Goldman Sachs Group Inc. to Pimco. "The fact that there are not currently viable alternatives to the U.S. dollar is a hollow victory and perhaps portends a deteriorating fate."
Members of the TBAC, as the committee is known, which met Aug. 2 in Washington, also discussed the implications of a downgrade of the U.S. sovereign credit rating. "None of the members thought that a downgrade was imminent," according to minutes of the meeting released by the Treasury.
Remaining AAAs
S&P gives 18 sovereign entities its top ranking, including Australia, Hong Kong and the Isle of Man, according to a July report. The U.K. which is estimated to have debt to GDP this year of 80 percent, 6 percentage points higher than the U.S., also has the top credit grade. In contrast with the U.S., its net public debt is forecast to decline either before or by 2015, S&P said in the statement yesterday.New Zealand is the only country other than the U.S. that has a AA+ rating from S&P and an Aaa grade from Moody's. Belgium has an equivalent AA+ grade from S&P, Moody's and Fitch.
A U.S. credit-rating cut would likely raise the nation's borrowing costs by increasing Treasury yields by 60 basis points to 70 basis points over the "medium term," JPMorgan's Terry Belton said on a July 26 conference call hosted by the Securities Industry and Financial Markets Association.
"That impact on Treasury rates is significant," Belton, global head of fixed-income strategy at JPMorgan, said during the call. "That $100 billion a year is money being used for higher interest rates and that's money being taken away from other goods and services."
To contact the reporter on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
http://www.bloomberg.com/news/2011-08-06/u-s-credit-rating-cut-by-s-p-for-first-time-on-deficit-reduction-accord.html
India's Economy Can Withstand Global 'Negative Sentiments,' Mukherjee Says
By Unni Krishnan - Aug 6, 2011 8:34 PM GMT+0530India will achieve "appreciable" growth this year and the nation's financial markets can weather "negative sentiments" spreading across the world, Finance Minister Pranab Mukherjee said.
"Our growth story is intact and the fundamentals are strong," Mukherjee told the Confederation of Indian Industry in New Delhi today. "Our markets have the capacity to withstand the negative sentiments affecting the external world."
Indian stocks tumbled, the rupee fell and bonds climbed yesterday on concern the U.S. economy is stalling and Europe's debt crisis is worsening. Standard & Poor's yesterday downgraded the U.S.'s AAA credit rating for the first time. Mukherjee said India's challenge is to tame inflation, contrasting with nations from Japan to Switzerland which are trying to support expansion.
"We witnessed some recovery already and this is testimony to our capacity for resilience," Mukherjee said, referring to the Indian stock, currency and bond markets.
The Bombay Stock Exchange Sensitive Index, or Sensex, lost 387.31, or 2.2 percent, to 17,305.87, the lowest since June 11, 2010, in Mumbai yesterday, after declining as much as 4 percent earlier in the day.
The rupee weakened 0.4 percent to 44.74 per dollar yesterday. It fell to 44.85 earlier, the weakest level since June 29. The yield on the 7.8 percent bond due April 2021 slid 9 basis points, or 0.9 percentage point, to 8.31 percent.
Investment Rate
Mukherjee cited an increase in savings and investment rates "reminiscent of the high-growth East Asian economies" and the the young working-age population of India, where over half the people are in their twenties, as factors that will spur growth."While the momentum in consumption has been sustained as the economy has recovered from the slowdown in 2008-09, the recovery in private investment growth has been held back," Mukherjee said. "It is a matter of concern and we must together do what is required to improve business sentiments to restore the investment growth seen in the years before the global crisis."
Corporate investment in the second half of the fiscal year ended March 31 dropped 43 percent compared with the first six months of the year, the Reserve Bank of India said in a report on July 25.
The central bank last month maintained its growth forecast of 8 percent for the current fiscal year ending March 31. The economy expanded 8.5 percent the previous year.
Mukherjee today said India may be able to repeat last year's growth performance.
U.S. Growth
By contrast, U.S. gross domestic product data last month showed a 1.3 percent growth pace in the second quarter, after a near stall in the first three months of 2011.
Standard & Poor's lowered the U.S. rating by one level to AA+ and criticized lawmakers for failing to cut spending enough to reduce record budget deficits.
European Central Bank President Jean-Claude Trichet Aug. 4 left rates unchanged and signaled the ECB has resumed bond purchases and will offer banks more cash to stop the region's debt crisis from engulfing Italy and Spain.
Japan this week followed Switzerland in seeking to stem appreciating exchange rates that threatened to damage export competitiveness, selling the yen and pledging to inject funds into the economy.
Switzerland Aug. 3 unexpectedly cut borrowing costs and vowed to boost the supply of the franc in money markets to curb a surge in the "massively overvalued" currency.
'Unnecessarily Worried'
"There is a crisis," Mukherjee said. "I am not unnecessarily worried. There is no need to press the panic button."He said the changes India started in 1991 to open the economy to foreign investors and cut bureaucracy are "irreversible" and reiterated the government's plan to narrow its budget deficitto a four-year low of 4.6 percent of gross domestic in the year through March.
Mukherjee also said that there is no proposal to introduce "dual pricing" for diesel or increase taxes to bridge any "perceived" shortfall in revenue.
Indian Oil Corp., the nation's biggest refiner, on Aug. 4 rose the most since May in Mumbai trading after Mukherjee signaled ending subsidies on diesel used by cars. Mukherjee told lawmakers in parliament that 15 percent of India's diesel is used by passenger cars and the government can "work out a mechanism to see that these sections are not subsidized."
The minister said India's "major challenge in the short term is inflation, which has implications of sustaining our growth momentum."
India's benchmark wholesale-price inflation accelerated to 9.44 percent in June. By comparison, consumer prices rose 6.9 percent in Brazil, 9 percent in Russia, 6.4 percent in China and 5 percent in South Africa.
India's central bank has raised its repurchase rate 11 times since the start of 2010 and last increased it by 50 basis points on July 26 to 8 percent.
To contact the reporter on this story: Unni Krishnan in New Delhi at ukrishnan@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
http://www.bloomberg.com/news/2011-08-06/india-s-economy-can-withstand-global-negative-sentiments-mukherjee-says.html
Nation-Wise people's movement is the only remedy for solving our Basic Problems.
In the Inauguration Session of the 21 st National Convention BAMCEF, held at Gandhina Gujarat, Mr. Waman Meshram - the national President of BAMCEF, in his presidential address welcomed the workers coming from the different parts of Bharat and pointed out that more than 5 crores of rupees are spent annually for conducting programmes at different levels in different parts of the country. But many persons advise us that instead of conducting such programmes, we should Start some schools or Colleges. But I wish to convince you that the movement initiated by our great persons is not going to fructify by opening a school or a College or by doing some charitable or social welfare work. In the society, social welfare work and charitable work will continue to take place, but it is not a movernent and what is badly required at present to solve our basic probiems is the Nationwise Movement. Without generating such a movement, our probiems will never be solved. I believe that the aims and objectives which our great leaders wanted to realize cannot be achieved without launching a nation-wise movement. We should identify and determine our aims and objectives and then apply our ability, capacity and energy to realize those objectives in practice, in reality. But first the objectives should be crystal clear before our eyes. In this way, we can achieve great things. The time-bound Programme that we made in 1999, its supreme objective was that we would create an effective nation-wise movement to achieve the goals set by our great persons, our great leaders. Without launching a nation-wise movement, these objectives and goals cannot be realized. Our great leaders had created a nation-wise movement for our liberation in slave Bharat (under British rule), but now how is it that this nation-wise movement has become weaker instead of becoming stronger and it has almost disappeared ? This is also a problem about whose causes we have to apply our mind.
The movement that is being run by BAMCEF was first commenced in modern Bharat by father of the nation Mahatma Phule. Actually this is not a movement begun by Babasaheb Ambedkar though it was made stronger and organised in a systematic way by Dr. Ambedkar. Mahatma Phule started this movement in 1848 and conducted it for 42 years upto the year 1890 and in the year 1891, Babasaheb was born. After the demise of Mahatma Phule, his wife Savitribai Phule conducted and continued this movement and became responsible for its further growth. After her demise, Chhatrapati Shahu Maharaj furthered the movement and in 1916, Baba Saheb Ambedkar entered this movement. Now before taking the leadership of this movement he studied the difFerent small-scale self-respect movements going on in different parts of the country and found a common defeet among them that there was no documentätion of these different movements. So when he entered into this movement in 1916, he started having domunetation of this movement and this documentätion is now also available. At that time whatever self-respect movements that were going on in different parts of the country, their goals also were not properly and clearly defined and consciously determined and fixed. So when Babasaheb Ambedkar started his movement, he put .before the people, the aims and objectives of this Movement in a crystal clear fashion, because people who wish to be successful, they should clearly formulate their aims and objectives. What they are feeling unconsciously they should bring it to the conscious awareness level and identify them and fix them äs goals to be achieved by this movement.
Three Defects Removed bv Babasaheb
Thus Babasaheb removed the three defects of this movement-(l) First was lack of documentätion, and (2) second was absence of clear formulation of the goals of the movement. These two defects were removed by Babasaheb Ambedkar. (3) The third defeet of these separately conducted moVements was that there was no mutual dialogue or co-ordination among these movements. He established dialogue among the leaders and workers of these separate movements and created co-ordination among them. For transforming this dialogue and co-ordination into a nation-wide movement, he had to struggle and work hard for 26 years. He began this work in 1916 and arranged the national convention of Scheduled Castes Federation in 1942 at Nagpur. This was the great achievement of Babasaheb Ambedkar's movement. In order to transform these .separately conducted small scale move-meats into nation-wise and nation-wide movement, he had to struggle and work very hard "for 26 years. But ever before this, he had another great achievement to his credit. On 17th August, 1932, "Communal Award" was announced and on the basis of it, the British ruling power, made the "Second Indian Act" in 1935. Dr. Ambedkar succeeded m making the list of the castes to be included in the category of scheduled castes and in that of the scheduled tribes. Before it, the untouchables were divided into one thousand and five hundred different parts or castes. But there was no common identity or common name of these different castes who suffered from almost the same social ailments and the same social discrimination. Babasaheb gave the common name "Scheduled Castes' these one and a half thousand castes. Dr. Ambedkar had taught a clear lesson that the people who do not learn a lesson from history, they cannot change history. We shall have to know correct history so that we can take a leaf out of the lesson that the study of history teaches us. The untouchables are having one and a half thousand or two thousand castes among them, but if they are asked who are they ? They will immediately answer "Scheduled castes" unless they are asked further which caste among scheduled castes, they do not mention their caste on their own. People who haVe one identity, they can have one common Organisation.
Common Identitv Leads to Common Organisation
The first, condition of one nation-wide Organisation is one common name.We learn this lesson from history that Babasaheb developed one common name to these one and a half thousand castes in 1935 and then he could create one common Organisation of them in 1942. So we also made one schedule and that is of Mul Nivasis. Babasaheb made the schedule of one and a half thousand castes, we have made a schedule of 6000 castes which is that of Mulnivasi. Mulnivasi is the common identity of all the people belonging to these six thousand castes. This common identity will lead to common, united Organisation. Thus the common identity is the precondition of common Organisation. Thus we have to learn a lesson from history and apply it to the present conditions. Many people frequently utter the slogan "Babasaheb zindabad". But only slogan mongering will not change the reality, because our enemies raise the slogan "Babasaheb Murdabad" and we say "Babasaheb zindabad". Only slogan mongering of "zindabad" will not lead to zindabad. The movement started by our greät persons can be zindabad in reality. If this movement becomes successful, then there will be zindabad and then nobody will be able to stop it or arrest its growth. This is the important point that I wish to explain to our workers äs regards our "nation-wise movement
The Biegest Challenge before us
Today what is the biggest challenge before us ? it is to create a nationwise and nation-wide movement. Then alone our basic problems can be solved, otherwise nothing is going to happen in the direction of solving our problems. But if we succeed (and we must succeed) in creating and developing such a movement, then many things will happen, otherwise nothing will happen even if we shout from our house tops the slogan of zindabad. Babasaheb first made a common identity, a common name to thousands of our castes and so a common Organisation became possible and due to common name and common Organisation, it became possible for Babasaheb to create a nation-wise movement of our people in slave Bharat. When Babasaheb created this movement we were the slaves of the slaves. Brahmins were the slaves of the Britishers and we were the slaves of the Brahmins. When Babasaheb created this movement, he had no resources, he was bereft of all resources. But now, today in independent Bharat, we have resources and a substantial number of our people are I.A.S., I.P.S. officers. In slave Bharat, our nation-wise movement was there, but in independent Bharat, how and why has this movement disappeared ? Who is responsible for its disappearance ? What are the causes ? People who raise the slogans of zindabad of Babasaheb and of our other great persons, they do not raise these questions, because it becomes difficult to answer these questions. To answer them is also not enough, we have to go much deeper. This is a difficult matter. In 1942, two important events took place. In 1942, Subhaschandra Bose gave the call to the people "Let us go to Delhi." In that very year 1942, Gandhi started "Quit India" Movement, in which he gave the call "Do or die" Gandhi who had preached non-violence throughout his movement, now asked the poeple, "To do or die". When Gandhiji gave this call, Babasaheb Ambedkar wrote an article in which he annoünced that it is good that Mahatma had died and a human being had emerged. These three events took place in 1942. In the convention of the scheduled castes Federation held in 1942, whatever resolutions that were passed, they are closely associated with out constitutional rights. It is very necessary and pertinent to know the reasons for the disappearance of the movement of self-respect of pur people in independent Bharat when it was so active in slave Bharat. Unless we know the cause or causes of our illness, we cannot take any right step to remove that illness.
