Dumb MOney Baby

For my friends who are very young in markets or want to invest.

Dumb Money—and that is how Wall Street(any market) classifies outsiders—always does what most benefits Wall Street. Dumb Money buys stocks when it should sell, and panics and sells when buying makes more sense. This is a primary reason why Wall Street makes so much money when most everyone else fails, or inches forward, in the stock market. If not for the positive effect of inflation, and corporate stock dividends, which represent more than 45 percent of historical stock gains, most investors would have sharply smaller investment portfolios.
Now, as Baby Boomers confront retirement, and younger generations worry they will not live as well as their parents, millions of people are beginning to understand that they must get much smarter, much faster, about the stock market if they ever want to retire, pay for their children’s college educations, or lead lives that eventually bear some semblance of financial ease. The old ideas of coasting toward retirement by regularly investing in stocks and effortlessly doubling stock portfolio values every seven or so years as the stock market advanced are no longer valid. The Credit Crisis of 2007, and Europe’s sovereign debt crisis that sparked in 2009, have unleashed new financial realities that are likely to prove true Wall Street’s adage that the stock market hurts the most people, most of the time. Yet, the future need not be as difficult as the recent past. A well trod path exists that anyone can follow to better deal with Wall Street and the stock market. This path has quietly existed for centuries. The path was carved out, and continually refined, by a small group of people who typically avoid the financial calamities that ensnare everyone else. This group of investors has historically dominated the financial market, and quietly snickered at the widespread idea, birthed in the late nineteenth century by John Stuart Mill, that people can make rational financial decisions. Mill called his idea Homo economicus. He declared his Economic Man capable of making decisions to increase his wealth. Mill’s man has persisted ever since like some financial Frankenstein even though the financial markets are so complex—especially in the past 40 years—that it is increasingly apparent that Mill’s man, today known simply as John and Jane Investor, has great difficulty profitably navigating the stock market. In sharp contrast to Mill’s incarnation is a small group of people who make more money than they lose. In keeping with Mill’s use of Latin, think of people in that group as Homo Indomitabilis. Bad investors think of ways to make money. Good investors think of ways to not lose money. Those 17 words are the most important words any investor can know. Learn the meaning of those words, and you have a chance of real success in the stock market. The difference between the idea of the good investor and bad investor is profound. One idea ensures you eventually give back profits, and likely some, or all, of your initial investment, to Wall Street. The other one lets you keep much of what you make. Though the good investor rule seems like common sense, it is not well known off Wall Street. This is one reason why so many people fail in the market, or are swept along with the crowd, because they lack a simple, proper, disciplined framework to make investing decisions. Most people are interested in getting rich, and getting rich fast. They try that approach again and again and again, often taking on more risk to make profits and recoup losses. Often, this ends poorly. Still, they continue to climb back up the stock market’s risk ladder, chasing the higher returns of riskier investments without truly understanding the risks they are taking, or even why they failed. The issue is not necessarily that people are too greedy for their own good, or not smart enough to understand how to navigate the stock market. The issue is that the United States very quickly morphed from a nation of savers to investors. People who once saved money in passbook savings accounts have since the mid-1970s been increasingly thrust into the stock market—even though they were, and often remain, effectively financially illiterate. These new investors use ideas that work on Main Street—but not Wall Street. The disconnect is now lethal. Rather than simply hoping the economy improves, or that another bull market erases people’s financial problems, it is better to focus on the facts and ideas on Wall Street that are made truer by time, and that have long kept the best investors safe when others have stumbled. If you think people learn anything from losing money, you are wrong. The people who lose the most money, at least in the stock market, are often the most anxious to recoup their losses. The reasoning is fascinating, and it is a key to understanding why investors are stuck in a boom-and-bust cycle. “If someone had a lot of money in the market, and then loses it, they respond by jumping back into the market because the risk of not making money is greater than the risk of losing what they have left,” says Mark Taborksy, a former portfolio strategy chief at PIMCO, one of the world’s largest money-management firms, who now works at Blackrock, another major firm.1 Gib McEachran, a financial planner in Greensboro, North Carolina, regularly deals with investors who have fallen off the risk ladder, and are eager to get back on. In late 2009, a retired couple with a $1.6 million investment portfolio came to his office for help. At the height of the Internet bubble, the couple’s account was worth $2.3 million. Rather than focusing on how the money could be managed to provide them with retirement income, the man, a former engineer, wanted to know how McEachran would recoup the lost $600,000. His wife eventually told him to be quiet and listen. (Women, studies show, are more risk averse than men.)2 Even though there is so much anger toward Wall Street in the wake of what is  now called the Global Financial Crisis that started in 2007, and that is now enveloping Europe, there is no escaping the market—only learning how to deal with it.

vocab

What is the difference between ‘peppy’ and ‘happy’?

