Threat - 7
Brittle Economies
The massive inefficiencies of industrialism are not more apparent because they are masked by a financial system that gives improper information.
~Paul Hawken
World Economy : A House of Cards
There are limits to growth and the world economy has crossed those limits. In last 5 decades, world economy has been globalized and its not the best thing to have happened to our finances. The economic system built on a need for constant growth obviously can't last long in a finite world. Small is beautiful...and sustainable.
The world has always hoped against the hope..until the reality stares in its face. There are important lessons to be learnt from the history but more often than not we fail to do so.
John Maynard Keynes said in 1927. “We will not have any crashes in our time.” Dr Irving Fisher, another distinguished economist, said on October 17, 1929. “Stock prices have reached what looks like a permanently high plateau.” US Treasury Secretary and Harvard Economic Society, among others, publicly shared their confidence.
They were reflecting on the state of the economy that was booming. It was a time when drivers and window cleaners eves-dropped on the conversations of their patrons to collect tips on shares. The DJ Index doubled from little less than 200 when Keynes made his prediction to almost 400 when Dr Fisher announced the high plateau of the state of the market. Within two weeks of Dr. Fisher’s forecast, it had crashed by over 50% to reach 200 again. All those who had invested their savings from 1927 to 1929 were impoverished overnight. Several of them committed suicide. By 1933, the DJ Index lost 90% of its value from the day of Dr. Fisher’s ‘high plateau’ proclamation to reach 40. Industrial production declined by two-thirds. The prices of farm land collapsed to nothing. The United States imposed high trade barriers, inviting retaliation by 25 other countries. Since Europe was dependent on exports to pay its World War I debts and Japan to be able to import the most basic necessities of life, high trade barriers devastated their economies. The Germans elected Hitler, a failed artist, to lead them. In Japan, too, nationalist extremism grew at a fast pace. The World War II followed from 1939 to 1945. History shows that bad finances and wars are the twins.
The world has always hoped against the hope..until the reality stares in its face. There are important lessons to be learnt from the history but more often than not we fail to do so.
John Maynard Keynes said in 1927. “We will not have any crashes in our time.” Dr Irving Fisher, another distinguished economist, said on October 17, 1929. “Stock prices have reached what looks like a permanently high plateau.” US Treasury Secretary and Harvard Economic Society, among others, publicly shared their confidence.
They were reflecting on the state of the economy that was booming. It was a time when drivers and window cleaners eves-dropped on the conversations of their patrons to collect tips on shares. The DJ Index doubled from little less than 200 when Keynes made his prediction to almost 400 when Dr Fisher announced the high plateau of the state of the market. Within two weeks of Dr. Fisher’s forecast, it had crashed by over 50% to reach 200 again. All those who had invested their savings from 1927 to 1929 were impoverished overnight. Several of them committed suicide. By 1933, the DJ Index lost 90% of its value from the day of Dr. Fisher’s ‘high plateau’ proclamation to reach 40. Industrial production declined by two-thirds. The prices of farm land collapsed to nothing. The United States imposed high trade barriers, inviting retaliation by 25 other countries. Since Europe was dependent on exports to pay its World War I debts and Japan to be able to import the most basic necessities of life, high trade barriers devastated their economies. The Germans elected Hitler, a failed artist, to lead them. In Japan, too, nationalist extremism grew at a fast pace. The World War II followed from 1939 to 1945. History shows that bad finances and wars are the twins.
The merchants of the earth will weep and mourn over her because no one buys their cargoes anymore–cargoes of gold, silver, precious stones and perils; fine linen, purple, silk and scarlet cloth; every sort of citron wood, and articles of every kind made of ivory, costly wood, bronze, iron and marble; cargoes of cinnamon and spice, of incense, myrrh and frankincense, of wine and olive oil, of fine flour and wheat; cattle and sheep; horses and carriages; and bodies and souls of men.
~ Revelation 18:11–13
Ominous Headlines
The history is trying to repeat itself in last two quarters. Headlines are blaring - Financial markets in a free-fall, Chaos on Wall St, International markets in a tailspin, European bailout, More banks to fail, Investors shy away amidst growing fears, Congress approves bailout, 51 Million to loose jobs, China goes down in first quarter.
These foreboding headlines are indications of something coming out way, if we are willing to listen.
Financial system is a farce and it has become exponentially more so as Treasury/Federal Reserve bailouts in the financial sector become the rule rather than the exception.
Six years ago the Federal Reserve adopted unprecedented monetary extravagance, leading to what can only be described as the largest and most pervasive global financial bubble in history. The inevitable result, as is becoming increasingly clear, is that the cleanup in the aftermath of this bubble when all is said and done, will have the largest price tag, indeed the largest destruction of wealth, in history. Bursting of a bubble always has disastrous consequences, as is painfully evident today.
There is no greater testament to this carnage than the fact that major Wall Street institutions, many of which have been around for over a century (having even survived the Great Depression) are now falling like flies one after the other, almost overnight.
These foreboding headlines are indications of something coming out way, if we are willing to listen.
Financial system is a farce and it has become exponentially more so as Treasury/Federal Reserve bailouts in the financial sector become the rule rather than the exception.
Six years ago the Federal Reserve adopted unprecedented monetary extravagance, leading to what can only be described as the largest and most pervasive global financial bubble in history. The inevitable result, as is becoming increasingly clear, is that the cleanup in the aftermath of this bubble when all is said and done, will have the largest price tag, indeed the largest destruction of wealth, in history. Bursting of a bubble always has disastrous consequences, as is painfully evident today.