Poona Pact
Due to Poona Pact, Gandhiji succeeded in destroyihg our nation-wise movement. When the Poona Pact was arrived ät, there was one provision in it. The provision was that the power of selection of the candidates belonging to the scheduled castes and scheduled tribes will not belong to the high command of any politcal party, but it will belong to the people belonging to the scheduled castes and scheduled tribes and after selecting these condidates, they will elect from among the candidates, their representatives. Thus the loyalty of these elected representatives would be towards their own people i.e. to the people belonging to the scheduled castes and scheduled tribes. But Gandhiji by using his influenece and putting pressure got removed this provision when the constitution of Bharat was framed. So now what is actually happening ? When the candidates are to be selected, it is the BJP high command or the Congress high command which selects the candidates. When the list of candidates of a political party appears in the newspapers, we come to know that the BJP high command and the Congress high command have selected some candidates. So what happens ? The scheduled castes and scheduled tribes candidates make a queue urging and begging to the BJP high command or the Congress high command for their selection as the reserve seats candidates of either the BJP or of the Congress. For one seat, there are more than 20 candidates. These urgers or so to say, beggars are disloyal people to the vital interests of their communities, because the BJP and the Congress are the exploiters of their eommunities. So there is competition among these beggars for showing greater disloyalty. Whosoever is the most disloyal i.e. the best Gaddär to his own Community, is selected by the BJP high command and the Congress high command. So our people have no choice, they have to elect their representatives from amongst these opportuhists, these betrayers. Their loyalty would be towards our exploiters and oppressors and not towards us from which they hail. Thus these party high commands would thrust upon us such opportunists and disloyal people as our representatives. This point was in the upper mind of Babasaheb, äs he had to look at Gandhiji and his tacties to understand this. So in the Poona Pact, he had insisted for the provision that the right to selection of the candidates belonging to the scheduled castes and scheduled tribes should vest in the hands of the people belonging to scheduled castes and scheduled tribes and they should then elect their representatives from amongst them. But this provision introduced by Babasaheb Ambedkar was got removed from Indian Constitution by the efforts and pressure of Gandhiji. The result is obvious to all. You can infer from this how correctly Babasaheb understood the tacties of Gandhiji and Brahmin-Bania clique. On the reserve seats for the scheduled castes and scheduled tribes people, our 119 representatives-get elected for the Parliament and our 1050 representatives for the state assemblies. But actually they are not our true representatives, they are loyal to the interests of Brahmins and Banias who had given them the party tickets as candidates for election. So political reservation becomes a hoax due to this topsy turvy provision
Disappearance of the Third Share
In 1946, Lord Wavell was the Governer General of Bharat and upto 1946, the British rulers had declared a definite policy that when they would leave Bharat as rulers and make it politically independent, there would be three sharer groups in power - namely the first-Hindus, the second-Muslims and the third-scheduled castes and scheduled tribes. But in actual transfer of power in 1947, only two sharer groups were there and the third sharer-group was conspicuously missing. Who usurped this third part ? Who was responsible for its disappearance ? In 1946, Lord Wevell delivered a speech on the All India Radio and Dr. Ambedkar in his book "What Gandhiji and the Congress have Done to Untouchables" has printed this Wavell's speech in the Appendix. Gandhiji, after hearing Lord Wevell's speech on the radio, he sent a telegram to Lord Wavell and this telegram also has been printed in that book by Dr. Ambedkar. In this telegram, Gandhiji had opposed giving the third share to the scheduled castes and scheduled tribes. When Lord Wavell was the Governor General of Bharat, there took place general elections in England and Churchill who was the hero of England and the Allies during the Second World War lost the election that took place after the end of the Second World War and the Labour Party led by clement Atlee came into power. Atlee changed the Governor General of Bharat and sent MountBatten as the new Governor General of Bharat. Mount Batten was ready to accept this offer with the condition that Atlee would not interfere in his work in Bharat and he should be given a free hand to seftle the issue of sharing power between different groups of Bharat so as to transfer power to the people of Bharat and thus grant political indiependence to them. The Britishers before leaving Bharat as rulers, they wanted to solve the problem of partition of the country and if they did not solve it, there would have been created chaos in Bharat and this would have harmed their prestige very badly at the international level. That is why the Atlee Government of England sent an energetic young man like Mount Balten as the last Governor General of Bharat to ease the way of granting political independence to Bharat by solving the burning communal problem.
Mount Batten persuaded Sardar Vallabhbhai Patel that he was old then and whether he would not like to see Bharat getting Independence during his life time when it was his cherished goal throughout his political career and he and his colleagues becoming the rulers in the independent Government ? Sardar was persuaded and he agreed with the plan of Mount Batten for the partition of the country. Mount Batten then approached Pandit Javaharlal Nehru and showed him the temptation that he would become the Prime Minister of independent Bharat and so he was also persuaded to agree with the partition of the country. Gandhiji came to know that Sardar and Jawahar both had agreed with the plan of the partition of the country and Sardar and Jawahar were his two arms and what would he do alone when he had already declared that the partition of the country could take place only on the partition of his body. He would not allow partition of the country to take place in any circumstances. Mount Batten after getting the consent of Sardar and Jawaharlal for partition of the country, he sent an invitation to Gandhiji for discussion. Gandhiji knew that Mount Batten was calling him to discuss the problem of partition qf the country when Sardar and Jawahar also had agreed to Mount Batten's plan. So first he went to see Maulana Abul Kalam Azad and asked him if he opposed the creation of Pakistan, in that case whether he would Support him, because he was afraid that if Azad also joined with Sardar and Jawahar in agreeing with partition, what .he alone could do ? So he asked Azad his opinion and Azad assured him that in that case, he would be with Gandhiji in opposing the .partition of the country.With this assurance of Maulana Azad, Gandhi went to see Mount Batten. But when he returned, after meeting him, he was found to be completely changed. The meeting of the Congress Working Committee took place in the presence of Gandhiji and the resolution for the acceptance of the partition of the country was adopted in Gandhiji's presence. Gandhiji also agreed with it. Now the question is what transpired between Gandhiji and Mount Batten that Gandhiji who was opposed to partition tooth and nail, how he agreed to it ? It means that some bargaining must have taken plaee between them. Of course, there is no record available in this respect. But we can imagine that when Mount Batten would have presented the plan for partition, Gandhiji would have opposed it Gandhiji was a bania and Britishers also were banias. When two banias meet there is business, there is give and take, so he would have said to Mount Batten that he would agree to partition with the condition that while transferring power and independence to Bharat, he would not grant the third share of power to the people belonging to scheduled castes and scheduled tribes. Mount Batten would have agreed and thus the third share of the Scheduled Castes and scheduled tribes disappeared. It was the official policy of the British Government which Lord Wavell had proposed and which meant giving third share of power to the scheduled castes and scheduled tribes. But Gandhiji had opposed this proposal of transferring third share to the people belonging to scheduled castes and the scheduled tribes and there are documentary evidences of his Opposition to it. Gandhiji would have told Mount Batten that he would be ready to accept the partition of the country if he would give up the plan of giving. 3rd share to the scheduled castes and scheduled tribes . This discussion would have taken place between them. After this agreement, the Britishers told Ambedkar that they would not give the 3rd share in the transfer of power. Thus when Babasaheb came to know about this conspiracy, he immediately rushed to England. Babasaheb after reaching England, did not meet Atlee or any other leader or leaders of the Labour Party, because it was their plan and so he met Churchill, He had no other alternative except meeting Opposition party leaders. Now the British Government was not ready to give third share to S.C. & S.T. people and if this is joined with the proposal to Ambedkar to become the chairman of the drafting committee, it becomes clear that it was trifling compensation, Dr. Ambedkar may get an opportunity to provide for constitutional guarantees for the upliftment of his people in the constitution of Bharat. Gandhi agreed with the partition of the country and with his prior condition for this acceptance, the Britishers abandoned the issue of 3rd share to scheduled castes and scheduled tribes in the transfer of power on the eve of Bharat's political independence. What was the result ? On 14th August, 1947, Pakistan came into existence and the Muslims of Pakistan got power. In Bharat, in the name of Hindus, Brahmans are the rulers. Due to this reason, Babasaheb met Gandhiji and insisted for the right of selection of the candidates by their society as provided in Poona Pact rather than by the political party or parties. But Gandhiji refused to discuss this matter with Babasaheb. Gandhiji did not budge at all in this respe'ct. Thus from the Poona Pact, whatever little justice was there to safeguard our vital interests, that even was obliterated and what remained in it was very dangerous.
Real Nature of Political Reservation
So in 1948, Babasaheb had conducted a movement for filling the jails by our freedom fighters under the leadership of Mr. R. R. Bhole and under which Mr Mansingji was imprisoned in Lukhnow. Thus Babasaheb had conducted the movement to finish off the political reservation of SC and ST in the Parliament and the state assemblies. But after 60 years, what is happening ? Babasaheb said 'remove it', but what are they doing ? When Jawaharlalji was the Prime Minister, he used to propose the Bill for the extension of political reservation to scheduled castes and scheduled tribes in the Loksabha and Bajpaiji used to get it passed. When Atalji became the Prime .Minister, he submitted the Bill and Soniaji got it passed in the Loksabha. Without any discussion on it, we have to struggle everyday very hard in getting reservation applied in practice in government and semi-government Services, in educational institutions and in technical education institutiones, but they do not give us and cleverly they put hrdles in it. But we donot demand political reservation, but at the lapse of every period of 10 years, our opponents take the initiative and care to elongate the period for political reservation for another 10 years. If this political reservation was not in favour of these high caste people, they would never have supported it or taken initiative every time. Due to this political reservation, we got a definite nümber of seats in the Parlament and the state assemblies for the scheduled castes and the scheduled tribes, but because they were selected by the political parties under the domination of Brahmins and Banias and also elected by all the people of the respective constituences, their loyalty was to their selectors i.e. the election ticket givers who are high caste people. But the Brahmin-Bania axis has been flourishing at the cost of the 85% of the people of Bharat who are the original inhabitants of Bharat, so our so called (elected) represntatives betray our interests and thus prove to be agents on behalf of the high caste people and their political parties. When these betrayers and agents got social . legitimacy, the nation-wise and country-wide movement that ßabasaheb had created. in slave Bharat, that movement of ours was destroyed in independent Bharat. The constitutional rights that our forefathers had secured after struggling for about 108 years, if those rights would have been implemented rather than kept on paper only, then we also would have got real freedom and independence in independent Bharat. The great movement that was intiated by our forefathers was now replaced by agents, black sheeps and cheaters and such betrayers of our vital interests got legitimacy in society and established themselves äs our representätives. But this was wrong and a great hoax and they actually worked for the interests of the high caste people. But the'photos of such agents are published in the newspapers and the ruling caste people teil us that these are your representätives and actually . they are used äs pawns in raising. a counter-movement against our true and real fighters. Thus the high-caste people finished off our movement by making and implementing a deliberate and planned conspiracy. So unless we plan and create a nation-wise movement of our 85% of the people who are the original inhabitants of Bharat, our constitutional rights would remain only on paper and they would not be carried into practice and thus ultimately, our consititution itself will taper off.
Introduction of LPG Policies
Now what is the Situation at present ? The ruling castes have found out a new way of avoiding the Implementation of our contitutional rights without formally destroying it. Now the Programme of LPG i.e. liberalisation, privatisation and globalisation that has been going on with füll speed has not spared even the industrialists of our Bahujan Samaj Mulnivasis. Some wealthy people belonging to Bahujan Samaj who think that on the basis of their wealth, they would be able to withstand the onslaughts of LPG, they are not right. In Gujarat, some people of Prajapati caste met me. They pointed out to me that their two lakh people work in the brick-making industry. But the Government'made one law.and our two lakh workers became unemployed. I explained to them that this was the result of LPG.
