A New Currency Bloc – The Chinese Question

Estimated Chinese Holdings

Stumbling Block

In any new world financial reform proposal, the Chinese voice will be very important. After all they are the world’s largest creditor nation! They have US$2 trillion worth of IOUs with them. Of course, the composition of these US$2 trillion Chinese reserves is a state secret. And after the Chinese come the Japanese with US$1 trillion of reserves. Russia, India and Brazil total to another US$1 trillion.

Given the Chinese history in the last 100 years, the Chinese will not agree to any ‘hare-brained’ scheme by ‘tin-pot’ dictators, who are sitting on some raw materials – and think that the future belongs to them. The world has so many of this variety, that it does not require me to be specific.

Even a serious attempt by the EU, with the Euro, has not been able to significantly dent the dollar market share! Apart from the Euro, in the the last 10 years, there have been at least 3 half-baked – and unbaked attempts to break the dollar hegemony. So, there you have it – it is out in the open!

What can you do about the Chinese question?

The Way Out

China, in its own short term interest (importantly) and long term interest (definitely) needs to find a way out!

Buying gold in such large quantities is not possible – there will simply be no deliveries. Increasing import ‘trade volumes’ is also difficult – as what more can China import. It cannot send many more Chinese on holidays! They don’t have the single-mindedness of the Indians – when it comes to buying gold.

What it can do is buy Western firms! China has been always been a laggard in terms of growth in software! Maybe they can buy some software firms. The domestic Chinese entrepreneurial spirit has been damped in the last 100 years. What if the Chinese were to spend on some Venture Capital funds! What if China were to kick-start their fast-moving consumer goods industry by buying P&G!

The Chinese need to acquire some big ticket assets – for about US$1.5 trillion and bring down their reserves to US$0.5 trillion. This will reduce US outstanding debt, create demand for US stocks, lift the Dow Jones, and create value for the dollar. As I see it this is the only way that the Chinese can cash in their chips. The House will not let them take it away any other way.

And then the Chinese are free to join any currency bloc – or even initiate one!

Slavery & Oppression – In The West and In India

The Moral Offensive

In 1901, Dadabhai Naoroji published his famous research – “Poverty and Un-British rule in India”. Before that, his 1876 paper, “Poverty In India” traced the rise of poverty in India due to colonialism. This laid the background for India’s Independence and shaped the strategy of Swadesh and Satyagraha. Fifty years later we were a Republic of the kind the world had never seen.

But …

This moral offensive continued for the next hundred years – provoking Nixon’s reaction during the Bangladesh War. “The Indians put on their sanctimonious peace Gandhi-like, Christ-like attitude,” an angry Nixon observed. Nixon declared, to George Bush Sr., then the USA ambassador to the United Nations, (later the President) on December 8, 1971, “We can’t let these goddamn, sanctimonious Indians get away with this. They’ve pissed on us on Vietnam for five years.”

Harry & Kill – Lord Irwin’s Peace Pact

The use of reverse-propaganda (a European tool) by the Congress against the British was singularly successful – and put the Colonial administration on the moral defensive. The British Colonial administration worn out by the “harry and kill” moral offensive of the Congress made peace. The British Viceroy, Lord Irwin brought some semblance of propriety in colonial administration thereafter. Military war then became less important.

The British response to that was ‘divide et impera’ – divide and rule; like the Euro-colonial cousins, the Austro-Hungarian Habsburg rulers. In the dying years of the Raj, the colonial administration put up issue of ‘untouchability’ and caste ‘oppression’. Untouchability, the caste system, social prejudices remained significant issues in post colonial India – and it continues to be a much debated and a divisive issue. Harijans, Dalits, manuvadis are terms and names used freely.

How much of this is real? Bad luck. It is a hoisted petard, which will blow up on the those who raise this.

Oppression – And It’s Many Avatars

Legal support for slavery is a feature of the Western and Levantine societies. Trade of human beings in market place had the support of the state. In Europe and USA, laws and courts  slavery. In Indic legal systems, such a feature has not been seen for the last 3000 years. The last Indic system which had explicit slavery laws were the Hittites around 1000BC. To cover up this aspect, and to shore up their image as champions of human rights, Western powers have tried to fuzzy the definition of slavery through the ILO – a creation of the Western powers after WW1.

To get some understanding on the oppression issue, a comparative examination may give a better perspective.

Painting by Robert Lindneux (Woolaroc Museum)

Wipe out of the Red Indian Population in North America

In 1492, when Columbus landed in the West Indies, the native American population was 3 million (in the what is currently USA) and more than 10 million in the Americas – and they spoke a 600 languages.

300 years later, they had become tourist attractions. The entire Anglo-Saxon race was against the very existence of the native Red Indian.

The British and the independent Americans were equally brutal with the Red Indians. During the French and Indian Wars, Britain waged a biological warfare against the Red Indians by distributing small pox infected blankets to Red Indians. 70 years later, Andrew Jackson delayed (some say withheld) small pox medical supplies and vaccines from Red Indians.