There is no greater testament to this carnage than the fact that major Wall Street institutions, many of which have been around for over a century (having even survived the Great Depression) are now falling like flies one after the other, almost overnight.
America - A Dubious Financial World Leader
America's unquenchable materialistic appetite is the machine that fuels a global economy. Japan's economy would collapse if it were not for the billions of dollars per year gained in trading with America. When America goes into a recession, the world follows. When America's economy is booming, the world's economy also booms.
America devours, yet is never satisfied. Running out of money, she tells the waiter to supply it on credit. He gladly complies making a tidy profit from the interest. He cannot serve her quick enough. The more she eats, the hungrier she becomes. As time passes, less goes to paying for food and more is needed to pay for the huge debt she is accumulating. Finally, all of her resources are used up in paying for the interest she owes. America falls crashing to the ground in economic ruin, so suddenly, it sends shock waves throughout the world. She is incapable of paying for her massive imports. Merchant ships sit offshore, heavy laden with cargo, weeping and wailing in horror.
America devours, yet is never satisfied. Running out of money, she tells the waiter to supply it on credit. He gladly complies making a tidy profit from the interest. He cannot serve her quick enough. The more she eats, the hungrier she becomes. As time passes, less goes to paying for food and more is needed to pay for the huge debt she is accumulating. Finally, all of her resources are used up in paying for the interest she owes. America falls crashing to the ground in economic ruin, so suddenly, it sends shock waves throughout the world. She is incapable of paying for her massive imports. Merchant ships sit offshore, heavy laden with cargo, weeping and wailing in horror.
In A Pit of Debts
In 1929, the debt ratio in relation to the America’s Gross National Product stood at a healthy 16%. In 2008, the national debt has increased to an alarming 70% of the GNP. The total debt of America is greater than the combined external debts of all the nations of the world.
They Say So
When NASA first started sending up astronauts, they quickly discovered that ballpoint pens would not work in zero gravity.
To combat the problem, NASA scientists spent a decade and $100 million to develop a pen that writes in zero gravity, upside down, underwater, on almost any surface including glass and at temperatures ranging from below freezing to 300 C.
The Russians used a pencil.
America's current debt is $10 trillion - $145,000 per American, or $350,000 for every full-time worker. Of course everyone is tossing around the words million, billion and trillion. Have we become numb to the numbers?
Number' itself can be pronounced as 'number' or 'numb-er.' And maybe in this case, the latter is a better pronunciation. Until now such big numbers were never heard that often.
To provide some perspective on just how big a trillion dollars is, think about it like this: A trillion dollars is the number 1 followed by 12 zeroes. Or we can think of it this way: One trillion $1 bills stacked one on top of the other would reach nearly 68,000 miles (about 109,400 kilometers) into the sky, or about a third of the way from the Earth to the moon.
Senate Republican leader Mitch McConnell has said that Americans have become desensitized to just how much money that is.
To put a trillion dollars in context, if we spend a million dollars every day since Jesus was born, we still wouldn't have spent a trillion. A million dollars a day for 2,000 years is only three-quarters of a trillion dollars.
Back in 1993, President Bill Clinton wanted a $30 billion jobs and investment package. He didn't get it. Just last year, President George W. Bush signed an emergency economic stimulus of $168 billion - a tally that seems paltry compared with the amount requested today. But consider this: If all of the financial market interventions, loans, guarantees, bailouts and rescues are approved, they will total more than $7 trillion. This simply means total absolute collapse of the financial house of cards.
Number' itself can be pronounced as 'number' or 'numb-er.' And maybe in this case, the latter is a better pronunciation. Until now such big numbers were never heard that often.
To provide some perspective on just how big a trillion dollars is, think about it like this: A trillion dollars is the number 1 followed by 12 zeroes. Or we can think of it this way: One trillion $1 bills stacked one on top of the other would reach nearly 68,000 miles (about 109,400 kilometers) into the sky, or about a third of the way from the Earth to the moon.
Senate Republican leader Mitch McConnell has said that Americans have become desensitized to just how much money that is.
To put a trillion dollars in context, if we spend a million dollars every day since Jesus was born, we still wouldn't have spent a trillion. A million dollars a day for 2,000 years is only three-quarters of a trillion dollars.
Back in 1993, President Bill Clinton wanted a $30 billion jobs and investment package. He didn't get it. Just last year, President George W. Bush signed an emergency economic stimulus of $168 billion - a tally that seems paltry compared with the amount requested today. But consider this: If all of the financial market interventions, loans, guarantees, bailouts and rescues are approved, they will total more than $7 trillion. This simply means total absolute collapse of the financial house of cards.
Dollar - Undependable World Currency
World experts in money markets like Warren Buffet and George Soros are betting on a major crash of the dollar in the near future. They think it will be greater than the Great Depression of the 1930s. With trade deficits of over 650 billion this year, America is placing its future in the hands of non-Americans. It is now, roughly 6.5 percent of the total economy. Their deficit is financed by the central banks of countries like China and Japan. In fact all the world banks are chock-full of US dollars, much more than they want or need for trade.
If the dollar collapses the whole world economy collapses because there is no alternative yet to the dollar. Right now if the dollar crashes so would the economies of China, Japan and dozens of other countries and much of their holdings are in American banks.
However, the supremacy of the dollar world wide is under a challenge by the Euro. For the time being the Euro is struggling and is not yet a safe bet to jump into instead of the dollar.