For finishing off our constitution, now there is no necessity of formally tinkering or changing the constitulion. The ruling castes are ready to worship our constitution, drafted by Babasaheb but they are not at all prepared to implement it in practice. The rights that are engraved in the constitution are in reality, the sources of power and strength. Constitutional rights are not mere rights, they are the sources of power and strength if they could be properly implemented. In 1942, Babasaheb could succeed in getting inserted the 8% reservation for our people in the Second Bharat Federal Act. It was because of that Provision of reservation since 1942 that Mr. K.R. Narayan could become an I.A. S. officer and afterwards, he could become the President of Bharat. Thus though the constitutional rights are the sources of power and strength äs we have seen, but they have got one defect that they do not flow automatically to the people or the constitution does not bring them to your doorsteps. We have to snatch them and that requires merits and qualifications oh our part. But the programme of LPG has been doing away with these merits and qualifications of ours. Due to our reservation in Jobs in Government and some government orgänisations and in admission in educational institutions, our people with such * merits and qualifications had come into being, but now due to privatisation and liberalisation and globalisation, our reservations are destroyed and so our people with merits and qualifications (who can avail of such constitutional rights) will be almost found to be compicuously absent. The constitutional rights will remain, but there will not be people from amongst u s who can be meritorious to avail of these rights. They will cease to be qualified to enjoy these rights. In our constitution, it is written that the right of living is a fundamental right, the inherent right. But for the people who are dying due to hunger, whether their right to live has any meaning because despite .this right, they are dying. To teil them that they have got the fundamental right of living (guaranteed by our constitution), will not stop them from collapsing and dying. But this also does not mean that in our country, there is any scarcity bf foodgrains. There was green revolution, electricity was available, water was there, chemical fertilizers were profusely used where per one reasonable unit of land, quintal food grains were produced, now it was producing 10 quintals of foodgrains. We are now exporting foodgrains to foreign countries instead of importing from them. But in Bharat, some 20 crore and 80 lakh people are on the fringe, say almost in the trap of starvation. They are not getting foodgrains to eat. What kind of emergency,. the Government has silently or implicitly declared that no electric media, no print media prints this fact that such a vast number of people of Bharat have been suffering from hunger and starvation and they are under the grip of prematured death. If anybody prints it, that paper or media would be declared to be the betrayer of the country. They have been trying to see that the people of the world should not know that such a vast number of people suffer from dire hunger and starvation. When some people in Ethiopia were dying from starvation, the Government of Bharat decided to send 20 lakhs of tons of foodgrains to Ethiopia free of Charge, just donating them as aid. So the people of the world may think that Bharat is a great country and there may not be any chronically starving people in Bharat. But the stark fact is that in Bharat 20 crore and 80 lakh people have been sufFering from severe starvation and they have been dying in a large number due to it. When we bring this fact to the notice of the people of the world, they feel that this may not be true and we may be circulating a false story. This is due to the fact that the ruling castes have got complete control over all the sources of information and actually it is they who have been providing the people of the world with totally false information. What information and what kind of information to release and circulate for opinion making is within their control. 1t is they who have been-providing the people of the world with totally false information. What information and what kind of information to release and circulate for opinion-making within the country and abroad is deeided by them. "Now in order to finish off, the constitution, there is no necessity of burning it or making any amendments in it. Only apply the policy of liberalisation, privatisation and globalisation and everything will be finished off and nothing substantial will be saved. The consequences of the application of the programme of LPG are so grave that the ruling castes are not sparing even the industrialists of the scheduled castes and scheduled tribes. Ambanis took IPCL under their control and the employees serving in them who belonged to the scheduled castes and scheduled tribes were meticuously identified and then driven out mercilessly from Service. This example is before our very eyes, because this fact was disclosed to us by our two or three BAMCEF workers who were serving with others of our people in IPCL. The ruling castes in Bharat have made the plan of making Bharat great upto the year 2020 through the greater and greater application of the programme of LPG. When Bharat will become great and will prosper, we all will decay, such a dangerous this programme of LPG is.! 14 years have elapsed since the commencement of the application of the Programme of LPG in Bharat and what has happened to the people at large ? It has worsened the condition of the doowntrodden people from the poverty line to still its lower level of starvation within this period of 14 years. Actually the poverty line and the line of starvation are two different things and the latter line is worse than the former one. This is the true record of the achievements of the programme of LPG in Bharat. The ruling castes are careful enough never to use to term "hunger" or starvation" but they deceitfully use the term "Mälnutrition". Our edu'cated people think that this may be some kind of a disease. The ruling castes are very smart and they know that if they use the word "starvation" rather than "malnutrition" not only educated people, but the uneducated and even the illiterate people will understand the real meaning of it and so they cunningly use the wörd "malnutrition line" instead of the "starvation line" to describe the prevailing worse Situation than that of "the poverty line", from which crores of people suffer. This situtation has been created due to the application of the Programme of LPG in our country.
Two Party System Under Brahminical Domination
But a more dangerous conspiracy than that of LPG has been active in our country and it is the prevailing two party parliamentary tradition in the form of NDA Front led by Bhartiya Janata Party (BJP) and the other one UPA Front led by the Indian National Congress. If the BJP Front has to be defeated, then the Congress Front has to be brought into power and if the Congress Front is to be defeated, then the BJP Front has to be brought into power. BJP led NDA Front is that of Brahmins and the Congress led UPA Front also is under Brahminical domination. If one Brahmin group is to be discarded, another Brahmin group has to be placed on our heads. It means that if one Brahmin is driven out, another Brahmin sits on our head. Thus if Rajaram goes, Sitaram comes and if Sitaram goes, Rajaram comes and for the people there is no other alternative except that of reciting the Bhajan -Rajaram, Sitaram, Sitaram, Rajaram. When there are elections and the BJP comes into power, the LPG Programme is applied and if the Congress comes into power, then also LPG Programme is implemented. After the recent elections, now the Government at the centre is formed under the leadership of the Congress Party and Mr. Chidambaram - the Finance Minister of the central Government announced in the meeting of the Chamber of Commerce held at Chennai that the econqmic policies that the BJP applied those very policies (of LPG) will continue to be applied and there will not be any change in them. What the BJP Government would have or should have done, we would do it. The Mulnivasis (original inhabitants) of Bharat should have been exploited more and therefore we would now complete that unfinished dirty Job. It means that we are applying the programme of Liberalisation Privatisation and Globalization full fledgedly and we have placed in Operation the daughter of Jagjivanram - Mirakumar, Ramvilas Paswan, Satyanarayana Jatia and other so-called leaders of ours like them, to demand reservation in privatised industries. Instead of opposing privatisation of nationalised industries itself, our people have become busy in demanding reservation in privatised industries and the real issue is surrendered and a sort of a fog is created on it by making a demand which is not going to be accepted. Our people do not realize that in demanding reservation in privatised industries, they are granting ligitimacy to privatisation of nationalised industries and become a consenting party to it. The ruling castes are busy applying the LPG programme and our people are busy making applications and supplications. It means that our people as if wish tp convey that you may put us on the brink of starvation, but at least, from the feast of the LPG Programme, give us something. Our people elected Ramvilas Paswan and sent him to Loksabha as our representative, but Ramvilas Paswan approaches the people and in his Speeches goad them vociferously to demand reservation of Jobs in privatised industries, but when he goes to Loksabha, he becomes silent and keeps mum. When there is a meeting of the cabinet, there also, he does not speak anything against it. Thus where he should speak, he does not speak and the place where he should not speak, he does speak and our people clapped their hands in appreciation of his guts. But nothing concrete is going to happen from such gimmicks of spreaking where I should not have done it and where one should not have done it one has done quite the opposite of it. The place where policy discisions are taken, our leaders are silent. Decisions are being taken against our vital interests and our leaders are tight-lipped. The System emanating from the Poona Pact, that the ruling castes have developed has given rise to all these problems. We shall have to know and understand it as the direct result emanating from the Poona Pact. Poona Pact is the low quality factory constructed by Gandhi. How can you expect a better quality product from a worse quality factory ? So it is inevitable that from a low quality factory only low quality product will be coming forth. Thus due to two party parliamentary System that has been prevailing in our country, nobody is going to lend his ear to our woes. We have got the right to vote, but we have got no other alternative except choosing either Congress led alliance or BJP led alliance and both being Brahminical parties, our right to vote has become powerless and hence there is no impact of it on political and economic decision-making. This is the most dangerous Situation for us. In such a Situation, you may feel that there is no ray of hope and everything is dark and disappointing. But all hopes are not exhausted. Still there is time to give U-turn to the Situation upto the year 2010. The constructive and hopeful alternative to the prevailing hopeless Situation is there and it is to create a country-wide and nation-wise people's movement. If we succeed and we must succeed in building up such a nation-wise people's movement, then we can control the entire Situation and change it in the right direction which can solve our basic problems. This is the only solution and that alternative is still available. Therefore we have resolved to spread the network of our Organisation in 550 districts and 5000 tahsils upto the end of the year 2006. At present, already our netwroking is there in 460 districts and 2000 tahsils and upto December 2006, this net-working will cover 550 districts and 5000 tahsils and within the same period of time i.e. upto the end of December, 2006, the Front of students, youths and women would be ready to struggle democratically and peacefully for the restoration of rights guaranteed in our constitution and also in the UNO's Charter of rights. From the year 2007 to 2009, it will be our efforts that this movement of ours may progress further and may get transformed into the nation-wise people's movement. It is our plan to mobilise 15 crore people upto the end of the year 2009. Therefore, in this convention, we have not invited the crowd, because this is the factory to create the leaders for the crowd. Where there are leaders, there are followers also and where there are not leaders, there are not followers. Only those persons are leaders who have got followers.
BAMCEF - the only Cadre-Based Organisation of the Mulnivasis of Bharat
Through the medium of the intellectual class that has been created by the movement started by our greatmen, we have built up the cadre-based BAMCEF Organisation. BAMCEF is the only cadre-based Organisation of the Mulnivasis (original inhabitants) of Bharat. To merely hold the convention is not the aim, the aim is to build up the nation-wide people's movement and we are convinced that the distance between us and the success is that of time only. Except this, there is nothing else. In corroboration of this development, I wish to give one example. In the past when some programme of R. S. S. or Vishwa Hindu Parishad or Bajrang Dal was going on, then our people used to try to create disturbance in such programmes, but now when our programme was there in Miraj (Maharashtra), persons belonging to RSS and BJP tried to create disturbance in this programme. It means that the Situation is reversed. Before, we were creating disturbance in their programmes and now they are trying to create disturbance in our programmes. They try to bring pressure on us. We tell them that we would do our work within the confines of Law. We shall not take Law in our hands. Persons who try to create disturbance in our programmes, they think that they would have to stop us, as our movement is rapidly progressing. In Rajkot (Gujarat) also, our opponents let loose the false Propaganda against me for 15 days, but I did not make a single comment upon it. you know that when the elephant is walking along the road, the dogs bark at it, but the elephant goes on walking, it does not even look at them. We also should have the quality of the elephant.
http://www.mulnivasibamcef.org/pages/page3n.asp
War economy
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War economy is the term used to describe the contingencies undertaken by the modern state to mobilise its economy for war production. Philippe Le Billon describes a war economy as a "system of producing, mobilising and allocating resources to sustain the violence".
Many states increase the degree of planning in their economies during wars; in many cases this extends to rationing, and in some cases to conscription for civil purposes, such as the Women's Land Army and Bevin Boys in the United Kingdom in World War II.
Franklin D. Roosevelt said that if the Axis Powers win, then "we would have to convert ourselves permanently into a militaristic power on the basis of war economy."[1]
In what is known as total war, these economies are often seen as targets by many militaries. TheUnion blockade during the American Civil War is regarded as one of the first examples of this.
Concerning the side of aggregate demand, this concept has been linked to the concept of "military Keynesianism", in which the government's military budget stabilizes business cycles and fluctuations and/or is used to fight recessions.
On the supply side, it has been observed that wars sometimes have the effect of acceleratingprogress of technology to such an extent that an economy is greatly strengthened after the war, especially if it has avoided the war-related destruction. This was the case, for example, with theUnited States in World War I and World War II. Some economists (such as Seymour Melman) argue, however, that the wasteful nature of much of military spending eventually can hurt technological progress.
[edit]See also
[edit]Further reading
- Le Billon, Dr. Philippe (2005) Geopolitics of Resource Wars: Resource Dependence, Governance and Violence. London: Frank Cass, 288pp
- Goldstein, Joshua S. (2001). War and gender: How gender shapes the war system and vice versa. Cambridge: Cambridge University Press.
- Moeller, Susan. (1999). "Compassion Fatigue", Compassion Fatigue: How the Media Sells Disease, Famine, War and Death. New York & London: Routledge. 6 - 53.
[edit]References
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05/08/2011
American President Obama turns 50
President Barack Obama marked his 50th birthday at the White House on Thursday. In the process, he also became the seventh American President to celebrate his birthday while in office. Take a look at the birthday celebrations.
U.S. President Barack Obama tries out the fly fishing rod given to him on his birthday by a group of avid fisherman on his staff.
Full coverage
06/08/2011
A global crisis but Indian economy strong: Mukherjee
New Delhi: In the backdrop of a global meltdown of stock markets, which also rocked Dalal Street, and a ratings downgrade of US, Finance Minister Pranab Mukherjee Saturday said despite such crises, the Indian economy remained strong.
"There are difficulties and some sort of a crisis. But there is no need to press the panic button. I do not want to worry unnecessarily," he said at a lecture hosted by the Confederation of Indian Industry (CII).