(Vinay Kumar, Coimbatore)

‘Peppy’ comes from the word ‘pep’ meaning ‘lively’ or ‘energetic’. When you refer to a person as being ‘peppy’, you mean that he is bouncing around and is full of energy. The word can be used with things as well; a peppy car is one that moves fast, and a peppy song is one that is lively or fast paced.

The word is mostly used in informal contexts in American English. Some people regard it as being old fashioned. ‘Happy’, on the other hand, suggests contentment or pleasure. It could be a state of mind. Grandparents are usually happy to see their grandchildren — when they see them, they usually break into a smile, not necessarily a dance! A happy individual is not necessarily peppy.

What is the meaning of ‘He is a basket case’?

(B.C. Koshy, Bangalore)

It means that the individual is an emotional wreck. When you say that someone is a ‘basket case’, you are suggesting that he is so nervous or so tired that he is incapable of thinking clearly. He has lost it mentally. When used with businesses, it means it is close to failure or ruin.

* On the morning of the interview, Latha was a complete basket case.

* Once his son took over, Sunder’s business became a financial basket case.

The term was first used during World War I to refer to soldiers who had lost both their arms and legs. Since the amputees could not move on their own, they were carried around in baskets.

Is it okay to say, ‘Don’t take tension’?

(Yogesh Chitte, Pune)

Native speakers of English would not say this. They would probably say, ‘don’t let the tension get to you’, ‘don’t get tense’, etc.

The expression, ‘don't take tension’ is an Indianism; it is a translation of what we say in our mother tongue. When we use the English word ‘tension’ in an Indian language, the verb that we commonly use with it is ‘take’: for example, in Hindi, we say, ‘tension muth le’.

How is the word ‘sepulchre’ pronounced?

(Rita Sharma, Kanpur)

The first syllable rhymes with ‘pep’, ‘rep’ and ‘hep’. The vowel in the second syllable and the final ‘re’ sound like the ‘a’ in ‘china’. The ‘ch’ is like the ‘k’ in ‘king’ and ‘kiss’. The word is pronounced ‘SEP-el-ke’ with the stress on the first syllable. It comes from the Latin ‘sepulcrum’ meaning ‘burial place’. It is different from a graveyard and cemetery. A sepulchre is a burial chamber made of stone; the casket placed in the room is also usually made of stone. In American English, the word is spelt ‘sepulcher’.

What is the meaning of ‘have one’s hand in the till’?

(M.N. Anuvarudheen, Palakkad)

The ‘till’ in the expression refers to a moneybox or cash register. So, when you have your ‘hand/fingers in the till’, you have easy access to your employer’s cash register. The idiom is mostly used to suggest that you are stealing from the person/organisation that has employed you. Americans tend to say ‘cookie jar’ instead of ‘till’.

* You couldn’t have bought this house on your salary. You must have your hand in the till.

******

“That politician is nothing but a ‘sneak’ in the grass.” — Clive Bishop

Grammer

You never mean: preventative You always mean: preventive Why: Grammar sovereign H. W. Fowler banned the long form almost a hundred years ago. So someone who is health conscious might seek preventive care; responsible homeowners might take preventive measures to keep their roof from leaking.

You almost never mean: infamous You almost always mean: famous Why: The rich and famous are widely known (and wealthy). But the rich and infamous have a reputation of the worst kind (… and money, which doubtless has dubious origins). Another way to look at it: Unless Aunt Donna’s chocolate chip cookies are notoriously evil and disgraceful, they are famous, not infamous.
You might say: evoke You might mean: invoke Why: A photograph evokes emotion; a joke evokes laughter—evoke means “to elicit or call forth.” Save invoke for when you mean “to call on a higher power, petition for support, or implement” (for example, “Allison invoked Robert Frost for her first assignment” or “The principal invoked the aid of the teachers”).
You might say: denounce You might mean: renounce Why: The two may sound similar, but their meanings are distinct: Denounce is “to condemn publicly or accuse formally” (“The judge denounced the CEO for insider trading”), while renounce means “to give up or refuse to follow” (“The CEO renounced his not-guilty plea”).
You might say: uninterested You might mean: disinterested Why: Careful speakers who wish to convey a lack of bias want to use disinterested. Speakers who don’t care about such grammatical subtleties are uninterested.
You never mean: “Jane, Andrew, and myself are going…”