Right now, the US dollar is probably 40 per cent overvalued versus the Japanese yen or the Chinese Yuan. The fear in the short term is that some one may dump the dollar and start a dollar run. Just like the stock market, the first out is going to loose the least money and everyone else will be holding dollars at less value. What if some small Islamic country decides they have too many dollars and dumps $10 billion all at once? Panic will set in the rest of the world, and everyone will start getting out of the dollar leaving those holding dollars with half its present value.
What is saving the dollar is not faith in the dollar but the lack of an alternative.
If the dollar collapses the whole world economy collapses because there is no alternative yet to the dollar. Right now if the dollar crashes so would the economies of China, Japan and dozens of other countries and much of their holdings are in American banks.
However, the supremacy of the dollar world wide is under a challenge by the Euro. For the time being the Euro is struggling and is not yet a safe bet to jump into instead of the dollar.
Right now, the US dollar is probably 40 per cent overvalued versus the Japanese yen or the Chinese Yuan. The fear in the short term is that some one may dump the dollar and start a dollar run. Just like the stock market, the first out is going to loose the least money and everyone else will be holding dollars at less value. What if some small Islamic country decides they have too many dollars and dumps $10 billion all at once? Panic will set in the rest of the world, and everyone will start getting out of the dollar leaving those holding dollars with half its present value.
What is saving the dollar is not faith in the dollar but the lack of an alternative.
So actually, human opulence means not these tin cars. Once it is dashed with another car, it is finished, no value. Human opulence means the society must have enough gold, enough jewelry, enough silk, enough grains, enough milk, enough vegetables, like that. That is opulent. That is opulence. Formerly a person was considered rich by two things: dhanyena dhanavan. How much grain stock he has got at his home. A big, big barn, filled with grains. Still in India, if I am going to give my daughter to some family, to see the family’s opulence, I go to see the house, and if I see there are many, many barns’ stock of grains and many cows, then it is very good.
-Srila Prabhupada (Srimad-Bhagavatam 1.9.2 — Los Angeles, May 16, 1973)
UN: World Economy May Lose 51 Million Jobs
In January 2009, International Labor Organization (ILO), a United Nations Agency said in Geneva that up to 51 million jobs worldwide could disappear by the end of this year as a result of the economic slowdown that has turned into a global employment crisis.
The International Labor Organization (ILO) said that under its most optimistic scenario, this year would finish with 18 million more unemployed people than at the end of 2007, with a global unemployment rate of 6.1.
More realistically, it said 30 million more people could lose their jobs if financial turmoil persists through 2009, pushing up the world's unemployment to 6.5 percent, compared to 6.0 percent in 2008 and 5.7 percent in 2007.
In the worst-case economic scenario, the Global Employment Trends report said 51 million more jobs could be lost by the end of this year, creating a 7.1 percent global unemployment rate.
"If the recession deepens in 2009, as many forecasters expect, the global jobs crisis will worsen sharply," it said. "We can expect that for many of those who manage to keep a job, earnings and other conditions of employment will deteriorate."
Caterpillar, Sprint, Philips, Texas Instruments and ING are among the companies that have cut thousands of jobs in response to the financial crisis and economic downturn that has spread around the world.
The ILO's previous employment estimate, released in October, was that 20 million jobs would disappear by the end of 2009 as a result of the financial crisis.
The International Labor Organization (ILO) said that under its most optimistic scenario, this year would finish with 18 million more unemployed people than at the end of 2007, with a global unemployment rate of 6.1.
More realistically, it said 30 million more people could lose their jobs if financial turmoil persists through 2009, pushing up the world's unemployment to 6.5 percent, compared to 6.0 percent in 2008 and 5.7 percent in 2007.
In the worst-case economic scenario, the Global Employment Trends report said 51 million more jobs could be lost by the end of this year, creating a 7.1 percent global unemployment rate.
"If the recession deepens in 2009, as many forecasters expect, the global jobs crisis will worsen sharply," it said. "We can expect that for many of those who manage to keep a job, earnings and other conditions of employment will deteriorate."
Caterpillar, Sprint, Philips, Texas Instruments and ING are among the companies that have cut thousands of jobs in response to the financial crisis and economic downturn that has spread around the world.
The ILO's previous employment estimate, released in October, was that 20 million jobs would disappear by the end of 2009 as a result of the financial crisis.
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We're entering a really fierce global recession. It's a very dangerous situation. The danger is that instead of having a few bad years, we’ll have another lost decade. |
Economic Earthquake - Devastation That Happens Within Minutes
Its a classic case of 1929 repeat. On 21st January 2008, known as Black Monday, investors in India lost Rs 6 trillion within minutes of the Indian Stock Exchange’s opening in Mumbai. The authorities immediately suspended the trading for one hour. The sensex tumbled 2,029 points within minutes of start of trading.
This loss of Rs 6,54,887 crore came on top of over Rs 11 trillion loss suffered by investors at Dalal Street in the last six days.
Small investors were advised to stay away from the markets.
Investors' wealth - measured in terms of cumulative market capitalisation of all the listed companies - declined by a whopping Rs 18,40,173 crore.
As per information available on the Bombay Stock Exchange website, the total market capitalisation stood at Rs 59,53,525 crore at the end of the Black Monday's trading against Rs 71,38,810 crore before the stock exchange began business on January 14.
The cause for this was attributed on concerns regarding the US economy going into recession.
This loss of Rs 6,54,887 crore came on top of over Rs 11 trillion loss suffered by investors at Dalal Street in the last six days.
