2ndlook

Global media investigation: 612 Indian firms in tax havens – Indian Express

Posted in Business, Current Affairs, India, Pax Americana, politics, Propaganda by Anuraag Sanghi on April 4, 2013

Only 612 Indian names, mostly businessmen, in the 1.2 lakh names. This vindicates 2ndlook reading on corruption in India.

For at least 5 years, it has been 2ndlook position that corruption in India is a small problem. All those stories about trillions in Swiss accounts, turned out to be just hot air. Based on 2ndlook at some economic and business realities it was clear that these corruption-in-India claims were just plain flibbertigibbet.

Arvind Kejriwal, Anna-bhau take that. Eat crow now.

Now we have data.

Indians businessmen are a small part of this offshore mechanism. This data is broadly in line with the trend. For India, which is a Top-5 economy, to have so few people in the list proves two things.

One: Indian take on corruption is round-tripped back into India.

Two: Indians generally lack faith in these corporate structures – and would rather hand over money to their CAs, who will handle this for free.

Typically, specialist Indian CAs handle this money on a simple understanding. Only the principal will be returned – and actual investments at the instruction of the beneficiary, if any, will come back to the beneficiary. Otherwise all risks and benefits from the deployment of these funds will be the CAs take.

Three: Indians understand money much better – and can handle it themselves instead of saand-ka-tel (snake-oil) MNC salesmen.

In the next few days we will read and hear more. But on thing is clear. Indian Express will not be able to suppress it – as the same data can be released by other media houses in the rest of the world.

I presume in the next 2-3 months, this data will be publicly available – and data-scraping software will be used by others.

Here is the initial story.

In the biggest global expose of its kind on offshore investments and secret financial transactions, an international group of investigative journalists has found details of more than 1.2 lakh offshore entities and trusts belonging to individuals and companies in more than 170 countries and territories, including India.

These individuals and companies include politicians, the mega rich and tax offenders, among others, who have invested in tax havens such as the British Virgin Islands, the Cook Islands, Samoa and other offshore hideaways.

The 612 Indians in this list include two members of Parliament — Lok Sabha Congress MP Vivekanand Gaddam and RS member Vijay Mallya — and several industrialists such as Ravikant Ruia, Samir Modi, Chetan Burman, Abhey Kumar Oswal, Rahul Mammen Mappillai, Teja Raju, Saurabh Mittal and Vinod Doshi.

The list also includes businessmen who have had a brush with authorities such as the Income-Tax department and the CBI. Several of the offshore investments were made in possible violation of RBI and FEMA rules.

Details of these transactions were contained in 2.5 million secret files and accounted for more than 260 gigabytes of data. They were obtained by the International Consortium of Investigative Journalists (ICIJ) and their total size is more than 160 times larger than the leak of the US State Department documents by Wikileaks in 2010.

Based in Washington DC, ICIJ (www.icij.org) is an independent network of reporters who work together on cross-border investigations. ICIJ collaborated with 38 media organisations around the world, including the The Indian Express, for this ambitious global project and to analyse the documents. The other media partners include The Washington Post in the US, The Guardian and BBC in Britain, Le Monde in France and the Canadian Broadcasting Corporation.

The 15-month long investigation has found that alongside perfectly legal transactions, the secrecy and lax oversight offered by the offshore world allows fraud, tax dodging and political corruption to thrive. The expose has also thrown light on the functioning of “nominee directors” in offshore companies, several of whom have also been engaged by Indian patrons of offshore companies.

For instance, a cluster of 28 “sham directors” have been identified as having served as the on-paper representatives of more than 21,000 companies between them, with some individual directors representing as many as 4,000 companies each. The expose comes shortly after a list of 18 Indians who had bank accounts in the LGT Liechtenstein Bank and around 700 Indians who had accounts in HSBC in Geneva became public. In both cases, account holders were prosecuted and paid penalties to Income-Tax authorities for deposits they had made abroad without paying taxes in India.

via Global media investigation finds 612 Indian firms in tax havens – Indian Express.

Anuraag Sanghi  |  February 24, 2011″ href=”http://quicktake.wordpress.com/2011/02/24/even-god-cant-help-you-corruption-ii/” target=”_blank”>c

Must India Curb Gold Imports: Why It’s A Bad Idea

Posted in Business, China, Current Affairs, Gold Reserves, India, Pax Americana, Propaganda by Anuraag Sanghi on February 10, 2013

India imports 800 tons of the 2500 tons of gold produced each year. This creates pressures on the dollar-currency architecture of the modern world. What can India do to resist US pressures on this front?

Gold smuggling has gained a new life with higher import duties on gold to curb rising demand, according to Indian financial intelligence agencies |  Graphic source & courtesy - economictimes.com

Gold smuggling has gained a new life with higher import duties on gold to curb rising demand, according to Indian financial intelligence agencies | Graphic source & courtesy – economictimes.com

Fourteen months ago, in December 2011, as the Western world took a break for Christmas, India and China took simultaneous actions to restrict demand gold in their respective markets.

Chindia in Tandem

China, till December 2011, was installing gold-ATMs to ramp up gold buying by its citizens.

Government of India (GoI) was tweaking policy (gold loans attracted zero-risk weightage in bank capital provisioning norms) to aid multi-billion corporations like Muthoot Finance to expand the gold-loans market.

And then the tune changed.

In India, the Prime Minster’s Economic Advisory Council (PMEAC) took a strident anti-gold stand. In the last 13 months, India has increased import tax by nearly 850% on gold – from a flat Rs.200/10 gm to 6% (roughly Rs.1700/10 gm at current prices & exchange rates).

In China, the Government cracked down on gold importers.

Dollar Drought

Three months before these concerted actions by India-China, in September-December 2011, as gold prices dropped from US$ 1900 to US$1600, global banking was seized by an acute dollar-scarcity.

Banks in Europe were raising money by using gold as collateral. India, the world’s largest importer of gold was particularly affected. The Indian rupee became Asia’s worst performing currency. India rushed to sign a US$15 billion of credit line from Japan.

China assured credit lines to some of its favored trading partners. Six months later, Africa got from China US$20 billion. Some US$10 billion of Chinese credit went to nations in Central and Eastern Europe and another US$10 billion to various Latin American countries came from China. Even before this, Chinese telecom firms made breakthroughs in Latin-America with credit.

A dollar-drought while the US was busy flooding the world with dollars?

A dollar shortage while Ben Bernanke is pumping trillions of dollars in the world economy?

As the difference increased in Indian and international gold prices, smuggling of gold too is making a comeback.

As the difference increased in Indian and international gold prices, smuggling of gold too is making a comeback.

Gold Tail That Wags the US dollar?

In the last 18 months, any drop in gold prices favored the dollar in the dollar:rupee trade.

Any drop in dollar-price of gold has been coupled with an increase in dollar price against the rupee. As a result, Indians had to spend more rupees to buy gold that was worth fewer dollars.

Now, this is strange!

On a long-term basis, gold has no positive, negative, inverse, divergent, convergent correlation with any other commodity, or exchange-traded stock. So why this short-term coupling of rupee:dollar:gold.

Is there a central bank consensus, including(?) Reserve Bank Of India (RBI), that the Indian consumer should not benefit from price-drops in gold?

Trade Deficit … Anyone?

India’s current account deficit i.e., exports + inward remittances less imports = current account deficit (CAD), is running at less than 6% – up from less than 3% at the start of the Great Recession.

Exports to a world in the grip of the Great Recession have grown slowly while imports-increase into a growing Indian economy is faster. While the Indian CAD situation needs addressal, it is by no means alarming.

It is well-known and widely-accepted that vast sectors of the Indian economy are not measured or monitored by official statistics. Hence, Indian GDP is understated. It is not surprising that Indian GDP measured on a nominal basis (US$1.85 trillion) is less than 42% of the figure obtained when measured on the basis of purchasing power (US$4.46 trillion).

Indian Gold Imports

Keeping these factors in mind, a CAD that is higher by 2% of India’s nominal GDP means a gap of about US$35 billion – no large sum for the Indian economy. Anyway, since a large part of Indian imports is gold, it further reduces the cause and need for alarm.

Ostensibly, India’s CAD situation is due to gold, India’s second largest import, according to GoI. The Indian Government has targeted gold for its policy-intervention attention. Prima facie, US$60 billion gold imports cannot be the issue for a US$2 trillion economy. There are good reasons to believe that this policy intervention by the GoI is happening under US pressure – because Indian gold imports account for one-third of total mine production of gold in a year.

In the past …

The Indian Government’s “management” of the rupee-dollar till the 1970’s meant the rupee at a higher value. Over the 1980s and early nineties in a series of devaluations, Indian rupee’s over-valuation was corrected. Before that, there was a massive arbitrage opportunity between  official exchange-rates and a thriving black market.

A blogger who has been travelling to this part of the world writes

“…in 1969 a dollar fetched 13 rupees, although you could buy 28 rupees for a dollar in Switzerland and 40 rupees for a dollar in Kabul. The official exchange rate is now 38.50 rupees for a dollar, a nice deal”

This high rupee-value gave rise to an active black market in foreign exchange, supported by gold smuggling into India; drug transshipment out of India from the Golden Crescent and the Golden Triangle. This drug+gold trade spawned a huge crime wave of global proportions.

