Meshing and gnashing – The Clash of civilizations

Huntington

Mercenary logic

Samuel P . Huntington’s 1993 book, Clash of Civilizations, has a historical ring to it – a hint of something grand. An influential book, it ostensibly examined ‘conflicts between Western and non-Western cultures’ – and brought the phrase, Clash of Civilizations into limelight.

In the post-Soviet World, the book marked the launch of a new Western campaign – Islamic demonization. This book, released some four years after Rushdie-fatwa, provided pseudo-intellectual justification for West’s anti-Islamic campaign.

The America+NATO sponsored ‘ethnic cleansing’ campaign in Bosnia was underway, since 1992. Saturation media coverage of Monica Lewinsky and cigars effectively drowned President Clinton’s role in the initiation of the anti-Islamic campaign – and the news coming out of the Balkans. Deliberate diversionary tactics?

India’s co-option too, into this campaign was planned in significant detail – and successfully executed. 9/11 (September 11, 2001) was still 8 years in the future. The verbal trickery behind Huntington’s Clash of civilizations ‘package-deal’ has gone by without challenge or de-construction in India. This post will cover some Trojan concepts Huntington  smuggled into the mainstream.

A Basic Stance

For one, the definition of civilizations has to be beyond race, ruins and region. Instead, a definition  around differentiated structures – political, social, economic and ethical structures makes comparative analysis possible.

Civilizations tend to repeat political, social, economic and ethical structures. In the last five thousand years, only three civilizational models can be identified and substantially differentiated.

Desert Bloc

The world’s dominant model today, it has been able to nearly erase competing systems from the collective minds of the ruling elites in the world.

Signs of the Desert Bloc’s birth were first evidenced in the Assyrian Empire – its first laws codified by Hammurabi. Dating is contested, and best estimates are that the Assyrian Empire collapsed around c.600 BC. Seven of history’s largest empires used the Assyrian Empire, as a springboard.

The Desert Bloc extends from west of India, across Middle East, West Asia, extending to Central Asia and Eastern Europe – with its core in a region of 1000 miles radius of Palestine. Inventors of religion, world’s three important religions, (Judaism, Christianity, Islam) were born within 1000 miles radius of Palestine, in the deserts of Middle East. Each of these religions were, so to say, ‘backward compatible’. Islam recognizes Christianity, which uses Judeo-Mosaic texts for its foundations.

Anti-feminist, none of the three religions have female goddesses – unlike the two other civilizations specified below. Western Christian world gave women the right to vote, mostly between 1920-1950. Low levels of marital success are institutionalized – and instead prostitution levels are high.

The Desert Bloc depends on extreme competitiveness between its own factions to gain leadership – extending the analogy of survival of the fittest. Some of its defining struggles in the last 1000 years were Islam vs Christianity; Spain vs Portugal; England vs France; USA vs USSR.

Such factions spring up around deified leaders based on a sharp identity – race, tribe, language, region, religion. Significant leadership struggles have broken out between even intra-religious sects – like Catholics and Protestants, Shias vs Sunnis.

A significant marker of the Desert Bloc is concentration of wealth, power and land in the hands of these deified leaders and their inner circle. Unlike the two other civilizational groups, as we will see. This allows Desert Bloc factions to indulge in extremism. Over 90% of the world’s bloodiest wars, genocides, massacres, annihilations, are to the Desert Bloc account.

The Desert Bloc is differentiated by extensive use of slavery, rule by elites, conspicuous consumption (show piece buildings, spectacular technology) et al.

Driven by ‘at-any-cost’ approach, in the Desert Bloc, everything and everyone is expendable to attain leadership position. Driven more by accelerated creation and destruction, Desert Bloc sub-groups have short life spans (Achaemenid Iran, Greece, Rome, Mongol Empire). Greece, Rome, the Ummayyads, Abbasids, Mongolian Empire, Colonial Spain and Britain best represent the Desert Bloc.

Can different factions of the Desert Bloc, like the Christian West and Islam collaborate? The Islāmic Ottoman Empire and the Christian European powers could not get around to colluding with each other. Even the collusion between the Christian European colonizers was  difficult.  Unless it was over carving the spoils, dividing areas for exploitation – like Papal Bulls (between Spain and Portugal) or the Berlin Conference which triggered the ‘scramble for Africa.’

The  Afro Group

Apart from the Indic System, the only other civilization, the Afro Group could resist the Desert Bloc onslaught in the last 1000 years. The Afro Group successfully kept its identity, at a great cost, unlike Native Americans or Australian aborigines.

An iconic photograph of the Soweto uprising. (Image courtesy - le-regent.net; photographer attribution absent at source).

They successfully engaged with the Desert Bloc in Haiti, at Battle of Isandlwana (22 January 1879), by the Mau Mau in Kenya.

Monica Schulyer, an assistant professor of history at Wanye State University, (thinks) the name Mau Mau was itself a British invention and means nothing in Kenyan. Members of the independence movement called them selves the Land and Freedom Army.

In modern South Africa, on July 16, 1976, the ‘day began with a march by 10,000 students carrying banners and slogans, saying “Down with Afrikaans” and “Viva Azania” (the name given to South Africa by black nationalists)’. Soon the number swelled to ‘fifteen thousand school children involved in the protests (Tuttle 1)’, rose against imposition of Afrikaans language by White Apartheid rule. Known to the world as Soweto Uprisings, it is without parallel in the annals of history. In the very heart of the modern Desert Bloc – the USA, after centuries of slavery and discrimination, the Afro Group was able to roll back excesses.

Their robust ‘native’ intelligence best describes how Desert Bloc works. In Jomo Kenyatta words,

“When the Missionaries arrived, the Africans had the Land and the Missionaries had the Bible. They taught how to pray with our eyes closed. When we opened them, they had the land and we had the Bible.”

Another unit from the Afro Group, Cuba, far from its base in Africa, after breaking from slavery,  successfully resisted coming under political bondage of the Desert Bloc, for the last 100 years. In the ancient world, Carthage checked the spread of Desert Bloc, represented by Greece. Carthage allied with Rome to destroy Greece.

Before that, Nubians brought the Egyptian Empire to heel. The 25th dynasty from Nubia or Kush, south of Egypt (modern Sudan), ruled over Egypt for at least 75 years. Piye, earlier”Piankhy”the Nubian king invaded Egypt (ca. 746 BC) – and started the 25th Dynasty, that probably continued till 650 BC. He was succeeded by Shabaqo (ca. 716-702 BC) and his successors Shebitqo (ca. 702-690 BC) and Taharqa (690-664 BC).

Traditional African structures had diffused land and wealth ownership – unlike the Desert Bloc. There is little proof of concentration of wealth in African structures.

Both, the Afro Group and the Indic System have a much superior record of minimal environmental degradation. The Big 5 in animals – elephant, tiger /leopard, lion, wild bull, rhino exist only in the these two core geographies. Big Game hunters in Africa (from the Desert Bloc, where else) described 5 animals as the Big 5 – elephants, lion, buffalo, leopard and the rhino as the Big Five. These were animals that were difficult to hunt and kill (for pleasure, if you thought otherwise).

This ‘pleasure’ was the operating principle. As a result of this ‘pleasure’, there are only two parts of the world where such Big Five exist. India and Africa. China, the Middle East and of course Europe and America, have wiped entire continents of all these animals.

Modern history, under a Hegelian spell has ignored Afro Group history. Bereft of spectacular structures, visible ‘leaders’ or the recent decline in fortunes, the study of African history has been decided as unimportant.