During the American War of Independence, George Washington, on May 31, 1779 Washington sent his official Instructions to Major General John Sullivan:

Sir: The expedition you are appointed to command is to be directed against the hostile tribes of the six nations of Indians, with their associates and adherents. The immediate objects are the total destruction and devastation of their settlements and the capture of as many prisoners of every age and sex as possible…whence parties should be detached to lay waste all the settlements around, with instruction to do it in the most effectual manner; that the country may not be merely overrun but destroyed…

Reminiscent of George Bush threatening the world, either you are for us or against us , George Washington, made a similar remark more than 200 years ago. George Washington wrote to the President of the Continental Congress in 1776:

In my opinion it will be impossible to keep them [Indians] in a state of Neutrality, they must, and no doubt soon will take an active part either for, or against us…

Thomas Jefferson view of the native Red Indians was equally dismissive. He (King George III) has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions… (Thomas Jefferson, Declaration of Independence, 1776).

Treaty after treaty was made with Red Indians – which were broken time and again. The Whites coveted everything that the Red Indian had – but mostly, his life. This “land of the free” by all possible (and some impossible) means was soon made land free of the “natives and savages”.

The US President, Andrew Jackson started by (December 8, 1829) posing as a Red Indian sympathiser. He proclaimed

“By persuasion and force they (Red Indians) have been made to retire from river to river and from mountain to mountain, … tribes have become extinct … Surrounded by the whites … which by destroying the resources … doom him to weakness and decay … That this fate surely awaits them if they remain within the limits of the states … Humanity and national honor demand that every effort should be made to avert so great a calamity.” (parts excised for brevity and ellipsis inserted; bold letters mine).

His solution – remove the Red Indians.

In 1830, 40 years after George Washington became the President, the “land of the free”, a law was passed to make the land free of the native Cherokee (Red Indian) population. The vast prairie lands were expropriated – and the Cherokee Indians were marched out by the US army. This march, Trail Of Tears, signalled the break of treaty by White Anglo Saxons. Land West of the Mississippi were to belong to the Eastern Indians ‘in perpetuity.’

The Red Indians resisted removal and forcible transfers. Their resistance was brutally crushed. By December 4, 1832, Andrew Jackson was saying,

“After a harassing warfare, prolonged by the nature of the country and by the difficulty of procuring subsistence, the Indians were entirely defeated, and the disaffected band dispersed or destroyed. The result has been creditable to the troops engaged in the service. Severe as is the lesson to the Indians, it was rendered necessary by their unprovoked aggressions, and it is to be hoped that its impression will be permanent and salutary.” (bold letters mine)

Gen. Winfield Scott was sent in May 1938, (with an army) to deliver the ultimatum to the Cherokees. Move or we will make you. At your cost.

President Woodrow Wilson echoes the ideology behind the alleged “genocide” –

“The experience of Liberia and Haiti show that the African race are devoid of any capacity for political organisation… there is an inherent tendency to revert to savagery and to cast aside the shackles of civilisation which are irksome to their physical nature. Our industries have expanded to such a point that they will burst their jackets… Our domestic markets no longer suffice; we need foreign markets. “In the matter of Chinese and Japanese coolie immigration, I stand for the national policy of exclusion… We cannot allow a homogeneous population of a people who do not blend with the Caucasian race.”

Just like Romani Gypsy and Australian aboriginal children were taken away from their parents, Red Indian children were also removed. In different continents, at different times, similar tactics were used by Europeans and the Anglo Saxons in the colonies.

Aborigines

In 1788, the estimated Aboriginal population was 7,50,000. By 1911, the survivors, were estimated at 31,000. Prior to the Anglo-Saxon settlement, “Australia was an ‘empty land’ because its inhabitants did not count as human“. Today, the Anglo-Saxon race prides itself for the building of Australia. Australia was a British colony and till date the Queen (or King) of Britain is the head of State for Australia.

Consider a one-time leader of the ‘free world’, the British Prime Minister during WW2, one time Chancellor Of The Exchequer, Winston Churchill, had his views on Arabs, Indians, Aborigines, Red Indians –

“I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race has come in and taken their place.“

Churchill similarly had highly enlightened views on Arabs. After all “the Arabs are a backwards people who eat nothing but Camel dung.” was Churchill’s stated stand.

One of the main causes of deaths was public health. In India, in the early 19th century, an estimated 25 million died due the cholera epidemic – as the colonial Government did not bother (to give them the benefit of any doubt). In Northern Ireland, during the Irish Famine, the then British Prime Minster with held supplies and essential aid from starving Irishmen. In USA, the Government delayed allocations to fight small pox, 20 years after similar actions for the Whites. Similarly from the Australian aborigines.

From 1860-1960

Little changed in 100 years after the American Civil War – except the matter of 25 million missing Blacks. At the start of the Civil War, the White Population of North and South was 22 million. And Blacks was 5 million. By 1960, the White population had grown by nearly 800%, to 160 million. The Black population in the meantime had grown by only 400% – from 5 million to 20 million.

What happened to the missing 400% of Black population growth? Apologists (and defenders) use white immigration to explain away some of the difference. But that further compounds the problem – because there was also about 1 million of Black immigration from Haiti, Jamaica, Africa and other countries.

Mortality amongst Blacks due to AIDS is higher than for Whites – 60,000 higher Black deaths every year. The New England Journal Of Medicine states,

“Among patients infected with HIV, blacks were significantly less likely than whites to have received antiretroviral therapy or PCP prophylaxis when they were first referred to an HIV clinic“.

Nett, nett – about 20-25 million Blacks are missing. Due to deprivation, poor health care and indifference. The maths? US population today is 300 million. Black population was estimated 4-5 million and whites at 20-22 million at the start of the Civil war in 1860. By the 1860 ratios, there should be another 20 million to 25 million Blacks in the USA.