Artificial valuation of the rupee made exports uncompetitive; imports cheap – for which there was no foreign exchange. India regularly had meetings with AID India Consortium and elaborate cases for borrowings were made. The trade deficit remained.

Will things be different this time? I am sure that a few people in the Central Bank consensus group who think that this time, it will be different.

How serious is the smuggling problem?

Gold imports through Thailand have increased as India has a free trade agreement with Thailand that allows gold imports at !1% instead of 6%  |  Image source & courtesy - economictimes.indiatimes.com...

Gold imports through Thailand have increased as India has a free trade agreement with Thailand that allows gold imports at !1% instead of 6% | Image source & courtesy – economictimes.indiatimes.com…

Why is the RBI Wrong?

RBI’s anti-gold policy is definitely misplaced.

Indian gold imports at 800+ tons are a cause of disequilibrium, with global production at some 2500 tons.

So be it.

India is at the receiving end of a bad deal in agricultural subsidies, foreign exchange reserves, technology imports, UN, IMF, World Bank – not to forget a bad deal in oil.

It is not like India controls global gold mines or production. Or is India in any position to stop other buyers from purchasing gold? Unfair apart, why must GoI + RBI take unilateral  steps to restrict gold imports into India?

Currency Printing: Like every other central bank in the world, the RBI also has been printing too many rupees. Unlike the rest of the world, Indian consumers have been sterilizing excessive printing of the Indian rupee by buying gold. This way, the market automatically sterilizes excess rupee liquidity.

More taxes is more profits for smugglers: The higher the difference between international prices and official prices, higher the profit margin for illegal imports.

In fact, raising of duty has only enhanced the profit margin of smugglers,” said a senior DRI official who did not want to be identified. (via Gold smuggling on the rise as imports turn costlier – Livemint).

“As of now, gold smuggling is limited to air passengers and carriers, which has limitations in terms of volume and cost. The bulk smuggling channels (by sea and land) have not revived, but the recent increase in customs duty will provide the profit differential to revive it,” said a senior customs official who too did not want to be identified due to the sensitivity of the issue. This person added that it would be impossible for enforcement agencies to contain smuggling through these routes. (via Gold smuggling on the rise as imports turn costlier – Livemint).

Trade Deficit: Is this increase in Customs likely to reduce India’s trade deficit? Unlikely. It will increase capital-flight to offshore financial centres – from where foreign-exchange earnings will get higher returns than in India. Higher customs or other barriers will mean more (and more) policy interventions that will increase compliance overload and reduce policy-impact.

If the proposed duties do indeed lead to more smuggling, though it would not appear in India’s balance sheet, it could continue to pressure the Indian rupee, which has been losing value against the U.S. dollar in recent months. (via Gold Smuggling Redux in India? – India Real Time – WSJ).

Questioning the anti-gold logic of the Govt apart, increasing customs duties from 2% to 6% will not change a 2000-yr of gold tradition  |  Graphic source & courtesy - economictimes.com

Questioning the anti-gold logic of the Govt apart, increasing customs duties from 2% to 6% will not change a 2000-yr of gold tradition | Graphic source & courtesy – economictimes.com

End of Bretton Woods: No fiat currency system has lasted for more than 75 years.

The Bretton-Woods system, pinned to the US dollar has morphed from a gold-based to an oil-based currency. In the last ten years, the petro-dollar surplus has decreased – and US debt has ballooned to US$17 trillion – 125% of US GDP. Add US consumer debt and corporate debt, and we are talking US debt at about 300% of US GDP.

Euro-Yuan Challenge: Euro-currency has not broken down. Not quite what Anglo-Saxon Media (ASM) has pushed us to believe. – in line with 2ndlook estimate of 2 years now. ASM also pushed the case of a Chinese hard-landing very hard. But the Chinese hard-landing is nowhere in sight. So, the Euro and Yuan are likely to increase their share in global trade. From nearly 90% of global trade, the US dollar share of trade has reduced to about 67%. As it gets close to 50%, (probably) in the next 7-10 years, we may see a greater role for gold as an objective cross-currency index. Gold trade will only increase in importance.

Rise Of The Underworld: Will we want to give the Indian narcotics-gold underworld a greater hold over the Indian economy – like it was 25 years ago. Like the narcotics-gold underworld dominates Pakistan or Afghanistan now.

Safety Net: In the face of global or local dislocations (due to drought, floods, earthquakes, war, epidemics) private gold reserves can help families to restart lives. Even without State support.

Much of the reason for Indian economic equilibrium over the last 65 years, has been the India’s private reserves of gold.

Let’s See Action

Covering a gap of US$35 billion means looking at three big targets of US$12 trillion each.

1. Increase oil refinery exports (set up two more Jamnagar type refineries), increase domestic crude output (split ONGC into four parts?) and shrink oil imports.

2. Fund 10,000 SMEs with credit for expansion and growth to add about US$12-US$15 trillion of output. Privatize city bus services and privatize train operations.

3. Sign a Third-World rupee-trade FTA, which will boost exports to the Third World by US$12 billion and replace dollar imports with rupee imports.

It is these measures which will yield answers to the Indian CAD problem – instead of curbs, taxes and barriers to gold imports.

But then …

What was on the Plate?

In October last year, the US Treasury Secretary, Timothy Geithner and the Chief of the US Federal Reserve were on a two-day India visiten-route to Tokyo to attend some IMF and World Bank meetings.

Any bets on Geither and Bernanke’s main item on the India-visit agenda was gold?

Anyone?

The depth of the global gold market with a large Indian diaspora makes it easy to avoid excessive taxation - a short step from criminal smuggling.  |   Graphic source & courtesy - economictimes.com

The depth of the global gold market with a large Indian diaspora makes it easy to avoid excessive taxation – a short step from criminal smuggling. | Graphic source & courtesy – economictimes.com

Aww … another conspiracy theory?

John Hopkins University in Baltimore, Maryland, USA hosts since WWII the Warfare Analysis Laboratory – a part of its Applied Physics Lab. Used frequently by the Pentagon, in 2009, a unique war simulation was conducted here.

Not a nuclear or a conventional war, not even a biological or chemical war – but an economic and financial war. Simulating how an Economic Hit Man from other countries would operate, its effect on the US and the US response.

Two years after this simulation, one of the participants, James Rickards has published a book outlining some of the presumably basic models used in the exercize.

All these actions point towards a declining US using more desperate means to stay on top.

For how long?

Rising Chorus … Within and Without

All these points are well-known and understood within sections of GoI. By the Indian and global press.

Some extracts below.

Gold smuggling has acquired a new lustre with imposition of higher import duties on the yellow metal to curb rising demand, financial intelligence agencies have said, warning of a sudden resurgence of underworld activity.

Import duty on gold has risen from nil to 6% in the last 12 months. Incidents of smuggling have seen an upswing recently.

Officials in the finance ministry fear that return of gold smuggling will revive Mumbai’s underworld, which thrived on the practice until the economic liberalisation of the early 1990s.

They say a rise in the illegal gold imports will undermine the government’s strategy to curb gold imports to check a runaway rise in current account deficit, which touched a record high of 5.4% of GDP in the first half of 2012-13.

Some officials said the recent confiscations point to a growing trend of organised networks engaging “carriers”, who are paid between 10,000 and 25,000 for each trip. They said illegal transfer of gold has become more lucrative for these carriers since the hike in import duties, adding that many of them are now resorting to rectal smuggling.

Agencies also fear that smugglers may take to the sea route once again.The authorities say they have seized Rs165 crore worth of gold between April and December 2012, an 11-fold increase over the seizures in the year-ago period.

India, the world’s biggest consumer of gold, imported $56.4 billion worth of the metal in 2011-12, accounting for nearly half of its current account deficit.

The country has already imported gold worth $38 billion this fiscal, prompting the government to raise import duties again by 200 basis points to 6%. Current account deficit widened to a record 5.4% of GDP in the first half of 2012-13, with higher gold and crude oil imports increasing the country’s dependence on foreign capital inflows

via Financial intelligence agencies sound alert on gold smuggling – The Times of India.

Gold smugglers have stepped out of 1970s’ Bollywood potboilers into present day reality with the government raising taxes to curb the import of the yellow metal.

According to data from the Directorate of Revenue Intelligence (DRI), an agency that monitors economic offences, the incidence of gold smuggling in the current fiscal year has zoomed at least eight times compared with the corresponding period the previous year.

As the government struggles to rein in a raging current account deficit that is likely to cross 4% of the national economic output this fiscal, it has increased the import duty on the precious metal thrice since last year.

India’s gold imports, (are) next only to oil imports in terms of value.

The increase in import duty on gold has clearly led to a price differential between Indian and international gold, and that, in turn, has led to an increase in smuggling. Spot gold prices here are as much as 5.7% higher than in Dubai, compared with a difference of 0.1% in 2008. Typically, gold is smuggled into India from Dubai.