"Our (Indian) growth story is intact and our fundamentals are strong. The markets have shown that they can withstand external pressures," the finance minister added at the lecture on 20 years of reforms in India. Friday had seen a key index of Indian equities market dip 700 points in the intra-day amid mayhem globally, followed by a ratings downgrade of the US economy by Standard and Poor's (SAP) for the first time in its history.
The international credit rating agency late-Friday night downgraded the top notch AAA credit rating of the US government's ability to pay back its creditors and investors to AA+. The US treasury bond has traditionally been considered as one of the safest avenues for investments. World over, governments and central banks have invested heavily in these treasury bonds.
Speaking to IANS after the lecture, leading industrialists said that as of now no real impact has been felt in the Indian market and that investor sentiment will remain positive for India, as one of the best destinations for investment.
"Our economy and fundamentals are strong and no real impact has been felt," said Hero Group managing director and CEO Pawan Munjal, adding that the only impact the downgrade may have would be on the US treasury bonds and ability of the US to raise money. "They (US) may have to print more notes. This may fuel inflation in the US and other economies as well," he said.
Munjal's views were corroborated by fellow industrialist, Jubilant Organosys co-chairman and managing director Hari Bhartia, said that Indian economy remains strong as the consumer growth is robust in the country and investors won't be deterred in coming to India. "The consumer growth story in India is not over. We are an investment favourites," Bhartia told IANS.
The government should take some pro-active steps to help the industry to grow by bring in reforms and removing infrastructure bottlenecks, he added. Earlier in the day, Mukherjee expressed concern over downgrading of the US government credit rating and said the situation will be monitored closely.
"The situation is grave. We will have to analyse it and it will take sometime to do that," he told reporters on the sidelines of an event here. Mukherjee Friday tried to calm the domestic investors' sentiment by blaming the volatility in the market on external factors.
"Stock markets fell due to global factors like weak recovery in US and spread of debt burden in Eurozone," he said. "Current volatility is temporary," he added.
Source: IANS
Photo: AFP
06/08/2011
No dual pricing for diesel
New Delhi: Finance Minister Pranab Mukherjee on Saturday ruled out dual pricing for diesel, which could have made the fuel expensive for passenger car owners.
"There are no proposals for introducing dual pricing for diesel," he said while addressing a CII event on two decades of economic reforms.
He also said there was no proposal to raise duties to make up any shortfall in tax revenues, as has been speculated in the past couple of days. He sought to allay apprehensions in the corporate sector that economic reforms have come to a halt.
It is true that sometimes the process of reforms has been held "hostage by political events" and this is in the very nature of our democracy and its polity, he said. Despite ideological differences, principal political parties have been able to work together on most issues, he said.
"I have no hesitation in saying that the process of economic reforms in India is irreversible," Mukherjee said, adding that the economic stakeholders have no reason to fear introduction of any regressive policy measures at any point of time.
"We have to deepen the policy reforms in the financial sector and address gaps in the overall economic regulatory architecture. The government has outlined a significant legislative agenda, which we hope to purse in the coming days in the ongoing Parliament session," he added.
He, however, asked the industry to join hands with the government in its efforts to improve business sentiments by way of increase in investment in crucial sectors.
Source: PTI
Image Source: AFP
Pranab Mukherjee hopeful of DTC roll out from April 1, 2012
Finance Minister Pranab Mukherjee on Saturday expressed hope that the DTC would be cleared in the Winter Session of Parliament and there would be no problem in rolling out the new direct tax regime from April 1, 2012.
"I am hopeful that the Parliamentary Standing Committee will submit its report by Winter Session. And if we can get it through, in the winter session, which most probably would be possible, then there would be no difficulty to bring it into operation from April 1, 2012," he said at a CII event here.
The Direct Taxes Code (DTC) Bill, which was introduced in Parliament last year, proposes to replace the 50-year old Income Tax Act. Mukherjee said since the Bill is still with the Standing Committee, stakeholders have time to give their views.
On implementation of the new indirect tax regime, Goods and Service Tax (GST), he said, efforts are on to bring in convergence of views in Parliament. "We are working on it.. Divergence of views delay the process of getting it (GST Bill passed) as fast as we desire to. But there is no reason of despondency," he added.
He expressed hope that opposition parties would "extend their support in the final stage of getting it approved by both the Houses of Parliament." Last month, senior BJP leader and Bihar Deputy Chief Minister Sushil Kumar Modi was elected as the chairman of the Empowered Committee of State Finance Ministers on GST.
Introduction of GST, which would subsume central and state taxes like excise, customs, service tax, sales tax and VAT has been pending for years in the absence of political consensus. A Constitution Amendment Bill has already been introduced in Lok Sabha for roll out of GST.
The Bill, however, is being opposed by the states, especially BJP-ruled ones, as well as BSP-ruled Uttar Pradesh, as they say its provisions would curtail their power to levy taxes.
Replying to another query regarding sops on infrastructure creation for gas transportation, the Minister said since Parliament was in session he would not make any comment, but added, "the matter is receiving our attention."
Regarding tax benefits to the manufacturing sector till the time DTC is introduced, Mukherjee said, any change in the existing policy will not be feasible.
Committee of Secretaries submits suggestions for retail FDI to ministry
The long pending issue of opening of multi-brand retail to foreign investment moved one more step, with the top secretaries forwarding 10 recommendations to the commerce and industry ministry on Friday.
"We have formally received the minutes of the Committee of Secretaries (CoS) meeting held on July 22 and appropriate decision will be taken soon," an official on the condition of anonymity said. The ministry is examining it and would take the proposal before the Cabinet soon, the official added.
On August 3, commerce and industry minister Anand Sharma had said in Rajya Sabha that an early decision on opening the sector for FDI would be taken after he formally gets the recommendations.
The CoS headed by cabinet secretary Ajit Kumar Seth has recommended that 51% FDI could be allowed in the sector, which is dominated by mom and pop stores. The CoS has also suggested that at least 50% of the investment and jobs should go to rural areas.
Besides, the entities with FDI should source at least 30% of their requirements from the MSME sector. A foreign player would have also to commit at least $100 million investment.
The other recommendations include, allowing such mega stores to sell nonbranded items and such entities should be allowed only in towns with population of over 10 lakh. India allows 51% FDI in single brand retail and 100% in cash and carry format of the business.
In July 2010, the Department of Industrial Policy and Promotion (DIPP) floated a discussion paper on opening of the politically sensitive multi-brand retail.
Once the Cabinet clears the proposal to allow FDI in the politically sensitive sector, foreign players like WalMart, Carrefour and Tesco, can form joint ventures with Indian companies to open multibrand retail outlets.
While the Central government formulates norms for FDI, the joint venture firms would have to seek permission from state governments (as per the Shops and Establishment Act) to open stores.
"In general any company or establishment needs to take permission from the state authorities to start business and so the joint ventures would require such permission before they can start their stores," the official added.
While several retail and farmers associations have opposed the idea of allowing FDI in the sector, the government claims the move would not only help in creating jobs, but arrest the spiralling inflation.
Euro-Region Central Banks Will Conference Tomorrow on Debt, U.S. Downgrade
Q
By Jeff Black and Craig Stirling - Aug 6, 2011 10:19 PM GMT+0530Euro-region central bank governors will hold emergency talks tomorrow aimed at stopping Spain and Italy from becoming the next victims of the sovereign debt crisis and limiting the market fallout from the first U.S. rating downgrade in history.
The central bank heads will hold a conference call at 6 p.m. Paris time, said a euro-area central bank official who declined to be identified because the talks are confidential. The talks come as Standard & Poor's downgrade of the U.S. risks further derailing efforts to stop the debt crisis from engulfing the euro-area's third and fourth-largest economies.
"Europe is in an incredibly dangerous situation," Nick Kounis, head of macroeconomic research at ABN Amro in Amsterdam, said in an interview by telephone today. "The risk is that the U.S. downgrade is just going to unsettle everyone even more. It's a unique situation in that we are essentially in the heart of a European sovereign debt crisis, which has reached its meltdown phase."
A week that European leaders intended to spend on vacation ended with S&P cutting the U.S. credit rating by one level from AAA, hours after an unscheduled appearance from Italian Prime Minister Silvio Berlusconi to pledge further austerity. He suggested an emergency Group of Seven meeting may convene to tackle a crisis that has cast doubt on the sustainability of his nation's 1.8 trillion-euro ($2.6 trillion) debt load.
European stocks posted their biggest weekly loss since November 2008, becoming the first major region to enter a market correction. The Stoxx 600 Europe Index tumbled 9.9 percent to 238.88, the gauge's lowest level in 13 months.
Yield Spread
Italian and Spanish bond yields rose relative to benchmark German bunds for a second week. Ten-year borrowing rates for both nations reached the most since before the euro was introduced in 1999. The U.S. rating cut may prompt further flows of funds into Germangovernment bonds, ABN Amro's Kounis said.As bond markets reopen on Aug. 8, investors may look for clues on whether the European Central Bank will expand purchases after it resumed its emergency debt-buying program on Aug. 4 following 18 weeks of absence. It acquired Irish and Portuguese securities and has so far avoided the Spanish and Italian bond markets.
Such a move, already unprecedented, would also take place against the backdrop of the nation managing the world's most- important reserve currency no longer being the highest-rated sovereign.
Assessing Impact
"In past events, when we've seen a triple-A downgrade the impact on bond markets has not been extremely large," ABN's Kounis said. "But this is a unique case with the world's major reserve currency."S&P lowered the U.S. one level to AA+ while keeping the outlook at "negative." The rating may be cut to AA within two years if spending reductions are lower than agreed, interest rates rise or "new fiscal pressures" result in higher general government debt, the New York-based firm said.
"It's not easy to assess the impact of the U.S. downgrade, but it's clear that it comes at the wrong time," said Marco Valli, chief euro-region economist at UniCredit Global in Milan. "It's easy to understand that the market won't like it."
Paul Donovan, deputy head of global economics at UBS AG, said that the downgrade's impact may still be limited because the standoff in Congress on raising the U.S. debt ceiling had braced officials for such an event.
Markets 'Prepared'
"The downgrade is unlikely to have a significant impact on bond yields," Donovan said. "It is one of three credit rating agencies, and the world's central banks have been prepared for this with the debt ceiling debate."The rating cut puts the U.S. in an expanding club of Western nations from Greece to Spain whose deteriorating credit quality has provoked downgrades in the past year. Italy also faces such a threat, according to a statement from S&P in July.
Berlusconi sought to fend off turmoil affecting his nation's bonds yesterday by announcing plans to balance the budget ahead of schedule. After a series of calls involving German ChancellorAngela Merkel, French President Nicolas Sarkozy, Spanish Prime Minister Jose Luis Rodriguez Zapatero and Berlusconi, European leaders pledged to push implementation of last month's deal to strengthen the European Financial Stability Facility, the euro-area's rescue fund.
To contact the reporter on this story: Jeffrey Black in Frankfurt at jblack25@bloomberg.net Craig Stirling at cstirling1@bloomberg.net
To contact the editor responsible for this story: Andrew Davis at abdavis@bloomberg.net
http://www.bloomberg.com/news/2011-08-06/euro-region-central-banks-will-conference-tomorrow-on-debt-u-s-downgrade.html
6 AUG, 2011, 09.25PM IST, ANI
India expected to be among top three economies in next two decades: Pranab Mukherjee
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NEW DELHI: Union Finance Minister Pranab Mukherjee on Saturday said that India is the second fastest-growing large economy in the world, and is widely expected to be among the top three economies in the next two decades.
Addressing the National Conference of Confederation of Indian Industry (CII) here, Mukherjee said: "The global economy has just witnessed one of its worst crises in recent history and is still suffering from its aftermath. It is a matter of pride for us that the Indian economy experienced only a brief pause in its rapid growth and could recover with an average of over eight percent growth in the years following the out-break of crisis."
"In the past two decades, the Indian economy has rapidly globalised and from around 2003-04, it has moved on to a higher trend GDP growth rate of 8.5 to 9 percent per annum," he added.
He further said that India would continue to achieve appreciable growth despite negative sentiments across the world.
"Our growth story is intact and the fundamentals are strong. Our markets have the capacity to withstand the negative sentiments affecting the external world," the Finance Minister said.
"We have taken several measures to make our markets attractive, robust and vibrant and would continue to do so making it an attractive investment destination for the foreign capital," he added.
Mukherjee also said that as global investors look for opportunities across the world, India's attraction as an investment destination would continue to grow.
http://economictimes.indiatimes.com/news/economy/indicators/india-expected-to-be-among-top-three-economies-in-next-two-decades-pranab-mukherjee/articleshow/9509146.cms
6 AUG, 2011, 05.15PM IST, ATMADIP RAY,ET BUREAU
Pranab Mukherjee okays Rs 21,614 crore package for West Bengal, Mamata not fully satisfied
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KOLKATA: New Delhi has doled out a Rs 21,614-crore financial package for West Bengal to help the debt-laden state back on track. But it fails to satisfy chief minister Mamata Banerjee.
"Though we are not satisfied, but we understand that the centre has some compulsions," Ms Banerjee said on Saturday, after announcing the Centre's decision at the state secretariat.