Indic systems

Based on भारत-तंत्र Bharattantra platform. Indic systems focus on four freedoms – काम kaam (desire, including sexual) अर्थ arth (wealth), मोक्ष moksh(liberty)and धर्मं dharma (justice), and stipulates unrestricted access to ज़र zar (gold), जन jan (people) and ज़मीन jameen (land).

Originating in India, based on platform of anti-slavery, distribution of power and diversity, this was the dominant ideology in the world till about 8th century. In Tibet, Songtsen Gampa, the 33rd king, became the first dharma-raja in 7th century – a follower of भारत-तंत्र Bharattantra . The Indic system has been in sharp retreat for the last 500 years – especially after Mughal rule in India. Inspite of sharp reversals in the last 500 years, half the world is still significantly influenced by Indic systems.

Militarily impregnable till about 17th century, Mughal rule established the first beachhead for the Desert Bloc in India.

Strong population growth based on widespread marital occurrence, strong and extensive family structures, are features that have sustained Indic systems in the society, even though some rulers defected to the Desert Bloc.

Indians worship every item of God's creation - not just cows. (Image source - Sri U.Ve. Prasanna Venkatachariar Chaturvedi Swamin)

With diverse liturgical, beatification, sacramental practices, graded pantheism (local deities, semi-divine gods and goddesses with a top layer of the Holy Trinity), faith and belief do not occupy the space or importance that religion has in the Desert Bloc. These are within the realm of individual choice with scattered efforts at proselytization

The Indic system still has significant following in China and most of ASEAN region – notably Indonesia, Tibet, Cambodia, Thailand, Sri Lanka. The modern proof of this was the India Independence League (IIL) headed by Subhash Chandra Bose.

In recent times

Each of these megaliths have traditional spheres of influence.

Post-WWII world has been been seriously influenced by the Desert Bloc. The Desert Bloc split into two factions. The liberal-progressive, democratic, Judeo-Christian faction led by America. Significant parts of the world has moved to the Desert Bloc orbit, and adopted the religion of Westernization.

An interesting study is the post-WWII behaviour of the Euro-American faction. After WWII, as British, French and Dutch colonialists were being thrown out of Asia, in country after country, the West was in real danger of losing markets and raw material sources.

To make war palatable, Desert Bloc invented religion. (Image source - loonpond.com; artist attribution not available at image source)

A new power, fueled by a growing migrant population, USA, took the place of tired, old powers – Britain, France and the Dutch. Instead of the openly-exploitative system of European powers directly running colonial governments in these Asian countries, the US installed an opaque system – which is equally exploitative. To impose its writ on the newly independent Asian countries, the US simply destroyed their  economies by war. The USA, then instituted the innovative USCAP Program and ‘helped’ these countries. These countries (Taiwan, Singapore, Japan, South Korea, Indonesia, Malaysia, et al) were now ruled by overtly independent regimes – but covertly, client states of the USA.

US multinationals and home-grown oligarchs (keiretsus, chaebols, etc.) took over the economy – and sidelined British, French and Dutch companies. To impose this economic model, US armies, using nearly 1 million troops, killed 50 lakh Asians. The takeover of European colonial possessions by the USA was handled over 3 regimes of Eisenhower-Kennedy-Johnson seamlessly.

Islamic units

The second faction is the Islamic faction. After the breakup of the Ottoman Empire, by the West, after WWI, new renegade groups supported by the West, sprang up. These renegade groups are using extremist  Islam to meld the Islamic faction into a more powerful factor in the global power equation.

Some of these Islamic regimes installed and supported by Western powers have been slowly drifting away from the West – like Turkey, Syria, Jordan, Iran, etc. Some other regimes are longer able to call the shots – like the Saud family, or the Iraqi regime.

The other aspect of the Islamic faction is the geographical spread. The primary Islamic region is the Arab region, centred around Middle East /West Asia region. The secondary Islamic region is the Central Asia – earlier a part of the Mongol Empire. Walled in by China and Japan on the East, by Russia on the West and diverse countries in the South, it is a shadow of its former self.

The region with the largest Islamic population is South and South East Asia – concentrated across India, Indonesia, Pakistan, Bangladesh and Malaysia. The South and South East Asia Islamic region has a moderate and non-imperial history.

Hence these three regions (Middle-East region, Central Asian region and South /SE Asian) have evolved differently and have little in common. Hence, the image of the Islamic ‘world’ as a monolithic unit is misleading.

Big trouble in Little China

The other puzzle is classifying China. China under Confucian State model was solidly in the Desert Bloc. After the advent of Buddhism, as the Chinese people became landholders, as they obtained rights to own silver and gold, they moved to Indic system. Marriage and family systems became the norm – instead of exception.

After and under Mongols, for instance the Kublai Khan restricted silver and gold rights – and issued fiat currency. The Chinese State has mostly been Desert Bloc in its tendency. But the Chinese people have great faith in their Buddhist teachers. Will China become a staunch Desert Bloc member like Iran in the past, is still possibly an open question.

Even stevens!

The Assyrian thread

With Niniveh, (also called Asshur) as its capital, the Assyrian Empire, ended in 600 BC. The Assyrian Empire passed through many hands – recreating and renewing itself in the same mould. The name, Assyrian Empire was a Roman modification of Asuristan – the area of current Iraq.

The  Achaemenid Empire (c. 550–330 BC) were the first successor power to preside over the Assyrian Empire, from their capital in Perspolis. Many wealthy Jews were envied for their vast slave holdings. Alexander ousted the Achaemenids to rule over the Assyrian Empire – effectively after the Battle at Gaugemela (331 BC). Daidochi Wars after Alexander’s death and attacks by Rome-Carthage alliance  led to the disintegration of Macedonian rule. Romans, added Western Europe, and ruled over the Assyrian Empire for the next 350 years (60 BC-285 AD), with its capital in Rome.

Rome formally lost the Assyrian Empire when Diocletian was forced to split Roman Empire in 285 AD. Eastern Roman Empire, well-known for its premier city, Byzantium (a cognate of Indian Vyjayanti) mostly had its capital in Constantinople (modern Istanbul) continued to gain power and wealth over the next 400 years.

Various Islamic dynasties (c.700-1300) ruled over large parts of the Assyrian Empire, with capitals mostly in Damascus, Baghdad, till they were deposed by Genghis Khan’s Mongols. After adding China, Mongol factions ruled over the Assyrian Empire for varying periods, between 1300-1600 AD over different parts of the Assyrian Empire.

It was the Mongols who helped in the rise of the West. First, was the trade in millions of slaves from Eastern Europe (the Slavs, hence slaves) by Venetian and Florentine traders, which funelled vast monies into European economies from Egyptian and Byzantine slave-buyers. This wealth from slave trade was the stuff of which tales are told. Shakespeare wrote of Merchant of Venice, Comedy of Errors, Gentlemen of Verona. Leonardo da Vinci,  architect Bramante, sculptor Donatello, Michelangelo, Titian and other famous artists found patrons with the earlier Visconti, powerful Medicis, notorious Borgias, lesser known Sforza (Milan), Pazzi and the Albizzi families. It was this slave-trade that fuelled Renaissance art and culture. Florence, Venice, Milan became major banking centres. Double-entry book keeping became standard, under which any kind of financial picture can be created. Quite unlike the Indian single-entry system.

Mongols brought to the West two major technologies. One, was the Indian decimal system and Indian saltpetre for gunpowder, was the other. Indian mathematics (initially outlawed by European rulers) is the foundation of Western science and technology. Indian gunpowder was their ticket to military power. Wealth from trade in African slaves, conquest, loot, annihilation of Native Americans, using gunpowder, fuelled a 500 year technology boom in the West.

