The Exploding Debt in Europe
By Kashan Wali, exclusive to the PTH
Wealth cannot be artificially created
Finance in a real world relies on underlying wealth of a society. Governments cannot create wealth by printing money. Print too much money and it will lose its value. A fall in the value of money leads to inflation. Inflation viciously attacks the value of savings of the population. As population loses the stored wealth, the population becomes dependent on the state. State has to pay more now for healthcare, education and in extreme situation, food and shelter for population that is going poorer by the day. Either way, unless the underlying wealth (net output of goods and services produced) does not increase, a country cannot become wealthier.
Let’s say state tries to pull another trick here; it starts borrowing heavily from the investors to boost its cash reserves. A smart market will quickly catch on to the trick as it analyzes the conditions of the local economies to see if this state has good books and stable revenues. If investors decide that the state cannot pay off its liabilities in the future, it will charge a lot more in interest rate to justify taking that excessive risk. Investors may decide not to lend at all to a government running shady practices.
By Dr. Omar Ali
Originally published at wichaar.com under the headline “The Air Marshal’s incompetent bombmaker son”
The son of an air marshal ruined his own life and abandoned his wife and kids in an utterly incompetent attempt to blow up innocent people (some of whom were probably Pakistani cab drivers). Why is Pakistan is breeding so many Islamic fanatics (luckily for us, some of them are incompetent Islamic fanatics)?
In some ways, Islamic supremacism is not that different from Christian evangelism, Hindu revivalism or those Japanese rightwing nuts who go around in loudspeaker vans appealing to the emperor to restore Japanese honor and for everyone else to prepare to commit hara kiri. Its true that Christian fanatics and Hindu revivalists are not exploding in buses and trains in faraway countries, but psychologically the profile is very similar. In any case, in most places, STATES do most of the killing domestically as well as internationally. Or people fight the state locally. What is different about Islamist terrorism is that these killers are international in scope and action and they seem to have an endless supply of morons willing to ruin their own lives for the cause. But why are they headquartered in Pakistan? The ideology, after all, is more closely associated with Saudi Arabia. I think the reason is that the presence of Islam is not the critical factor. The road from ideology to actual explosion passes through state-sponsored education, an infrastructure of terrorism and a culture where this kind of bombing has become an accepted response to whatever is perceived as injustice. And the reason this infrastructure is headquartered in Pakistan rather than Saudi Arabia is because the elite has been uniquely stupid in Pakistan.
By Kashan Wali, exclusive to the PTH
As the United States economy took off for most of the 1990s, the new found wealth across the world was staring at the best of both worlds; high economic output due to technological advances, cheaper labour entrance into the global economy from India and China, entrance of Eastern Europe and Latin America in the democratic capitalist system, all combined with a lower inflation. What could go wrong?
In some ways, the situation was similar to the roaring 1920s of the United States. 90 years ago, the US economy was expanding rapidly. New technological advances in automobile and telephone technology were erasing geographical distances within and outside of the United States. Rising productivity was increasing wealth and the signs of prosperity were evident in the stock market and the housing market.
The stock markets in the United States took off for most of the 1990s. Most of the rise was understandable; internet was revolutionising the distribution of knowledge. And modern economy is a knowledge based economy, not the traditional manufacturing based economy of the 20th century. Technology is a self perpetuating phenomenon. It builds on a wider base and increases exponentially. The equity market future expectations of higher revenue in the future due to higher revenues and profits down the road were probably justified.
By Kashan Wali, exclusive to the PTH
Today is May 08, 2010. As I write these line it occurs to me that this weekend is one of the most critical weekends as the seven month long crisis that started with initial doubts about Greece’s ability to pay off the massive debt that Greece had accumulated. The world nervously watches the European debt crisis morph into a contagious financial nightmare. Investors are worried that indebted nations like Greece, Portugal, Spain and even UK have accumulated too much debt too soon.
Coming on heels of the subprime crisis in 2007 and 2008, the world economies and the financial system are still in the recuperation phase from the wounds inflicted from the subprime crisis and the subsequent Great Recession afterwards. Below, we examine the European debt crisis in more detail. We will also look at the lessons for Pakistan and other emerging countries. There are a lot more similarities between the Greek tragedy and the Pakistani fiscal conditions. For those who do not learn from others mistakes end up being others down the road.
But first let’s take a step back to the subprime crisis that had the fiscal implications for the United States and Europe. Even before the subprime crisis, let’s examine the roaring 1990s that were a direct result of the massive globalization unleashed with the arrival of the internet. This was an important decade as two most populous countries properly entered the global economic arena for the very first time. They were China and India. For the next two decades, we see an explosive growth in the world economic output, globalization of trade, fall in industrialized world inflation, falling yields and the rise of phenomenon called the “leverage”. A few decades from today, we may exclaim what a shame that such prosperity became a victim to excessive leverage and regulatory failure. Yet we have countless examples of this reckless behaviour throughout the human history.