The CM said that actual grant amounts to Rs 9,240 crore which will be used for development. The state has to raise the balance Rs 12,374 crore from the market and the centre has enhanced the state's borrowing limit as part of the package.
Ms Banerjee is not too willing too call it a financial package though as she sees it just as an interim measure. "We can go on for another four five months with this support and we may need to seek centre's help yet again," she said at Writers' Buildings.
She is however well aware of the fact that such support does not come so easily and the state needs to be self-sufficient soon. Union finance minister Pranab Mukherjee wants his state counterpart Amit Mitra to levy more taxes to boost state revenue.
Both the finance ministers held a series of meetings to finalise the financial assistance. Though it did not fully convinced Ms Banerjee, but she was politically correct in expressing gratitude to prime minister Manmohan Singh and his finance minister.
Out of Rs 9,240 crore grant, Ms Banerjee said Rs 300 crore will be used for agriculture development, Rs 100 crore for green energy development and another Rs 94 crore to curb Maoist insurgency.
Earlier in June, the Planning Commission approved a Rs 22,214 crore annual plan for the state, which is a good 27% rise than what the state received last year.
http://economictimes.indiatimes.com/news/economy/finance/pranab-mukherjee-okays-rs-21614-crore-package-for-west-bengal-mamata-not-fully-satisfied/articleshow/9507028.cms
6 AUG, 2011, 08.03PM IST, AP
US job worries surge as debt-limit issue recedes
WASHINGTON: Anger at US leaders for taking so long to strike a debt-ceiling deal has turned into high anxiety over jobs and the economy amid growing fears of a new recession.The news that credit rating agency Standard & Poor's downgraded the nation's credit rating a notch for the first time ever only added to the tension.
The darkening clouds come in what should have been a good week for President Barack Obama. After all, he and Republican leaders finally ended a months-long game of brinkmanship with a bipartisan agreement to raise the government's debt ceiling and to trim spending.
The deal kept the government from beginning to run out of cash last Tuesday, averting a first-ever US default and a possible global financial meltdown. And there was a relatively good jobs report on Friday. But applause for the debt-limit deal or the increase in jobs never came.
In fact, stock markets around the world tumbled during the week as grim new economic figures suggested the US recovery has stalled and as debt default tensions climbed in Europe.
Terms of the deal to extend the US government's borrowing authority and trim federal spending contributed to investor angst. Many economists suggest the debt-limit measure could even wind up making economic problems worse if belt-tightening spending cuts coincide with a new recession.
And the Standard and Poor's downgrade late Friday cast new doubts on the value of the US debt-limit deal. The credit rating agency said it was cutting the country's top AAA rating by one notch to AA-plus because the deficit reduction plan passed by Congress did not go far enough to stabilize the country's debt situation.
As to that downgrade, economists suggested it might not have much actual impact, noting that the credit ratings of Japan, Canada and Australia had also been downgraded in recent years with few economic consequences.
And in the past few days, investors have been fleeing stock and commodity markets for the perceived safety of US Treasury bonds and bills.
That's a dramatic about face, since just a few days ago, global investors were worried that a US default on its debt would end the long-standing status of Treasurys as the world's safest-haven investments.
``Investors have voted and are saying the US is going to pay them,'' Mark Zandi, chief economist of Moody's Analytics. Despite the S&P downgrade Friday night, ``US Treasurys are still the gold standard,'' he said.
Zandi noted that neither his parent organization, Moody's, nor Fitch, the other of the three major rating agencies, has downgraded US debt.
``I don't think it (the S&P downgrade) is going to amount to a lot,'' said Peter Morici, a University of Maryland business economist. Still, Morici said, ``The United States deserves to have this happen,'' because of its clumsy handling of economic policy.
Friday's jobs report, a net increase of 117,000 new jobs in July and an unemployment rate ticking down to 9.1 percent from 9.2 percent in June, was better than expected by forecasters, but it did little to ease fears of a new recession. The jobless rate now has exceeded 9 percent in all but two months since the recession officially ended in June 2009.
Recent reports suggest the economy is slowing to a near-stall.
4 AUG, 2011, 01.06AM IST, SAIBAL DASGUPTA,TNN
China strikes the first blow, downgrades US ratings to negative territory
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BEIJING: The world may still be debating the consequences of the US federal government's decision to raise the country's debt limit. But China's State-controlled credit rating agency, Dagong Global Credit Rating Co., has cast the first stone by pushing US rating into negative territory.
http://economictimes.indiatimes.com/news/international-business/china-strikes-the-first-blow-downgrades-us-ratings-to-negative-territory/articleshow/9471016.cms
The move might mean drastic cut in China's purchases of US bonds, which will put US borrowings in serious jeopardy. China is the largest foreign holder of US debt, with holdings amounting to 1.15 trillion US dollars as of April end.
"This incident will definitely exert its continuous impact on investors' confidence in US Treasury bonds, affecting the stability of the US debt income," Dagong said on Wednesday while announcing it has cut the credit rating of the United States from A+ to A with a negative outlook.
Moody's, the international rating agency last month put US credit rating on a watch list. A final call from the international agencies after the latest US move is now expected.
Last Monday, the US House of Representatives approved legislation to raise the country's debt limit by at least 2.1 trillion US dollars and cut federal spending by 2.4 trillion US dollars, one day before a threatened default.
The interests of the country's creditors are short of systematic protection both politically and economically, the Chinese agency while explaining its decision to downgrade the US rating. It has also recently downgraded Poland's sovereign credit rating.
Dagong said the United States has to reduce no less than four trillion US dollars in its fiscal deficit in the coming five years to sustain its liability scale. The increase in US debt ceiling shows there will not be any positive changes in factors that will influence the country's debt-paying ability in the long run, it said.
Obama for bipartisan effort on economy front: Carney
WASHINGTON: US President Barack Obama believes it is important that American elected leaders come together to strengthen the country's economy and put it on a stronger fiscal footing, his spokesman said here on Saurday.
"Over the coming weeks, the President will strongly encourage the bipartisan fiscal committee as well as all members of Congress to put our common commitment to a stronger recovery and a sounder long-term fiscal path above our political and ideological differences," the White House Press Secretary Jay Carney said.
"The President believes it is important that our elected leaders come together to strengthen our economy and put our nation on a stronger fiscal footing," Carney said in a statement, adding that the bipartisan compromise on deficit reduction was an important step in the right direction.
"Yet, the path to getting there took too long and was at times too divisive. We must do better to make clear our nation's will, capacity and commitment to work together to tackle our major fiscal and economic challenges," he said.
"Over the past weeks and months the President repeatedly called for substantial deficit reduction through both long-term entitlement changes and revenues through tax reform, with additional measures to spark jobs and strengthen our recovery," he said.
"That is why the President pushed for a grand bargain that would include all of these elements and require compromise and cooperation from all sides," Carney said.
6 AUG, 2011, 01.35AM IST, REUTERS
Economy will improve: Barack Obama
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WASHINGTON: US President Barack Obama said on Friday the US economy had faced a "tumultuous year" and more measures were needed to boost job growth but he reassured Americans that the situation would improve.
Noting that financial markets had had a "bumpy ride" recently, Obama welcomed a Labor Department report that showed 154,000 private sector jobs were created in July and the jobless rate ticked down slightly to 9.1 percent.
Obama, whose 2012 re-election hopes depend largely on his ability to resuscitate economic growth, said his "singular focus" now was getting the unemployed back to work, boosting wages and helping Americans recover from the recession.
"What I want the American people and our partners around the world to know is this: We are going to get through this. Things will get better," he said in an address to veterans.
"We need to create a self-sustaining cycle where people are spending and companies are hiring and our economy is growing and we've known that will take some time," he said.
Obama emphasized that many outside forces had affected the U.S. economy, including the effect of uprisings in the Arab world on oil prices, the earthquake and tsunami in Japan, and the "extraordinary economic uncertainty in Europe."
The president's options for boosting economic growth are limited.
Republicans, who control the U.S. House of Representatives, oppose further stimulus spending and both parties have shifted focus toward cutting spending and reducing the deficit.
"WE'VE GOT TO DO BETTER"
Obama, a Democrat, lamented that an impasse between the two political parties over raising the U.S. debt ceiling had taken so long to get resolved.
"The bipartisan compromise on deficit reduction was important in terms of putting us on sounder fiscal footing going forward but let's be honest: the process was divisive, it was delayed," he said.
"If we want our businesses to have the confidence they need to get the cash off the sidelines and invest and hire, then we've got to do better than that. We've got to be able to work together to grow the economy right now and strengthen our long-term finances."
When the U.S. lawmakers return to Washington in September, Obama said he wanted them to move quickly to extend a payroll tax cut and unemployment insurance in an effort to boost jobs.
Nodding to the anti-government-spending mood in Washington, Obama said getting the economy on solid footing would help reduce the deficit over time.
"There's no contradiction between us taking some steps to put people to work right now and getting our long-term fiscal house in order," he said. "In fact, the more we grow, the easier it will be to reduce our deficits."
6 AUG, 2011, 04.45AM IST, ET BUREAU
CAG blames government for deliberately pushing costly fertiliser imports
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The Comptroller and Auditor General has castigated the government's fertiliser subsidy policy for deliberately pushing costly imports, turning the focus away from indigenous production of the key farm input, reports Our Bureau from New Delhi.
During 2003-04 and 2008-09, when fertiliser consumption increased by 46%, food grain, oilseeds and sugarcane production rose a mere 16%, said the CAG's performance audit on fertiliser subsidy. The strong indictment of the policy comes on a day when a group of ministers finally approved inclusion of urea under the nutrient based subsidy scheme or NBS.
Rubbishing the ongoing New Pricing Scheme, or NPS-III, for urea, the audit report said changes in the subsidy regime have failed to incentivise an increase in domestic production.
Increased consumption is, therefore, met largely through imports, leaving the country dependent on imports, whose pricing is volatile. "Increased demand of urea was primarily met through imports. Further, the weighted average cost of production increased by 81% to 120% post-NPS," the report said.
http://economictimes.indiatimes.com/news/economy/foreign-trade/cag-blames-government-for-deliberately-pushing-costly-fertiliser-imports/articleshow/9500916.cms
6 AUG, 2011, 04.40AM IST, ET BUREAU
Ministerial panel approves conditional deregulation of urea pricing
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NEW DELHI A ministerial panel has approved a conditional deregulation of urea pricing, setting the stage for a price increase of the most widely used fertiliser.
A Group of Ministers on Friday approved the recommendation of the Saumitra Chaudhuri committee that urea pricing should be decontrolled to the extent of 10% initially.
Experts say the move will add to input costs and force the government to raise the minimum support price for food grains.
The decision of the Group of Ministers, headed Finance Minister Pranab Mukherjee, will now go to the Cabinet Committee on Economic Affairs for final approval.
Urea is to come under the nutrient-based subsidy scheme from October 1.
The ministerial panel has also accepted the other suggestions on gas pooling, which will make the key feedstock available to all producers at the same price.
Neither urea decanalisation (allowing private sector to import since only parastatals do so now) nor the new investment policy was on the ministerial panel's Friday agenda.
"The 10% hike proposal is to ensure that there is some sort of comfort level," Fertiliser Association of India director-general Satish Chander said.
The 10% hike in per tonne over the current maximum retail price (MRP) of Rs 5,310 a tonne could translate to any where up to Rs 530 in additional spend for farmers. In reality, industry will also pass on any pass-through increases in gas pricing and any additional taxes imposed directly on farmers.
"That flexibility was given to industry," an industry official said. Experts say the decision will set the ball rolling on a much-needed review of the new investment policy for urea, in order to boost investment in the sector.
However, gas supply remains the single-most important driving factor here, and the expert panel can now start deliberations on this issue since urea has been formally brought under nutrientbased subsidy (NBS).
Interestingly, Fertiliser Minister M K Alagiri, who has so far opposed the inclusion of urea under NBS, stayed away from the meeting. Minister of state Srikant Jena attended instead.
Last year, the government raised urea prices by 10% after several years of freeze, an indication of the political sensitivity of the issue. "Bringing urea under NBS was long overdue.
A formal announcement was likely to happen only after elections in key states such as Tamil Nadu, Kerala, West Bengal and Assam," said research analyst Tarun Surana of Sunidhi Securities & Finance.
This gains significance in the wake of the possibility that higher potash import prices clinched by industry on Tuesday by breaking the export cartel's stranglehold could spell a 50-60% rise in farm gate prices for muriate of potash, pushing up the MRP possibly to Rs 10,000 a tonne.
http://economictimes.indiatimes.com/news/news-by-industry/indl-goods-/-svs/chem-/-fertilisers/Ministerial-panel-approves-conditional-deregulation-of-urea-pricing/articleshow/9500871.cms
6 AUG, 2011, 05.15AM IST, SANJAY K SINGH,ET BUREAU
NMDC gets conditional nod for Bellary mining
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NEW DELHI: The Supreme Court has given conditional nod to public sector undertaking National Mineral Development Corporation for mining iron ore in Karnataka's Bellary district.
The court rejected the plea of the private miners seeking permission to resume operations in the areas, saying issue of production comes only after environmental aspect.
