Wednesday, April 15, 2009

would things get any better in 2010, as some say?

Here is an article I kind of agreed with when it comes to U.S. response to a recession. Comparing the path India has taken over the years with a combination of Socialistic and Capitalistic policies, it seems like India has been on the right path all along and has been able to sustain recession better. Only if it were a little richer and bigger in size, given the plundering that had been done to it till it's independence in 1947. Even though it has gotten better, I think U.S. public still has the same more spending and less saving mentality.
Is America the new Russia?
By Martin Wolf
Published: April 14 2009 21:47 Last updated: April 14 2009 21:47
Is the US Russia? The question seems provocative, if not outrageous. Yet the person asking it is Simon Johnson, former chief economist at the International Monetary Fund and a professor at the Sloan School of Management at the Massachusetts Institute of Technology. In an article in the May issue of the Atlantic Monthly, Prof Johnson compares the hold of the “financial oligarchy” over US policy with that of business elites in emerging countries. Do such comparisons make sense? The answer is Yes, but only up to a point.
“In its depth and suddenness,” argues Prof Johnson, “the US economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets.” The similarity is evident: large inflows of foreign capital; torrid credit growth; excessive leverage; bubbles in asset prices, particularly property; and, finally, asset-price collapses and financial catastrophe.
Economists’ forum - Oct-01
“But,” adds Prof Johnson, “there’s a deeper and more disturbing similarity: elite business interests – financiers, in the case of the US – played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse.” Moreover, “the great wealth that the financial sector created and concentrated gave bankers enormous political weight.”
Now, argues Prof Johnson, the weight of the financial sector is preventing resolution of the crisis. Banks “do not want to recognise the full extent of their losses, because that would likely expose them as insolvent ... This behaviour is corrosive: unhealthy banks either do not lend (hoarding money to shore up reserves) or they make desperate gambles on high-risk loans and investments that could pay off big, but probably won’t pay off at all. In either case, the economy suffers further, and, as it does, bank assets themselves continue to deteriorate – creating a highly destructive cycle.”
Does such an analysis make sense? This is a question I thought about during my recent three-month stay in New York and visits to Washington, DC, now capital of global finance. It is why Prof Johnson’s analysis is so important.
Unquestionably, we have witnessed a massive rise in the significance of the financial sector. In 2002, the sector generated an astonishing 41 per cent of US domestic corporate profits (see chart). In 2008, US private indebtedness reached 295 per cent of gross domestic product, a record, up from 112 per cent in 1976, while financial sector debt reached 121 per cent of GDP in 2008. Average pay in the sector rose from close to the average for all industries between 1948 and 1982 to 181 per cent of it in 2007.
In recent research, Thomas Philippon of New York University’s Stern School of Business and Ariell Reshef of the University of Virginia conclude that the financial sector was a high-skill, high-wage industry between 1909 and 1933. It then went into relative decline until 1980, whereupon it again started to be a high-skill, high-wage sector.* They conclude that the prime cause was deregulation, which “unleashes creativity and innovation and increases demand for skilled workers”.
Deregulation also generates growth of credit, the raw stuff the financial sector creates and on which it feeds. Transmutation of credit into income is why the profitability of the financial system can be illusory. Equally, the expansion of the financial sector will reverse, at least within the US: credit growth and leverage masked low or even non-existent profitability of much activity, which will disappear, and part of the debt must also be liquidated. The golden age of Wall Street is over: the return of regulation is cause and consequence of this shift.
Yet Prof Johnson makes a stronger point than this. He argues that the refusal of powerful institutions to admit losses – aided and abetted by a government in thrall to the “money-changers” – may make it impossible to escape from the crisis. Moreover, since the US enjoys the privilege of being able to borrow in its own currency it is far easier for it than for mere emerging economies to paper over cracks, turning crisis into long-term economic malaise. So we have witnessed a series of improvisations or “deals” whose underlying aim is to rescue as much of the financial system as possible in as generous a way as policymakers think they can get away with.
I agree with the critique of the policies adopted so far. In the debate on the Financial Times’s economists’ forum on Treasury secretary Tim Geithner’s “public/private investment partnership”, the critics are right: if it works, it is because it is a non-transparent way of transferring taxpayer wealth to banks. But it is unlikely to fill the capital hole that the markets are, at present, ignoring, as Michael Pomerleano argues. Nor am I persuaded that the “stress tests” of bank capital under way will lead to action that fills the capital hole.
Yet do these weaknesses make the US into Russia? No. In many emerging economies corruption is egregious and overt. In the US, influence comes as much from a system of beliefs as from lobbying (although the latter was not absent). What was good for Wall Street was deemed good for the world. The result was a bipartisan programme of ill-designed deregulation for the US and, given its influence, the world.
Moreover, the belief that Wall Street needs to be preserved largely as it is now is mainly a consequence of fear. The view that large and complex financial institutions are too big to fail may be wrong. But it is easy to understand why intelligent policymakers shrink from testing it. At the same time, politicians fear a public backlash against large infusions of public capital. So, like Japan, the US is caught between the elite’s fear of bankruptcy and the public’s loathing of bail-outs. This is a more complex phenomenon than the “quiet coup” Prof Johnson describes.
Yet decisive restructuring is indeed necessary. This is not because returning the economy to the debt-fuelled growth of recent years is either feasible or desirable. But two things must be achieved: first, the core financial institutions must become credibly solvent; and, second, no profit-seeking private institution can remain too big to fail. That is not capitalism, but socialism. That is one of the points on which the right and the left agree. They are right. Bankruptcy – and so losses for unsecured creditors – must be a part of any durable solution. Without that change, the resolution of this crisis can only be the harbinger of the next.
*Wages and Human Capital in the US Financial Industry 1909-2006, January 2009,