But rights and equality is something else

From 1865 to 1965 Blacks though no longer bought and sold – were still excluded from the political and social systems – in the land of the free. The Freedman’s Bureau made the ‘free’ blacks into poor sharecroppers and destitute. The Ku Klux Klan became a vigilante group to ensure that Blacks stayed where they were – at the bottom of the economic, social and political ladder.

By 1890’s the disenfranchisement laws came into effect – which ensured that the disproportionate numbers of Blacks could not vote. Petty crime (where poor) where Blacks were convicted in higher ratios were grounds for disenfranchisement. These laws ensured that 10 times higher number of Blacks were disqualified compared to Whites. If that is not bad enough, it continues till now. After some 60,000 Black Voters were disenfranchised, George Bush, technically, won by less than 1000 votes (most were expected to vote against George Bush). Such tactics continue to be used to limit Black participation in democracy.

The re-emergence of the Ku Klux Klan in its second avatar continued with its agenda of Black subjugation till the Civil Rights Movement in the 1960s. The second coming was a mainstream event with President Woodrow Wilson endorsing the film and the message.

Black Emancipation

Black emancipation in the USA is a 1970s phenomenon, 30+ years ago event – and not 200 years ago as this article in New York Times seems to make out.

It took non-violent protests (Martin Luther King, inspired by Gandhiji) and violent threats (Malcolm X) for ’emancipation’ and equity to come in. In the Cold War scenario, under international media glare, during the Little Rock School stand-off, Eisenhower (a Southerner himself) reacted.

Reluctantly,in 1954, he sent in the National Guard to Little Rock, Arkansas to enforce de-segregation. The Mayor of Little Rock, Arkansas closed down the school rather than de-segregate. The eyeball-to-eyeball confrontation during the Kennedy years produced the Civil Rights Act of 1964.

Demonise, Genocide and Apologise

Now that there are only a few Red Indians and aborigines left – they serve as tourist attractions. The ritual of regret and apology about their role in the genocidal past. Since, the “Jewish Problem” was solved by Hitler (there are hardly 1 million Jews left in Europe and 5 million in USA), the West and USA has no problems, anymore with the Jews. Australia, Canada and France have tendered their ritualistic apologies – and start demonizing someone else.

In fact, Jews today serve a useful purpose to the West. After the Anglo-Saxon led alliance broke up the Ottoman Empire in the Middle East (post WW1), the Israelis were introduced into the Middle East after WW2 as the Western cat’s paw. They have been suborned to the job of keeping a lid on the simmering oil rich, Middle East, and keeping it in check.

What is the real cost to the USA – an inflated arms bill. They make up the cost of supplying free arms to Israel by selling the same arms to the oil rich sheikhs. What does it cost Israel to serve as the ‘America’s terrible swift sword in the desert’ – millions of precious Jewish lives, lost in the fight to keep the Anglo Saxons in luxury.

Western demonisation of Islam has replaced the Jewish demonisation (Shakespeare joined in with his anti-Semitic Merchant Of Venice). Without taking responsibility for the destabilisation of the Islamic World by the liquidation of the Ottoman Empire after WW1 – perpetrated by Anglo-Saxon countries and the French.

The Greatest Suffering

The Blacks in the USA and Europe have seen some justice – as they were an important constituency in the Cold War. USA propaganda was on the verge of losing Africa to Soviet Russia. The Jews have been very persistent and they have not let the world forget – or the perpetrators rest in peace.

The forgotten lot is that that of the Romani Gypsies. This one segment based in Europe and USA continues to remain on the fringes and discriminated. They have been hunted (like forest animals), their children kidnapped (to end their race and social system), they have been gassed (by Hitler along with the Jews), they have been galley slaves, In fact there was a time when they could be killed, if found alive!

The History Of King Leopold-II & Congo

“Dr.Livingstone, I presume!” and that is how Henry Stanley made his name and the life of Congolese miserable. Based on this incident, he was given a contract by King Leopold-II to establish “trading posts along the Congo River”. In time, like with other colonial possessions, with a mix of fraud, guile, deceit, force, massacre and other such ‘civilised’ norms by ‘Christian’ civilisers, Congo was also made into a colony. By King Leopold-II of Belgium, in his personal capacity.

King Leopold (current king’s predecessor 3 times away) was murderer. Plain and simple.

What happened was that in 1871, King Leopold decided that he needed to get respect. So he called for the Brussels Conference. His colleague, Otto Von Bismarck, of Germany got into the act and called for the Berlin conference. Plans were hatched and agreements signed.

Based on Dr.Livingstone’s propaganda, it was decided there that Europe will directly enslave the Africans – instead of the the Arabs. At that time 90%of Africa was free. In the next 20 years, 90% of Africa was colonialised.

King Leopold’s personally owned the Belgian Congo territory. His personal army-men and his personal agents killed more than 1 crore people. When hardly any Congolese were left, he sold Belgian Congo to his own country for GBP3.8 million. Congo was a major producer of rubber – and the King’s agents kidnapped African families – and released them against collections of natural rubber from African forests.

To understand oppression better, we also need to look at the genesis of the various religions across the world.

The Desert Religions

Judaism, Christianity, Islam were all born within 500 miles of each other and share a common culture and history. Judaism can be said to have been born when Moses led the Hebrew slaves from the Pharoah (across the Red Sea) to freedom. This possibly happened around 500 BC at the latest to 1500 BC at the earliest. His earliest followers were the Hebrews and they were a significant part of the Middle Eastern history all through till today.