"To balance environmental concerns with economic development and keeping in mind the mandate of Article 21 of the Constitution, including inter-generational equity, we are of the view that in extra-ordinary circumstances, NMDC alone be allowed to operate it's mines (two mining leases) to the extent of providing one million tonnes per month commencing from August 6, 2011, till further orders," a three judge special forest bench headed by Chief Justice SH Kapadia said in its order.
However, the he court added that NDMC shall not export the ore thus mined, till further orders. The PSU shall sell the production to the states in consultation with Ministry of Steel.
The bench further directed Karnataka to charge royalty on the basis of 10% of current market value of the iron ore. The state government had been charging royalty at the rate of 10% of rates at the pithead as determined by Indian Bureau of Mines.
"The differential between that rate and the market rate will be accounted for by Karnataka. We make it clear that differential rate will be deployed for rehabilitation purpose of the area concerned," the judges said. The apex court asked the state government to submit a Reclamation and Rehabilitation plan of the Bellary district within three months.
It rejected the plea of the Federation of Indian Mineral Industries (FIMI) seeking order to resume its mining operations in Bellary areas. "We are permitting conditional mining only to the PSU. There shall be no private minings", said Justice Kapadia rejecting the plea of private miners' counsel Dushyant Dave.
When Dave insisted on modification of the apex court order saying the ban on their operations in Bellary has adversely affected the steel industries and livelihood of the people, the bench" the issue of production comes only after environmental aspect".
The court said, immense damage has already been done due to rampant mining in the areas. Dave's plea that the private companies have contractual rights to carry on their operations also failed to cut ice. The bench then talked about the constitutional provision contained in Article 21 and remarked, "environmental aspect has to take precendence over contractual right".
Dave fuerther argued "the permission to PSU to resume its operation and denying such right to private companies amounted to nationalization." However, the court disagreed with it saying it was giving permission to NDMC only to feed the domestic steel industry.
The apex court also called within three months a macro level Environment Impact Assessment (EIA) for the Bellary district. Such study to be undertaken by Indian Council of Forestry Research and Education (ICFRE) in collaboration with the Wildlife Institute of India, FSI and other experts.
This was in order to ascertain whether the district of Bellary in Karnataka constitutes one single environmental unit or more than one unit with different degrees of environmental degradation. The court posted the matter for further hearing on Aug 19. On July 29, the apex court had halted mining operations and transporation of the iron ore from Bellary in Karnataka.
http://economictimes.indiatimes.com/news/news-by-industry/indl-goods-/-svs/metals-mining/nmdc-gets-conditional-nod-for-bellary-mining/articleshow/9501110.cmsTop Stories
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US government loses triple-A credit rating
S&P says deficit plan doesn't go far enough; move could raise borrowing costs
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S&P downgrades US credit rating
06/08/2011
S&P downgrades US credit rating
The United States has lost its coveted top AAA credit rating for first time since 1917
Washington: Credit rating agency Standard & Poor's on Friday downgraded the US rating for the first time since the nation won the top ranking in 1917. The move came after Congress haggled over budget cuts and the nation's borrowing limit -- and failed to cut enough government spending to satisfy S&P. The issue has contributed to convulsions in financial markets.
The drop in the rating by one notch to AA-plus was expected. The three main credit agencies, which also include Moody's Investor Service and Fitch, had warned during the budget fight that if Congress did not cut spending far enough, the country faced a downgrade. S&P said that it is making the move because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country's debt situation. Moody's said Friday it was keeping its AAA rating on the nation's debt, but that it might still lower it.
One of the biggest questions after the downgrade was what impact it would have on already nervous investors. Many financial analysts said investors were expecting a downgrade. But some selling was expected when stock trading resumed Monday morning. The Dow Jones industrial average fell 699 points this week, the biggest weekly point drop since October 2008.
"I think we will have a knee-jerk reaction on Monday," said Jack Ablin, chief investment officer at Harris Private Bank.
One fear in the market has been that a downgrade would scare buyers away from U.S. debt. If that were to happen, the interest raid paid on U.S. bonds, notes and bills would have to rise to attract buyers. However, even without its AAA rating, U.S. debt is seen as one of the safest investments in the world. And investors clearly weren't being scared away this week. While stocks were plunging, investors were buying Treasurys. The yield on the 10-year note, which moves opposite its price, fell to a low of 2.39 percent on Thursday.
The government fought the downgrade. Administration sources familiar with the discussions contended that the S&P analysis was fundamentally flawed. They spoke on condition of anonymity because they weren't authorized to discuss the matter publicly. S&P had sent the administration a draft document in the early afternoon Friday and the administration, after examining the numbers, challenged the analysis.
In a statement, Treasury said, "A judgment flawed by a $2 trillion error speaks for itself."
S&P said that in addition to the downgrade, it is issuing a negative outlook, meaning that there was a chance it will lower the rating further within the next two years. It said such a downgrade to AA would occur if the agency sees smaller reductions in spending than Congress and the administration have agreed to make, higher interest rates or new fiscal pressures during this period.
In its statement, S&P said that it had changed its view "of the difficulties of bridging the gulf between the political parties" over a credible deficit reduction plan.
S&P said it was now "pessimistic about the capacity of Congress and the administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics anytime soon."
Source: AP
06/08/2011
S&P downgrade 'a facts-be-damned decision': US
Washington: As Standard & Poor's move to downgrade the credit rating of the US sent shock waves through America, Obama administration officials called it "a facts-be-damned decision," saying S&P admitted to an error that inflated US deficits by $2 trillion.
US Treasury officials received S&P's analysis Friday afternoon and alerted the agency to the error, CNN cited an unnamed senior administration official as saying.
The agency acknowledged the mistake, but said it was sticking with its decision to lower the US rating from a top score of AAA to AA+.
"This is a facts-be-damned decision," the official was quoted as saying. "Their analysis was way off, but they wouldn't budge." The White House is now in wait-and-see mode -- hoping the decision and the S&P analysis face outside scrutiny, he added.
"A judgment flawed by a $2 trillion error speaks for itself," a Treasury Department spokesperson said.
John Chambers, head of sovereign ratings for S&P, admitted there was an error in a CNN interview Friday night, saying "we agree with the Treasury's position on this and our figures reflect that."
But he also said the error "doesn't make a material difference -- it doesn't change the fact that your debt-to-GDP ratio ... will continue to rise over the next decade."
S&P has not spelled out what the US has to do to regain its AAA rating. However, Chambers said "it's going to take a while to get back to AAA."
Meanwhile, in the midst of the blame game, analysts said the downgrade of the US AAA credit rating will apply even greater pressure on Congress to follow through on plans to tame the nation's debt.
In its downgrade announcement Friday, S&P said it could "stabilise" the US rating if the work of a proposed new bipartisan 12-member "super committee" helps lead to debt-reduction measures "beyond the minimum mandated."
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NEW YORK — The United States lost its top-tier AAA credit rating from Standard & Poor's on Friday in an unprecedented blow to the world's largest economy in the wake of a political battle that took the country to the brink of default.
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S&P cut the long-term U.S. credit rating by one notch to AA-plus on concerns about the government's budget deficit and rising debt burden. The action is likely to eventually raise borrowing costs for the American government, companies and consumers.
"The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics," S&P said in a statement.
The outlook on the new U.S. credit rating is "negative," S&P said in a statement, indicating another downgrade was possible in the next 12 to 18 months.
The move reflects the deterioration in the global economic standing of the United States, which has had a AAA credit rating from S&P since 1941, and it could have implications for the U.S. dollar's reserve currency status.
"The global system must now adjust to the many implications and uncertainties of the once-unthinkable loss of America's AAA," said Mohamed El-Erian, co-chief investment officer at Pacific Investment Management Co which oversees $1.2 trillion in assets.
The decision follows a fierce political battle in Congress over cutting spending and raising taxes to reduce the government's debt burden and allow its statutory borrowing limit to be raised.
On August 2, President Barack Obama signed legislation designed to reduce the fiscal deficit by $2.1 trillion over 10 years. But that was well short of the $4 trillion in savings S&P had called for as a good "down payment" on fixing America's finances.
The political gridlock in Washington over addressing the long-term fiscal problems facing the United States came against the backdrop of slowing U.S. economic growth and led to the worst week in the U.S. stock market in two years.
Read the full S&P report in PDF format
The S&P 500 stock index fell 10.8 percent in the past 10 trading days on concerns that the U.S. economy may be heading into another recession and because the European debt crisis has worsened.
Treasury bonds, once indisputably seen as the safest security in the world, are now rated lower than bonds issued by countries such as Britain, Germany, France or Canada.
Debt calculations off by trillions?
Obama was briefed earlier in the day regarding S&P's intentions, but discussions only took place with Treasury officials and did not include the White House, a source familiar with the discussions told Reuters.
CNBC's John Harwood reported that S&P told the federal government at 1:30 p.m. ET Friday that it was preparing to downgrade the country's rating.
But Harwood reported that after U.S. officials pointed out an error in how S&P computed the ratio of U.S. debt to the gross domestic product, S&P decided to reconsider.
A source said S&P's calculations were off by "trillions," CNBC reported. A source familiar with the discussions said that the Obama administration believes S&P's analysis contained "deep and fundamental flaws."
S&P confirmed it changed its economic assumptions after discussion with the Treasury Department but said it did not affect its decision to downgrade.
Video: How this will affect the American people (on this page)
"We take our responsibilities very seriously, and if at the end of our analysis the committee concludes that a rating isn't where we believe it should be, it's our duty to make that call," David Beers, head of sovereign ratings at S&P, told Reuters.
The theme running throughout S&P's analysis is the breakdown in the ability of the Democratic and Republican parties to govern effectively.
The agency said that policymaking and political institutions had weakened in the past few months "to a degree more than we envisioned." This has major implications for the nation's budget and debt problems.
For example, S&P now assumes that tax cuts brought in under President George W. Bush in 2001 and 2003 would not, as planned, expire by 2012 because of staunch Republican opposition to any measure that would raise revenues.
The compromise reached by Republicans and Democrats this week calls for creation of a bipartisan congressional committee to find $1.5 trillion of deficit cuts by late November, beyond the $917 billion already identified.
Markets to be closely watched this week
While the downgrade is a blow to U.S. prestige, it was largely expected and may not have a big impact on trading of U.S. Treasuries and other assets when markets reopen in Asia on Monday.
In fact, Treasuries have rallied this week, driving the yield on the benchmark 10-year note to 2.34 percent, its lowest level in about 10 months. This reflects a belief among investors that U.S. government debt is still a safe bet at a time when prices of stocks and commodities are falling on concern about slowing global economic growth.
"To some extent, I would expect when Tokyo opens on Sunday, that we will see an initial knee-jerk sell-off (in Treasuries) followed by a rally," said Ian Lyngen, senior government bond strategist at CRT Capital Group in Stamford, Connecticut.
Story: Finger pointing follows debt downgrade
But the downgrade has implications for the country's financial sector, ranging from insurance companies to government-related firms such as housing financiers Fannie Mae and Freddie Mac.