You always mean: “Jane, Andrew, and I are going…”
Why: Myself is notoriously misused for I or me, often because people are trying (too hard, it seems) to sound smarter (wrong: “My husband and myself have belonged to the country club for years”). Myself is a pronoun best reserved for reflexive uses (when an action is directed toward the subject: “For Christmas, I gave myself a gift”) or for emphasis (“I myself have done that many times”).
You might say: former

You might mean: latter
Why: The difference is clear-cut, yet writers and speakers sometimes muff these two: Simply, former is the first of two; latter is the second. (And while we’re at it, formerly vs. formally: The former means “at an earlier time,” as in “Formerly the governor of California, Schwarzenegger …”; the latter means “by an established form or structure,” as in “The school is formally called the University of California at Los Angeles.”)
You almost never mean: neither/either are
You almost always mean: neither/either is
Why: Both neither and either are singular pronouns and should take a singular verb. Confusion sets in when the verb appears far from its subject or when a plural object falls after it: “Turns out, neither of the usually mischievous dogs were [read: was] responsible for tearing up the pillows; the cat wast to blame.”
You never mean: fall between the cracks
You always mean: fall through the cracks
Why: Logically speaking, you can’t fall between an opening; you fall into or through it. As such, don’t let logic fall through the cracks when you use this idiom.
You might say: mute
You might mean: moot
Why: Moot‘s most common meaning is “deprived of practical significance.” Mute means silent. So while they might want to be mute about a moot point, careful speakers will be vocal about the difference.
You almost never mean: just desserts
You almost always mean: just deserts
Why: When you want someone to get what he deserves, you hope he reaps his just deserts. But on her birthday, a particularly well-behaved three-year-old might be allowed in just desserts.
You never mean: modern-day
You always mean: modern
Why: Quite simply, modern covers it. Modern-day is a redundant term. Modern speakers will sound smarter by using the superior word.
You might write: so-called “good grammar”
You mean to write: so-called good grammar
Why: So-called introduces a term as falsely, improperly, or commonly referred to as something. So by default, it covers the need for quotation marks (or a speaker’s air quotes).
You might say: exuberant
You might mean: exorbitant
Why: While both mean “extreme,” the terms are often confused in relation to money. Exuberant refers to unrestrained enthusiasm or flamboyance; exorbitant means “exceeding an appropriate amount.” Another way to look at it: Exuberant use of a credit card leads to an exorbitant bill down the road.
You might say: come
You might mean: go
Why: Come refers to movement toward the speaker (Henri says, “Come to Paris!”); go denotes the opposite (After you’ve stayed two months, Henri says, “You should go”). But idiomatic use sometimes clouds this rule, as “I’ll come over” is more comprehensible than “I’ll go over.”
You might say: jealous
You might mean: envious
Why: Great grammarian Bryan Garner reminds us that “jealousy connotes feelings of resentment toward another, particularly in matters relating to an intimate relationship,” while “envy refers to covetousness of another’s advantages, possessions, or abilities.” So your ex is jealous of your new boyfriend but envious of your ability to use these two terms correctly.

Tame my flesh fiix my eyes

And I came home
Like a stone
And I fell heavy into your arms
These days of darkness
Which we've known
Will blow away with this new sun

And I'll kneel down
Wait for now
And I'll kneel down
Know my ground

And I will wait, I will wait for you
And I will wait, I will wait for you

So break my step
And relent
You forgave and I won't forget
Know what we've seen
And him with less
Now in some way
Shake the excess

But I will wait, I will wait for you
And I will wait, I will wait for you
And I will wait, I will wait for you
And I will wait, I will wait for you

So I'll be bold
As well as strong
And use my head alongside my heart
So tame my flesh
And fix my eyes
That tethered mind free from the lies

But I'll kneel down
Wait for now
I'll kneel down
Know my ground

Raise my hands
Paint my spirit gold
And bow my head
Keep my heart slow

Cause I will wait, I will wait for you
And I will wait, I will wait for you
And I will wait, I will wait for you