In the first 10 months of 2012-13, till January, DRI has seized gold worth Rs.60.17 crore (200kg at the current price of gold) and cracked 36 cases of smuggling. In the corresponding period in 2011-12, it had seized gold worth Rs.7.42 crore and cracked 15 cases.

To be sure, the number is almost insignificant when compared with the value of India’s gold imports—$38 billion (around Rs.2.03 trillion today) till December.

And it refers only to seizures and the gold smuggled into India could be much more; DRI officials admit that they detect about one in every 10 cases.

“The duty rate hike in phases, from Rs.100 per 10g to 6% (about Rs.1,800 at the current price) now, has not really dampened the demand. In fact, raising of duty has only enhanced the profit margin of smugglers,” said a senior DRI official who did not want to be identified.

While the government’s actions are intended at discouraging import of physical gold, DRI and customs officials say the recent 2 percentage point increase in the import duty on the precious metal will make it difficult for enforcement agencies to contain bulk gold smuggling in India.

On 22 January, India raised the import duty on gold to 6% from 4%.

After restrictions were lifted on gold imports and a few commercial banks were allowed to import gold and sell the yellow metal to jewellers and exporters in 1997, the spread between international and local market prices shrank dramatically, but with the rise in import duty, it is now widening.

Modus operandi

Explaining the modus operandi of gold smugglers, the DRI official said most of the smuggled gold is brought into India through air mostly from Dubai and Thailand, concealed in either cabin baggage or different parts of the body. People carrying this gold are called carriers, or mules, and they work in pairs. Going by the data collected by DRI, on average, each mule carries at least 5kg of gold per trip.

According to the DRI official, the return on investment for a smuggler in a year amounts to as much as 200% for such trips.

Here’s how the math works: At the current price, it costs Rs.1.44 crore to buy 5kg of gold in Dubai. The cost of an air ticket, hotel expenses and the commission of the mule plus hawala fees to send the money to Dubai after the gold is sold in India comes to another Rs.2 lakh. The same gold can be sold in Mumbai for Rs.1.51 crore, netting the smuggler Rs.5 lakh for a single trip.

Such an operation typically takes four days. Theoretically, this means a smuggler can churn his initial investment seven times a month. Over a year, that means a profit of Rs.4.2 crore on the original Rs.1.5 crore investment.

“As of now, gold smuggling is limited to air passengers and carriers, which has limitations in terms of volume and cost. The bulk smuggling channels (by sea and land) have not revived, but the recent increase in customs duty will provide the profit differential to revive it,” said a senior customs official who too did not want to be identified due to the sensitivity of the issue. This person added that it would be impossible for enforcement agencies to contain smuggling through these routes.

Customs officials also claim their job has been made tougher by a 2011 Supreme Court ruling under which individuals arrested for violating the Customs Act can be released on bail. The apex court’s decision, both officials mentioned above said, has taken away the powers of the customs department to deter smuggling.

via Gold smuggling on the rise as imports turn costlier – Livemint

For some, it’s almost Haji Mastan time again.

There has been a 10-fold increase in the number of gold smuggling cases in recent months. Between April and June this year, authorities impounded gold worth 940 crore in some 200 cases of smuggling, up 272% over the same period last year, finance ministry data shows.

Smugglers make money if they can successfully avoid paying duties – 4% customs duty and other taxes, which add 5%-plus to the landed cost of gold.

via Weak rupee makes gold smuggling, bets attractive – Economic Times.

An increase in the import duty on gold, the third in less than a year, is expected to lead to a rise in smuggling of the precious metal into the country. On Monday, the government hiked the import duty on gold from 4% to 6%.

Air customs officials speculate that more gold will be smuggled from abroad through airports as import duty is now at its steepest.

There has been an increase in smuggling of gold through Chennai from Sri Lanka, Singapore, Malaysia and other Southeast Asian countries over the past three years.

This is the third time the government has raised import duty on gold. In March 2012, the government doubled import duty on standard gold from 2% to 4%. In January 2012, it increased duty from 1% to 2%. Of the 800 tonnes of gold that India imports every year, one-fourth is accounted for by Tamil Nadu.

While customs officials are apprehensive that they will have to be on their toes, bullion traders are unhappy that high duty will push up attempts to smuggle in gold by evading taxes and will lead to loss of jobs for local goldsmiths.

Jewellers say smugglers, couriers and middleman can make as much as Rs 1,800 for every 10g of gold imported (6% of Rs 30,000).

“With imports of 50kg, the margins can be as high as Rs 1 crore,” said a jeweller who did not want to be named. Jewellers say the government has seized close to 900kg of unaccounted gold in the last year.

via Import duty hike to up gold smuggling – Times Of India.

Gold smuggling is not new to India; in fact, many villains of Bollywood movies in the late 1970s were often smugglers. One of the most memorable Bollywood smugglers was Lion (pronounced Loyan) played by actor Ajit in movies like Kalicharan and Yaadon Ki Baraat. Even superstar Ambitabh Bachchan was a smuggler in his blockbuster movie in 1975 Deewar.

“In the late 1980s and early 1990s, the price of gold in India was 65% higher than in other countries,” wrote Douglas Farah, a national security consultant in the U.S., in a paper in 2004.

Citing a report by Interpol from the mid-1990s, Mr. Farah said that gold worth $4.2 billion was smuggled into India in 1991.

In the early 1990s, as part of India’s economic liberalization, the Indian government removed the restrictions on importing gold.

This eventually helped lower the price gap between prices in India and abroad.

If the proposed duties do indeed lead to more smuggling, though it would not appear in India’s balance sheet, it could continue to pressure the Indian rupee, which has been losing value against the U.S. dollar in recent months.

via Gold Smuggling Redux in India? – India Real Time – WSJ.

The government has raised customs duty on gold in bid to curb imports that are largely responsible for the high current account deficit and weakening currency, but a spurt in smuggling threatens to undermine its efforts.

“The operation is currently on…there was intelligence on a sudden jump in gold jewellery imports from Thailand,” said an official with the organisation privy to the development.

India has a free trade agreement with Thailand that allows gold jewellery imports at a concessional customs duty of 1 per cent.

The duty rates for imports through normal channels are much higher after a steep increase in this year’s budget and goes up to 10 per cent on standard gold bars, gold coins and non-standard gold stand, making Thailand an attractive place for purchases.

Though, stringent rules of origin norms are in place in the FTA to ensure that any goods taking advantage of the concessional duty regime undergoes a substantial value addition in Thailand, DRI is alleging large-scale misuse of these norms by importers.

According to DRI sources, the rules of origin under the FTA envisage a value addition of up to 20 per cent but since gold rates in Thailand are at the same levels at India and value addition can only push up the cost of goods and render gold jewellery imports uncompetitive.

Customs authorities had impounded gold worth 942 crore in some 200 cases of smuggling bettween April and June this year, up 272 per cent on 243 crore corresponding period last fiscal that involved 20 cases.

via DRI cracks down on gold smuggling from Thailand – Economic Times.


2000 years Of World Manufacturing History

Posted in America, Business, China, European History, India, politics by Anuraag Sanghi on June 28, 2012

Till 200 years ago, India was the dominant industrial power in the world. It has regained a place in the Top 10 again in the space of the last fifty years.

Western manufacturing starts its dominant phase after slave-revolts in Hiati and Caribbean. These revolts coupled with the capital-concentration allowed the Industrial Revolution to spread across the West - and later the world.  |  Creative credits embedded. Additional animation at source. |  Click for image.

Western manufacturing starts its dominant phase after slave-revolts in Hiati and Caribbean. These revolts coupled with the capital-concentration allowed the Industrial Revolution to spread across the West – and later the world. | Creative credits embedded. Additional animation at source. | Click for image.

Western Invention of China

Gunpowder or silk, China has long been credited by the modern West as the inventor or innovator. Thin Chinese evidence in the face of overwhelming balance of convenience favoring India has been overlooked – largely the work of one man, China-Champion Needham.

Even with this bias, India emerges as the historical champion in manufacturing. With technology monopolies in gunpowder, sugar, wootz steel, dominance in silk, cotton, textiles, fabrics, India was an unmatched industrial power till 200 years ago. India’s de-centralized manufacturing made it a lead innovator and manufacturer for the longest period in human history – thanks to भारत-तंत्र Bharat-tantra.

Recent DNA analysis of fibre has revealed that Saraswati-Indus Valley urban centres processed silk much before China. India produced 1000% more gunpowder than China.

Yet, China gets the credit.

Mehrgarh Statuette; Courtesy - Wikimedia Commons; Source: Denis Biette

Mehrgarh Statuette; Courtesy – Wikimedia Commons; Source: Denis Biette

Saraswati Plains – Indus Valley Pioneered Silk, Cotton & Copper

On the plains of Saraswati River and in Sindhu River, (Indus Valley as per modern history) there is archaeological evidence that Indians were the first in the world to use silk, cotton, copper and bitumen (tar) – called daamar डामर/अलकतरा in Hindi (also daambar in some parts).