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War and the Global Economic Crisis: Blame America's War Economy rather than China by Paul Kellogg | |||||||
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Global Research, December 23, 2010 | |||||||
Socialist Project | |||||||
There is a growing chorus of voices in the media and the academy singling out the actions of the Chinese state as central to the dilemmas of the world economy. This focus finds its most articulate presentations, not in the xenophobia of the right, but in the polite analysis of many left-liberals. Nobel Laureate economist Paul Krugman, for instance, writing in the run-up to November's G20 summit in South Korea, praised the United States' approach of creating money out of nothing ("quantitative easing") as being helpful to the world economy, and criticized the Chinese state's attempts to keep its currency weak as being harmful. "The policies of these two nations are not at all equivalent," he argues, adding his influential voice to the chorus which is increasingly targeting China for the world's woes.[1] Krugman's, however, is a simplistic analysis which overlooks the role of the U.S. over decades in creating huge imbalances in the world economy, and has the dangerous effect of scapegoating one of the poorest nations of the world (China) for the problems created by the world's richest.  Krugman's argument proceeds through a sleight of hand. He objects to the attempts by the Chinese state to keep down the value of its currency – the yuan – as a series of policies whose "overall effect...on foreign economies is clearly negative." This is a common theme – China's "weak-yuan" currency being good for China (making its exports cheaper in world markets) and bad for the rest of the world. Intents and EffectsBut there is a problem. By Krugman's own admission, the U.S. policy of creating money out of nothing will result in a "weaker American dollar." What he doesn't say, but what is implicit in his analysis, is that this U.S. policy is identical to China's – a "weak-yuan" policy in the latter, matched by a weak-dollar policy in the former. Krugman nonetheless lets the U.S. off the hook because, he argues, even though the U.S. dollar is certain to fall in value as a result of the new trillions being created, "that is not the ultimate goal." Judging a policy on its intent rather than its effect is disingenuous. Brian Burke's intent as general manager of the Toronto Maple Leafs has been to deliver a Stanley Cup to Toronto. Hockey fans are unlikely to forgive him, though, for the fact that his policies see the Leafs sitting, again, near the basement of their conference. However, let's take Krugman at face value. Why does he see the U.S. policy as good for the world? Because, he argues, "basically, the United States is pursuing a policy that increases overall world demand" and China "is pursuing a contractionary domestic monetary policy, reducing overall world demand." Let's begin with some of the key facts. At the peak of the economic crisis, the United States, Canada and the European Union had to borrow hundreds of billions of dollars from the rest of the world to finance stimulus programs to stabilize their economies. China also engaged in serious fiscal stimulus (relative to GDP, virtually on the same scale as the United States)[2], but unlike the North American and European powers, it was able to do so without borrowing a penny from the rest of the world.[3]  Chart 1: Deficit/surplus, U.S. Central government (billions). One of the reasons the U.S. had to resort to large-scale foreign borrowing, was because of years of high levels of central government deficit spending. The first chart here shows the last twenty years of central government spending, a story of only momentary surpluses and a "norm" of deficits in the hundreds of billions of dollars – in 2009 and 2010 in the wake of the financial crisis, passing the one trillion dollar mark.[4] Because the United States central government had been running very large deficits for years, borrowing on a large scale was inevitable to do the very necessary work of trying to "stimulate" the economy at the peak of the crisis in 2009. But with these deficits pushing debt levels very high very quickly, there has been increasing nervousness about both deficits and debts getting out of hand. Enter "quantitative easing." As an alternative to creating more government debt, the world's most powerful economy can, for the moment, simply "create more money," push it into the economy and hope that this has the desired stimulus effect. Krugman assesses the merits of these actions solely on their effect on world demand. But is this a sufficient criteria? There are all sorts of policies pursued by the U.S. over generations which have increased overall world demand. One in particular comes to mind. The U.S. central government has for a long time been the center of military expenditure in the world, and its role as such is accelerating. In 1990, its military expenditures represented 36.19 per cent of the military expenditures in the entire world. By 2009, its military expenditures had grown to fully 44.13 per cent of world military expenditures. In other words, almost half of the money spent on war in the world is spent by the U.S. state. This huge infrastructure of planes, missiles, bases, tanks, guns, ammunition and personnel has a powerful effect on demand in the world economy. For instance, "the U.S. military is the single largest consumer of energy in the world."[5] This might be bad in terms of global warming. Nonetheless, gobbling up millions of barrels of oil certainly helps stimulate world demand for petroleum. The trillions spent on war and militarism do meet Krugman's criterion in that they "stimulate world demand." But they do so in perverse ways. In particular, they are the principal reason for the desperate fiscal weakness of the U.S. central government, documented above, fiscal weakness which is driving the move to quantitative easing. Three Deficit ScenariosLet's try on three different scenarios to examine the relationship between military expenditures and U.S. deficits. Begin with one aspect of arms spending: the "war on terror." Launched in 2001, it has had three components – Operation Enduring Freedom (the war in Afghanistan), Operation Iraqi Freedom (the war in Iraq) and Operation Noble Eagle (beefing up U.S. military bases and homeland security). The official bill to-date for this "war on terror" is almost identical to the amount of money created in the first round of quantitative easing – $1.1-trillion.[6]  Scenario 1: Deficit/surplus, U.S. Central government (billions), less cost of Iraq and Afghanistan. This is probably an understatement, perhaps a gross understatement. Joseph Stiglitz and Linda Bilmes estimate that the true cost of the war in Iraq alone will be in excess of $3-trillion.[7]However, for argument's sake, we will take the official figures. If those official figures are removed from the books (Scenario 1) – that is, if we see what the picture would be like had the "war on terror" not been launched – then a change begins to take place in the picture of U.S. deficit spending. It doesn't eliminate the deficit problem. But it does lessen it, to the extent that as late as 2007 – the year the financial crisis first revealed itself – the U.S. central government would have actually run a modest surplus. But the "war on terror" is just the tip of the iceberg. The United States, as documented above, spends money on the military at a rate far greater than any country in the world. In 2010, for instance, the War on Terror costs of $130-billion were dwarfed by the $534-billion spent on other aspects of the military. Since 2006, the total "defense" budget of the U.S. has been over half a trillion dollars. By 2011, it is projected to be closing in on three quarters of a trillion dollars. Now imagine a pacifistic instead of a militaristic United States. In other words, see what the picture would be like without sustaining this massive war machine. When this military spending is removed (Scenario 2), the picture of the U.S. central government budget is completely different.  Scenario 2: Deficit/surplus, U.S. Central government (billions), less defence spending. In 2009 and 2010, there are, of course, quite large deficits. This is the normal "Keynesian" turn to deficit spending that occurs in any economic downturn. What is remarkable however, is the fact that in terms of non-military spending, before 2009 and 2010, there would have been no deficit whatsoever. In fact, in many years, there would have been surpluses, twice (in 2000 and 2007) touching half a trillion dollars. With a budget history for the last 20 years resembling this graph, a pacifistic U.S. government could have spent billions on its stimulus package, without borrowing a dime. Stimulus could have been completely financed out of accumulated surpluses from the last 20 years. And in fact, this understates the situation. Many of the costs of the U.S. bloated war budget are hidden. It would take a team of forensic accountants with unlimited time and unlimited funds to sort through government finances and corporate balance sheets to tease out the actual costs of sustaining the world's biggest military, and the world's only truly global empire. But there are two "non-defense" line items that we can say with certainty are directly related to the U.S. military. Veterans Affairs spending is extremely high in the U.S. precisely because so many young people have come back maimed and broken through U.S. military adventures abroad. And the space program is a barely disguised excuse to develop and test the rocket technology that is the backbone of the U.S. nuclear arsenal. When these two are factored in (Scenario 3), the picture is breathtakingly clear.  Scenario 3: Deficit/surplus, U.S. Central government (billions), less total costs of war and militarism. The U.S. central government deficit problem has one source – addiction to war and empire. That addiction has led to borrowing on an unprecedented scale, making it impossible for the U.S. to stimulate its economy through accumulated savings and making it increasingly nervous about the accelerating practice of borrowing on a mass scale. The quantitative easing approach – creating money out of nothing – has been made inevitable by the massive deficits used to sustain empire abroad. What Kind of Stimulus?Return, then, to Krugman's argument. If we only have one criterion by which to assess this – the creation of demand in the world economy – then there is no problem here. Massive levels of arms spending create demand. Years and years of arms-related U.S. budget deficits do "stimulate" the world economy. But downing two or three pots of coffee in one setting will similarly "stimulate" a person's metabolism. That doesn't mean it is a recommended method by which to obtain our nutrition. Obviously "the creation of demand" is not the only criteria we should use. When trillions are spent, it is useful to us ordinary folk when these trillions are spent in productive ways – on homes for the homeless, on child care, on health care, on education, on infrastructure, on subways, on clean energy, on water purification in the Global South – the list is endless. But when the trillions are wasted on grenades, nuclear weapons, M-16 rifles, nuclear submarines, aircraft carriers and all the other paraphernalia of the U.S. killing machine – this is ultimately the equivalent of taking those trillions and flushing them down the toilet. It is "investment" which leaves nothing behind – except nuclear waste that future generations will have to dispose of, deadly munitions that will exist for generations to maim and kill peasants in the field, and broken bodies and minds chewed up in endless wars. The creation of "demand" is not the only criteria. It matters – and it matters desperately – exactly what kind of "demand" we are feeding. And think this through. This creation of money from nothing will systematically drive the U.S. dollar lower relative to other currencies. For those holding billions (and in some cases trillions) of U.S. dollar-denominated debt, the devaluation of the U.S. dollar means a devaluation of the worth of their holdings. In effect, the United States through quantitative easing is forcing the rest of the world to pay for its empire – to pay for the costs it has incurred through sustaining a bloated permanent arms economy. It is irresponsible to assess the value of the policies of the U.S. and Chinese governments by narrowly focusing in on momentary decisions related to their currencies, and by pretending that these policies happen in a vacuum. There is a history to the current predicament of the United States, a predicament of its own making. When put in this bigger context, the message that must be sent to Krugman and others making similar arguments is quite clear: blame the wars, not China. • Paul Kellogg maintains a blog at PolEconAnalys.org where this article was originally published. Endnotes 1. Paul Krugman, "When China Exports, Everyone Pays," Truthout, November 4, 2010. 2. Eswar Prasad, "Assessing the G-20 Stimulus Plans: A Deeper Look," Brookings, December 2, 2010. 3. Joseph Trevisani, "While Many Countries Must Borrow, China and Japan Can Fund Their Own Stimulus," Seeking Alpha, January 28, 2009. 4. Figures for this and the next three charts (Scenarios 1-3) are primarily derived from "Budget of the United States Government: Historical Tables Fiscal Year 2011: Table 4.1 – Outlays by Agency, 1962-2015." For the years 2001 to 2010, the charts are based on figures in Office of the Under Secretary of Defense (Comptroller) / CFO,United States Department of Defense Fiscal Year 2011 Budget Request: Overview, February 2010: 1-1. The latter differ slightly from the former, but have the advantage of explicitly incorporating the military portion of the "war on terror," euphemistically referred to as "Overseas Contingency Operations." 5. Sohbet Karbuz, "U.S. Military Energy Consumption – Facts and Figures," Sohbet Karbuz, May 20, 2007. 6. Amy Belasco, "The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11," Congressional Research Service, September 2, 2010: 1 and 3. 7. Joseph E. Stiglitz and Linda J. Bilmes, "The true cost of the Iraq war: $3-trillion and beyond," Washington Post, September 5, 2010. | |||||||
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Print this articleAmerica's 'Outrageous War Economy!' Yes, We Love War, Even When The Pentagon Can't Find $2.3 Trillion, Keeps Wasting Trillions More on "National Defense"
Yes, America's economy is a war economy. Not a "manufacturing" economy. Not an "agricultural" economy. Nor a "service" economy. Not even a "consumer" economy. Seriously, I looked into your eyes, America, saw deep into your soul. So let's get honest and officially call it "America's Outrageous War Economy." We spend over half our tax dollars on war. So admit it, we love our war economy. And that's the answer to Jim Grant's thought-provoking question in The Journal: "Why No Outrage?"
There really is only one answer : Deep inside we love war. We want war. Need it. Relish it. Thrive on war. War is in our genes, deep in our DNA. War excites our economic brain. War drives our entrepreneurial spirit. War thrills the American soul. Oh just admit it, we have a love affair with war. We love the "America's Outrageous War Economy."
That's the only rational, honest answer to James Grant's probing question in The Journal: "Why No Outrage?" Americans passively zone-out playing video war games. We nod at ninety-second news clips of Afghan war casualties and collateral damage in Baghdad. We laugh at Jon Stewart's dark-comedic news and Ben Stiller's new war spoof Tropic Thunder … all the while silently, by default, we're cheering on our leaders as they aggressively expand "America's Outrageous War Economy," a relentless machine that needs a steady diet of war-after-war, feeding on itself, consuming our values, always on the edge of self-destruction. Yes, there is "No Outrage." Why? Admit it, because we secretly love war …
· Why else are Americans so eager and willing to surrender 54% of our tax dollars to a war machine, which consumes 47% of the world's total military budgets?
· Why are there more civilian mercenaries working for no-bid private war contractors than the total number of enlisted military in Iraq (180,000 to 160,000), at an added cost to taxpayers in excess of $200 billion and climbing daily?
· Why do we shake our collective heads "yes" when our commander-in-chief proudly tells us he is a "war president;" and his party's presidential candidate chants "bomb, bomb, bomb Iran," as if "war" is a celebrity hit song?
· Why do our spineless Democrats let an incompetent, blundering executive branch hide hundreds of billions of war costs in sneaky "supplemental appropriations" that are more crooked than Enron's off-balance-sheet deals?
· Why have Washington's 537 elected leaders turned the governance of the American economy over to 42,000 greedy self-interest lobbyists?
· And why earlier this year did our "support-our-troops" War President resist a new GI Bill because, as he said, his military might quit and go to college, rather than reenlistment in his war; now we continue paying the Pentagon's warriors huge $100,000-plus bonuses to re-up so they can keep expanding "America's Outrageous War Economy?" Why? Because we secretly love war!
Truth is, we've lost our moral compass: The contrast between today's leaders and the 56 signers of the Declaration of Independence in 1776 shocks our conscience. Today war greed trumps morals. During the Revolutionary War our leaders risked their lives and fortunes, many lost both. Today it's the opposite: Too often our leaders' main goal is not public service but a ticket to building a personal fortune in the new "America's Outrageous War Economy," often by simply becoming a high-priced lobbyist.
Again, ask yourself: Why no outrage? How did we become such wimps? In particular, why are 95 million investors silently watching from a distance? Why are we like sheep, passively surrendering our morals as Washington spends trillions of our tax dollars to expand the "Outrageous American War Economy?" Why are we no longer a democracy but a plutocracy of wimps kowtowing to the wealthy elite running our nation from the shadows? Yes, we ignored President Eisenhower warning in his 1961 Farewell Address:
"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes."