The next major religious reformer in the Middle East was Jesus Christ. For the first 300 years, Roman slaves were the major believers in his teachings. Emperor Constantine earned the loyalty of his Christian troops and won the war for Roman throne by his win over Maxentius at Milvan Bridge. Prior to Maxentius, for the previous 30-40 years, Christians had been persecuted by “rule of four’ Tetrarchy reformists in Rome, headed by Diocletan. Hence, the Christian slave soldiers of Constantine were eager for victory – as the persecution under Maxentius would have been worse.

Liberated slaves were the founders and rulers of Islamic dynasties, (in India, the Slave dynasty – builders of Qutub minar). Thus all the three “desert religions” were first adopted by the slaves and only after gaining significant numbers of adherents, these religions became mainstream and commenced aggressive proselytising and conversions.

What’s Going On Here

‘Caste systems’ (by different names) are prevalent all over the world, in all societies, based on colour, race, income, wealth, education, social status, political position, et al. Most such ‘caste systems’ have no force of the state behind it or are legal. They are the burakumin in Japan today and the Blacks in Europe and USA. The most ‘respected’ caste system is the British nobility which exists even today – a caste system, approved by law. In India, colonial administration encouraged and increased divisions within society. Through propaganda efforts of the ILO, the Indian caste system, is now being equated with slavery.

Slavery (capture, kidnap, sequestration, transport, trade and transfer, re-capture of human beings) continued in the “desert bloc” till the 20th century. In the Indic territories, it was an inherited institution – and last seen in the Hittite rule around 1000BC. Faced with West Asian reluctance to give up slavery, Indo-Aryan rulers disengaged politically from West Asia and Middle East from around 1000 BC. Possibly, the slave revolt of Egypt by Moses itself was a result of the liberalising laws of the Hittites. Hence the fade out of the Indic rule from the Middle East – but the continuation of Buddhist influences, trade and peoples contact.

Reformers In India

After the slave revolts in the Middle East, India was witness to major renewal movements. More than a 100 Bodhisattvas and 24 Jain Tirthankaras were major figures in India’s renewal after the slave revolts in the Middle East. Modern history, influenced by Western historiography, recognizes only the “ahimsa twins” – Gautama Buddha and Vardhamana Mahavira.The “ahimsa twins” – Gautama Buddha and Vardhamana Mahavira were both princes of royal blood – Prince Siddharth and Prince Mahavira.

Their first adherents were the rulers and their methods of proselytising was also aimed at the ruling class. Ashoka The Great sent missions with his daughter Sanghamitra to Sri Lanka – where Buddhism was established.

Guru Nanak Dev came from the upper caste family and his focus was to end feuding on the basis of caste and creed. His first converts were from upper class families cutting across religions – and hence the opposition from some of the Mughal Kings.

Gandhiji was from the upper caste and the first item on his reform agenda was end to the “bhangis” carrying fecal refuse on their heads. His initial focus was social reform and less of anti-British activities.

Half the world today follows Indic religions and culture. The other half follows the “desert religions”. The development trajectories of these two halves has been significantly different. The motivations, behavioural and acceptable civilisational norms for these blocs are different – and mostly opposite.

Same difference?

Based on the above most notorious cases of oppression, there are some clear markers for to ‘real oppression’.

Declining Populations

In all the cases above, Jews in Europe, Black population in the Africa and USA, the Gypsies across USA and Europe, the aborigines in Australia, The Red Indians in America, or the Belgian Congo, the ‘marker’ for oppression was the decline in population. And we are not talking about a few percentage points here and there (which can be explained by many factors) but by multiples.

State Oppression versus Social Discrimination

In all these cases, these genocides were legalised – in USA with the Dredd Scott case. In Europe, anti-Gypsy laws existed till 1973 in Switzerland and other countries. The Red Indians and Aborigines were dispossessed in connivance with the State and enabling legislation. There were laws in Europe and Australia which allowed people to kidnap children of the oppressed and take them away from their parents.

Economic Rationale

All these cases of oppression are marked by a clear economic motive. Cotton plantations in the USA needed black slaves,West needed natural rubber from Congo, Red Indian land was needed by the West, Gypsy and Aboriginal children were kidnapped by declining European and Australian populations. Europeans historically envied Jewish business success.

How much of the division of labour in Indian society was coercive, extractive or enforced – and how much is explained by Pareto’s Law of Social Disequilibrium?

Majority Oppression Or Military Might

In all these cases, the majority oppressed the minority – or massacred them till the oppressed became a minority. Military might was used for oppressive purposes – like King Leopold-II in Congo, till such time, the oppressed became numerically weak.

Does this hold true for India?

What about Harijan massacres incidents. Two aspects – these massacres are not approved or condoned by law. Massacres and death of Red Indians, Aborigines, Jews, Gypsies were approved by law (yes, that is right! Click on links and other posts to get more info on that). There are equally massacres by the ‘oppressed’ in UP, Bihar, Rajasthan, J&K, MP – which shows a failure of the ‘over-burdened’ State and not oppression.

The Oppressed Make The Laws In India

At the time of Indian Independence, the ‘oppressors’ (the ‘ruling’ Brahmin Hindus) gave the role of Constitution writing to the leader of the ‘oppressed‘ – Bhimrao Ramji Ambedkar. No ‘oppressed’ class has been ‘given’ such a position and responsibility in any country of the world – ever. No ‘oppressor’ lets the ‘oppressed’ write the laws.

And for the record, let me state, BR Ambedkar was NOT given that position – he earned it.