Small investors were advised to stay away from the markets.
Investors' wealth - measured in terms of cumulative market capitalisation of all the listed companies - declined by a whopping Rs 18,40,173 crore.
As per information available on the Bombay Stock Exchange website, the total market capitalisation stood at Rs 59,53,525 crore at the end of the Black Monday's trading against Rs 71,38,810 crore before the stock exchange began business on January 14.
The cause for this was attributed on concerns regarding the US economy going into recession.
So actual value, to keep cows, to have food grains or gold, jewelries, these are the signs of richness. But Kali-yuga is so cruel that if you have got gold, if you have got jewels, then government will take away. Dasyu-dharmabhih. Formerly there were ordinary plunderers, thieves. Now, according to Srimad-Bhagavatam, the government will be composed of organized thieves. That is meant: dasyu-dharmabhih, rajabhih. Government officer means organized thieves in every country. That will be the situation. So you cannot keep now. You have to be satisfied with these papers. That’s all.
-Srila Prabhupada
(Srimad-Bhagavatam 1.8.21 — Mayapura, October 1, 1974)
2008 - The Cousin of 1929
Apart from the story of January 2008 in India, by October 2008, investors across the world lost more than $10 trillion - an amount more than 10 times of the entire investor wealth in India.
All 52 equity markets of the world suffered a loss of $10.5 trillion in 2008 as per a leading rating agency and financial data provider, Standard and Poors.
Indian stock market valuation nearly halved in 2008. 2009 is expected to be worse than its predecessor.
All 52 equity markets of the world suffered a loss of $10.5 trillion in 2008 as per a leading rating agency and financial data provider, Standard and Poors.
Indian stock market valuation nearly halved in 2008. 2009 is expected to be worse than its predecessor.
Tremors of An Economic Earthquake
Day When On Wall Street, It Rained The Bodies Of Men Jumping
From Offices High Above.
In 1929, America was having an economic explosion. Immigrants were pouring in. There were more jobs than people. Farmers were leaving their fields for factories, making twice the income for half the labor. Politicians confidently portrayed a picture of an endless era of unprecedented prosperity. The prophets of gloom and doom were ignored as being fanatical crazies.
Fall is a beautiful time of year. A time of thanksgiving, a remembrance of God's blessing upon the birth of a Christian country. The leaves are in full bloom, ready to fall. It is a time for Sunday drives through the country without a thought of the winter to come. Splashes of color cover the hills and valleys. As the squirrels wisely gather food for a cold long winter, a nation is borrowing and spending because of a thriving economy that can promise only spring and summer.
Fall is a beautiful time of year. A time of thanksgiving, a remembrance of God's blessing upon the birth of a Christian country. The leaves are in full bloom, ready to fall. It is a time for Sunday drives through the country without a thought of the winter to come. Splashes of color cover the hills and valleys. As the squirrels wisely gather food for a cold long winter, a nation is borrowing and spending because of a thriving economy that can promise only spring and summer.
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I think we have more machinery of government than is necessary, too many parasites living on the labour of the industrious. |
A ship sails to England in the early part of October, full of wealthy entrepreneurs, a sign of absolute faith in a thriving American economy. While they were on their care–free vacation, enjoying the pleasure away from the stress of their jobs, a powerful economic tremor rippled through the United States. On October 24, 1929, 12,000,000 shares of common stocks traded in a single afternoon. By Monday, October 28th, the trading averages had dropped by 20 points. On Tuesday, October 29th, virtually all trades were to sell. It became ‘A Nightmare On Wall Street.’ Investors became panic–stricken, resulting in a huge economic land slide. AT&T was down a hundred points, General Electric, 90 points and General Motors, plummeted 150 points. Sixteen million shares were traded at a loss of 10 billion dollars. This was equivalent to twice the amount of currency of the entire USA. Headlines proclaimed, Wall Street Crashes. Tens of millions of people's life savings became completely useless. Millionaires were reduced to the unemployed. On Wall Street, it rained the bodies of men jumping from their offices high above. When the ship returned full of happy–go–lucky entrepreneurs, they were worth the clothes on their backs. An economic winter had fallen upon America which would effect the entire earth. An ice age that would last four long years.
Simple And Healthy Economics
By Srila Prabhupada
Money is required for purchasing food, but the animals, they do not know that food can be purchased. They are searching after food. But we are civilized; we are searching after money. Money is required for purchasing food. Why don’t you produce food directly? That is intelligence. You are getting money, very good. What is that money? A paper. You are being cheated. It is written there, “hundred dollars.” But what is that hundred dollars? It is cheap of..., piece of paper only. But because we are so fool, we are accepting a piece of paper, hundred dollars, and the struggle for existence for a piece of paper. Why don’t you be intelligent — “Why shall I take the piece of paper? Give me food”? But that intelligence you have lost. Therefore my Guru Maharaja used to say the present human society is combination of cheaters and cheated, that’s all. No intelligent person. Formerly money was gold and silver coins. It had some value. But what is the present currency? Simply piece of paper. Bunch of papers. During the last war the government failed in Germany, and these bunch of papers were thrown in the street. Nobody was caring. Nobody was caring.
So our civilization is based on that way. You require food. That’s fact. Therefore Krsna says, annad bhavanti bhutani [Bg. 3.14]. You produce your food. Anywhere you can produce your food. The land is enough land. In Australia you have got enough land. In Africa you have enough land, uncultivated. No. They’ll not produce food. They will produce coffee and tea and slaughter animals. This is their business. I understand that in your country animals are slaughtered and exported for trade. Why export? You produce your own food and be satisfied. Why you are after that piece of hundred dollars paper? Produce your own food and eat sumptuously, be healthy and chant Hare Krsna. This is civilization. This is civilization.