The last significant dynasties that ruled over the ancient Assyrian Empire were Islamic Ottomans and the Christian Austro-Hungarian Empire. These two empires were dismantled after WW1 (1920) by Western allies.

Slavery rarely finds mention in Indian media. Much less is any discussion or understanding about the role of slavery in the rise of the West. A rare Indian columnist with awareness of the slavery factor. Even this discussion about clash of civilizations does not work.

Related Articles

• The Assyrians and Jews: 3,000 years of common history | Gene Expression (blogs.discovermagazine.com)
• The Clash of Civilizations (adweek.com)
• Arab Voices, Heard at Last (nytimes.com)
• Fighting Words (nytimes.com)

People for Profit – The NGO story

(Cartoon courtesy - http://www.bihartimes.in). Click for larger image.

Funding India NGOs

Something very strange is happening. There are some 33 lakh (3.3 million) NGOs, operating in India – for the 20 crore (200 million) odd families in India. That would be one NGO for every 70 families.

These mushrooming NGOs are getting billions of US$ in funding. Recently,

Statistics released by the home ministry regarding ‘foreign funds to NGOs’ show that India, which has a total of 33,937 registered associations, received Rs 12,289.63 crore in foreign contributions during 2006-07 as against Rs 7,877.57 crore in 2005-06, a substantial increase of nearly Rs 4,400 crore (56%) in just one year.

The US, Germany, the UK, Switzerland and Italy were the top five foreign contributors during 2006-07. These five countries have consistently been the big donors since 2004-05. Spain, the Netherlands, Belgium, Canada and France are the other countries which figure prominently in the list of foreign donors. (read more via Foreign funds to Indian NGOs soar, Pak among donors-India-The Times of India).

Foreign aid kitty - Table courtesy - Times of India.

What does this mean …

Rs 12,289.63 crore is roughly US$3 billion – based on average dollar value for 2008.

And that, is a lot of money.

That is more money than what the US Govt. gave as aid to more than the 100 poorest countries. Till a few years ago, India annual FDI was US$ 4 billion. Just a little more than the US$3 billion that India received as charity through various NGOs in 2008.

The total US Official Development Assistance to the whole of sub-Saharan Africa (more than 40 countries), in 2007, was “US$4.5 billion contributed bilaterally and an estimated $1.2 billion was contributed through multilateral organizations”.

What is the source of these funds …

The rich, the poor and the middle class in these ‘charitable countries’ are themselves deep in debt. Where are they getting the money from? Why are they being so liberal towards India? What is the source of these funds?

Where this money going …

Is it going as thinly disguised aid to Naxal affected areas – where some ‘Christian’ missionaries are working to‘save’ the tribals? Is it going towards publicity for causes which are thinly disguised trade issues. For instance, child labour – which is, in many cases, a system of apprenticeship for traditional skills.

Or are these NGOs promoting policy frameworks which are distorting India’s social systems? The Population Myth /Problem /Explosion for instance was promoted for the first decade by Ford Foundation, the Carnegie Foundation and USAID. Are they behind the NGOs which are promoting Section 498 laws as a legal solution – a solution that ‘benefits’ about 5000 women and creates about 150,000 women as victims.

AIDS was the excuse to open doors. (Cartoonist - Godfrey Mwampembwa “Gado”; from Nairobi, Kenya; courtesy - http://www.pambazuka.org). Click for larger image.

These are laws and policies which are undermining the Indian family system. Which country in the world has a stable family structure with such low divorce rates as India?

The Clintons, The Gates, The Turners, et al

The ‘progressive-liberal’ establishment of the West is viewed rather benignly in India – and seen as ‘well-wishers’ of India. Many such ideas are welcomed in India without analysis. These ideas are viewed positively, as the source of such initiatives is seen as well-intentioned. These rich money-bags in cahoots with the State’s propaganda machinery, the media and academia are creating false messiahs, hollow idols and instant saints.

St.Tony Judt - The media and academia in cahoots with the State (Cartoon by Pavel Constantin, Romania; Cartoon Courtesy - caglecartoons.com).

The beatification of Saint Judt

The last 90 days saw a surge on obits, reviews and tributes to Tony Judt.

Tony who? Exactly.

An unknown writer till a few months ago, has suddenly become famous in his death. Media (at least in India) has gone overboard. But when Marathi media started on Tony Judt, it was high noon. The straw on the camel’s back.

OK, guilty of misrepresentation. Not the camel’ back! It was my back.

There seems an effort at beatification of Tony Judt. In the modern era, temporal authorities, award a quick Nobel Prize, pin a Congressional Medal of Honor – and the process of ‘secular’ sainthood is completed. Media aids by marching to the drumbeat of the State. These ‘secular’ sainthoods by the ‘modern-secular-liberal-progressive-democratic’ establishment are not meant to be enduring or important. They , the latter-day, disposable, ‘secular’ saints, serve a utilitarian purpose to their masters – the State.

Tony Judt is no exception.

How come 'modern' Western identities are not included by Tony Judt in his 'problem' list? (Cartoon By - Angel Boligan, Courtesy - Cagle Cartoons)

From the safety of a university cloister

By being overtly anti-Israel, Tony Judt, gets an inside track into the Islāmic mind – to start his ideas of ‘identity’.

A self-confessed, Social Democrat (but that is not ‘identity’) Tony Judt is the type who speaks from the comfort of a winning side.

We know enough of ideological and political movements to be wary of exclusive solidarity in all its forms. One should keep one’s distance not only from the obviously unappealing “-isms”—fascism, jingoism, chauvinism—but also from the more seductive variety: communism, to be sure, but nationalism and Zionism too. And then there is national pride: more than two centuries after Samuel Johnson first made the point, patriotism—as anyone who passed the last decade in America can testify—is still the last refuge of the scoundrel. (read more via Edge People | The New York Review of Books).

As fortunes shifted and wavered, Tony Judt’s recounts how his family moved from one declining economy to another growing economy. From Eastern Europe, vaguely in a region near Russia, to Antwerp in Belgium, thereon to Britain, and finally to the USA. He finds

over the years these fierce unconditional loyalties—to a country, a God, an idea, or a man—have come to terrify me. The thin veneer of civilization rests upon what may well be an illusory faith in our common humanity.

The West has systematically deformed Islamic identity - after dismantling the Ottoman Empire. (Cartoonist - Paresh Nath, Published by - The National Herald, India)

To people like Tony Judt, identity is a matter of convenience. And they rightly, recommend that people must have no identity – and by extension, no loyalty. Fly flags of convenience. May the highest bidder win.

I wonder where Judt’s family was, when the Belgians were flogging the Congolese.

Sainthood by the Vatican

The ‘modern’ State and the media of the Free World have it easy when it comes to cannonising people like Tony Judt!

The Catholic Church has a rather exacting process, stretching over a few years, at the very least. The Catholic Church even appoints a Devil’s Advocate – someone who tries to find reasons why the candidate should NOT be declared a saint.

This process has sometimes taken decades too. After multiple processes and steps, a committee. the Congregation for the Causes of Saints decides on these issues. With the kind of rigour that the Vatican process follows, Saints have ‘public memory’ life span extending to centuries.

The perversion of the Islamic world started with the break up of the Ottoman Empire (Cartoon By - Emad Hajjaj, Jordan; Cartoon Courtesy - caglecartoons.com)

Coming to Saint Judt

Today when the West is paying the price for creating a misshapen Islāmic identity, people like Judt thinly speak out against identity – an Islāmic identity. Or when the West faces a challenge from Asia, China and India, it pays to talk of less identity.

This idea of less identity would not be such a bad idea – if you have so little of identity, to start with!