Yes, we were warned decades ago by a president who actually fought wars as a five-star general. Today's new 'war president' is doing the exact opposite, transforming our lethal "military-industrial complex" into "America's Outrageous War Economy," wasting trillions of taxpayer dollars. Ultimately, the price of our greed may be the fulfillment of Kevin Phillips' warning in Wealth and Democracy: "Most great nations, at the peak of their economic power, become arrogant and wage great world wars at great cost, wasting vast resources, taking on huge debt, and ultimately burning themselves out."
"National defense" a propaganda slogan selling a war economy?
But wait, you ask: Isn't our $1.4 trillion war budget essential for "national defense" and "homeland security?" We must protect ourselves. Sorry folks, but our leaders have degraded those honored principles to advertising slogans. They're little more than flag-waving excuses used by neocon war hawks to disguise the buildup of private fortunes in "America's Outrageous War Economy." Yes, something is terribly wrong. And still silence: "No outrage?" We've become A Nation of Sheep as FoxNews commentator Judge Andrew Napolitano aptly calls today's Americans.
America may be a ticking time bomb, but we are threatened more by "enemies within" than external terrorists, by ideological fanatics on the left and the right. Most of all, we are under attack by our elected leaders motivated more by pure greed than ideology. They terrorize us, brainwashing us into passively letting them steal our money to finance "America's Outrageous War Economy," the ultimate "black hole" of corruption and trickle-up economics. You think I'm kidding? I'm maybe too harsh? Sorry but others are far more brutal. Listen to the ideologies and realities eating at America's soul.
One. Our toxic "war within" is killing America's soul
How powerful is the Pentagon's war machine? Trillions in dollars. But worse yet: Their mindset is now locked deep in our DNA, in our collective conscience, in America's soul. Our love of war is enshrined in the writings of neocon war hawks like Norman Podoretz, who warns the Iraq War was the launching of World War IV: The Long Struggle Against Islamofascism,a reminder that we could be occupying Iraq for a hundred years. His WW IV also reminded us of the coming apocalyptic end-of-days "war of civilizations" predicted by religious leaders in both Christian and Islamic worlds back two years ago.
In contrast, this ideology has been challenged in works like Craig Unger's American Armageddon: How the Delusions of the Neoconservatives and the Christian Right Triggered the Descent of America – and Still Imperil Our Future. Unfortunately, neither threat can be dismissed as "all in our minds." Nor as merely ideological rhetoric. Trillions of tax dollars are in fact being spent to keep the Pentagon war machine aggressively planning and expanding wars decades in advance, including spending billions on propaganda brainwashing naïve Americans into co-signing "America's Outrageous War Economy." Yes, they really love war, but that "love" is toxic for America's soul.
Two. America's war economy financed on blank checks to greedy
Read Nobel Economist Joseph Stiglitz and Harvard professor Linda Bilmes' $3 Trillion War. They show how our government's deceitful leaders are secretly hiding the real long-term costs of the Iraq War, which was originally sold to the American taxpayer with a $50 billion price-tag and funded out of oil revenues. But add in all the lifetime veterans' health benefits, equipment placement costs, increased homeland security, interest on new federal debt, and suddenly taxpayers got a $3 trillion war tab!
Three. America's war economy has "no idea where its money goes"
Read the Portfolio magazine's special report "The Pentagon's $1 Trillion Problem." The Pentagon's 2007 budget of $440 billion included $16 billion to operate and upgrade its financial system. Unfortunately "the defense department has spent billions to fix its antiquated financial systems [but] still has no idea where its money goes." And it gets worse: Back "in 2000, Defense's inspector general told Congress that his auditors stopped counting after finding $2.3 trillion in unsupported entries." Yikes, our war machine has no records for $2.3 trillion! How can we trust anything they say?
Four. America's war economy is totally "unmanageable"
For decades Washington has been waving that "national defense" flag, to force the public into supporting "America's Outrageous War Economy." Read John Alic's Trillions for Military Technology: How the Pentagon Innovates and Why It Costs So Much. A former Congressional Office of Technology Assessment staffer, he explains why weapon systems cost the Pentagon so much and "why it takes decades to get them into production even as innovation in the civilian economy becomes ever more frenetic, and why some of those weapons don't work very well despite expenditures of many billions of dollars" and how "the internal politics of the armed services make weapons acquisition almost unmanageable."
Yes, the Pentagon wastes trillions planning its wars well in advance … so guess what … we just have to keep fighting … somebody … we're prepared … spend all those trillions … in advance … so we must love war … we are America's Great War Exonomy!
orig.MarketWatch: 8/08
America's War Economy: Support Killing People or Lose Your Job
Published on May 21, 2011 by Nenad · 2 Comments
"Ban the bombers are afraid of a fight
"Peace hurts business and that ain't right
"How do I know? I read it in the Daily News"
–Tom PaxtonPBS (the P stands for "Pure" I think) is concerned that if the U.S. government stops funding the war in Afghanistan, the U.S. economy will crash:
"An executive at a small defense contractor recently joked to me, 'Afghanistan is our business plan.' I asked him what he would do if the war ended. He stared at me for a moment and said, 'Well, then I hope we invade Libya.'"
I've passed this story around on Facebook and Twitter to a general response of complete bewilderment. It seems that not many people are aware that the U.S. economy depends heavily on massive government investment. The investment is through the military, and through the militaries of foreign governments running the full gamut from quasi-democracy to total dictatorship. Making the materials of war is what we do; it is our major industry, and it is funded with about half of our income taxes every year. This helps explain why President Obama was willing to de-escalate in Iraq only as he escalated in Afghanistan, and why he escalated in Afghanistan prior to forming any plan for Afghanistan. War is business. The trick for this business is how to de-escalate in both Iraq and Afghanistan without a major escalation somewhere else.
Now, our government could take the same money that it invests in wars, and the much larger pile of money that it invests in the base military budget, and instead invest it elsewhere. We could cut the military by 85% and still have the world's largest. We could take some or all of that saved money and put it into infrastructure or green energy or education, each of which would producemore jobs and better paying jobs than the military. But there's a problem. Investing public money in a massive jobs program that doesn't slaughter lots of innocent human beings is Socialism. Slaughtering innocent human beings is something our politicians can stomach, but Socialism is simply beyond the pale. So it's kill people or crash the economy; pick your poison. You can hurt others or yourselves.
Or . . .
Or . . .
Or we can go with what Americans tell pollsters they want to do: end the wars, tax the rich, tax and disempower the corporations, create single-payer healthcare, and invest in education, green energy, and non-violent jobs.
I'm kidding. I'm kidding. Relax.
Like my FaceBook friends, I too am properly concerned that even if we run out of enemies on earth, we ought to be properly prepared to annihilate space aliens when and if they show their faces (assuming they have faces). But in the back of my head I have to wonder if killing people is necessarily part of space aliens' "human nature" (or "alien nature"). It seems to me that aliens who survived their cultural adolescence and made it here would have learned to stop killing. They would also have learned to steer clear of suicidal killing machines like homo sapiens, meaning we won't actually be seeing any aliens any time soon.
If we develop a nonkilling society, we may or may not be visited by aliens, but at least we'll survive. However, this may be difficult given our murderous "human nature." Between 1 million BCE and 2000 CE, an estimated 91 billion people have lived, of whom an estimated 3 billion have ever killed another person, in war or anywhere else. If we ignore the other 88 billion people as extreme and unusual cases, then it is simply a demonstrated fact that "human nature" involves killing. There's just nothing to be done about it.
Unless, of course, we decided to think for ourselves rather than through pro-killing propaganda, for about five seconds. As Glenn D. Paige points out in an excellent book called "Nonkilling Global Political Science," (PDF) (where you'll find an explanation of those estimates above) most people do not kill. You've probably read Shirley Jackson's classic short story, "The Lottery". It's a jarring story, because the twist at the end transforms human beings, normal and believable human beings, into killers. Change the ending, and the story would become a more typical depiction of what most people are like.
For virtually all of the existence of modern homo sapiens our ancestors evolved in bands of hunters and gatherers, living as prey far more than as predators, never knowing war. We now live outside of the world we evolved in. We have unlimited access to things like sugar, salt, petroleum, and weapons of mass destruction. We aren't easily inclined to handle such access with restraint. We get fat. We change the earth's climate. We kill. But most of us don't want to do these things. We just haven't learned to place sufficient restraints on those who gain great immediate satisfaction by endangering us all.
Learning is the solution. Douglas Fry studied two Mexican villages of similar socioeconomic characteristics but different beliefs about how humans are or should be. One viewed people as peaceful and was peaceful. The other viewed people as killers and saw a lot of killing. The difference was in outlook, not systemic forces. People behaved as they thought people should behave.
Political science, Paige laments, although this is changing, views killing as inevitable. It therefore does not seek to understand it. A political science that views a nonkilling society as possible must carefully study the causes and remedies of killing. Paige hopes to see universities take up the task of eliminating wars and killing. One problem with that proposal is the extent to which U.S. universities profit from killing. Here in Charlottesville, Va., the University of Virginia lives off the military jobs program. We learn very little about this from the local newspaper, the Daily Progress, which ran full-page color ads all this week promoting a military jobs fair. So, it was interesting to watch how Russian TV covered our local military-industrial-academic complex.
I guess it's comforting to know that someone is paying attention to our self-destruction, even if it isn't us.
David Swanson is the author of "War Is A Lie"
http://facebook.com/pages/David-Swanson/297768373319
Tags: afghanistan, BCE, CE, Libya, military, US, war
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Number of sources covering this storyObama, GOP lawmakers shift their focus back to jobs7 hours ago - CNN (blog)Republican candidates slam Obama after latest unemployment reportAug 5, 2011 - Los Angeles Times2012 candidates jump on July jobs numbersAug 5, 2011 - CNN (blog)Obama gets a little good news on jobsAug 5, 2011 - USA TodayWhite House Focus on Jobs: VeteransAug 5, 2011 - CNN (blog)Obama To Announce New Steps To Get Veterans Back To WorkAug 4, 2011 - ABC News (blog)Images
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USA - A Divided Union 1941-80
The US Economy at War
Key Question: How did the war affect the American economy and industry? |
Quick Links - WWII - Women,Blacks, Economy; Women in 1950s, McCarthyism, Civil Rights Reasons, Montgomery,Little Rock, Tactics,Successes; Black Power,Youth and Students,Women's Movement, JFK's New Frontier, Johnson's Great Society, Watergate | |||
Key Words are explained down the page Key Issue: Big businesses made big profits. Smaller companies were taken over by bigger ones to make huge corporations. Background: In the 1930s the USA was hit by a big economic depression after the Wall Street Crash of 1929. Millions were out of work, companies and banks had gone bust, and the system of free-market capitalism was on the point of collapsing. President Franklin Delano Roosevelt (FDR) set up the New Deal in the 1930s. The New Deal was theFederal (all-states) Government spending billions of dollars creating jobs, by building dams, roads, schools and hospitals. Many rich people did not like this because it meant they had to pay more taxes. The New Deal did not solve unemployment problems. In 1939 18% of American workers were jobless (9.5 million). The war however did create more jobs (especially soldiers!) and unemployment dropped to 670,000 by 1944. Big BusinessIn 1942 the War Production Board was set up to convert peacetime industry into war production.
e.g. car factory --> tank factory fridge makers --> munitions (bombs/bullets)
America had to make more aeroplanes. In 1939 the US Army Air Corps had just 300 planes. In 1944 over 96,000 were built in that year alone – 30,000 more than Germany and Japan put together.
Over $175 billion – that's $175,000,000,000 - government war contracts were given to companies. Bigger companies such as Ford, Boeing, Douglas, Winchester and General Motors were given most of the contracts so many smaller businesses ended up going bust or being taken over by them to create super-corporations. The public was encouraged to invest in war bonds - like a savings account with the government - which would be spent on the war and returned to the investor after the war. Rationing and recycling goods such as metal, rubber and nylon were brought in.
PropagandaSome companies were encouraged to make their workers feel patriotic about going to work. They were made to feel guilty if they were off sick, and were discouraged from asking for pay-rises. The $175 billion was obviously not aimed at the worker! The main unions in America agreed not to go on strike during the war, waiting until 1945 to press for better pay.
SummaryThe war brought the USA out of the Depression. US companies were now the biggest in the world and made huge profits. Government spending on military contracts became the 'fuel' for the growing American economy. This has been the way ever since. The big corporations formed a 'military-oil-industrial complex' which has had a big influence on American government policies ever since.
Key Words depression - when the economy is failing - job losses, companies going bust Wall Street Crash - the collapse in share prices in October 1929 which led to depression in capitalist countries like USA, Britain and Germany free-market capitalism - the system where companies are free to make as much profit as they can without regulation by governments Federal - the way the US is run - a federation of 50 different states. Federal law and agencies (e.g. the FBI) apply to all states. corporations - big companies owned by shareholders, they usually compete in many sectors of the economy e.g. mining, manufacturing, oil, finance etc. patriotic - proud and supportive of your country military contracts - a deal between the government and a company to buy weapons, or other war equipment. This is paid for in taxes.
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