The Oppressed Population Grows Faster than the Oppressors

The population of the ‘oppressed’ is growing at a faster rate than the ‘oppressors’. Thus the ‘oppression’ of the majority in India is resulting in a faster growth for the oppressed. A first in the history of oppression.

Reservations Of Opportunities

The US affirmative action (a dilution of the Indian reservation system) was a persuasive system – whereas India is the only country where the ‘minority’ oppressors are supporting an enforced, legally mandated system of reservations for the ‘oppressed’ majority. The whole world is fighting to steal, rob, snatch, kill and maim for opportunities – but in India the ‘oppressors’ are giving away opportunities.

Caste System & Slavery

‘Caste systems’ (by different names) are prevalent all over the world, in all societies, based on colour, race, income, wealth, education, social status, political position, et al. Most such ‘caste systems’ have no force of the state behind it or are legal. They are the burakumin in Japan today and the Blacks in Europe and USA. The most ‘respected’ caste system is the British nobility – which is a caste system, approved by law.

Slavery was different – and a distinctive feature, promoted (largely) by the Western and Middle Eastern powers. It had state sanction, state protection, laws passed by the kings, emirs, emperors, parliaments and legislating authorities. The US Supreme Court (Dredd Scott Case) even prohibited slaves from approaching courts for any redress. There was an organised, legal, sponsored industry involved in the kidnap, sequestration, transport, trade and transfer (and might I add re-capture) of slaves – with the might of the state behind it.

Andy Mukherjee’s Poverty

Andy Mukherjee – On The American Stimulus Package

Andy Mukherjee, on Wednesday, February 13, 2008, in his syndicated column used his Asian background with devastating effect. Devastating to his (at least, partly Indian) background.

He writes, “the stimulus package that has been put together to keep the U.S. economy from tipping into a recession”.

Just what is the problem with that. In the current economic thinking, all Governments are expected to create these ‘stimulus’ package.

Andy Still Talks Of Aid

He further writes,

“At $168 billion, the largesse is almost three-fifths more generous … than the record $107 billion that 22 rich nations together gave out as official foreign aid in 2005 …” (ellipsis mine)

I thought every country has a right – and as per current acceptable political philosophy, it is the bounden duty of Governments to be generous to their citizens. What exactly is the objection that Andy has to the US Government’s ‘largesse’ and ‘munificence’, (his words)? I am unclear about on that till now.

Which planet is Andy on? Since he is writing a business and finance columns, is he aware (I hope he is) of the large body of research that shows how aid has in fact creates problems – and doesn’t solve any. The notorious PL-480 was abandoned because it elongated the cycle of food scarcity.

Low self esteem, Andy?

He advises,

“Middle-class Asians ought to turn green with envy at the “home bias” implicit in the munificence of President George W. Bush’s administration.”

So what does Andy expect – Uncle Sam should be more liberal to Asians than to Americans? Does he expect Americans to earn and be taxed for the benefit of Asians? And just why does he think that Asians (at least Indians) will turn green with envy.

I am sure that Asia wishes to compete with the largest, best, competitive economies – but surely there is no envy involved (exceptions apart). I am also sure (unlike Andy) that, in time, we will create a level playing field (more important and more on that later) and Americans will want to be born in Asia (and most probably, India).

Andy’s Cheques by mail programme

Unlike the 111 million US households that will enjoy some tax rebate, there won’t be any cheques in the mailbox for the Asian workers.

And who exactly does Andy think, is going to send cheques by mail to Asians? Americans? Just why will Americans do that? How does Andy think Americans will fund this Andy’s ‘cheques by mail’ programme? Does Andy think that 60-80 million working Americans can suport 3 billion Asians?

And why does Andy think that Asians will queue up to take this charity? Just why is Andy’s opinion of Asians so low? Is is it because of his own low self esteem?

Asians Are Funding the US Stimulus Plan

Asia lost last year (my estimate) more than US$300 billion dollars due to the monetary policy of the USA. Deliberate, well thought out monetary policy by the USA Government.

The truth my dear Andy, is that American lifestyle is being maintained due to Asian stupidity. The Chinese, Japanese, Indian, and other ASEAN countries have lent the USA – which is in the hock, by over US$4trillion dollars. They will lose US$ 300 billion for the privilege of lending US$4 trillion to the USA.

What? Asians Fund The USA …

Why? Because the system is fixed. Go back to Bretton Woods! The Anglo Saxon Bloc controlled 80% of the world’s gold production and reserves. Hence, only they could underpin their currency with gold- which the world accepted. It is separate story that they defrauded the world – and the system unravelled within a short 20 years.

And the world has been paying a price for that moment of folly.

What Does Asia Need

Asians need to create a new financial system. That is what Asia needs – and that is what US has been sabotaging for years now.

And a case for that is what I would have expected from you, Andy – or is that too much too ask for!

India – Beyond Individuals

“Whenever and wherever there is a decline in righteousness, O descendant of Bharata, and a rise of evil — at that time I manifest myself. To deliver all those who believe in goodness and to annihilate the evil, to reestablish righteousness, I will appear, in millennium after millennium.” Bhagwad Geetha IV, 7-8.

Who was Kalidasa? No one quite knows. After composing some of the best lyrical poetry ever, (in Sanskrit), little is known about him. His life lives in his works. Who was Ved Vyasa – the writer of Mahabharata? Or for that matter Valmiki! No one knows. About any one of these people.