Remember trojan horses

A ‘tolerant’ and ‘open’ society like India can be a complacent victim to trojan horses – and ‘secular’ saints like Tony Judt. Another article a few weeks ago gave an overview of the NGO ‘economy’.

In many ways, (the) metamorphosis from a modest, village-level, kurta-pyjama clad activist into a well-heeled, suited-booted, city slicker whose voice is heard in high places, mirrors the changing face of India’s burgeoning voluntary sector. Once the preserve of the humble jholawallah, the ‘third sector’ of the Indian economy is now teeming with smart men and women, armed with management degrees, laptops and huge funds generated by a liberalised and booming economy. As the state retreats in an era of privatisation, new-generation NGOs have moved in to fill the vacuum, often doing what the government used to do in rural areas and urban slums or conducting advocacy programmes for policy interventions, even holding skill-building workshops to update small voluntary groups. Their activities are vast and varied and bear little resemblance to the sweetly charitable work of the silent, selfless grassroots workers of the ’70s and the ’80s.

The growth of the sector has been explosive in the past two decades, both in numbers and financial resources. First, the numbers. If the findings of a survey conducted by the Central Statistical Organisation of the ministry of statistics in 2008 are to be believed, there are as many as 3. 3 million NGOs registered in India. In other words, there is one NGO for every 400 Indians. No other country in the world boasts of such huge numbers in the third sector. However, this mind-boggling figure should be taken with a pinch of salt, as even the CSO report has acknowledged that many are probably defunct. But, as Sanjay Agarwal, a chartered accountant who works with several NGOs, said, “At least the CSO has tried to shine a light where there was darkness all these years. No one has ever tried to collate any kind of data on the voluntary sector. “

The CSO report then is a starting point and its data is revealing. It found that the big growth spurt has happened since 1991. As many as 30 per cent of the 3. 3 million NGOs were registered in the decade of the ’90s and 45 per cent more came up after the year 2000. While religious organisations and charities were the most commonly registered societies in the period before 1970, there was a phenomenal expansion in social service organisations after 1991 – as much as a 40 per cent increase, according to the CSO report.

It is significant that the phenomenal expansion of the voluntary sector coincides with the opening up of the economy and its rapid growth. India was changing as it privatised and globalised, and the changes saw NGOs blooming in thousands as civil society matured and began asserting itself. Nothing underscores their growing influence more than enforcement of the Right to Information Act and the National Rural Employment Generation Act, both of which were products of pressure from civil society organisations.

Yet, despite such unprecedented growth, there has been little or no effort to map the voluntary sector or streamline it for transparency. It remains opaque, with questionable accountability levels, leaving it vulnerable to scams and scandals and the inevitable public suspicion about sources and utilisation of funds. Because of the lack of comprehensive data, even estimates about the financial size of the sector vary. One figure is as high as Rs 75, 000 crore annually, but Rajesh Tandon, president of PRIA (Society for Participatory Research in Asia), a leading mega NGO that works with a host of smaller ones, puts the amount of money available to this sector at around Rs 40, 000 crore per year.

Most of the funding comes from domestic sources, of which the government is the largest donor. However, foreign donations make up a significant portion of the financial resources available to NGOs. Unfortunately, here too, despite a Foreign Contributions Regulation Act, no authentic figures are available, underlining the laxity that prevails in this sector. Home minister P Chidambaram told Parliament recently that the government recorded a figure of around Rs 10, 000 crore from foreign donations last year. He went on to add that this figure was grossly undervalued because nearly half the NGOs registered to receive foreign aid had not reported contributions they have received over the years. In other words, he said, foreign funding of the NGO sector could be as high as Rs 20, 000 crores.

The prevailing confusion and the lack of systems to track movement of funds have only served to tarnish the image of the voluntary sector, despite the good work that many of them do. As with every sector, there are good NGOs and bad NGOs. Unfortunately, the latter hog the headlines. Scams are aplenty, particularly when it comes to the disbursement of government money. The rural development ministry’s main funding agency, which also happens to be the biggest government donor, CAPART (Council for Advancement of People’s Action and Rural Technology ), fell into disrepute because of the high level of corruption in the department. (read more via People for Profit | Cover Story | Times Crest).

Vatican opposes abortion for a steady supply of targets? (cartoonist - Adam Zyglis; cartoon courtesy - http://www.adamzyglis.com.). Click for larger and original image.

The hoax of this century

2ndlook tracked and collated the entire Climate change campaign, where

1. Multiple PR agencies, NGOs were used and funded by the British, Norwegian and Australian Governments
2. To mount a global campaign of ‘epic’ proportions
3. To stampede the world into a regime of faceless and unaccountable bureaucrats –
4. That would monitor nations, industry and economies of the world.

The campaign possibly even subverted the Maldives election campaign to propel a Trojan horse into the developing world camp. Nobel prizes were dangled in front of the Trinidad’s PM. A group of ‘Vulnerable 14′ was promoted to make proxy noises on behalf of the organizers of his climate change hoax.

The do-gooder industry

These NGOs under the garb of being do-gooders, soon end up showing their true colours. Whether its was the Climate change campaign, or the social-service sector, the do-gooder industry is dangerous idea.

A 62-year-old British national, who was arrested by the UK police on charges of sexually abusing several boys of a boarding school in Chennai over three years from September 2003, is likely to walk free in a fortnight because of a year-long delay on the part of Indian authorities in assisting the probe. (read more via UK paedophile may walk free-Chennai-Cities-The Times of India).

The do-good industry

An Australian do-gooder was arrested for sexually assaulting children of an orphanage in Puri. Powel Allen, an eye surgeon employed with the orphanage for the past four years, was arrested in Vishakhapatnam (Andhra Pradesh). Sometime back, two other orphanage administrators, and alleged pedophiles, Duncan Grant and Allan John Waters were convicted (their conviction is now under appeal-review).

What do the supposed beneficiaries get? A lot of 'wind' ...(Cartoonist - Godfrey Mwampembwa “Gado”; from Nairobi, Kenya; courtesy - http://www.pambazuka.org). Click for larger image.

Further back, Wilhelm and Lile Marti, a Swiss couple, again in the do-good industry, were granted bail in a pedophilia case. After bail, they promptly fled India.

Do we really need these do-gooders?

Mother Teresa, another do-gooder raised hundreds of crores in the name of Kolkatta’s poor, A few hundreds of the Kolkatta’s poor benefited from that money. But many missionaries rode on the backs of these poor Kolkattans, raising even more money. The PR machine of the Vatican has done a great job on this scam.

Create false alarums! (cartoon date - 2009/12/22; SeattlePI - (cartoon - Horsey) What's the take-away message?). Click for larger image.

Even if India can’t take care of its poor, we don’t need these do-gooders!

Away!! Begone!

Should we say, ‘Get thee behind me, Satan!!’

They have problems at home

Spain has 400,000 prostitutes (for a population of 40 million) who ‘attract’ 15,00,000 clients every day. Some state the Spanish social system is in! Britain has 10,000 Muslim prisoners out 16,00,000 British Muslims . Quite a number of prisoners to have!

And these very countries had the temerity to ‘donate’ Indian NGOs a humungous US$3 billion (nearly) last year. May I suggest? Keep your money and keep your do-gooders at home.

Your need is greater than ours.

Related Articles

• NGOs across the country awarded (topinews.com)
• Donations to Missionaries in India. (ramanan50.wordpress.com)
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Turning points in 20th century history

A poster advertising life of the "Abonos Nitrato de Chile" (Fertilizer Nitrate of Chile), 1930.

Gunpowder monopoly ends

Towards the end of 19th century, newly discovered nitrate deposits (sodium nitrate) in the Atacama desert of Chile came onto world markets. Chile’s nitrates were a crucial intermediate for gunpowder.