Thursday, April 2, 2009

Then, how does one get Mukti, liberation from this unending cycle of rebirth? Guru Arjan Dev Ji explains in the following shabad.

I was just looking for another shabad, but got distracted and found this one and decided to post it. I start pondering as to how does one get liberation, how to end this endless cycle of reincarnation and what is a true sat-sangat? Can reading/reciting/ Gurbani alone in the house, on a mountain, in a cave, in a grabage dump, in the ocean, on the moon, on the Mars, while working, playing etc. etc. etc. be counted as true sat sangat? I would think so. Does Guru Granth Sahib and other people have to be present and does it have to be in a building like a Gurdawara? Yes, that would be the Ultimate sat-sangat and it only adds to the true experience. But, I would think even if someone is lost in a jungle, or in a ice-berg, someone sitting in one's home  and doesn't have the Guru Granth Sahib with him or her, but sings and recites Gurbani would be still in true sat-sangat.

ਗੁਰ ਕੈ ਸਬਿਦ ਮਨੁ ਜੀਿਤਆ ਗਿਤ ਮੁਕਿਤ ਘਰੈ ਮਿਹ ਪਾਇ ॥
gur kai sabad man jeeti-aa gat mukat gharai meh paa-ay.
Through the Word of the Guru's Shabad, the mind is conquered, and one attains the State of Liberation in one's own home.

ਹਿਰ ਕਾ ਨਾਮੁ ਿਧਆਈਐ ਸਤਸੰਗਿਤ ਮੇਿਲ ਿਮਲਾਇ ॥੨॥
har kaa naam Dhi-aa-ee-ai satsangat mayl milaa-ay. ||2||
So meditate on the Name of the Lord; join and merge with the Sat Sangat, the True Congregation. ||2||

After all one would be connecting with the Guru's word no matter where he or she is. If it is more than one, then it is a sangat. Me and my Guru's word. So what is the ideal place for a sat-sangat? I would say, any and all places, spaces, khands, brahmands, where Guru's word resounds. Be it just one word or a whole shabad or a mantra or a line or a tuk or satnam or waheguru or har or hari. Now, how about fasts, pilgrames, alms giving, ritualistic practices, sacrifices, putting ashes on body, holy baths, fortune telling, astrology, magic spells, drinking, smoking, drugs, parties, and all that other garbage in various societies. Do those lead one to liberation? Guru Sahib shows how clear and straightforward the path is and yet many of us are in the dark, under the influence of maya and want to take the side roads. I guess, those are also His colors too, as Guru Sahib explains. Satnam!

