Israel As A Country Model For India

Should India adopt a hard-line policy like Israel with ‘zero tolerance’ policy on ‘terrorism’.

Probably the best depiction of Israeli role in the world. | Cartoon by Jim Morin in Miami Herald on February 17, 2012 | Click for larger image.

Soft state … soft target

The Indian State has often been accused of being soft on terror‘soft on terror.’ We are frequently reminded how we should consider patterning India along hard lines like Israel – which has ‘zero tolerance’ policy on ‘terrorism’. As proof, the Israeli actions against the perpetrators of the Munich massacre. Or the capture of Eichmann. The air raid of Entebbe is another example that is referred to, with a glint in the eye.

Israel - The US Hatchet Man (Creative credit absent at source. Cartoon courtesy - http://www.science.co.il). Click for larger image.

Israel’s Tenuous Existence

The first disqualification against accepting the Israeli State model is the fact it is heavily dependent on America, for fiscal and military aid – “since 1974 totals roughly $80 billion” and an article from Daily Times Of Pakistan says enviously “The United States has poured $140 billion into Israel since its formation”. That is about a US$56,000 for every Israeli family.

After all, (as NYT says)

America has vital long-term strategic interests in the Middle East. The gulf has well over 60 percent of the world’s proven conventional oil reserves and nearly 40 percent of its natural gas.

To some it may look like a boon, but is surely the kiss of death.

American policymakers began regarding Israeli strength as an American asset in the Cold War, they supported significant aid as a matter of strategy, not charity. … American aid continues to flow to Israel. … critics on the opposite end of the political spectrum argue that while aid to Israel may be tied to the best of intentions, it does more harm than good to the Jewish State by propping up a big and inefficient government and making Israel dependent upon the U.S.

The Israel and USA tango - who is using whom!

For how long can any country, society, individual survive on foreign largesse? Note how during the 1973, Arab Israeli War, the tide of battle finally turned when the massive US airlift of weapons, tanks, spares happened! Which itself, is self-serving – “American assistance, emerging as a disjointed policy that urges a peaceful resolution to the conflict while boosting military aid to Israel.”

Another client state of US, Pakistan enviously records, that

Israel is the only country that receives all of its U.S. aid in a single package, while others only receive it in quarterly installments.” It continues, “Most recipients of military aid are obliged to spend it in the US but Israel is permitted to spend 25 percent of what it receives to subsidize its own defence industry,”…

Israel’s Future With Its Neighbours

The biggest Israeli failure is the state of permanent hostility it has engendered in the neighbourhood. Israel’s dysfunctional relationship with its neighbours has taken significant efforts from Israel – possibly, based on its superior ‘European’ extraction.

The Israel and USA tango - who is using whom!

How long can Israel depend on US support which since

“1982, … has vetoed 32 Security Council resolutions which were critical of Tel Aviv, a number that exceeds the total number of vetoes exercised by all other permanent member states put together.”

American support may change (linked to American decline?) with time – but Israel’s neighbourhood is not changing!

The Persecution of Palestinians

The logic for the creation of Israel was persecution of Jews in Europe. Within 10 years, the same ‘persecuted’ Jews, allied themselves with their former persecutors and invaded Egypt – precipitating the Suez Crisis. Thus the very logic of the creation of the Israeli state was corrupted within 10 years.

The subsequent occupation of neighbouring territories was a continuation of this policy of aggressive expansionism based on European and later American support.

Israel’s population is less than Pune

Pune’s official population of 45 lakhs is close to Israel’s population of 72 lakhs.

The only logic for Israeli policy is the probable Israeli intention. Is it that they are not staying in the neighbourhood after (or when, if you prefer) American aid ceases?

India with a population of 110 crores, has no such option.

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Related articles

• Netanyahu rules out apology to Turkey – Washington Post (news.google.com)
• How Bibi Pulled Israel To The Right (andrewsullivan.thedailybeast.com)
• ‘Israel won’t harm prisoners – if they don’t return to terror’ – Ynetnews (news.google.com)

New Global Reserve Currency – Connecting the dots – Part 2

ECB’s Nowotny Sees Global `Tri-Polar’ Currency System Evolving Bloomberg.com: Worldwide

European Central Bank council member Ewald Nowotny said a “tri-polar” global currency system is developing between Asia, Europe and the U.S … leaders of the U.S., France and the European Commission will ask other world leaders to join in a series of summits on the global financial crisis beginning in the U.S. soon after the Nov. 4 presidential election, President George W. Bush, French President Nicolas Sarkozy and European Commission President Jose Barroso said in a joint statement yesterday.