Yet, whenever, India had needed, inspirations have come. To lead us … असतो मा सद्गमय From untruth to the truth … तमसो मा ज्योतिर्गमय … From darkness to light … मृत्योर् मा अमृतं गमय … from termination, to eternity …

Tipu Sultan unceasing opposition for more than 30 years (The Mysore Wars – 1767-1799) to the foreign rule before the 1857 War made the British rulers cautious about waging war in India. Immediately thereafter was the challenge of the Sikh qaum – led by Ranjit Singh. The death of Ranjit Singh in (1839) gave them another opportunity. Then followed the Afghan wars and the Sikh Wars (between 1839-1850). In 1857 was the India‘s first war of Independence.

From 1857 to the 1900, the British colonial government decimated Indian leadership. Bahadur Shah Zafar was sent to Rangoon. Rani Lakshmibai of Jhansi. Ahalyabai Holkar. Tantia Tope. Leader after leader came to the fore. And India continued to redefine itself.

From feudal and hereditary leaders, the leadership slowly changed. From political to social. In parallel. In 1828, Raja Ram Mohan Roy formed the Brahmo Samaj. In 1875, Swami Dayanand formed the Arya Samaj. On 24th December 1892, Swami Vivekananda reached Kanyakumari – after travelling across India. He was entertained by rajas and the रंक (commoners) of his day.

Then followed the political leadership. Dadabhai Naoroji’s (Congress President in 1886, 1893 1906) research and quantification of the British Loot from India started a new set of leaders against colonial rule – and a new definition of India. Tilak’s demand for ‘swaraj’ and ‘swadeshi’ goods unnerved the colonialists. The colonial British Government deported Balgangadhar Tilak to Rangoon. He came back stronger than before. In other countries, when old leaders and rulers were removed or replaced, those countries descended into dictatorship, confusion, poverty. In India, we had wave after wave of leaders – and each time India moved forward. In a direction which has no precedents in world history.

What Happened In Other Countries

Why do Australia and Canada still acknowledge the British Queen as the head of the state? Spain has Juan Carlos I as its king! Did you know that Belgium has Albert II as it King? And Queen Beatrix rules over Holland (The Netherlands). King Akihito is venerated by the Japanese – and is the head of the state. Sweden is ruled by King Carl XVI Gustaf. Luxembourg has the Grand Duke Henri as its equivalent to a King! King Harald V lords over Norway! Queen Margrethe II rules over Denmark. The world still has quite a few monarchies – especially in the OECD. Why?

France removed and guillotined the monarchs – and they got Napoleon Bonaparte, as dictator! Russia tried – and they got 70 years of communist dictatorship. Italy asked King Victor Emmanuel III to go – and got Mussolini. The British exiled the Kaiser of Germany – and the Germans had to put up with Hitler thereafter.

Britain terminated the Turkish Ottoman Empire – and Turkey got a benign dictator, Mustafa Kemal Attaturk, and then not so benign dictators – and is yet to recover! East Europe (Romania, Poland, Czechoslovakia, Albania, etc) promptly started fighting with each other, within and without – after the kings were removed. China became communist after the last emperor – and still has a communist dictatorship. Iran, Egypt, Iraq, Libya, most of Africa, South America – same or similar story.

This history is why Canada and Australia cling to the skirts of British Monarchy.

Republican Democracy

America became one of the first successful Republican democracies – from 1789, when George Washington became the first elected President of USA. (70 years later there was a Civil War). America survived.

Israel, (propped up by massive US aid) is another country which has been a republican democracy for more than 50 years. Switzerland (with guaranteed neutrality from the European powers) is another in modern history to survive 50 years of republican democracy. Srilanka has been another country which has survived 50 years as republican democracy – but just about.

India is the youngest Republican democracy – and we have completed a historic 50 years as republican democracy – Jan 26th 1950, till date.

Gandhiji’s Conquest

But before the republic, came the unification of India – the crowning achievement of Gandhiji. Not the political union (achieved by Sardar Patel) – but the ideological union!

Garibaldi (united Italy), Bismarck (united Germany), Simon Bolivar (liberated and united South American countries) were unifiers who succeeded with the help of armies.

Gandhiji (armed with a walking stick) unified a larger India (and Pakistan) without an army. An India and a Pakistan – bigger than what the largest empire in the history of the world, the British Empire could not conquer with its armies.

One Clean Break

To make a one clean break from the feudal-colonial past – and succeed! That is a dream – never before in the history of the world. India made history – by surviving for 50 years with a republican democracy.

In 1947, India was a feudal society with more than 500 Kings and (some) Queens at the time of Independence. (No, the British did not rule over all of modern India). Large parts of India also had to change from a colonial mindset.

How Is India Unique

However, no other country has 15 official languages.

Switzerland has only 4. Sri Lanka’s Sinhalas do not want to accept Sri Lankan Tamils as full and equal citizens – hence the 20 year old civil war.

Social Equality

The liberation of Blacks in the USA is a 1970s phenomenon. It took non-violent protests (Martin Luther King) and violent threats (Malcolm X) for some kind of real emancipation and equity to come in.

Blacks in the USA legally got full and equal liberty only in 1964 after President Kennedy’s Civil Rights Act of 1964. Earlier in 1954, President Eisenhower had to send in the army (the National Guard). In the Cold War scenario, under international media glare, during the Little Rock School stand-off, Eisenhower (a Southerner himself) reacted. The Mayor of Little Rock, Arkansas closed down the school rather than de-segregate. De-segregation (between the Blacks and Whites) happened clearly and fully only by 1970-75. Non-violent protests by Martin Luther King (inspired by Gandhiji’s) till 1968 and violent threats by Malcolm X thereafter, made desegregation a reality. Not to forget Martin Luther King’s assassination in 1968. The eyeball-to-eyeball confrontation during the Kennedy years produced the Civil Rights Act of 1964.