Chile’s nitrates broke the British monopoly over the trade in Indian saltpetre for the first time in modern history. French domestic production of saltpetre, barely enough for their own needs, could not challenge Indian saltpetre output that the British monopolized.

Indian saltpetre (potassium nitrate) could be simply refined and used directly in gunpowder – unlike Chilean nitrates. Also Chilean nitrates were limited natural deposits, whereas Indian saltpetre was produced on an industrial scale, accounting for some 70% of global production.

Germans quickly secured supplies of Chilean nitrates. A few years into the WWI, Germans brought the Haber-Bosch process from the laboratory stage to industrial production. The Haber-Bosch process for production of ammonia, gave Germans industrial capacity to produce gunpowder.

Causes for WW1

With this industrial capacity for gunpowder in place, Germany and Turkey, both non-colonial, industrialized powers challenged colonial powers, Britain and France, for access to world markets.

Image via Wikipedia

The breakup of the Islamic Turkish Ottoman Empire was long seen (1890-1920) as an outcome essential for continued Anglo-French hegemony.

Funding WWI

Against Britain and France, the then dominant world powers, with extensive colonies, were Germany, the Austro-Hungarian Empire and the Ottoman Empire out of Turkey. Once WWI started, US funded both Britain and France. The US plied the Anglo-French alliance with extensive supplies and credit.

Emergence of USA

While millions died in European trenches, the USA bided its time. With mud, blood and disease taking a heavy toll, Britain, France, Germany, Turkey and Russia were soon exhausted and prostrate into a stalemate by the end of 1916. As the fate of WWI hung in balance, USA finally joined the Anglo-French side to gain a share of spoils.

A soldier evacuated from the battlefront on a stretcher during WW1 - Image courtesy - bbc.co.uk. Click for larger image.

Financially unaffected, industrially strong, militarily effective, the US emerged on the world stage.

Post-WW1

Soon after WWI, as Anglo-French colonies and markets started opening up, US products gained new customers. Indians started buying Chevrolets, Buicks, Packards in small numbers. Victrolas started playing music in India – and on India. Michelin’s radial tyres from France became a byword in India for long-life. Indian natural rubber started going to Italy’s Pirelli and France’s Michelin.

Impoverishment of India

But Britain, a victorious nation was deep in debt – to USA and Colonial India. US emerged as the largest creditor nation. To settle these wartime debts, debtor Britain and creditor USA worked out a debt-repayment ‘mechanism’. Nothing but financial jugglery, this mechanism slashed the amount due to Colonial India and actually transferred the debt-burden of WW1 onto the backs of Indian peasant.

To settle this debt, Britain took recourse to gold from India. To give impetus to this transaction US supplied Britain with silver – then in abundant supply, in the form of US silver currency coins. This silver was ‘sold’ to Britain at double the market price – under the guise of the Pittman Act. Britain paid its wartime debt to India with this silver – at this inflated Pittman Act price. Abundant silver coins were stuck by the Colonial Raj, which are still available across India in large quantities.

To settle loans taken from USA to fight WW1, Britain extracted scarce gold from India. While payments for Indian exports were made in overpriced silver, the Indian peasant was forced to pay for imports and taxes in under-priced gold.

Starving Indian woman with swollen ankles & feet because she suffers from dropsy as young daughter stands by with swollen belly from hunger during famine crisis. (Photographer - Margaret Bourke-White; Date taken-1946; picture courtesy - life.com). Click for larger image.

Due to this overpriced silver-under-priced gold combination, a surge in gold outflows started from India. Soon the US banking system was flush with liquidity.

Great Depression

Expecting the closed markets of Anglo-French colonies to open up, US economy expanded trade relations and industrial capacity. This expansion in trade and production of industrial goods was funded partly on the back of inflows of gold from India through Britain.

Finally though, protective barriers did not come down substantially enough – creating industrial over-capacity and excess liquidity in USA. Seeing ‘irresponsible’ bankers, waste ‘hard-earned’ gold on ill-planned trade expansion and production capacities, the US Federal Reserve clamped down on liquidity.

Great Depression followed. To ‘save’ gold-reserves, Roosevelt went further and nationalized gold.

Crime in the 20th century

In turn, Roosevelt’s gold nationalization, sparked a global crime tsunami. Only after the easing of restrictions on gold ownership by 1990, did the crime tsunami subside. The axis of this tsunami of crime was gold smuggling into India and narcotics trans-shipment through India.

A tsunami that engulfed all major economies of the world.

WW2

Unresolved issues of WW1 triggered WW2. Germany hemmed in from all sides by British client-states, unable to find markets for its industrial production,  reacted.

Germany, allied with Japan and Italy, proposed creation of larger ‘home’ markets. This was to be done by ‘expanding’ their own borders – to include neighboring countries. As first steps, on 3 October 1935 Italy invaded Abyssinia, now Ethiopia, Germany on 11-12 March, 1938, swallowed Austria; and Japan occupied Manchuria.

The basic assumptions of all the European powers, Japan and the USA were the same. The Confucian-Platonic ideal of superior, wise rulers who ruled over ‘inferior’ peoples.

These militant powers shared the same disregard for human life. Britain wreaked havoc by creating The Great Bengal Famine. Some 40-50 lakh (4-5 millions) Indians died. Hitler rained the Holocaust on the Jews. Some 50-60 lakh (5-6 million) Jews died.

Same difference.

Three faces of stagnation

Production capacity of non-OECD world was destroyed by years of colonialism, WW1 and WW2. Economic conditions after WW2 improved due to relative peace and as countries of the world started rebuilding their economies in the last 60 years (1950-2010).

The last 60 years has seen significant increase in industrial capacity of non-OECD nations. US extended supplier’s credit – using the US dollar, the favored currency of the Bretton Woods system.

A significant portion of economic expansion of OECD economies during 1950-1980 happened as production capacity of the world was rebuilt. The same capacities that were destroyed by colonialism, WW1 and WW2 – especially during 1850-1950 period.

WW3?

This creation of production capacity in non-OECD countries means economic stagnation and loss of political power for a few decades across OECD. With greater production capacity in the hands of non-OECD producers,  production capacity in OECD-USA must shrink.

Or a WW3 will be ‘needed’ to destroy the production systems of the poorest countries – to ‘save’ the West-OECD.

Creating false agenda's has become a full time job in the West with specialist think-tanks, media organisations and PR firms. (cartoon courtesy - http://polyp.org.uk). Click for larger image.

Red herrings

To get around this ‘problem’ of stagnation, the West has created artificial ‘crisis’ situations.

1. Population Explosion
2. Global Warming and climate change
3. Civil Wars in Africa
4. Islamic Demonization
5. Terrorism
6. Financial meltdowns

Complicating the current situation is the US currency mechanism, called USCAP (by 2ndlook) which favors selected US allies with advantageous exchange rates. China, Asian Tigers, Japan and NATO-Europe have gained significantly from the USCAP program.

The most notable loss due to trade distortion has been Africa’s.

Power Corrupts

During the 20th century, the world had to contend with an intolerable situation. The Anglo-Saxon Bloc (America, Australia, Britain and Canada) accounted for 80% of gold production (between 1200-1800 tons per annum) and controlled 80% of global gold reserves (around 100,000 tons circa  1920) also. Not even Chengez Khan had that kind of control over global economy.

Dawn of a new century

Things change.

At the beginning of 21st century, gold reserves in the hands of all the nation-States, are at a historic low. All the Governments in the world own less than 20%, i.e. 30,000 tons from global gold reserves of 150,000 tonnes.

Another 5 years of aggressive gold buying by global consumers will see this down to possibly 15%-17%. This will severely limit the ability of any State to wage a prolonged war.