The metallurgical analysis of a copper bead from a Neolithic burial (6th millennium bc ) at Mehrgarh, Pakistan, allowed the recovery of several threads, preserved by mineralization. They were characterized according to new procedure, combining the use of a reflected-light microscope and a scanning electron microscope, and identified as cotton (Gossypium sp.). The Mehrgarh fibres constitute the earliest known example of cotton in the Old World and put the date of the first use of this textile plant back by more than a millennium. Even though it is not possible to ascertain that the fibres came from an already domesticated species, the evidence suggests an early origin, possibly in the Kachi Plain, of one of the Old World cottons. (via ScienceDirect.com – Journal of Archaeological Science – First Evidence of Cotton at Neolithic Mehrgarh, Pakistan: Analysis of Mineralized Fibres from a Copper Bead).

This topic has come to the fore again.

An infographic (on top) by a British publication badly represented the fact that between 1AD-2000 AD, for 1800 years India was either a dominant or a significant manufacturing centre in the world.

This infographic at first glance seems to show Western manufacturing prowess as long-term development – and not a short-term blip in the last 200-years.

Not surprisingly, it coincides with India’s eclipse – now a 200-year old phenomenon.

What does the future look like.

China will rival the US as the country with the biggest potential to develop key technology breakthroughs with a big impact on the business world, according to a survey of more than 650 executives in industries such as computing and electronics.

According to the poll, organised by the KPMG consultancy, Chinese companies and researchers are beginning to develop expertise.

In the study, 30 per cent of the executives asked to give their views said that China will be the single biggest “global hotspot” for innovation within the next four years, with the US in second place attracting 29 per cent of the votes.

India, Japan and South Korea came next in the poll, with 13 per cent, 8 per cent and 5 per cent of the respondents to the survey naming these countries.

The executives who answered questions in the survey work in technology-based businesses around the world, mainly in North America, Europe and the Asia-Pacific region. (via China to rival US tech knowhow, say execs – FT.com).

This survey, overplays India manufacturing prospects and ignores Germany.

More than India, Japan or Korea, it is Germany which is likely to be the Top-3 industrial and innovation power stakes in the next 25-50 years.

While Indian prospects are indeed worthy of mention, it is unlikely that India will provide the concentration of wealth and power to become a global ‘innovation’ leader in the next 25 years.

We can check this ‘prediction 13 years later.

A date in 2025 , then!


Rajat Gupta – Take-Down-of-Indians Pattern Continues

Posted in America, Business, Desert Bloc, India, politics by Anuraag Sanghi on June 15, 2012

How come never wire-taps were allowed in insider trading cases? Why only against Rajarathnam and Rajat Gupta?

Many in the US Senate and Congress are suspected of insider trading - but enjoy legal immunity  |  Cartoonist Chuck Asay in 2012  |  Click for image.

Many in the US Senate and Congress are suspected of insider trading – but enjoy legal immunity | Cartoonist Chuck Asay in 2012 | Click for image.

Rajat Gupta, 63, denied illegally leaking boardroom secrets to Raj Rajaratnam, a former hedge fund manager now serving 11 years in prison.defence lawyers told the jury that the use of phone records and FBI wiretaps only created the illusion of illegal business activities.

“That is a gambit that can bamboozle people into thinking something was proven when it wasn’t,” defence lawyer Gary Naftalis said.

The trial focused on a phone call made to Rajaratnam on 23 September 2008, minutes after Gupta had listened to a private conference call discussing a $5bn (£3.2bn) investment in Goldman Sachs by Warren Buffett’s company Berkshire Hathaway. The deal would be made public after stock markets closed that day.

According to phone records, Rajaratnam bought $40m in Goldman Sachs stock moments after the phone call, earning nearly $1m. (via BBC News – Ex-Goldman Sachs director Rajat Gupta guilty of fraud).

How come never wire-taps were allowed in insider trading cases? Why only against Rajarathnam and Rajat Gupta?

Was it a huge fraud? Even if the State case is true, the amount was in a few piffling millions – unlike the Boesky.

Ivan F. Boesky, once among the financial world’s most powerful speculators and now a symbol of Wall Street’s excesses, was sentenced yesterday to three years in prison for conspiring to file false stock trading records.

The three-year term is the third longest to have been imposed in a case related to insider trading. Mr. Boesky had faced a maximum penalty of five years in jail and a $250,000 fine.

A year ago, Mr. Boesky settled civil insider trading charges, paying a record $100 million. He had been charged with illegally earning more than $50 million by trading with inside information he bought from Dennis B. Levine, a former investment banker who pleaded guilty to criminal charges earlier and is now in prison. Mr. Boesky subsequently disclosed that he additionally earned more than $30 million by illegally trading with inside information sold to him for $700,000 by Martin A. Siegel, once one of Wall Street’s top corporate merger specialists. Mr. Siegel has pleaded guilty to criminal charges and is awaiting sentencing.

Last April, Mr. Boesky pleaded guilty to the single felony count, at that time one of the most important devel-opments in the widening Wall Street insider trading scandal. Mr. Boesky pleaded guilty to conspiring to file false documents in regard to a scheme in which he helped the corporate raider Victor Posner take over the Fischbach Corporation by buying stock in the company.

Mr. Boesky was unlikely to serve more than two years of his term, though. According to the standard guidelines that govern prison sentences. (via BOESKY SENTENCED TO 3 YEARS IN JAIL IN INSIDER SCANDAL – New York Times).

And if, you thought this was bad, look at what followed.

Michael Milken pleaded guilty to six felonies and agreed to put up $600 million, $200 million of that in fines, to settle the biggest fraud case in the history of the securities industry.

Mr. Milken’s public admission ends four years of obdurate denial of wrongdoing, virtually assures a prison term and opens the possibility of further fraud prosecutions.

The six felonies to which he pleaded guilty are serious yet technical securities violations and did not directly enrich him. His lawyer has even characterized them as an overzealous attempt to help friends.

The plea bargain allows theft to be cloaked as misguided loyalty.
The plea bargain reinforces another misconception. In his statement to the court, Mr. Milken explained that his ”business was in no way dependent on these practices. Nor did they comprise a fundamental part of our business.” That claim is, at best, a self-serving half-truth.

Opportunities to cheat clients, the Internal Revenue Service and regulators were numerous and lucrative. Drexel, for example, would lend money to investors who were buying stocks based on the predicted outcome of deals that Drexel itself was arranging. (via Michael Milken’s Guilt – New York Times).

Now these were cases that were ‘open’ secrets. Everyone knew these guys were brazenly flouting basic norms of professional etiquette – and should be disbarred from Wall Street.

Legally, any action against Boesky or Milliken was possible – short of a death sentence.

Did Rajat Gupta know that  this how insider-trading cases ae settled?  |  A Carol Simpson cartoon from 2003  |  Click for image.

Did Rajat Gupta know that this how insider-trading cases ae settled? | A Carol Simpson cartoon from 2003 | Click for image.

After fraud and illegal earnings in hundreds-of-millions, they served a few years in jail – and resurrected Michael Milken, ‘it seems, has made the classic American transformation from despised villain to “controversial” figure.’

Rajarathnam crime.

Two big ones.

SEC wanted Rajarathnam to squeal on and implicate his brother Renjit. He refused. Secondly, apparently, he never banged his head at the altar of the American Dream.

Ditto for Rajat Gupta.

Forbes, had one article that summed up the case very well.

Zilch.

That was evidence, that could put away Rajat Gupta for life.

Gary Naftalis, Rajat Gupta’s lawyer asked, “Where’s the beef?” referring to the government’s lack of evidence. Unlike other insider cases, Neftalis has a point.

While the circumstantial evidence against Gupta is strong, there was no concrete evidence, a recorded conversation, that put Gupta on the phone with Raj Rajaratnam passing inside information. Sure there was the call in 2008 that Gupta placed to Rajaratnam after a Goldman Sachs board meeting and minutes later Raj placed a large order for Goldman stock ahead of the announcement of Warren Buffett‘s $5 billion investment in the investment bank.

Granted, it does not look good, but is it enough to persuade a jury?

Galleon hedge fund trader, Rajaratnam was convicted last year of receiving insider information from various sources, some of whom were caught on FBI surveillance (tape) speaking directly with him about the confidential information. The government was actively taping many of Rajaratnam’s calls, so why don’t they have Gupta saying, “Here is some confidential information for you to trade on.”?

Who knows, but they do have other people on tape saying just that, and that person is not even on trial.

Goldman Sach’s David Loeb, who is still employed by the firm, was caught on phone calls tapped by the FBI passing inside information to Rajaratnam about Intel and Apple, both publicly traded stocks. Those tapes, Gupta’s lawyers argued, show that Rajaratnam had multiple sources of inside information, including others at Goldman besides Gupta.

However, U.S. District Judge Jed Rakoff sided with the prosecution that such evidence was hearsay and not directly a part of this case. The jury never heard the tape. Loeb has not been charged, but if I were him I would be sleeping with one eye open.