(Lecture, Bhagavad-gita 9.4 — Melbourne, April 22, 1976)
Money is required for purchasing food, but the animals, they do not know that food can be purchased. They are searching after food. But we are civilized; we are searching after money. Money is required for purchasing food. Why don’t you produce food directly? That is intelligence. You are getting money, very good. What is that money? A paper. You are being cheated. It is written there, “hundred dollars.” But what is that hundred dollars? It is cheap of..., piece of paper only. But because we are so fool, we are accepting a piece of paper, hundred dollars, and the struggle for existence for a piece of paper. Why don’t you be intelligent — “Why shall I take the piece of paper? Give me food”? But that intelligence you have lost. Therefore my Guru Maharaja used to say the present human society is combination of cheaters and cheated, that’s all. No intelligent person. Formerly money was gold and silver coins. It had some value. But what is the present currency? Simply piece of paper. Bunch of papers. During the last war the government failed in Germany, and these bunch of papers were thrown in the street. Nobody was caring. Nobody was caring.
So our civilization is based on that way. You require food. That’s fact. Therefore Krsna says, annad bhavanti bhutani [Bg. 3.14]. You produce your food. Anywhere you can produce your food. The land is enough land. In Australia you have got enough land. In Africa you have enough land, uncultivated. No. They’ll not produce food. They will produce coffee and tea and slaughter animals. This is their business. I understand that in your country animals are slaughtered and exported for trade. Why export? You produce your own food and be satisfied. Why you are after that piece of hundred dollars paper? Produce your own food and eat sumptuously, be healthy and chant Hare Krsna. This is civilization. This is civilization.
(Lecture, Bhagavad-gita 9.4 — Melbourne, April 22, 1976)
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Dhanyena dhanavan. If you have got grain, then you are rich. And if you have got cows, then you are rich. This is the standard of Vedic richness. Dhanyena dhanavan gavayo dhanavan. They don’t say, “Keep some papers and you become rich.” All rascal, one thousand dollar I promise to pay, a piece of paper. Practical, we have got enough food grains. We have got enough... That is richness. What is use of paper? Even gold you have got, you have to exchange. And if you have grain, immediate food. Just boil with milk, and it is nectarean, param anna, immediately. Take some wood... collected from the wood and have fire, put the milk and the grains-oh, you’ll get so nice food, nutritious, full of vitamin, and so easily made. It is practical. So tasteful, so nutritious, and don’t require. If you simply boil little milk and little grain, whole day, so much sweet rice, you take- You don’t require any more. And if you add little apples and fruits, oh, it is heavenly. Your whole day free from any food anxiety, and you can work. And you can work. You can chant Hare Krsna. Make this ideal life here. America has got good potency. We have got so much land here. We can have hundreds of New Vrindabans or farms like that. And people will be happy. And invite all the world, “Please come and live with us. Why you are suffering congestion, overpopulation? Welcome here. |
Cooked Up Books - Concealing The Financial Realities
On January 7, 2009, India Inc. woke up to a shocker of a life time - $1.6 billion Satyam Computers fraud. Chairman Ramalinga Raju and his family cooked up books and siphoned off money in what is being termed as India’s biggest corporate fraud to date. By the end of the day, the fourth largest IT company lost a staggering Rs 10,000 crore in market capitalisation as investors reacted sharply and dumped shares, leaving an uncertain future for the company and its 53,000 employees. The entire stock market crashed.
Headlines
London, September 22, 2008: Satyam Computer Services Ltd., a leading global consulting and information technology services provider, has won the coveted Golden Peacock Global Award for Excellence in Corporate Governance for 2008.
India, January 7, 2009: Rs. 7000 Crore Fraud in Satyam, Chairman Detained.
(Only a mere 19 out of 4.700 listed firms whose shares are traded in India, have made their corporate governance ratings public.)
Its unprecedented. Satyam’s balance sheet as on Sep 30, 2008, carried an inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 reflected in the books).
Satyam fraud clouds the corporate governance of India Inc. More skeletons are supposed to come out from corporate closets and it poses a big question over the credibility of auditors in general also.
Ramesh Damani, a financial expert, was quoted as saying, “I am actually a little less surprised at what was going on because I have been in the markets long enough and know all manners of companies, not just in India but across the world, do some degree of cooking of books, and that is let’s say ‘accepted’.”
Satyam fraud clouds the corporate governance of India Inc. More skeletons are supposed to come out from corporate closets and it poses a big question over the credibility of auditors in general also.
Ramesh Damani, a financial expert, was quoted as saying, “I am actually a little less surprised at what was going on because I have been in the markets long enough and know all manners of companies, not just in India but across the world, do some degree of cooking of books, and that is let’s say ‘accepted’.”
If one gets a diamond, he possesses something valuable. But in this civilization you are simply making plastic plates and plastic cups. Indeed, in Japan I have seen pasteboard homes. And everyone is thinking that he is advanced. Formerly people used to have golden and silver utensils, but now they have plastic ones, and still they are very proud to be so materially advanced. What is your position? You have a bunch of paper and think, “I am a millionaire.” What is the value of that paper? Is that not cheating? However, if we possess gold or diamonds worth a million dollars, that is actual wealth. But we are educated in such a way that we think we are millionaires by paper only. As soon as there is some catastrophe, millions of such dollars could not buy bread. This actually happened in Germany; millions of marks could not purchase one piece of bread. All this is going on in the name of advancement of civilization, and the real purpose of life, God consciousness, is missing.