Among all the gloom about our country, we tend to forget the richness and the diversity of our cities and culture. We have a lot to achieve, but we overlook a lot more that we possess. George Fulton expresses his disdain for Dubai, a ritzy burgeoning middle eastern city that portrays itself as a coastal quasi-western city of choice for businesses and tourists. We may not fully agree with George’s assessment of Dubai as just a glamorous and materialistic cosmopolitan. Yet his comparison of Karachi or Lahore (with their rich culture, traditions, intelligentsia, linguistic pluraity and democracy) with a drab city (run by an autocratic dynasty and inhabited by empty fops looking for relatively quick riches) do ring a loud bell. (AZW)
By George Fulton, The Express Tribune
We haven’t got a lot to be thankful for these days in Pakistan.
But at least we are not Dubai.
Fed up with loadshedding, bombs, and TV cynicism pervading Pakistan, I recently escaped to Dubai for a holiday. Big mistake. Huge. Ten days later I returned, gasping for Karachi’s polluted, but far sweeter, air. Dubai may have the world’s tallest building and the world’s largest shopping mall, but it also has the world’s tiniest soul. It’s a plastic city built in steel and glass.
It has imported all the worst aspects of western culture (excessive consumption, environmental defilement) without importing any of its benefits (democracy, art). This is a city designed for instant gratification a hedonistic paradise for gluttons to indulge in fast food, fast living and fast women. It’s Las Vegas in a dish dash. You want to eat a gold leaf date? Munch away.
You want to drink a Dhs 3,000 bottle of champagne? Bottoms up. You want a UN selection of hookers at your fingertips? Tres bien. Let’s start with the malls. These cathedrals of capitalism, these mosques of materialism are mausoleums of the living dead. Slack jawed zombies roam around consuming food, clothes and electronics in a desperate attempt to fill the emptiness of their existence.
Filed under ancient civilisations, Architecture, culture, Democracy, Karachi, Lahore, New Writers, Pakistan, Politics, public policy, Society, UAE
Who says Pakistani literature was a relic of the past? If anything, Pakistani authors have a global audience today, and our writers are now the greatest harbingers of Pakistan’s complexity and nuance in a way that the embedded media can scarcely fathom.
The first literary festival took off in our cosmopolitan melting pot, Karachi, in March. The Oxford University Press’ dynamic head Ameena Saiyid, and the British Council, together organised this event. Asif Farrukhi, the premier litterateur of the metropolis was central to the festival. Farrukhi’s comprehensive command of Urdu and English literary currents, and the stature which he has earned with his hard work, ensured that we were all set for a fabulous gala.
Earlier, the festival faced the usual hurdles: the Indians were issued visas rather late in the day and my friend Sadia Dehlvi was denied a visa at the last minute, despite earnest efforts by the organisers. The iron curtain was rigidly in place. But the other regional and international delegates arrived as planned. The last minute finalisation of the schedule meant that due notice could not be given to many participants. However, the OUP team, especially Raheela Baqai, were adept at getting things done. Saiyid herself used Facebook to advertise the event. She’s obviously keeping up with technology and its changing frontiers.
We arrived just in time for the launch ceremony that was held at the British Consulate. It was quite a journey from the Carlton Hotel to old-world Clifton – a mini-bus that dazzled with literary icons of our time: Iftikhar Arif, Intezar Hussain, Masood Ash’ar and Shamsur Rehman Farooqi from the world of Urdu. The front seats were occupied by the petite and resplendent Bapsi Sidhwa, the contemplative Zulfiqar Ghose and the younger British Pakistani writer Sarfaraz Manzoor, whose book ‘Greetings From Bury Park’ has created waves across the English reading Continue reading
by S.Mubashir Noor
Mommy’s gonna tuck you in tight
No monsters under the bed
No bogeyman in sight
And yes on the news,
Those people were just playing dead
Had a paint-ball fight,
Guess they only used red
God likes bowling too,
And you’ve heard how loud that can be
Those people running around
Just had wish-lists for Him to read
You get extra vacation,
For being the good boy that you are
And yes you can use their panic room
To day-dream in the dark
It’s just two brothers scuffling
They don’t see eye-to-eye
One seeks daddy’s approval,
The other in him stick a hunting knife
Each believes in the singularity of his purpose
Point guns at each other in God’s name
But God has left the building young one
They’re just poster-children for the holy gravy train.