Another piece of information that the jury will not hear is that Rajat Gupta (63) could spend the remainder of his life in prison if he is found guilty. The jury must decide guilt or innocence, but they will have no idea that the penalty they could be giving Gupta because that is not allowed.

There is no real “DNA”, a wire tape, that proves Gupta passed inside information to Rajaratnam. It does not exist, but the circumstantial evidence is powerful …. but that does not mean Gupta is guilty.

Last weekend, we learned that Commerce Secretary John Bryson was involved in a traffic accident where he left the scene, proceeded to drive along further and ran into another vehicle. Immediately the press wondered if there were alcohol and drugs involved with Bryson’s accident(s).

The real story that Bryson had suffered a seizure leading to the accidents. How quick we judge.

If this jury convicts Gupta, it is because they believed he had a close relationship with Rajaratnam and not that they had irrefutable evidence. Is that worthy of a life sentence? We will see.

via Rajat Gupta Case – It’s All Circumstantial – Forbes.

In case of Anand Jon, it is amazing how a murder accused, Phil Spector, was Juror No.6, of the jury that found Anand Jon guilty. While the Phil Spector murder case went on for nearly a decade. Anand Jon’s case that started after Spector’s crime, has completed quite a few years in prison.

Phil Spector, the rock music impresario behind hits like “Da Doo Ron Ron,” and “You’ve Lost that Lovin’ Feeling,” was convicted Monday of murdering a struggling actress at his mansion in 2003 after a night of drinking.

Mr. Spector, 68, faces at least 18 years in prison. The jury, ending a five-month trial, reached its decision after 27 hours of deliberating This was the second murder trial in the case; the first ended in a hung jury in 2007. Mr. Spector has been out on bail for most of the last six years, but was immediately taken into custody after the verdict on Monday.

Lana Clarkson, who was 40, starred in a 1985 cult hit, “Barbarian Queen,” and had a bit part in “Fast Times at Ridgemont High” in 1982.

She was working as a hostess at the House of Blues on the Sunset Strip when Mr. Spector visited, struck up a conversation and took her out drinking.

They finished the night at his mansion, known as the Castle, but, when she spurned his advances and tried to leave, he shoved a gun in her mouth and pulled the trigger, prosecutors said.

The prosecutors argued that this fit a pattern of Mr. Spector’s drinking and threatening women with guns over decades. (via Phil Spector Found Guilty of Killing Actress – NYTimes.com).

Anand Jon never pulled a gun, to force wannabe-models to have sex. He got more than 50 years in prison. Phil Spector gets less than half.

Anand Jon was a Brown Indian – a segment of people who Uncle Sam wants to cow down and make subservient and submissive.

Unlike Rajat Gupta. Rajarathnam. Or Vikram Budhi.

These people may be guilty as hell – but they had a lot more grace and character under pressure.

Unlike many others, who hiding in their rat-holes.


Global Health Threats: How Governments are Creating Them

Posted in America, Business, India, Media, Propaganda by Anuraag Sanghi on June 12, 2012

How the economics of sugar and sugar-substitutes have an impact on the eating disorder related epidemics across the world – from India to USA.

Why is obesity and eating-related disorder rampaging across the world  |  Cartoon titled Big Problem by Jeff Parker  via Cagle Post  |  Click for image.

Why is obesity and eating-related disorder rampaging across the world | Cartoon titled Big Problem by Jeff Parker via Cagle Post | Click for image.

History in Chemistry

In 1976, Shashikant Phadnis, an Indian-Marathi student, researching for a pesticide, at King’s College London, misunderstood his professor’s instruction to test a chemical as a request to taste – a mistake common among Marathi and Gujarati speaking-people, who have difficulty in differentiating between a long-sound and short-sounds like beg becomes bag, leg becomes lag – or bag becomes beg and lag becomes leg.

Shashikant Phadnis ‘tasted’ a chemical he was supposed to test. That chemical was sucralose – a popular sweetener today that is probably one of the chemicals behind America’s obesity epidemic.

Sweet, sweet world

Sugar-substitutes are a billion dollar industry in the US – and in India about US$25 million dollars. The US market is dominated by aspartame (from Nutrasweet; an ex-Monsanto company); acesulfame potassium or acesulfame K (pronounced AY-see-sul-fame-KAY) initially introduced by Hoechst, now Sanofi-Aventis. In the US, Johnson & Johnson promotes sucralose, the Tate & Lyle sweetener, 600 times sweeter than sugar but no calories – sold as Splenda. Cyclamates from Abbot are banned in US – and saccharin remains popular. A rather low-key production and promotion is happening to Neotame – which is 7500-13,000 times sweeter than sugar.

For the last 70 years, sugar and sugar substitutes have been big business and backed by powerful lobbies and politicians.

Can consumer who bombarded by slick advertising, oily messages from the media, reassurances by the State and the academia have the discretion to over-rule all this and make an informed decision.  |  Cartoonist(s): Brian Walker Greg Walker Mort Walker; Comic/Cartoon: Beetle Bailey Viewable; Date: 2012-03-29; Pub. Date:  2012-03-29 |  Click for image.

Can consumer who bombarded by slick advertising, oily messages from the media, reassurances by the State and the academia have the discretion to over-rule all this and make an informed decision. | Cartoonist(s): Brian Walker Greg Walker Mort Walker; Comic/Cartoon: Beetle Bailey Viewable; Date: 2012-03-29; Pub. Date: 2012-03-29 | Click for image.

Why are sweeteners such an important commodity?

History of sugar

For centuries, sugar from sugarcane was the best and cheapest source of sugar in the world. According to Indian oral history, sugarcane cultivation was pioneered some 4000-7000 years ago, by the Ikshvaakus – the family of Raghu Ramachandra. Ikshvaaku itself in Sanskrit means cultivators of sugarcane. Till 18th century, the Indian sub-continent was the only principal grower of sugarcane and producer of sugar.

Sugarcane remains, even after centuries of research by the West, the best source of sugar – accounting for close to 80% of world sugar production. It is crop that can be grown  continuously – unlike sugar beet, which is the distant second-best source of sugar. Sugar beet quickly creates soil fatigue – and crops collapse, unless the soil is given a sugar-beet ‘holiday’ for a season. Continuous cropping also triggers a ‘rhizome-madness’ where the tap-root, which contains the sugars, starts to sub-divide randomly, making any further processing difficult.

For the West, sugarcane presents two problems.

It grows in tropical climates and needs a lot of labour. Till slave labour was available, sugar cane was equivalent to oil in the 17th-19th century. Sugar-plantation colonies in the Caribbean like West Indies, Cuba, Haiti were prized for sugar production. Inspired by Haiti’s example, as each of these slave-plantations revolted, Western sources of sugar also dried up.

In the 20th century, major sugar-exporting countries were Brazil, Cuba, Australia and the Dominican Republic. But, at the slightest hint of international disturbances – like war, sugar stocks would vanish – and the war-mongering nations of the West were left dry.

Sugarcane to sugar-beet

The first attempts to diversify from sugarcane in modern history came from what is now Germany.

Andreas Sigismund Marggraf (3 March 1709 – 7 August 1782) a German chemist from Berlin isolated zinc in 1746. Not the first to do so, Marggraf is more famous as he detailed the process and establishing the basic theory of zinc extraction. Next year, in 1747, Marggraf devised a method using alcohol to extract sugar from beets.

Prussia (no Germany then) without colonies or the slave labour was dependent on imperial powers for sugar. It was left to Marggraf’s student Franz Karl Achard to breed and improve the White Silesian fodder beet to a sugar beet variety with higher sugar content in 1784. Achard’s work attracted the Prussian Emperor, Frederick William III, to help Achard to start the world’s first beet sugar factory in 1801, at Cunern in Silesia.

Sugar as weapon

The French loss of Haiti created a national shortage of sugar – and Achard’s work attracted Napoleon’s attention. Additionally, the British naval blockade during the Napoleonic wars, made sugar into a scarce commodity.

France readily moved to sugar-extraction from beet.

US Sweetner Usage - all sources.  |  Graphic source - pomona.edu  |  Click for image.

US Sweetner Usage – all sources. | Graphic source – pomona.edu | Click for image.

Sugar-guzzlers

Haiti’s surviving sugar-production workers moved to America – giving rise to sugar production in America, using slave labour. This too was short-lived. Except for the last three decades, US has always been a significant importer of sugar – and a principal reason for high sugar prices globally.

However sugar production has been a source of friction with Haiti, Dominican Republic, – and most famously, in Cuba.

As a global super-power, America could not be seen as suffering shortages – especially of an item, like sugar. Sugar shortages were a Third-World feature. In the Cold War era, Soviet Union was an economy of shortages – and US was the land of plenty.

US sought to replace sugar imports which accounted for roughly 40% of US sugar consumption. Apart from increasing sugar production, sugar in the form of high-fructose corn syrup (HF-corn syrup) was promoted. Artificial sweeteners like saccharin, aspartame, sucralose, neotame, acesulfame potassium were permitted – and widely promoted.

Result.