A collapse of the currency systems in the world is imminent – in the next 5-15 years. Gold may give super-normal returns in the face of such an event.

Desert Twins - Westernization and Jihad. Problems both!

Desert Bloc – beginning of the end?

The 20th century possibly saw the Desert Bloc reach its high-point. The world fully understands the bankruptcy of the Desert Bloc – and it may take some time for the effects of Desert Bloc propaganda to wear off.

Celebrations may, however, be premature. The alternate to Desert Bloc politics – भारत-तंत्र Bharat-tantra is yet to regain traction.

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Emerging India – ‘Immi-grunt’ supplier to English speaking world

The Komagata Maru in Vancouver harbor, surrounded by police boats. (Picture courtesy - bhagatsinghthind.com.) Click for larger picture.

Brave, new world?

On May 23, 1914, a Japanese tramp steamship, S.S. Komagata Maru, steamed into Burrard Inlet, near Vancouver, Canada. Chartered to carry a few hundred Indian immigrants into Canada, it arrived with a list of some 376 immigrant-passengers – mostly Sikh. The Canadian Government decided that these Indian-immigrants were not White enough – and disallowed entry into Canada.

When asked to sail out of Canadian waters, mutinous Indian passengers relieved the Japanese captain of the command. The Canadian authorities engaged a tug-boat, Sea Lion to tow the ship back into international waters. Sent back to India, the ship departed from Canada on July 23 and landed at Kolkatta (then Calcutta) on September 27th – only to be harassed by the British Raj. 26 of the passengers who returned to India were executed by the British.

Indians in Canada and USA, from the Ghadar movement, like Barkatullah, Tarak Nath Das (of letter to Tolstoy fame), and Sohan Singh publicised the incident giving momentum to the Ghadar movement for a massive uprising in India – against the British Raj. More than 90 years later, the Canadian authorities apologized.

SS Komagata Maru - Image via Wikipedia

One of the passengers on Komagata Maru was Jagat Singh Thind. His brother was Dr. Bhagat Singh Thind – an Indian-immigrant to the USA. Bhagat Singh Thind further tested immigration laws in the West – this time in the USA. Bhagat Singh Thind’s bid for US citizenship-by-naturalization finally landed at the US Supreme Court. The US Supreme Court rejected Bhagat Sngh Thind’s claim saying,

It may be true that the blond Scandinavian and the brown Hindu have a common ancestor in the dim reaches of antiquity, but the average man knows perfectly well that there are unmistakable and profound differences between them today … Our own history has witnessed the adoption of the English tongue by millions of Negroes, whose descendants can never be classified racially with the descendants of white persons notwithstanding both may speak a common root language … What we now hold is that the words “free white persons” are words of common speech, to be interpreted in accordance with the understanding of the common man, synonymous with the word “Caucasian” only as that word is popularly understood.

whatever may be the speculations of the ethnologist, it does not include the body of people to whom the appellee [Thind] belongs. It is a matter of familiar observation and knowledge that the physical group characteristics of the Hindus render them readily distinguishable from the various groups of persons in this country commonly recognized as white. The children of English, French, German, Italian, Scandinavian, and other European parentage, quickly merge into the mass of our population and lose the distinctive hallmarks of their European origin. On the other hand, it cannot be doubted that the children born in this country of Hindu parents would retain indefinitely the clear evidence of their ancestry. It is very far from our thought to suggest the slightest question of racial superiority or inferiority. What we suggest is merely racial difference, and it is of such character and extent that the great body of our people instinctively recognize it and reject the thought of assimilation. (excerpts from judgment on United States v. Bhagat Singh Thind 261 U.S. 204 (1923); delivered by Associate Justice George Sutherland; parts excized for brevity; text within […] supplied for clarity.).

Escaping to the West is an option ... for some! Click for larger image

In the post-War world

After WWII, with more than 50 million dead in Europe, European immigration to the US dried up. Without much ado, USA changed its immigration policy. Simultaneously, African-American activism created a market for Welfare Reform. The expanding Welfare State in the USA, created labour shortages. Many among the poor in USA, on welfare, soon stopped full-time work altogether. Faced with acute labour shortages, the West needed to something – and fast.

Back home, in India

Coinciding with this on the opposite side of the world was JN Nehru, trying to build ‘temples of modern India‘.

IIT-Chennai and Kharagpur with German collaboration were kick-started; IIT-Mumbai with assistance from UNESCO and the Soviet Union. The Anglo-Saxon Bloc jumped onto this bandwagon. They decided to ‘help’ India by setting up more IITs and IIMs. IIT-Kanpur, with US-aid in 1960; and IIT-Delhi with UK-assistance in 1961 followed. IIM-Calcutta with collaboration from Massachusetts Institute of Technology, USA. More recently, to keep this flow coming into the US, American companies have tied up for virtual classrooms.

The Resident Non-Indians are a part of the problem. Click for larger image.

And where do graduates from these centres go? Need I answer!

The Anglo-Saxon Bloc pushed disguised labour-recruitment programs as development aid. For instance, the Colombo Plan was pushed in the sub-continent – by the US, UK, Canada and Australia to bring English speaking populations of the Indian sub-continent up to scratch, for use by the Anglo-Saxon Bloc.

Ten years after … the Colombo Plan, … the four advanced countries who are members of the Plan, namely, the U.S., the U.K., Australia and Canada … member countries, which have good training facilities to offer, are willing to make them available to others that still lack them. Under the Colombo Plan Technical Cooperation … training is provided at the cost of the host Government. (via This day that age-The Hindu; parts excised for brevity and clarity.).

The USA overturned Thind vs US Govt judgment by the US Supreme Court. As a result of this policy tweak, Indian students suddenly were welcome to the USA. Earlier, the US Supreme Court, in Thind vs US Govt supported US Government immigration policies which barred Asian immigration.

Suddenly Indians could land at USA shores and airports as immigrants. Soon, for Indians, USA became: –

1. A liberal, egalitarian, non-racist society – based on meritocracy. A land of opportunity.
2. Eager, grateful, hard-working, no-questions asked, English speaking, qualified, low-cost employees became available to US industry.
3. US gained brownie points on global platforms in a world fighting the Cold War. A leg-up to USA propaganda.
4. On the slippery slope of post-colonial India, the IITs and IIMs gave USA diplomatic traction in India.
5. Net result – The most apparent result. 2.5 million Indians have come to occupy 10% of high-income, high-end jobs, professions, positions, careers in the USA, making them the richest sub-group in modern USA.
6. All this at zero cost to the US taxpayer. The entirely amount was to the account of the Indian taxpayer.
7. The Indian taxpayer is left with a 7% fiscal deficit. And Government debt equal to 60% of GDP debt.
8. It provided USA with a steady stream of workers. US got it work-force from India. The expat and immigrant Indian workforce has become the richest sub-group in India.

With success at home, NRIs are not as hot as they once were!

Immi-grunts

Many ‘desi‘ Indians who migrate, believing that they can expect ‘superior’ systems in the West. All that these ‘desi‘ ’immi-grunts’ have to then do is take ‘advantage’ of opportunities in the West – they believe! Is it surprising that these ‘desi’ Indian ‘immi-grunts’ hit ‘glass-ceilings’, encounter ‘racism’?

Nation-building is a tough job – and someone’s gotta to do it! We can’t ‘escape from backward’ India to the ‘forward’ West. Not without becoming second-class citizens. The Indian ‘immi-grunt’ has seen some level of acceptance – after India itself achieved some modicum of success.