But, Gandhiji’s first step, after coming back from South Africa, (many decades before India’s Independence, Unification and the creation of the Republic) was to start social reform against untouchability.

Enforcement – or Help

India and America, created their own constitutions without external enforcement. Republican democracy in Germany was imposed by the Allied Powers – hence their record is blemished.

Religions

In most countries, religion divides. In India, we are different. India has the world’s second /third largest Muslim population. The Indian Christian population is equal to that of most majority-Christian countries – excluding just a few big one like USA, Russia, Mexico, Brazil, etc. Buddhists number nearly 50 lakhs. Sikhs, Parsis (Zoorastrians), Bahais, follows their own religion. Iranians, Armenians, Jews, Chinese have come to India – when persecuted in their homelands.

Racism! Anyone?

No, thanks!

India has the Caucasoid stock – spread over the North and West India; Australoid stock spread over South India and the Mongoloid stock spread over of East and North East. There is also a very small sprinkling of the Negroid stock – less than 1%.

The Challenges Ahead

The challenges ahead are defence and economics.

India’s defence unpreparedness is beyond comprehension. Worse, is the lack of threat perception. Indians (sadly and truly) limit their threat perception to the Pakistanis – and the Chinese. with the world’s largest private reserves of gold India becomes a target. The resultant global and emerging threats are unrealised. We spend billions of dollars on buying arms all over the world – but our domestic arms industry is starving.

The second is economics. The world trade systems, financial agreements, currency management continue to drag down India – and many other countries. Navigating these uncharted waters successfully is the other.

And I am sure that another set of new leaders will arrive and take India forward to another level.

Sooner – not later.

China’s Bullion Reserves – Gold, Silver and Silk

Modern economic research estimates that through most of last 1000 years, China and India have accounted for about 50% of the world economy. 20th century was different for both. While Indian gold based systems are better known, Chinese gold story is very different.

1. China & Neighbours – Gold Producers

India was always an importer of gold. Domestic gold production in India’s core geography has historically been negligible – or low.

China, on the other is different. Mongolia and China have been significant gold producers in history. Estimated gold reserves from current ore mining in China exceed 600 tons – and exploration efforts are expected to increase this to 3000-3500 tons. China is the world’s 4th largest producer of gold – ahead of USA and behind Australia, and expected to overtake South Africa soon.

Currently, illegal mining in China is big time activity and is indicted for supporting poaching!. Chinese were exporters of gold and silks.

2. Chinese – Great believers in silver

Chinese common coin was a silver coin – the tael (which came from the Malay word tahil; which came from Indian word tol; meaning ‘measure’). There were 2 taels – one was commercially pure silver ingot of one Chinese ounce called a liang. The other was a kuping tael – which was coin. Bulk silver was used as currency and called sycee. There were many other taels like Tsaoping, Peking, Tientsin, Hankow, Canton. Chinese also use silver jewellery – against gold preferred by Indian women

3. Chinese invention of Paper

Jiaozi - circulated in Sichuan in the Chunhua period of Emperor Taizong of Song Dynasty

Chinese rulers circulated paper money for longer (from 6th century onwards) and greater area than any country in the world. The first paper currency jiaozi was issued in 6th century – which collapsed very soon. The Song dynasty re-introduced paper currency in 9th century due to copper shortage. Probably, some Jewish merchants were also involved in the jiaozi manufacture.

Kublai Khan’s (a descendant of Genghis Khan) paper money management meant that all Chinese had to deposit all gold (or be prepared to die) with the Khan’s treasury and they got a currency note which was trade-able. This ‘system’ received wide publicity in Europe (thanks to Marco Polo). 600 years later, Roosevelt did the same with the Americans – and collected 8000 tons of gold.

4. Opium & China

Western consumers bought tea, silks and other Chinese commodities for which they paid in silver. The Chinese did not need much of Western goods – like India. To correct this negative balance of trade, Europeans promoted opium in China. When Chinese resisted the Opium trade, wars followed.

In early 19th century AD, Opium imports into China by British, French, American, Dutch, Spanish traders, sourced from India led to an outflow of silver from China – and a currency crisis. The ruling Qing state went into a downward spiral– culminating in the Chinese Civil War and rise of Communism. The Kuomintang (supported by Chinese underworld, The Green Gang, The Red Gang and The Blue Gang) was pitted against the Mao Ze Dong’s Communist Party – and both were armed and supported by Western powers.

Opium for China was produced by indebted Indian farmers and a few Parsi traders set up their offices in Hong Kong. However, the Parsi role diminished after the advent of steamships, their big losses during the Opium Wars and the rise of the cotton trade. Other Indian traders, possibly restricted by ‘shubh labh’ compunctions played a lesser role (compared to the European traders) in this Opium trade.

Major opium trading companies like Jardine Matheson, David Sasoon & Company and sundry traders set up The Hong Kong & Shanghai Banking Corporation for facilitating this misery. The Chinese Opium problem was finally solved by several draconian measures during Communist rule.