Imported sugar is now down to less than 10% of total sugars – from nearly 40%. If artificial sweeteners are converted to sugar equivalents, the share of imported sugar will fall to probably less than 1%. HF-corn syrup, which was less than 10% of US sugar consumption, exploded to nearly 50% in a short 10-year period – from 1975-1985.

While all these ‘good’ things were happening, simultaneously another bad thing was happening.

America goes to fat. |  14 Mar 2004 – Obesity in America - Daily Political Cartoons by Mike Keefe, editorial cartoonist for the Denver Post.  |  Click for image.

America goes to fat. | 14 Mar 2004 – Obesity in America – Daily Political Cartoons by Mike Keefe, editorial cartoonist for the Denver Post. | Click for image.

Fat, Fatter, Fattest

Obesity assumed the proportions of a national epidemic.

One of the most comprehensive data sets available about Americans—how tall they are, when they last visited a dentist, what sort of cereal they eat for breakfast, whether they have to pee during the night, and, if so, how often—comes from a series of studies conducted by the federal Centers for Disease Control and Prevention. Participants are chosen at random, interviewed at length, and subjected to a battery of tests in special trailers that the C.D.C. hauls around the country. The studies, known as the National Health and Nutrition Examination Surveys, began during the Eisenhower Administration and have been carried out periodically ever since.

In the early nineteen-nineties, a researcher at the C.D.C. named Katherine Flegal was reviewing the results of the survey then under way when she came across figures that seemed incredible. According to the first National Health study, which was done in the early nineteen-sixties, 24.3 per cent of American adults were overweight—roughly defined as having a body-mass index greater than twenty-seven. (The metrics are slightly different for men and women; by the study’s definition, a woman who is five feet tall would count as overweight if she was more than a hundred and forty pounds, and a man who is six feet tall if he weighed more than two hundred and four pounds.)

By the time of the second survey, conducted in the early nineteen-seventies, the proportion of overweight adults had increased by three-quarters of a per cent, to twenty-five per cent, and, by the third survey, in the late seventies, it had edged up to 25.4 per cent. The results that Flegal found so surprising came from the fourth survey. During the nineteen-eighties, the American gut, instead of expanding very gradually, had ballooned: 33.3 per cent of adults now qualified as overweight.

Flegal began asking around at professional meetings. Had other researchers noticed a change in Americans’ waistlines? They had not. This left her feeling even more perplexed. She knew that errors could have sneaked into the data in a variety of ways, so she and her colleagues checked and rechecked the figures. There was no problem that they could identify. Finally, in 1994, they published their findings in the Journal of the American Medical Association. In just ten years, they showed, Americans had collectively gained more than a billion pounds. “If this was about tuberculosis, it would be called an epidemic,” another researcher wrote in an editorial accompanying the report.

During the next decade, Americans kept right on gaining. Men are now on average seventeen pounds heavier than they were in the late seventies, and for women that figure is even higher: nineteen pounds. The proportion of overweight children, age six to eleven, has more than doubled, while the proportion of overweight adolescents, age twelve to nineteen, has more than tripled. (According to the standards of the United States military, forty per cent of young women and twenty-five per cent of young men weigh too much to enlist.) As the average person became heavier, the very heavy became heavier still.(via Why are Americans fat? : The New Yorker).

In the same period that HF-corn syrup and artificial sweetener consumption was exploding, obesity in the US was also growing.

America was growing fat. In fact, lot of Americans were growing very fat.

Silently.

Artificial sweeteners, far from diminishing the craving for sugar, seem to reinforce it. Americans ate about 24 lbs. of sugar substitute per person last year, nearly double what they did in 1980, yet sugar consumption rose about 25% in the same period. (via Department of Food Science: The Search for Sweet : The New Yorker).

Chemical or Character

Much like how female foeticide is being portrayed as a social moral failure of people, obesity also is being portrayed as an ethical failure.

The truth may be otherwise.

In its ability to pack on the body fat, high-fructose corn syrup appears to be worse than sugar. Research from Princeton University looked at how high-fructose corn syrup increases body fat.

It might seem that this much-maligned sweetener would have seen its day. Instead, high-fructose corn syrup continues to be a powerhouse, sweetening the big soft drinks and sports drinks. It adds a touch of sweetness to ketchup and provides stickiness to barbeque sauce. Americans suck back 60 pounds per person, on average, of high-fructose corn syrup each year.

Read: High-Fructose Corn Syrup Propaganda

High-Fructose Corn Syrup and Body Fat

A research team from Princeton has concluded that high-fructose corn syrup outdoes sugar when it comes to increasing body fat. [1] Researchers from the Princeton’s Neuroscience Institute and its Department of Psychology explored the connection between body fat and use of high-fructose corn syrup.

When they did experiments involving rats, they found that rats with high-fructose corn syrup available to them packed on more weight than rats that had sugar available.

Professor Bart Hoebel, leader of the Princeton team, discussed the results:

“Some people have claimed that high-fructose corn syrup is no different than other sweeteners when it comes to weight gain and obesity, but our results make it clear that this just isn’t true, at least under the conditions of our tests.”

He continues:

“When rats are drinking high-fructose corn syrup at levels well below those in soda pop, they’re becoming obese — every single one, across the board. Even when rats are fed a high-fat diet, you don’t see this; they don’t all gain extra weight.”

Learn about: Artificial Sweeteners, Not So Sweet

The link between high-fructose corn syrup and obesity has also been explored in studies conducted at research centers in locations such as Louisiana State University and the University of California. Writing in the American Journal of Clinical Nutrition, the Louisiana researchers note:

“The consumption of HFCS increased more than 1000% between 1970 and 1990, far exceeding the changes in intake of any other food or food group.” [2]

Researchers in Germany have also studied the high-fructose corn syrup and weight gain connection. Publishing their findings in the journal Obesity Research, researchers from the German Institute of Human Nutrition gave mice drinks containing either fructose, sucrose or artificial sweetener to see the impact on weight gain and metabolism. [4] They found that mice drinking the fructose containing beverage increased body fat, while the others did not.

Read: Increase Metabolism With the Fat Burning Hormone Leptin

via Jonathan Galland: Worse Than Sugar: What’s in Your Soda?.

Was this the entire story.

Not quite. Some other studies found that in preparation of HF-corn syrup, mercury-contaminated caustic soda was used to make this ‘natural sugar’.

Almost half of tested samples of commercial high-fructose corn syrup (HFCS) contained mercury, which was also found in nearly a third of 55 popular brand-name food and beverage products where HFCS is the first- or second-highest labeled ingredient, according to two new U.S. studies.

“Mercury is toxic in all its forms. Given how much high-fructose corn syrup is consumed by children, it could be a significant additional source of mercury never before considered. We are calling for immediate changes by industry and the [U.S. Food and Drug Administration] to help stop this avoidable mercury contamination of the food supply,” the Institute for Agriculture and Trade Policy’s Dr. David Wallinga, a co-author of both studies, said in a prepared statement.

IATP’s Ben Lilliston also told HealthDay that the Environmental Health findings were based on information gathered by the FDA in 2005. And the group’s own study, while not peer-reviewed, was based on products “bought off the shelf in the autumn of 2008,” Lilliston added. (via Study Finds High-Fructose Corn Syrup Contains Mercury).

Is the case against HF-corn syrup open-and-shut? Hardly. But when, producers defend with a lot of noise, and tricks, surely there is something fishy.

In 2008, the corn refiners launched a multi-million dollar advertising and marketing campaign designed to convince consumers that sugar and HFCS are identical. The message was “sugar is sugar” and the ads encouraged people to learn more at CornSugar.com and SweetSurprise.com.

The FDA was not happy with this and asked the refiners to modify statements that used the term corn sugar.

U.S. sugar farmers and refiners responded by filing a lawsuit which is still pending. (via Feds say high-fructose corn syrup is not sugar – Vitals).

How natural is HF-corn syrup? Not very, if this report is to be believed.

Massive print and television advertising campaigns by the Corn Refiners Association’s attempt to dispel the “myth” that HFCS is harmful and assert through the opinion of “medical and nutrition experts” that it is no different than cane sugar. It is a “natural” product that is a healthy part of our diet when used in moderation.

High fructose corn syrup is an industrial food product and far from “natural” or a naturally occurring substance. It is extracted from corn stalks through a process so secret that Archer Daniels Midland and Carghill would reportedly not allow the investigative journalist Michael Pollan to observe it (via Mark Hyman, MD: The Not-So-Sweet Truth About High Fructose Corn Syrup).

The rise of obesity coincides with increased use of artificial sweeteners and sugar-substitutes  |  Aug 24 2006 Steve Breen’s Cartoon; image source & courtesy - cagle.com  | Click for image.

The rise of obesity coincides with increased use of artificial sweeteners and sugar-substitutes | Aug 24 2006 Steve Breen’s Cartoon; image source & courtesy – cagle.com | Click for image.

Biology, Technology

How does this obesity story work?

There is some understanding – and much of empirical evidence.

The key to obesity seems to a complex interplay between insulin and leptin – two hormones that seem to manage metabolic activities.