European leaders have pressed to convene an emergency meeting of the world’s richest nations, known as the Group of Eight, joined by others such as India and China, to overhaul the world’s financial regulatory systems. … Sarkozy wants the G8 to consider re-anchoring their currencies, the hallmark of the 1944 Bretton Woods agreement that also gave birth to the International Monetary Fund and World Bank.

Europe’s Been Onto Something … While the US gently weeps

The EU region calling for a ‘G8 + India & China’ conference to thrash out this global monetary issue – and has been twisting the knife in the reluctant US side. The US has been dragging its feet. While the EU has been going gung-ho on this, the US has been floating many trial balloons. Warren Buffet, Paul Volcker and Lawrence Summers have been co-opted by the likely President of the US – Barack Obama. There has been talk of a manipulation in bullion prices – which may be required for re-anchoring currencies. Interesting deals – considered impossible till a few years, are being done in a tearing hurry.

Imagine! The EU in the middle of a global crisis goes out and restores diplomatic ties with Cuba.

The US Gameplan

US analysts, led by Paul Krugman, have been calling for Barack Obama (or maybe McCain) to emulate Roosevelt – who waded into WW2, with 25,000 tons of nationalized gold. If gold is nationalized, it may depress demand in the short term – giving rise to huge volatility in gold prices. But Warren Buffett has been on the silver bandwagon for a while – and that is making the gold-silver equation hazy. What if Warren Buffet becomes the new US Treasury Chief? There is the real risk of another fraud like the gold standard happening all over again.

The US has been making its moves – differently. Paul Krugman’s Nobel Prize is an indication of this. Will the US use Paul Krugman as the Keynes of the Bretton Woods. The background of Bretton Woods itself, is of course something that the US and Europe do not want the world at large to know. The other ploy that is being bandied about is the re-launch of the fraud called the Gold Standard – now in a better packing.

The Oil-Dollar Tango

What Has Been India Upto?

While the US has been resisting calls for action, busy doing post-mortem, Asia and Europe have been moving. Interestingly, Manmohan Singh has done some huge work in the last 60 days – the nuclear deal with the USA and NSG, the IBSA Summit, the ASEAN free trade agreement – and now his three Asian nation visits. India’s Trade and Commerce Minister, Kamal Nath, has been talking about a multi-lateral set up. The UN was made to issue a statement on this. Am I reading too much into this? At times, India has seemed clueless.

After the ministerial meeting, both Prime Minister Manmohan Singh and Finance Minister PC Chidambaram talked about how the ‘developed’ world’ was now ‘listening’ to the developing world – and was willing to ‘give more representation.’

This language itself indicates the distance that the Third World needs to travel.

China and Russia

The big issue is of course, China and Russia. China has 2 trillion of US dollars – and what does China do with this? Russia has come out from a default about a decade ago – with a nearly US$400 billion reserves – flexing its muscles in Georgia and dependent on a high oil prices. What happens to Russia if a new Pacific Republic (Cuba, Haiti, West Indies, etc) were to start drilling for oil? In 5 years, the world would be awash with oil – and Russia’s mineral earnings could evaporate. This crisis seems to have made the Chinese Premier shaky. So, the world may not trust China and Russia too much. Russia and China can be the party poopers – but they cannot be the life of the party.

For financial and military reasons, the inclusion of Russia and China is useful – though not essential to the emergence of a tri-polar currency system. The cost of Russian and Chinese inclusion is high degree of influence that these ‘super powers’ will want – which the developing world will not approve.

Why supplant one form of exploitation with another?

Contours Of The Deal

The EU-USA-Asia may agree on a broad a global regulatory and oversight body to monitor and maintain oversight over a multiple currency regime – an improved, better IMF.

The new 3rd currency may take some time to figure out. Not that it is difficult, expensive, or impossible. Some of Asia may want to cling to the dollar skirt. The new currency may be an Asian-Developing world currency. This may see the emergence of a tri-polar currency regime – which the US and Europe duopoly is desperate to avoid.

The 2ndlook proposal for the Third Global Reserve Currency has been in circulation for some time now.

The Shape Of Things To Come Part – II

On March 14th 2008, this blog talked about how

It is being whispered that Barran Wolfet and his team members, Sorg Goros and Rim Joggers had played a major role in the enhancement of these gold stocks – and the formation of IMAR. Initially named as Global Financial Reserve Authority for Development, the IMAR idea was first tossed out over a dinner at the famous Les Ambassadeurs eatery – which offers a classic cuisine by the Ducasse-trained chef, Jean-François Piege.

The US Electoral outcome

There is (seemingly) harmless speculation that next US President may appoint Warren Buffett as the Treasury chief

The two were asked at the beginning of their second presidential debate who would be a good replacement for current Treasury Secretary Henry Paulson who is standing down at the end of the current administration.