Power Nap

Power Nap Soundscapes App for iOS Get It For: Free The best way to beat stress is a quick power nap. And this app helps you catch some badly needed z’s. It masks distracting noises in your environment with a good selection of neutral audio tracks. It induces sleep with continuous soundscapes devoid of lyrics.
Relax & Sleep Well App for iOS& Android Get It For: Free Glenn Harrold, one of UK’s leading hypnotherapists and self-help audio authors, knows how to make even stressed-out celebrities relax. The Relax & Sleep Well app brings Harrold's voice and background sound effects to give fatigued, sleep-deprived folks a 27-minute session.
Relax Timer (SleepCycle) App for Android, Get It For: Free A relaxing app for a relaxing slumber, Relax Timer makes you listen to soothing sounds like nature loops and soft melodies. An interesting feature is a sleep cycle tracker, which records your sleeping patterns.
Sleep Cycle Alarm Clock App for iOS, Get It For: $0.99 If you don’t want a rude alarm-clock jolt that makes you sit up from the depths of slumber, try this intelligent alarm clock that analyses your sleep and wakes you up in the lightest sleep phase. Get up feeling rested and relaxed.
Stop Snoring App for iOS, Get It For: Free This app helps people who have problems with snoring. It first detects snoring and then emits sounds that will disturb the snorer’s sleep and prevent recurrent snoring. The app features a catalogue of pre-recorded sounds to alert you and gives you the option of recording your own sounds.