On of the biggest marketing and PR tactics for man-made chemical sweeteners has been the claim that they help in the battle against obesity. Folks, they don’t. They never have and they never will.

The research and the epidemiologic data suggest the opposite is true, and that artificial sweeteners such as aspartame and neotame tend to lead to weight gain. There’s more to weight gain or weight loss than mere calorie intake.

One reason for aspartame and neotame’s potential to cause weight gain is because phenylalanine and aspartic acid – the two amino acids that make up 90 percent of aspartame and are also present in neotame — are known to rapidly stimulate the release of insulin and leptin; two hormones that are intricately involved with satiety and fat storage.

Insulin and leptin are also the primary hormones that regulate your metabolism.

So although you’re not ingesting calories in the form of sugar, aspartame and neotame can still raise your insulin and leptin levels. Elevated insulin and leptin levels, in turn, are two of the driving forces behind obesity, diabetes, and a number of our current chronic disease epidemics.

Over time, if your body is exposed to too much leptin, it will become resistant to it, just as your body can become resistant to insulin, and once that happens, your body can no longer “hear” the hormonal messages instructing your body to stop eating, burn fat, and maintain good sensitivity to sweet tastes in your taste buds.

What happens then?

You remain hungry; you crave sweets, and your body stores more fat.

Leptin-resistance also causes an increase in visceral fat, sending you on a vicious cycle of hunger, fat storage and an increased risk of heart disease, diabetes, metabolic syndrome and more. (via Neotame Receives FDA Approval But is Not Widely Used Yet).

|  The State and its minions have managed to deflect attention away from their faulty products and policies - and instead have pinned the blame on the consumers as being voracious gluttons  |  Cartoonist: Steve Kelley ; Pub. Date:  1999-01-01; souce and courtesy - cartoonistgroup.com |  Click for image.

| The State and its minions have managed to deflect attention away from their faulty products and policies – and instead have pinned the blame on the consumers as being voracious gluttons | Cartoonist: Steve Kelley ; Pub. Date: 1999-01-01; souce and courtesy – cartoonistgroup.com | Click for image.

What do studies show?

Run.

Run fast and far, from HF-corn syrup and artificial sweeteners.

In a series of experiments, scientists at Purdue University compared weight gain and eating habits in rats whose diets were supplemented with sweetened food containing either zero-calorie saccharin or sugar. Animals fed with artificially sweetened yogurt over a two-week period consumed more calories and gained more weight — mostly in the form of fat — than animals eating yogurt flavored with glucose, a natural, high-calorie sweetener.

In 2004, they reported that animals consuming saccharin-sweetened liquids and snacks tended to eat more than animals fed high-calorie, sweetened foods. Susan Swithers, a professor of psychological sciences at Purdue University and a co-author of the study (says) the net result is a more sluggish metabolism that stores, rather than burns, incoming excess calories.

Swithers says that the study does suggest artificial sweeteners somehow disrupt the body’s ability to regulate incoming calories. “It’s still a bit of a mystery why they are overeating, but we definitely have evidence that the animals getting artificially sweetened yogurt end up eating more calories than the ones getting calorically sweetened yogurt.” (via Can Sugar Substitutes Make You Fat? – TIME).

Calorie-free drinks and diet products seems have a vicious back-lash by the body’s metabolic system. Instead of getting fooled, it seems to simply increase craving, appetite – close to addiction.

They are the calorie-free way of having a sweet treat, but diet drinks could still make you fat, scientists have warned.

A ten-year study of almost 500 men and women linked low-calorie soft drinks with bulging waistlines – even when taken in small quantities.

Those who downed two or more diet fizzy drinks a day saw their waistbands expand at five times the rate of those who never touched the stuff, a diabetes conference heard.

The results were so dramatic that the American researchers advise that people ditch their diet drinks and use water to quench their thirst instead.

Those who cannot bear to give up the sugar rush may be better off drinking normal full-sugar fizzy drinks. (via Why guzzling a diet drink can make you fatter – they can trigger the appetite | Mail Online).

How the 'Establishment' mocks at us - and deflects attention from itself.  |  Cartoonist: Darrin Bell; Pub. Date: 2012-04-22; source & courtesy - cartoonistgroup.com |  Click for image.

How the ‘Establishment’ mocks at us – and deflects attention from itself. | Cartoonist: Darrin Bell; Pub. Date: 2012-04-22; source & courtesy – cartoonistgroup.com | Click for image.

Evolutionary mumbo-jumbo

Some ‘scientists’ have proposed that obesity is an evolutionary response in human beings in the last 20-40 years.

several million years of hominid evolution can’t explain why it is just in the past few decades that waistlines have expanded.

Eric Finkelstein is a health economist at a research institute in North Carolina. In “The Fattening of America” (Wiley; $26.95), written with Laurie Zuckerman, he argues that Americans started to put on pounds in the eighties because it made financial sense for them to do so. Relative to other goods and services, food has got cheaper in the past few decades, and fattening foods, in particular, have become a bargain. Between 1983 and 2005, the real cost of fats and oils declined by sixteen per cent. During the same period, the real cost of soft drinks dropped by more than twenty per cent.

“For most people, an ice cold Coca-Cola used to be a treat reserved for special occasions,” Finkelstein observes. Today, soft drinks account for about seven per cent of all the calories ingested in the United States, making them “the number one food consumed in the American diet.” If, instead of sweetened beverages, the average American drank water, Finkelstein calculates, he or she would weigh fifteen pounds less.

The correlation between cost and consumption is pretty compelling; as Finkelstein notes, there’s no more basic tenet of economics than that price matters. But, like evolution, economics alone doesn’t seem adequate to the obesity problem. If it’s cheap to consume too many calories’ worth of ice cream or Coca-Cola, it’s even cheaper to consume fewer.

In “The End of Overeating” (Rodale; $25.95), David A. Kessler, a former commissioner of the Food and Drug Administration, takes a somewhat darker view of the situation. It’s not that sweet and oily foods have become less expensive; it’s that they’ve been reëngineered while we weren’t looking. Kessler spends a lot of time meeting with (often anonymous) consultants who describe how they are trying to fashion products that offer what’s become known in the food industry as “eatertainment.” Fat, sugar, and salt turn out to be the crucial elements in this quest: different “eatertaining” items mix these ingredients in different but invariably highly caloric combinations. A food scientist for Frito-Lay relates how the company is seeking to create “a lot of fun in your mouth” with products like Nacho Cheese Doritos, which meld “three different cheese notes” with lots of salt and oil. Another product-development expert talks about how she is trying to “unlock the code of craveability,” and a third about the effort to “cram as much hedonics as you can in one dish.”

Kessler invents his own term—“conditioned hypereating”—to describe how people respond to these laboratory-designed concoctions. Foods like Cinnabons and Starbucks’ Strawberries & Crème Frappuccinos are, he maintains, like drugs: “Conditioned hypereating works the same way as other ‘stimulus response’ disorders in which reward is involved, such as compulsive gambling and substance abuse.” For Kessler, the analogy is not merely rhetorical: research on rats, he maintains, proves that the animals’ brains react to sweet, fatty foods the same way that addicts’ respond to cocaine. A reformed overeater himself—“I have owned suits in every size,” he writes—Kessler advises his readers to eschew dieting in favor of a program that he calls Food Rehab. The principles of Food Rehab owe a lot to those of drug rehab, except that it is not, as Kessler acknowledges, advisable to swear off eating altogether. “The substitute for rewarding food is often other rewarding food,” he writes, though what could compensate for the loss of Nacho Cheese Doritos he never really explains. (via Why are Americans fat? : The New Yorker).

So, what is emerging from the jigsaw puzzle is public-policy actions by the State and Big Business.

Between the State and Big Business, they control and manage our food, appetites, nutrition, diseases, medicine – and information about all this. Media and academia also owned, funded and controlled by the State and Big Business lets us know little – only when forced, in dribs and drabs.

New York has decided that it must legally force food-vendors (like Coke) etc., to reduce the size of each helping.  |  Cartoonist: Gary Varvel; Pub. Date: 2012-06-06; source & courtesy - cartoonistgroup.com  |  Click for image.

New York has decided that it must legally force food-vendors (like Coke) etc., to reduce the size of each helping. | Cartoonist: Gary Varvel; Pub. Date: 2012-06-06; source & courtesy – cartoonistgroup.com | Click for image.

In the early nineteen-sixties, a man named David Wallerstein was running a chain of movie theatres in the Midwest and wondering how to boost popcorn sales. Wallerstein had already tried matinée pricing and two-for-one specials, but to no avail. According to Greg Critser, the author of “Fat Land” (2003), one night the answer came to him: jumbo-sized boxes. Once Wallerstein introduced the bigger boxes, popcorn sales at his theatres soared, and so did those of another high-margin item, soda.

A decade later, Wallerstein had retired from the movie business and was serving on McDonald’s board of directors when the chain confronted a similar problem. Customers were purchasing a burger and perhaps a soft drink or a bag of fries, and then leaving. How could they be persuaded to buy more? Wallerstein’s suggestion—a bigger bag of fries—was greeted skeptically by the company’s founder, Ray Kroc. Kroc pointed out that if people wanted more fries they could always order a second bag.