-Srila Prabhupada (Interview with the New York Times — September 2, 1972, New Vrindaban)
Damani adds, “ In fact a survey in the US that was conducted a couple of years back of CFOs, 70% of the CFOs said that they had always been pressurised to cook the books by the CEO, and a reasonable proportion of the 70% admitted to having cooked the books. And that is the US. So, the fact is that companies cook books.”
When asked whether market fears were legitimate that many more companies were propping up their books if not cooking them, he replied, “It is a great question and if you ask me, off the record, I could name you 50 companies where I am not convinced about the quality of earnings coming through the reports that they do. Beginning this quarter, the market will examine, with a whole new microscope or a whole new magnifying glass, to see exactly what the quality of earnings is. Is it legitimate, is the bank balance legitimate, and there are lot of well-created, highly liquid counters where we always puzzle and scratch heads as to how they produce these results in an operating environment that is so non-conducive. Companies will inevitably have to face analysts who are more hostile, auditors who are more hostile, and inevitably, there will be a lot of companies that fall through the crack.”
When asked whether market fears were legitimate that many more companies were propping up their books if not cooking them, he replied, “It is a great question and if you ask me, off the record, I could name you 50 companies where I am not convinced about the quality of earnings coming through the reports that they do. Beginning this quarter, the market will examine, with a whole new microscope or a whole new magnifying glass, to see exactly what the quality of earnings is. Is it legitimate, is the bank balance legitimate, and there are lot of well-created, highly liquid counters where we always puzzle and scratch heads as to how they produce these results in an operating environment that is so non-conducive. Companies will inevitably have to face analysts who are more hostile, auditors who are more hostile, and inevitably, there will be a lot of companies that fall through the crack.”
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Prabhupada: So one very important word is here: sadasvaih svarna-bhusitaih. Formerly the horses were used in military division. Horses, chariot, elephants and then infantry. So not one or two, but one division of military phalanx required sixty thousand horses. Aksauhini. So many horses, so many elephants, so many chariot, and so many infantry soldiers — that will compose one division of soldiers. So “so many” means the, I exactly remember now, sixty thousand horses. So all the horses, when they are required for procession or for going to the fight, were well-decorated with golden ornaments, svarna-bhusitaih. So just imagine the, all the saddles of the horse, if they are golden ornamented, how many ounces you will require to decorate the horse. And what is the price of gold now? |
Delta and Northwest Bankruptcy - A Similar Tale.
The America’s airline crisis took a stunning turn for the worse when Delta Air Lines Inc. and Northwest Airlines Corp. filed for bankruptcy in the face of massive losses in 2005.
Much of the problems of these airlines were caused by all the CFOs and MBAs hired to paint a rosy picture of earnings along with converting losses into profits through creative accounting.
The suited guys with absolutely no life experience, fresh off the MBA assembly line of Harvard, hired to replace the old-gen economists in the vain hope of increased efficiency.
Sure, it is all good, as long as the economy is coasting along. As soon as it hits a rough patch, it becomes necessary to lie, so that you may cover up the mess. And one lie leads to another, and another, and then the whole thing falls flat.
Much of the problems of these airlines were caused by all the CFOs and MBAs hired to paint a rosy picture of earnings along with converting losses into profits through creative accounting.
The suited guys with absolutely no life experience, fresh off the MBA assembly line of Harvard, hired to replace the old-gen economists in the vain hope of increased efficiency.
Sure, it is all good, as long as the economy is coasting along. As soon as it hits a rough patch, it becomes necessary to lie, so that you may cover up the mess. And one lie leads to another, and another, and then the whole thing falls flat.
It went to hell in a handbasket. I didn’t think this would happen to me. It’s just something that I don’t think that people think is going to happen to them, is what it amounts to. It happens very quickly, too.
-Barbara Harvey (A homeless living in car)
Time To Live In Cars Almost A Milliion US Homes Repossessed In 2008
Inventors of car thought of it as a means of transport. They never imagined that one day it will double up as home also. Well, That’s happening now in America with thousands becoming homeless overnight and living in cars.
Hundreds of thousands are being forced into homelessness after being laid off. More than 2.3 million American homeowners faced foreclosure proceedings in 2008 with more than 860,000 properties actually repossessed by lenders. This was more than double the 2007 level. The worst is yet to come as consumers grapple with layoffs, shrinking investment portfolios and falling home prices.
U.S. home values fell by $3.3 trillion in 2008. Since the housing market's peak in 2006, homes across the US lost $6.1 trillion in value. Approximately 22 percent of all American homeowners are underwater and owe more on their mortgages than what their home is worth.
In UK, year 2008 saw repossession of some 35000 homes with 168,000 mortgage borrowers at least three months in arrears. This number is expected to skyrocket in 2009.
Hundreds of thousands are being forced into homelessness after being laid off. More than 2.3 million American homeowners faced foreclosure proceedings in 2008 with more than 860,000 properties actually repossessed by lenders. This was more than double the 2007 level. The worst is yet to come as consumers grapple with layoffs, shrinking investment portfolios and falling home prices.
U.S. home values fell by $3.3 trillion in 2008. Since the housing market's peak in 2006, homes across the US lost $6.1 trillion in value. Approximately 22 percent of all American homeowners are underwater and owe more on their mortgages than what their home is worth.