5. Wars In China

When Chinese resisted the Opium flood, Western traders resorted to war. The Japanese emboldened by new found wealth and military technology, joined Western powers. The Sino Japanese Wars, The Opium Wars with Europeans and The Boxer Uprising before WW1 imposed large war reparations on the Chinese. The Civil War in China between the world wars destroyed Chinese commerce systems. The Cultural Revolution has left the Chinese commercially backward.

6. How did the Chinese preference for silver affect them?

In 1500, the approximate exchange ratio between gold liang and and silver liang was 1:4. Today it is 1:50. Silver mineral deposits, mining and availability is more elastic than gold. Elasticity of gold production is very low. Secondly, above ground supplies of gold are far higher than known below the ground estimates. Hence, manipulation of gold prices over a period of time is difficult.

Touchy … feely … selly … silly …

7. Current Status

China, as the world’s largest holder of US dollar debt is constrained in its move to increasing gold reserves through market operations. A dollar sell off by China could collapse the world’s currency system – and the biggest loser would be the Chinese! But a negotiated conversion of some dollar reserves to gold is eminently possible.

Between 2000-2007, the Chinese Government increased their monetary gold reserves from more than 300 tons, to more than 600 tons. Official Gold Reserves of Chinese Central Bank Gold reserves are about 600 tons of gold.

China has become the world’s 3rd largest consumer of gold – up from a 100 tons to 350 tons. The Shanghai Gold Exchange has made it easier for individuals to invest in gold. They have reduced the transaction size from 1 kg to 100 gm.

8. Possible Chinese Strategy

China’s investment in US$3 billion in Blackstone Private Equity /hedge fund, was the first by any country. This gives China an inside track to the world’s largest hedge fund and private equity player. The Blackstone Fund on the other, gets access to the world’s largest liquid reserve – more than 1 trillion dollars of the Chinese Government’s monetary reserves.

China is setting up a US$200 billion sovereign fund that will invest in range of markets and instruments. With this institutional framework, for China to increase their monetary reserves by a 1000-2000 tonnes is well within realm of possibility.

9. The 2ndlook alternative (Oct.3, 2008, update)

Chinese assets …

In any new world financial reform proposal, the Chinese voice will be very important. After all they are the world’s largest creditor nation! They have US$2 trillion worth of IOUs with them. Of course, the composition of these US$2 trillion Chinese reserves is a state secret.

The Chinese will not agree to any ‘hare-brained’ scheme by ‘tin-pot’ dictators, who are sitting on some raw materials – and think that the future belongs to them. The world has so many of this variety, that it does not require me to be specific.

The Chinese need to acquire some big ticket assets – maybe, some big US companies, for about US$1.5 trillion and bring down their reserves to US$0.5 trillion. This will reduce US outstanding debt, create demand for US stocks, lift the Dow Jones, and create value for the dollar. As I see it this is the only way that the Chinese can cash in their chips. The House will not let them take it away any other way.

10. What does this mean for others

China, the largest creditor nation in the world, carries a big stick. They are not democratically accountable and transparency is not required from them. Hence, a significant conversion from dollar holdings to gold is feasible, can be done quietly (hence, at an economic price) and with trade power they have, a strong negotiating position is a given.

And that is an opportunity others may not get!

In the last 150 years, strong monetary gold reserves have been a feature of Western monetary systems (acquired mostly, by  dubious means like slavery, genocide). China’s moves, if any, will diversify global monetary reserve systems away from the dollar and the West and spread the weightage in a more equitable manner – giving rise to speculation about a renminbi bloc.

And that is something that is good for global monetary system.

What should India do …

Oil Dollar Tango

Two years ago …

This post had estimated that the Chinese could possibly (and they have)  increase their monetary gold reserves. On April 24th, 2009, Bloomberg reported that China had increased

its (gold) reserves by 454 tons to 1,054 tons through domestic purchases and refining scrap metal, Hu Xiaolian, head of the State Administration of Foreign Exchange, said in an interview with the Xinhua News Agency today. China, the world’s biggest gold producer, has increased its holdings before, Hu said in the interview carried on the administration Web Site. They rose from 394 tons to 500 tons in 2001 and to 600 tons in 2003. The U.S. has the world’s biggest gold holdings at 8,134 tons, followed by Germany with 3,413 tons, World Gold Council data show. France has 2,487 tons and Italy 2,452 tons, while the IMF has 3,217 tons, according to the council.

Another report, from Market Watch, a WSJ web publication added,

The increase makes China the world’s fifth-largest holder of gold, just ahead of Switzerland, and among the six nations plus the International Monetary Fund that have reserves of more than 1,000 metric tons. Although Hu did not elaborate on where China had sourced the additional bullion, her comments were interpreted as meaning they came from domestic sources and may included refining of scrap metal.  Traders also say the gold was accumulated systematically over a number of years. Last year China ranked as the world’s largest gold producer with 12.2% of world output, equivalent to 288 metric tons. The U.S. ranked second with a 9.9% share, or 234 metric tons.

What are the future plans of the Chinese? A report quotes an analyst

China should increase its gold reserve from 600 tons to about 2,500 tons in a short term and to 3,000 tons in a long term to cope with the versatile exchange rate risks, said Teng Tai, an economist of China Galaxy Securities Company.

Of course, this really does not mean much – except that it may keep gold prices on boil. Whether a currency is backed by a 5% or a 10% gold reserve may not mean much, in this era of rampant use of “a technology, called a printing press” as an economic tool – not just by the US of A. For long term economic stability, gold needs to be in the hands of individuals – and not Governments.