“I think the first criteria, would have to be somebody who immediately Americans identify with. Immediately say we can trust that individual,” said McCain. Buffett, chief of the Berkshire Hathaway holding company, has supported Obama in the race for the White House.

Barack Obama’s chance of a lifetime

If Barack Obama wins on 4 November, as looks likely, he’ll inherit an economic mess rivalled only by the one that faced Franklin Roosevelt in 1933.

Everyone is saying …

There is rising chorus that the new President (whoever it may be) should do what Roosevelt did. What they are not saying, but meaning is, do what Roosevelt did. Krugman, this year’s Nobel prize winner, has also suggested that Barrack Obama should emulate Roosevelt’s actions need.

Among the many things that Roosevelt did, the merits of which are debatable, there is one action that made the US into a super power. If only for a short while of 70 years.

Roosevelt nationalized gold.

Nationalization of gold enabled the US Governments to enter costly wars like WW2, Vietnam War, and now the Iraq and Afghan Wars. This allowed to US to walk into the WW2 with 25,000 tons of gold – and impose Bretton Woods on the world. And the nationalization of gold also impoverished the Americans – apart from the poor.

Gold production (from Ghana, South Africa, Australia, Canada, Papua New Guinea, America, etc.,) was controlled by the Anglo Saxon Bloc – and the world’s largest private reserves of gold, in India were controlled by the British. It is this choke on gold reserves that enabled thes sustenance of US as a superpower.

And now they are trying it again.

The methodology

And how do the US ‘thought leaders’ suggest that new President do it … when victory is within grasp, and Obama Faces A New Choice

The opposite argument is that the political costs of voicing pessimism are prohibitive, that there is plenty of opportunity to prepare voters for drastic action after election day, and that a candidate risks worsening conditions by sounding strong warnings. The classic example to support this case is the 1932 Depression-era campaign of Franklin Delano Roosevelt, who said little or nothing while campaigning in 1932 to indicate the contours of his New Deal program.

What are they pulling over our eyes…

This again very interesting. Roosevelt’s economic plan was surprise. Obama (or McCain, doesn’t matter who), will do something similar. Read this with the Warren Buffet silver play and his (possible) appointment as Treasury Chief, and the game becomes clear.

Nationalize gold again?

But What Was Warren Buffet Doing …

Buffett’s Purchases Push Silver Past $7 an Ounce said the New York Times

Separately yesterday, Phibro, a commodities-trading firm, confirmed that it was the dealer for all the silver purchases by Berkshire. Phibro is a unit of the Travelers Group, in which Berkshire has a major stake. Last week, a Canadian investor filed suit in United States District in New York, contending that Phibro had moved silver from warehouses in the United States to hidden locations in an effort to mislead traders about supplies and push the price higher. A Phibro official denied all the charges yesterday.

How did Warren Buffet buy such a large amount of silver without disturbing the market?

The silver purchases by Berkshire Hathaway were made in London, a center of activity in the silver market. The purchases were done with over-the-counter contracts, in which Mr. Buffett bought silver for delivery at future dates. Since he began he has accepted delivery of 87.51 million ounces, which are apparently now sitting in the vaults of London bullion banks. The remaining 42.2 million ounces must be delivered between now and March 6.

60 days from now … Warren Buffet Handle The US Treasury?

Sometime, back there was speculation that Warren Buffet could be a possible choice of US Treasury Chief. This news was sparsely reported – originating with AFP. Google search showed this up only with a few Indian sites and journals.

What does this mean as possible policy outcome? Do a Quicktake – and then a 2ndlook.

Ben Bernanke says a ‘savings glut is the problem …

Ben Bernanke joins a long list of Western propagandists, who find ‘specious’ ways to blame others for Western problems. His most recent propaganda gem was to blame Asia for a ‘savings glut.’

a satisfying explanation of the recent upward climb of the U.S. current account deficit requires a global perspective that more fully takes into account events outside the United States. To be more specific, I will argue that over the past decade a combination of diverse forces has created a significant increase in the global supply of saving–a global saving glut–which helps to explain both the increase in the U.S. current account deficit and the relatively low level of long-term real interest rates in the world today.

After Ben Bernanke opened the flood gates of such logic with ‘helicopter drop of dollars’ and ‘printing press technology’, and now the ‘savings glut’ – others such ‘economists’ have rushed in to do another tom-tom dance around this logic.

A so called economist, weighed in with two bits, Dani Rodrik: Who killed Wall Street?

…the true culprits lie halfway around the world. High-saving Asian households and dollar-hoarding foreign central banks produced a global savings “glut,” which pushed real interest rates into negative territory, in turn stoking the US housing bubble while sending financiers on ever-riskier ventures with borrowed money. Macroeconomic policymakers could have gotten their act together and acted in time to unwind those large and unsustainable current-account imbalances. Then there would not have been so much liquidity sloshing around waiting for an accident to happen.