Importance of Indian immi-grunts to the US of A

Each year, India loses more than 1,00,000 doctors, engineers, other post graduates to the US alone and another 3,00,000 to other Western countries – commonly, referred to as ‘brain drain.’

To get a real handle on this number, project this number to the 25-65 age group in the USA. India currently sends 100,000 students and professionals, every year to the USA. With lesser numbers earlier, there are nearly 2.0-3.0 million Indians – mostly highly qualified, between the ages of 25-65 – holding up the US industry.

Opportunistic use of 'immi-grunts'?

To get a perspective, assume that a worker is a tax paying worker. The IRS of the USA processed under 100.5 million individual tax returns – from a US population of 300.5 million. Thus, these highly skilled Indians are 2 million of the 100 million tax-paying workers – approximately 2% of the total US working population.

If we further gate people typically, white-collar workers, high technology work force, earning more than US$ 100,000 per annum, we are at about 20-30 million Americans (24% of US taxpayers). Put that way, Indians comprise an estimated 8%-12% of the highly qualified and (highly paid) workforce in the US. What would the US have done without this skilled and qualified labour force? Is it surprising that Bill Gates lobbies for H1B visas for Indians?

This message is not lost to others. Businessweek reported how even “the French and German governments, faced with declining numbers of engineers, are trying to attract grads through exchange programs.” More recently, Australia recruited, under a migration scheme of the Australian government, nearly 450 technicians (plumbers, masons, carpenters, electricians and heavy and light-vehicle mechanics) from the Industrial Training Institute (ITI) at Pune.

Give me your tired, your poor whites, Your huddled white masses yearning to breathe free, The wretched white refuse of your teeming shore. Send these, the white homeless, tempest-tossed, to me: I lift my lamp for these whites beside the golden door. - The real meaning of Emma Lazarus words.

Remittances

As an article pointed out, India does not gain from these high-skill workers. Unlike

“less skilled workers, highly educated professionals tend to account for little in terms of remittances. Skilled Indian professionals in the U.S. have also failed, by and large, to contribute large levels of foreign direct investment (FDI) required by India. In contrast, China, which along with India is the largest exporter of students to the U.S., has greatly benefited in this regard from its skilled emigrants. The Financial Times (January 18, 2003) noted that China “has managed to attract 10 times more FDI than India on the back of strong in-flows from the Chinese diaspora.”

Interestingly, the IITs and their web sites are coy about the number of alumni who go abroad to study and work. Despite receiving substantial budgetary allocations from the Central government, the failure to collect systematically data on the sensitive point of the brain drain suggests an attitude of non-transparency. IIT managements and alumni networks tend to avoid initiating a public debate on the destination of IIT graduates and who benefits directly from the IIT system. (From The IIT Story: Issues and Concerns By KANTA MURALI; Frontline magazine.).

India is proud of its English language heritage - while English language itself is a declining force.

Chains made of words

What is making this easy is the subsidy given to higher education in English by the Government of India (GOI). This system of English language education turns out near-perfect candidates for absorption by the West.

Will India’s new generation get the perspective?

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The 2ndlook Gold Report – 2010

Buy gold … young man!

2ndlook has proposed to all and sundry, to buy gold for the last 20 months. Interestingly, a Chinese-blogger-online financial advisor, with some fan-following, going as Maoxian says, “I’d wager $20 that no one can show me an audited trading record for any system that has traded GLD since its inception that has beaten simply buying and holding GLD since then.”(errata – an American blogger, and not Chinese).

Now, 2ndlook is not a hedge fund, or a financial advisor! And will not pretend to be one either. But 2ndlook will take a 2ndlook, and put a context and perspective that others will not. And answer your question, “Is it the time to buy gold!”

How far and how high will gold go? Some history before that.

Nixon and Kissinger - 1972 (Courtesy - nytimes.com)

The Nixon Chop

On August 15th, 1971, ‘Tricky Dick’ Nixon emerged from Camp David, on an evening television show, and announced the end of dollar redemption against gold.

For the 10 years, France had been redeeming gold, even sent a French warship to escort gold from US to France. On August 13th, 1971, Britain also made an official request for dollar-redemption – and Nixon shut the door on that possibility.

And that was the end of Bretton Woods Agreement!

Dollar anchor shifts – from gold to oil

Over the next 10 years, the world saw severe stagflation (economic stagnation + price inflation). Gold prices zoomed from US$35 an ounce to US$800 an ounce.

Gold does not have any price-correlation is traditional wisdom! Correlation like inverse, perverse, reverse, positive!

From 1980, President Ronald Reagan, in the next 8 years, persuaded his Middle East allies to pump out more oil – cajoling, mixed with threats – ranging from the Iran to US-led increase in oil production. The resultant drop in oil prices cooled down inflation, strengthened the US dollar.

Surplus revenues from oil-sales by Middle East oil producers, were used to fund US deficit. By 1990, surplus petro-dollars vanished, with the drop in oil prices, and the increased cost of running welfare states in the Middle East.

In the last decade, it was the turn of the Chinese and the Japanese to prop up the dollar.

IN China, many people refer to the dollar as mei jin, or “American gold.” Government officials, businessmen and people on the street all use the term. So if a Chinese person tells you that he owes you 100 American gold, don’t expect a big fortune, because he’s planning to pay you $100.

US has been able to find lenders to bridge their deficit for more than 50 years. From the 1950s to 2010. Europe till the 70s, Middle East up to the 90s, Japan and China, till 2010!

Can the US find another target to fund their deficits.

The collapse of Soviet Union

In the 70s, with out-sized gains in oil, platinum and aluminum prices, the Soviet economy became a powerhouse, funding anti-US regimes across Africa, South America, Asia and the Middle East. Soviet Russia, one of the largest gold producers in the world, made windfall gains.

The expansion in subsidies by the USSR in the 1970-1990 period to its allies and sympathetic regimes created a huge pressure on Soviet finances. A simultaneous drop in oil and gold prices in the 1985-1995 period severely dented Soviet export earnings, leading to the economic collapse of the Soviet Union. In USSR’s economy, after WWII, commodities like oil, natural gas, metals (like gold, platinum, uranium) and timber accounted for 65%-80% of Russian exports.

Reagan managed to increase oil production, decrease Soviet earnings - and create an economic crisis in the USSR! (Cartoon by David Horsey from seattlepi.com).

Gold sales by central banks

The Central Bank Gold Sales Agreement, further dented gold prices, 1995 onwards. Gordon Brown, the then British Chancellor of the Exchequer, has been under pressure to ‘reveal’ details of British gold sales during this period.

The (British) bullion was sold in 17 auctions between 1999 and 2002, with dealers paying between $256 and $296 an ounce. Since then, the price has increased rapidly. Yesterday, it stood at $1,100 an ounce.

Dark stories are told that this was stolen gold during WWII, going around as the Yamashita gold, the Nazi gold, with marginal characters like Edmond Safra, playing an important role. It is suspected that the Soviet Union unloaded a lot of gold during the glasnost and perestroĭka period under Gorbachev.

The upshot of this was that for the first time in modern history (1800-2000), ‘declared’ gold reserves of governments across the world, reduced to a historic low of 20% of total global reserves.

The Great Collusion

By the end of The Great Depression, and the start of WWII, public sector (all the Governments of the world) owned some 50%-65% of the gold in the world. That is now reduced to less than 20%.

Will the State(s) sit back and allow the citizenry to become so independent – and the State to become ‘powerless’?

Improbable!

Global conclaves on economic matters (the G20 Summits, WTO Summits, the Copenhagen Summit) are getting organized easily and often. A global, mass nationalization of gold to ‘save the global economic system’ may be called for! Instead of warring with each other, Governments may decide to collude and jointly loot their respective citizens in a coördinated manner!