In UK, year 2008 saw repossession of some 35000 homes with 168,000 mortgage borrowers at least three months in arrears. This number is expected to skyrocket in 2009.
If you write something which you do not believe in, are you not cheating? That means cheating. You take word, you are giving a piece of paper, and it is written there, “one thousand dollars.” That means you are cheating, in the name of God, he will accept you, that’s all. If you say, “No, I don’t want paper. Give me gold dollar,” then you are finished. Your currency will be finished. Immediately there will be revolution, that “The government is cheating us.” Actually it is cheating. What is the proof, value, of this paper, little paper? Simply “I promise to pay, governor and this...” But it is on trust only: “Yes, government will pay me.” They’ll never pay, but so long the government goes on, it will go on, that’s all, cheating will go on. And as soon government fails, you throw in the street, no one will care for it.
-Srila Prabhupada (Garden Conversation — June 22, 1976, New Vrindaban)
Nowhere To Live, All of A Sudden
Barbara Harvey, a 67-year-old Californian lady, climbs into the back of her small Honda sport utility vehicle and snuggles with her two dogs, her head nestled on a pillow propped against the driver’s seat.
She says she is forced to sleep in her car with her dogs after losing her job. She never thought she’d spend her golden years sleeping in her car in a parking lot. “This is my bed, my dogs,” she said. “This is my life in this car right now.”
Harvey was forced into homelessness this year after being laid off. She said that three-quarters of her income went to paying rent in Santa Barbara, where the median house in the scenic oceanfront city costs more than $1 million. She lost her house few months ago and had little savings as backup.
Harvey now works part time for $8 an hour, and she draws Social Security to help make ends meet. But she still cannot afford an apartment, and so every night she pulls into a gated parking lot to sleep in her car, along with other women who find themselves in a similar predicament.
There are 12 parking lots across Santa Barbara that have been set up to accommodate the growing middle-class homelessness. The lots open at 7 PM. and close at 7 AM. A growing number of senior citizens, women and middle-class families are living on the streets today.
She adds, “I see women sleeping on benches. It’s heartbreaking. The way the economy is going, it’s just amazing the people that are becoming homeless. It’s hit the middle class. It’s a tough existence. There are no showers or running water. I can’t drink liquids after 7pm as the public baths close by then.”
She says she is forced to sleep in her car with her dogs after losing her job. She never thought she’d spend her golden years sleeping in her car in a parking lot. “This is my bed, my dogs,” she said. “This is my life in this car right now.”
Harvey was forced into homelessness this year after being laid off. She said that three-quarters of her income went to paying rent in Santa Barbara, where the median house in the scenic oceanfront city costs more than $1 million. She lost her house few months ago and had little savings as backup.
Harvey now works part time for $8 an hour, and she draws Social Security to help make ends meet. But she still cannot afford an apartment, and so every night she pulls into a gated parking lot to sleep in her car, along with other women who find themselves in a similar predicament.
There are 12 parking lots across Santa Barbara that have been set up to accommodate the growing middle-class homelessness. The lots open at 7 PM. and close at 7 AM. A growing number of senior citizens, women and middle-class families are living on the streets today.
She adds, “I see women sleeping on benches. It’s heartbreaking. The way the economy is going, it’s just amazing the people that are becoming homeless. It’s hit the middle class. It’s a tough existence. There are no showers or running water. I can’t drink liquids after 7pm as the public baths close by then.”
War - A Fall out of Economic Collapse
An economic collapse is a devastating breakdown of a national, regional, or territorial economy. It is essentially a severe economic depression characterised by a sharp increase in bankruptcy and unemployment. A full or near-full economic collapse is often quickly followed by months, years, or even decades of economic depression, social chaos, and civil unrest. Such crises have both been seen to afflict capitalist market economies and state controlled economies.
Today it feels like the summer of 1931. The world's two biggest financial institutions have had a heart attack. The global currency system is breaking down. The policy doctrines that got us into this mess are bankrupt. No world leader seems able to discern the problem, let alone forge a solution. The International Monetary Fund has abdicated into schizophrenia. All these does not forebode well for an already unstable world
Historically, the causes for war have always been economic in nature, no matter what the official reasons were. Economic disintegration and war go hand in hand, as both have a similar, imperial root.
If world economies continue to disintegrate and fall apart, war would be a real threat. History is a witness that bucks have been the basis of the great wars. Two world wars were fought to counteract British colonialism and their financial exploitation of the whole world. Hitler termed the British as ‘Shopkeepers’ nation.” The Germans made better and cheaper products but all the world markets were forcefully occupied by the British. This led to the World Wars.
Modern word for unscrupulous colonials is corporations. Corporatisation is the modern way of colonizing the world. Today’s world is getting ground under the corporate jackboot. These huge corporations make obscene profits from human misery and they want the world to remain in misery. They run our health care industry. They run our oil and gas companies. They run our bloated weapons industry. They run Wall Street and the major investment firms. They run our manufacturing firms. They also, ominously, run our government. World is simply not a safe place in the shadows of these greedy monsters. They want profits - when economy thrives and they want profits - when economy dies. Profits in a dying economy means war. That’s the only way to go about it.
Today it feels like the summer of 1931. The world's two biggest financial institutions have had a heart attack. The global currency system is breaking down. The policy doctrines that got us into this mess are bankrupt. No world leader seems able to discern the problem, let alone forge a solution. The International Monetary Fund has abdicated into schizophrenia. All these does not forebode well for an already unstable world
Historically, the causes for war have always been economic in nature, no matter what the official reasons were. Economic disintegration and war go hand in hand, as both have a similar, imperial root.