The Real Culprits …

Ben Bernanke is not even mentioned even once. Bernanke’s printing press and helicopters are not mentioned even once. The evasion of Federal Reserve on M3 figures is completely ignored. But, Alan Greenspan is mentioned once. China which has funded the US to the extent of US$2 trillion is buried without mention. Japan which has funded the US to the extent of US$1 trillion is ignored.

I rest my case

But Asians countries whose reserves are getting wiped due to dollar depreciation – are instead mentioned as culprits.

Wow.

This is a new level in brazen-ness. Keep it up, Dani boy. This fraud may yet happen. And Warren Buffet may give cover to this fraud.

Connecting The Dots …

The Dollar Yuan Rumba

Dollar Devaluation

1973-1985. The Japanese were strutting on the world stage.

1973-1985. The Japanese were strutting on the world stage. In their hubris, one Japanese businessman declared that the only world-class product made in USA was maple syrup. The Japanese manufacturing juggernaut seemed unstoppable. Japanese management was the first lesson and the last word in business schools. Companies like Xerox, FedEx, Motorola adopted various ‘QIP’ systems – quality improvement processes.

Finally, the Americans decided that the yen-dollar exchange rate was the culprit. In 1985, the US worked out a deal whereby the US dollar was devalued. Only it was not called a devaluation. It was called the Plaza Accord.

Without a formal devaluation, the Plaza Accord allowed Americans to depreciate the dollar against other currencies – especially the Japanese Yen. Intense negotiations spread over nearly a decade followed. During a crucial negotiation in Japan, in 1992, a stressed out George Bush Sr., vomited and fainted.

The Oil-Dollar Tango

Endaka – and the end of the Japanese run

After the Plaza Accord, the Japanese team went back home and prepared their industry for endaka – high yen prices.

From August 1971 through April 1995, the yen’s value ratcheted up from 360 to the dollar to 80 to the dollar. This was primarily because some U.S. industries, anxious about their eroding share of world markets, put political pressure on American politicians. The American government in turn put pressure on Japan’s politicians and central banking officials to keep raising the value of the yen against the dollar. With some support from academic economists, American producers argued that a higher-valued yen would help their products sell better in competition with Japanese products and therefore reduce the American trade deficit.

Net outcome, by the mid 1990s, the Japanese juggernaut was halted. Japan had to remain contented with being the world’s second largest economy. George Soros thought,

the prospect of Japan’s emerging as the dominant financial power in the world is very disturbing, not only from the point of view of the United States but also from that of the entire Western civilization

For the next 10 years, the Japanese economy stagnated, investments stagnated. Their dream of supplanting the US as the world’s largest economy were over – for now at least.

Stuffed Tigers

The 90s was decade of the Asian Tigers. Korea, Malaysia, Thailand, Indonesia, Singapore were all set to replace Japan as the axis of world economy. India especially came out as a distant plodder against these countries. Lee Kuan Yew, held forth on the Indian character was faulty – and could not compete with the Chinese-Confucian value-set.

Then followed the Asian Crisis. Mahathir Mohammed claimed that the 1997 Asian Crisis was a foreign conspiracy. Specifically, he named George Soros as the master mind behind the Asian Crisis. 9 years later, Mahathir made up with George Soros – and retracted his charge.

The ostensible reason was that investors in the Asian Tigers were funding long-term investments from short-term borrowings – a classic mismatch. The rapid withdrawal of foreign funds impacted development of these economies to the extent of a decade.

Has It Come To This? (Cartoon by David Horsey from seattlepi.com).

The 2 trillion trap

After the Asian crisis, China was in a better position to resist American pressure for renminbi revaluation.

That resistance to renminbi revaluation, in turn, caught China, in another trap. China has US$ 2 trillion worth of rapidly depreciating foreign reserves.

Which brings us to India!

What will it be

What are the threats to the Indian economy! Will it be a ‘sudden’ collapse in software and outsourcing? Or will it be a severe contraction in gems and jewellery exports? Can it be a 3 year drought due to global warming?

Related articles

• In Japan, No Holiday for the Yen (blogs.wsj.com)
• G-20 shows no interest in high yen (search.japantimes.co.jp)
• You: Rising yen, falling prices, cheap beer (search.japantimes.co.jp)
• You: Japan Moves to Weaken the Yen (nytimes.com)

Morarji Desai On Mount Rushmore

Breaking News

St.PT Barnum, our resident Propaganda Slayer has succeeded in a top secret project. He, and George Bush have put up Moraji Desai, our own aapro Morarjibhai, on Mount Rushmore. Read the Whole Story.