Was the US crackdown on Swiss banks a precursor to the global gold nationalization?

Central Banks own ≈20% of the world’s gold

Central banks the world over, claim to own something over 30,000 tonnes of gold – about 20% of the world’s total gold stocks. Officially, that is. Some of it is double counting. The most obvious example is IMF gold.

Most of IMF’s gold reserves are actually pledge papers by founder-member countries that they will pony up the gold. A book entry. This pledge was covered by a back-to-back with a reverse sale agreement by the IMF back to the pledgor -called ‘restitution agreement’ in IMF lingo.

The Bretton Woods agreement gave birth to IMF and World Bank (Pictured above: Treasury Secretary Henry Morgenthau speaking at the opening of the Bretton Woods conference on July 8, 1944.; picture credit - nytimes.com).

The hoax of IMF gold

Of the 3005 tons which is held by IMF at ‘designated’ depositories (meaning pledgor central banks), 2600 is covered by the restitution agreement. Of the balance, 403 tons, only some 191 tons remains with IMF. In fact, IMF does not have any gold – apart from 191 tons.

What it has, are pieces of paper that various central banks have given, ‘promising’ gold to the IMF – and this ‘promised’ gold was held in safe custody by the pledgor-central bank on behalf of the IMF.

Is this the right gold price

Estimated global economic output is some US$70 trillion. Gold is now ruling at some US$1200-1250 (per ounce). Total global reserves of gold (private, public, central banks, et al) are estimated at 130,000-140,000 tonnes. In dollar terms, the value of gold stock is US$5.0-5.5 trillion.

Gold futures (Image Source - Wall Street Journal).

If all the liquid capital in the world is measured in gold, then the total capital to output ratio turns out to be 1:14 ratio. For every 1 unit of gold, there are fourteen units of economic production (US$5 trillion of gold gives an output of US$70trillion). Of course, to make this liquid capital productive, other forms of capital are also required – namely land, buildings, factories, technology, education, healthcare, et al. Those could also be similarly valued – and added to the gold capital in the form of gold. Currency would become proxy for gold – and hence all currency units will be ignored as store of capital. Looking at the past, adjusting for inflation,

Gold is still at half the peak set in 1980, after adjusting for inflation. Then, prices rose to $US850, equal to $US2266 today.

If one were to measure gold as a proportion of global /national economy, it may give us a better idea about where gold is headed. Looking at it from this perspective, the upside for gold is definitely less than 100%. Based on current pace of liquidity creation – that is printing of Euros, dollars, yuan, yen, rupees, that various governments are printing. In Western markets, it is seen that

The yellow metal remains in a $1220-$1260 channel for the time being, and is still showing a Kilimanjaro-sized 975 tonne pile of long positions standing and casting a…long shadow in the market.

and … gold revealed some ‘disconcerting’ technical signals on the price charts and that in coming days ‘prices may not ‘necessarily strengthen.’

These weak signals, are largely due to some expected dampening in demand from India during June to September, in the generally slack monsoon season (though not quite so, last year).

Helicopter Ben is using his famous 'printing' technology!

Gold shortage!

There have been many reports about shortage of gold – in coins and bars form. Now this is strange.

In India, there is no such talk or shortage! The probable reason is that in India, gold lumps are also accepted by customers – without hallmarking! The jewellers, assayers and valuers are dime a dozen. Hence, gold fraud by the trade can be easily detected – especially in raw gold. Not to mention, that there are ‘dharam-kantas’ in every town and village across India – which does gold assaying for free.

In jewellery form, however, there is rampant mis-declaration of purity. So, buying gold in India is, as of now, not a problem!

Due to this ‘shortage’ in some Western markets, for sometime gold futures were cheaper than gold for physical delivery. The US mint and the Perth mint in Australia have suspended coin sales – supposedly, as they were swamped by orders, and demand.

Let us look at old mining and productions figures, to get some context.

All the gold in the world

Annual global gold production at some 2200 tons, is itself seen as an issue! Gold mining companies are “digging deeper to extract dwindling reserves, with mines in South Africa extending as far as 3.8km down” Apart from having to dig deeper, the other issue is “Ore grades have fallen from around 12 grams per tonne in 1950 to nearer 3 grams in the US, Canada, and Australia.”

China, Australia and the 16 other largest mining nations averaged weekly output of 42.3 tonnes last year, researcher GFMS estimates. Even though prices have fallen 5.8 percent to $US1177.10 from a record $US1249.40 an ounce May 14, the median prediction in a Bloomberg survey of 23 traders, analysts and investors is that it will reach $US1500 by the end of the year.

Investment, including bars and coins, almost doubled to 1901 tonnes last year, exceeding jewellery demand for the first time in three decades, according to GFMS. Jewellery will jump 19 per cent to 2100 tonnes this year and industrial use 8 per cent to 398 tonnes, Sydney-based Macquarie Group says.

The gap in demand and supply is being met by scrap sales.

In Southeast Asia, scrap sales, which are routed through Australia and sold on to India, are already up.

“When gold gets to these sorts of levels, Southeast Asia gets interested in dishoarding,” said Nigel Moffatt, treasurer at the Perth Mint in Australia. “We’ve been seeing it now for some weeks.”

Which way the wind blows?

With the world’s largest private reserves of gold, and as the world’s largest consumer of gold, India has a significant role to play in gold prices.

The Bloomberg poll of 23 traders (linked and extracted above), gives a consensus estimate of some US$1500 an ounce.(31.1034768 grams). Which translates to about Rs.21000-23000 per tola (10 gm) range. Dollar rupee exchange rate will also make a difference. That is an appreciation of about Rs.3000-5000 – some 15%-25% from current prices (Rs.18,100-18,500 range). A strong and stable gold price during July-September period could easily see gold cross 21,000 by October. A weak 3 quarter, will corner gold to the 20,000 barrier.

In another post, Maoxian remarks,

Two years ago when I wrote the post, Jim Sinclair’s Crazy Bet, I annoyed the tinfoil hatters. One commenter wondered where a pajama blogger dude sitting in a crappy little Third World apartment would get the money to take a million dollar bet.

I thought it was time for an updated post/chart given the Greek drama and Euro crisis. Recall that Sinclair’s wager was: “Gold will trade at USD $1650 before the second week of January 2011.” Price could still make it there, but looking at the chart, it seems as improbable to me now as it did back in 2008.

Will Government’s scam people out of gold

Let us deconstruct this price upmove.

A US$1650 gold price @Rs.50 to a USD price means some Rs.26,500 per tola. At that rate, in Jan 2ndweek, we are talking about a 45% appreciation in 6 months. Take gold at US$1650 @Rs.42 to a USD, translates to about Rs.22,300 per tola.

At about 21,000-23,000, Indian consumer buying is likely to be anemic – and investment demand from OECD+China will have to make up for weak Indian demand. At Rs.26500 per tola, the Indian consumer may start selling gold – and we may see a small replay of the Hunt Brother’s silver saga in gold. Scrap sales of gold out of India may dampen prices much.

The third scenario may see gold at about 33000-36000 per tola. To do this the Indian rupee must trade at Rs.60 to a dollar, to get Indian consumers to part with their gold. Like the successful scam by Winston Churchill-Montagu Norman between 1929-1939 to loot the Indian peasant of his gold.

We may see a variation on that play!

Related articles

• The gold rush is on – and the clock is ticking (independent.co.uk)
• Gold standard (bbc.co.uk)
• Gold reaches all-time high of $1,457 per ounce (telegraph.co.uk)
• Mexico bolsters its gold reserves (bbc.co.uk)
• Factbox: Gold milestones on the road to record highs (reuters.com)