“But Ray,” Wallerstein is reputed to have said, “they don’t want to eat two bags—they don’t want to look like a glutton.” Eventually, Kroc let himself be convinced; the rest, as they say, is supersizing.

The elasticity of the human appetite is the subject of Brian Wansink’s “Mindless Eating” (2006). Wansink is the director of Cornell University’s Food and Brand Lab, and he has performed all sorts of experiments to test how much people will eat under varying circumstances. These have convinced him that people are—to put it politely—rather dim. They have no idea how much they want to eat or, once they have eaten, how much they’ve consumed. Instead, they rely on external cues, like portion size, to tell them when to stop. The result is that as French-fry bags get bigger, so, too, do French-fry eaters.

Consider the movie-matinée experiment. Some years ago, Wansink and his graduate students handed out buckets of popcorn to Saturday-afternoon filmgoers in Chicago. The popcorn had been prepared almost a week earlier, and then allowed to become hopelessly, squeakily stale. Some patrons got medium-sized buckets of stale popcorn and some got large ones. (A few, forgetting that the snack had been free, demanded their money back.) After the film, Wansink weighed the remaining kernels. He found that people who’d been given bigger buckets had eaten, on average, fifty-three per cent more.

In another experiment, Wansink invited participants to cook dinner for themselves with ingredients that he provided. One group got big boxes of pasta and big bottles of sauce, a second smaller boxes and smaller bottles. The first group prepared twenty-three per cent more, and downed it all. In yet another experiment, Wansink rigged up bowls that could be refilled, via a hidden tube. When he served soup out of the trick bowls, people, he writes, “ate and ate and ate.” On average, they consumed seventy-three per cent more than those who were served from regular bowls. “Give them a lot and they eat a lot,” he writes. (via Why are Americans fat? : The New Yorker).

This super-sized servings are having an effect. We have a curious situation in New York.

First the State and its cohorts (Big Business, media and academia) create a problem – and then they display their intent to solve – making the problem, even more complex.

New York is trying to take a stand. The city’s mayor, Michael Bloomberg, says he’ll seek to limit sugary soft drinks sold at restaurants, movie theaters and sports stadiums to no more than 16 ounces per cup.

A 16-ounce Coke contains nearly 200 calories, or about 10% of your entire recommended daily intake.

Beverage companies say the New York plan is nanny-state regulation run amok — and to some degree they’re right. The problem is that leaving people to their own devices is turning us into a nation of porkers. Bloomberg has concluded that to protect the public welfare, we have to save us from ourselves. (via David Lazarus: FDA strikes a sour note for corn sweetener makers – latimes.com).

Industrial food inputs are sold to Big Food producers who 'manage' Big Retail to give us a choice of unhealthy food in blue, green, yellow colours in peach, vanilla and chocolate flavors. We the consumer have choice  |  Jeff Koterba’s Cartoon  on Jun  20  2006; source and courtesy - cagle.com  |  Click for image.

Industrial food inputs are sold to Big Food producers who ‘manage’ Big Retail to give us a choice of unhealthy food in blue, green, yellow colours in peach, vanilla and chocolate flavors. We the consumer have choice | Jeff Koterba’s Cartoon on Jun 20 2006; source and courtesy – cagle.com | Click for image.

Global, local – same difference

Are these problems isolated and limited to America. Unfortunately not.

“Globesity” (Earthscan; $34.95) takes an international approach to the problem of weight gain. The book’s authors—Francis Delpeuch, Bernard Maire, Emmanuel Monnier, and Michelle Holdsworth—observe that, while Americans were the first to fatten up, they no longer lead the pack. “Like it or not, we have no choice but to face up to the numbers: current data reveal that in Cyprus, the Czech Republic, Finland, Germany, Greece, Malta, and Slovakia, the proportion of overweight adults is actually higher than in the U.S.,” they write.

In Asia, Africa, and South America, too, obesity is on the rise. Although nearly a billion of the world’s most impoverished citizens still suffer from too few calories, Delpeuch and his colleagues note that it’s those living just above the poverty level who appear to be gaining weight most rapidly. It may seem to go without saying that being fat is better than starving, but even this truism, the authors argue, is no longer entirely true: in the new world order, it is possible to be overweight and malnourished at the same time.

“People on modest incomes suddenly find a cheap, calorie-packed diet within their grasp and make the most of it as soon as they can,” they write. “Unfortunately this means sacrificing many elements that are nutritionally more valuable.” Type 2 diabetes, coronary disease, hypertension, various kinds of cancers—including colorectal and endometrial—gallstones, and osteoarthritis are just some of the conditions that have been linked to excess weight.

But, as anyone who has ever gone on a diet knows, weight that was easy to gain is hard to lose. If anything, this is even more true on a societal level. Those politicians who could take the recommended actions tend, the authors of “Globesity” point out, to be in thrall to the very interest groups that are profiting from the status quo. (It’s probably no coincidence that, in a period when the rest of the world has come to look more like Americans, U.S. corporations have been making significant investments—some fifty-five billion dollars a year—in food-processing and distribution facilities abroad.) “To conquer obesity will thus require a complete new awareness, the re-education of the great mass of consumers, and this seems a distant prospect,” they write. (via Why are Americans fat? : The New Yorker).

Tracking price changes in consumer edibles on a gold index reveals interesting correlations.  Graphic by 2ndlook. Price data is based on shopping memory og 2ndlook.

Tracking price changes in consumer edibles on a gold index reveals interesting correlations. Graphic by 2ndlook. Price data is based on shopping memory og 2ndlook.

India has emerged as the diabetic capital of the world. Though Indians have been sugarcane users for centuries, why have we suddenly become so prone to diabetes.

Two interesting observations.

When sugar was made at an artisan level – in each village, in many houses, crystalline sugar was discarded.

Only raw sugar was used – without refinement, which has no such side-effects.

Secondly, if we see the relative price of selected edibles in the last 50 years, sugar has shown the maximum decline. By nearly 1000%. Along with skimmed milk. Probably skimmed milk consumption has not taken off as much as sugar has, it is probably because Indians prefer full-cream milk.

But sugar, which was expensive and limited just about 50 years ago, has suddenly become the cheapest, in relative terms. Is this sudden dip in prices, led to a surge in consumption of sugar, that has created a diabetic epidemic in India. The attempts by the Indian State to keep sugar prices low, paid off in the way of increased diabetics? Should sugar prices be allowed to rise – the moment sugar is decontrolled sand sugar exports are allowed.

The Powerful Few control our food, medicine, home, work. We can change this  |  Cartoonist: Joel Pett Pub. Date: 2002-03-20; source & courtesy - cartoonistgroup.com |  Click for image.

The Powerful Few control our food, medicine, home, work. We can change this | Cartoonist: Joel Pett Pub. Date: 2002-03-20; source & courtesy – cartoonistgroup.com | Click for image.

Back in the USA.

Is the government really helping people to slim down and avoid foods that pack on pounds and invite the risk of heart disease? High-saturated-fat foods like cheese? Not according to a New York Times expose in 2010. A USDA group with 162 employees called Dairy Management, mostly funded by farmers, is shamelessly committed to getting people to double and triple their cheese intake to replace profits from falling milk sales.

According to the Times, Dairy Management has supported Pizza Hut, Taco Bell, Burger King, Wendy’s and Domino’s in “cheesifying” their menu options, putting dairy farmers’ profits before consumer health. “If every pizza included one more ounce of cheese, we would sell an additional 250 million pounds of cheese annually,” rhapsodized the Dairy Management chief executive in a trade publication. Dairy Management received $5.3 million from the USDA during one year, for an overseas dairy campaign, which almost equals the total $6.5 million budget of USDA’s Center for Nutrition Policy and Promotion. That’s the group that tells people not to eat high fat milk and cheese! (via 8 Surprising Things That May Be Making Americans Fat | Food | AlterNet).

Farm subsidies, ‘well-intentioned’ with complex justifications have ballooned to US$100 billion across the Western world. What is that these subsidies are achieving?

Are farm subsidies making us fat?

Billions in taxpayer dollars are going to support high fructose corn syrup and three other common food additives used in junk food, according to the report, “Apples to Twinkies: Comparing Federal Subsidies of Fresh Produce and Junk Food,” makes the case that federal farm subsidies are helping feed the nation’s obesity epidemic.

The research shows that from 1995 to 2010, $16.9 billion in federal subsidies went to producers and others in the business of corn syrup, high fructose corn syrup, corn starch and soy oils.

Among the findings: Taxpayers in the San Francisco area spend $2,762,295 each year in junk food subsidies, but only $41,950 each year on apple subsidies. In Los Angeles, taxpayers spent $13,010,286 in junk food subsidies, and $201,291 on apple subsidies, according to the report. (via Junk Food | U.S. spending billions to subsidize junk food, study says – Los Angeles Times).

Not a good feeling, eh?


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