If world economies continue to disintegrate and fall apart, war would be a real threat. History is a witness that bucks have been the basis of the great wars. Two world wars were fought to counteract British colonialism and their financial exploitation of the whole world. Hitler termed the British as ‘Shopkeepers’ nation.” The Germans made better and cheaper products but all the world markets were forcefully occupied by the British. This led to the World Wars.
Modern word for unscrupulous colonials is corporations. Corporatisation is the modern way of colonizing the world. Today’s world is getting ground under the corporate jackboot. These huge corporations make obscene profits from human misery and they want the world to remain in misery. They run our health care industry. They run our oil and gas companies. They run our bloated weapons industry. They run Wall Street and the major investment firms. They run our manufacturing firms. They also, ominously, run our government. World is simply not a safe place in the shadows of these greedy monsters. They want profits - when economy thrives and they want profits - when economy dies. Profits in a dying economy means war. That’s the only way to go about it.
Bank Runs And Currency Collapse
Prior to the 1800s, savers looking to keep their valuables in safekeeping depositories deposited gold coins and silver coins at goldsmiths, receiving in turn a note for their deposit. Once these notes became a trusted medium of exchange an early form of paper money was born, in the form of the goldsmiths' notes.
As the notes were used directly in trade, the goldsmiths observed that people would not usually redeem all their notes at the same time, and saw the opportunity to invest coin reserves in interest-bearing loans and bills. This left the goldsmiths with more notes on issue than reserves to pay them with. This generated income— a process that altered their role from passive guardians of bullion charging fees for safe storage, to interest-paying and earning banks. Thus ‘Fractional-reserve banking’ was born.
However, if creditors (note holders of gold originally deposited) lost faith in the ability of a bank to redeem (pay) their notes, many would try to redeem their notes at the same time. If in response a bank could not raise enough funds by calling in loans or selling bills, it either went into insolvency or defaulted on its notes. Such a situation is called a bank run and has caused the demise of many banks.
The collapse of Washington Mutual bank in September 2008, the largest bank failure in history, is an example of a "silent run" on the bank, where depositors removed vast sums of money from the bank through electronic transfer.
In year 2008 we witnessed many currencies suddenly collapse. Iceland, Argentina, Hungary, Ukraine and others all saw a sharp fall in the value of their currency.
When a currency loses the confidence of its people, its fall becomes exponential, as has happened to the Zimbabwe dollar. In 1982 one US dollar equalled one Zimbabwe dollar. Today around Z$200,000 buys one US $1. During World War II, German mark was used for making Cigars. Rampant inflation, current account deficits, lower interest rates, these all contribute to the currency collapse. Most of the currencies in the world, including major ones, have no asset backing. Governments simply print money whenever they need it or a crisis hits them. This leads to inflation and when a currency gets completely discredited, it collapses. Today the US dollar, the world currency, is in real danger of collapsing.
As the notes were used directly in trade, the goldsmiths observed that people would not usually redeem all their notes at the same time, and saw the opportunity to invest coin reserves in interest-bearing loans and bills. This left the goldsmiths with more notes on issue than reserves to pay them with. This generated income— a process that altered their role from passive guardians of bullion charging fees for safe storage, to interest-paying and earning banks. Thus ‘Fractional-reserve banking’ was born.
However, if creditors (note holders of gold originally deposited) lost faith in the ability of a bank to redeem (pay) their notes, many would try to redeem their notes at the same time. If in response a bank could not raise enough funds by calling in loans or selling bills, it either went into insolvency or defaulted on its notes. Such a situation is called a bank run and has caused the demise of many banks.
The collapse of Washington Mutual bank in September 2008, the largest bank failure in history, is an example of a "silent run" on the bank, where depositors removed vast sums of money from the bank through electronic transfer.
In year 2008 we witnessed many currencies suddenly collapse. Iceland, Argentina, Hungary, Ukraine and others all saw a sharp fall in the value of their currency.
When a currency loses the confidence of its people, its fall becomes exponential, as has happened to the Zimbabwe dollar. In 1982 one US dollar equalled one Zimbabwe dollar. Today around Z$200,000 buys one US $1. During World War II, German mark was used for making Cigars. Rampant inflation, current account deficits, lower interest rates, these all contribute to the currency collapse. Most of the currencies in the world, including major ones, have no asset backing. Governments simply print money whenever they need it or a crisis hits them. This leads to inflation and when a currency gets completely discredited, it collapses. Today the US dollar, the world currency, is in real danger of collapsing.
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Why this hypocrisy? In the schools, colleges, you are forbidding, “Don’t talk of God,” and on the bills you are writing, “In God We Trust.” That means if the bill is not paid, don’t be dissatisfied, you trust in God.(laughs) Although I’m giving you a piece of paper, don’t hesitate to take it. Trust in God, it will be paid. They write, “I promise to pay,” but people may not have faith in this word. Actually, I’m paying you hundred rupees — or a thousand rupees-worth currency note, but actually it is paper. But only on faith and trust I’m accepting it, it is one thousand dollars. That much. In last war, the Germany, marks note were thrown in the street. And the bunch of note, taken to the confectioner, “Give me a piece of bread,” There is no bread; they throw away. It happened, actually. So these notes are accepted on the understanding that the government will pay. But time may be there when government may be not able to pay. And it has been practically experienced in the last war. |