ਕਾਨੜਾ ਮਹਲਾ ॥ कानड़ा महला ५ ॥ Kānrā mėhlā 5. Kaanraa, Fifth Mehl:
ਰੰਗਾ ਰੰਗ ਰੰਗਨ ਕੇ ਰੰਗਾ ॥ रंगा रंग रंगन के रंगा ॥ Rangā rang rangan ke rangā.
The Playful Lord imbues all with the Color of His Love.
ਕੀਟ ਹਸਤ ਪੂਰਨ ਸਭ ਸੰਗਾ ॥੧॥ ਰਹਾਉ ॥ कीट हसत पूरन सभ संगा ॥१॥ रहाउ ॥ Kīt hasat pūran sabh sangā. 1 rahā▫o.
From the ant to the elephant, He is permeating and pervading all. 1Pause
ਬਰਤ ਨੇਮ ਤੀਰਥ ਸਹਿਤ ਗੰਗਾ ॥ बरत नेम तीरथ सहित गंगा ॥ Barat nem tirath sahit gangā.
Some go on fasts, make vows, and take pilgrimages to sacred shrines on the Ganges.
ਜਲੁ ਹੇਵਤ ਭੂਖ ਅਰੁ ਨੰਗਾ ॥ जलु हेवत भूख अरु नंगा ॥ Jal hevat bhūk ar nangā.
They stand naked in the water, enduring hunger and poverty.
ਪੂਜਾਚਾਰ ਕਰਤ ਮੇਲੰਗਾ ॥ पूजाचार करत मेलंगा ॥ Pūjāchār karat melangā.
They sit cross-legged, perform worship services and do good deeds.
ਚਕ੍ਰ ਕਰਮ ਤਿਲਕ ਖਾਟੰਗਾ ॥ चक्र करम तिलक खाटंगा ॥ Chakar karam tilak khātangā.
They apply religious symbols to their bodies, and ceremonial marks to their limbs.
ਦਰਸਨੁ ਭੇਟੇ ਬਿਨੁ ਸਤਸੰਗਾ ॥੧॥ दरसनु भेटे बिनु सतसंगा ॥१॥ darsan bhete bin satsangā. 1 They read through the Shaastras, but they do not join the Sat Sangat, the True Congregation. 1
ਹਠਿ ਨਿਗ੍ਰਹਿ ਅਤਿ ਰਹਤ ਬਿਟੰਗਾ ॥ हठि निग्रहि अति रहत बिटंगा ॥ Hath nigrahi at rahat bitangā. They stubbornly practice ritualistic postures, standing on their heads.
ਹਉ ਰੋਗੁ ਬਿਆਪੈ ਚੁਕੈ ਭੰਗਾ ॥ हउ रोगु बिआपै चुकै न भंगा ॥ Ha▫o rog bi▫āpai chukai na bhangā. They are afflicted with the disease of egotism, and their faults are not covered up.
ਕਾਮ ਕ੍ਰੋਧ ਅਤਿ ਤ੍ਰਿਸਨ ਜਰੰਗਾ ॥ काम क्रोध अति त्रिसन जरंगा ॥ Kām krodh at tarisan jarangā.
They burn in the fire of sexual frustration, unresolved anger and compulsive desire.
ਸੋ ਮੁਕਤੁ ਨਾਨਕ ਜਿਸੁ ਸਤਿਗੁਰੁ ਚੰਗਾ ॥੨॥੩॥੩੬॥ सो मुकतु नानक जिसु सतिगुरु चंगा ॥२॥३॥३६॥ So mukat Nānak jis satgur changa. 2336
He alone is liberated, O Nanak, whose True Guru is Good. 2336