Maths has the edge

Mathematics as the subject you will earn is hard to believe in this country unless you are a professor or a teacher in school or a private tution teacher to students who are weak but the mncs in India are wanting then everbefore people who are good in mathematics and actuaries. 
Sequencing a person’s genome is an expensive and complicated exercise, but the benefits can be enormous if done well and quickly. You could calculate the risk of getting major diseases, develop new drugs, or provide targeted therapies. But because of the cost and difficulty, routine gene-sequencing has not started in a big way in India. Strand Life Sciences, a Bangalore-based life sciences company, decided recently to test the waters with a pilot project. It has sequenced the genome of about 20 people, and hopes to start a commercial service soon.
    Such a service would have been unthinkable even two years ago. To sequence a genome quickly, the DNA has to be chopped up into bits and the pieces sequenced separately. Assembling these pieces of information into a meaningful whole is difficult, and requires special resources and mathematical techniques.
    Instrumentation technology has advanced rapidly in recent times, but some of the most dramatic improvements have been in mathematical techniques.
    And these have resulted in a precipitous drop in the cost of gene sequencing, which is now set to make a high impact on our lives. “Genome data is very different from other data,” says Ramesh Hariharan, chief technology officer, Strand Life Sciences. “But algorithms and special mathematical techniques to deal with it have improved rapidly in the last two years.”
The Plus Factor It is a quiet revolution happening away from public view, but it is going to transform technology and business. As mathematical techniques improve, many day-today problems are being solved mathematically, thereby helping companies and governments take better decisions and forecast trends more accurately. Some of it is led by big data analytics companies, but the trend is deeper and more widespread than big data. A data-rich world is infinitely interesting to applied mathematicians, as they look for beautiful patterns and striking correlations among the huge amounts of data being collected every day. Says Bernard Meyerson, vice-president, IBM Research: “The magic of mathematics is the only way to discover useful information from so much data.”
    In recent times, IBM Research has been using mathematics to investigate some uniquely Indian problems like low-cost traffic speed analysis and standardisation of addresses. Across the world, IBM employs arguably the largest pool of mathematicians in a private organisation. They look at the world in a distinctly mathematical way, breaking down conventional business problems into equations that can be solved by modern computers. IBM is representative of a larger trend in the technology world, as private companies use mathematics increasingly to solve a variety of problems from customer acquisition to predicting infant mortality.
    In the last few years, IBM has invested $15 billion in companies with such capabilities. During this period, its engineers have applied this capability to a mindboggling variety of situations. They have used mathematics to predict failures in semiconductor plants, plan marketing campaigns, understand visitor behaviour on websites, manage public water supply, and spot infections in infants well before the symptoms manifest. Apart from core industrial areas, IBM also
    researches topics like astrophysics,
    genomics and climate change because its mathematicians have seen fascinating connections between natural phenomena and its core businesses.
Number Power Other IT companies are building this capability through acquisitions or by hiring a large number of applied mathematicians. Business analytics is an industry built around statisticians and computer scientists, both of whom are applied mathematicians in different garbs. Internet start-ups need good mathematicians for their existence. Telecom companies need them to learn how to retain customers. Life sciences companies require them to model the body’s processes or discover whether drugs are effective or not. Financial companies, after learning valuable lessons in 2007 and 2008, are now using mathematicians to question the assumptions behind their models and develop more dependable ones for the next decade.
    Oil companies use increasingly sophisticated mathematics for oil discovery and extraction. The emerging breed of complexity theorists looks at the social world in new ways, and are trying to understand collective human behaviour using mathematics. Amidst all this, a large number of IT companies now use sophisticated mathematics for their routine operations, far more than they did a decade ago. Many of the methods are not new, but mathematicians have found new ways of combining them. “Statistical models have improved considerably in the past 10 years,” says Leland Wilkinson, founder of the statistical software company Systat. “You can now get huge leverage by combining Bayes’s theorem and multivariate analysis, or graph theory and Bayesian statistics.”
    Many start-ups now flaunt their mathematical capability strategically. Take the Chicago-based Mu Sigma, set up in 2004. Named after two Greek letters used in probability theory, it has raised $163 billion in the past five years, about four-fifths of it just last year. A single investment of $108 million last year was among the largest ever in an analytics services company.
    Mu Sigma tackles problems like pricing of insurance policies, understanding customer loyalty to retailers, designing sales-force compensation tiveness, assessing airline ty, predicting product diffu so on. In a recent project, some of its consultants had to learn geophysics as found patterns of Himalay snow-melting matching with the business problem it was trying to solve. “Mathematics is our differentiation,” says Mu Sigma founder Dhiraj Rajaram, “and it combines art and science with scale.”
    The kind of mathematics that Mu Sigma uses is now fairly established in the analytics industry: statistics and probability theory, operations research, artificial intelligence, machine learning. At the heart of many analytics companies is Bayesian statistics, derived originally from the century-old Bayes Theorem, but combined with iner areas.
ematics of human has inspired many s. Genetic algohich originated in but now present in sophisticated forms, are widely used for optimisation of resources. Optimisation is indeed a major problem tackled by many internet companies, as their businesses depend on how it optimises traffic and revenue. “Our ability to analyse big data is still limited by technology,” says Srinivasan Seshadri, former IIT professor and founder of Bangalorebased Allthingscustomized.com. “I expect this to improve in the next few years.”
Microsoft Puts
Two and Two Together Rapid technological development in the past decade has brought us to this situation. One big step was the development of cheap hardware and huge server farms. Rackmounted clusters in a single location can now handle big problems by parallel computing. Recent algorithms have revolutionised parallel computing by chopping problems into small bits, Google’s MapReduce being one good example. The third revolution is in mathematics itself. A combination of topics in statistics, probability theory and computer science has produced highly effective methods.
    A few big IT companies hire top mathematicians in large numbers and let them work in their area of choice. Microsoft Research has turned this into a fine art. “You have to be a star to be hired to Microsoft Research,” says P Anandan, managing director, Microsoft Research India. “And we never tell them what to do.” But the company engineers have gained immensely by the presence of so many top-ranking mathematicians in their midst. “I am sure a lot of their ideas have gone into Bing, and it has made its search results at least as good as that of Google,” says Anandan.
    Ravi Kannan, principal researcher at Microsoft Research, was a professor at Yale University and a winner of the Knuth Prize, the highest award in theoretical computer science. “Microsoft realised early on that research mathematics, the kind of mathematics you do years after a PhD, is very useful, although not directly to make a product,” says Kannan.
    Abstract mathematics can be useful in unforeseen ways. The world, as we perceive it, is in three dimensions, but the mathematics of space in 10,000 dimensions is useful for big data analytics. Kannan does some of this work in his lab in Bangalore.
    Also working on abstract mathematics is Madhu Sudan, formerly a professor at the Massachusetts Institute of Technology, but now at the Microsoft lab near Boston. Some years ago, he had won the Rolf Nevanlinna Prize for his work on probabilistically checkable proofs. “Mathematics gives deeper solutions to traditional problems,” he says. Among the problems he has tackled is the mathematics of communication, especially the challenges of modelling uncertainty in communication. Engineers, interested in sending bits accurately, are focused on reliability of communication. Madhu Sudan focuses on the meaning of the messages, and investigates whether the sender and the receiver understand this meaning.
    Another set of mathematicians, known as complexity theorists, is looking for simple ways to understand complicated stuff. At the New England Complex Systems Institute in Boston, Yaneer Bar-Yam looks at social problems through the lens of mathematics. He has published a study with a startling conclusion: the Arab Spring may have been an illusion. This is because societies are sophisticated structures that evolve like organisms, and revolutions disrupt the complex web of dependencies and create simpler systems. “Constructing a theory of governmental change from the perspective of complex systems can explain and perhaps anticipate the outcomes of revolutions,” says Bar-Yam.
    Mathematicians have finally crept into even one of the most non-mathematical of entities: societal change.
Figure It Out Who is an applied mathematician? Anyone who uses mathematics to solve problems. In practice, it is someone who has advanced degrees in mathematics or a related discipline, and combines mathematical techniques with their domain knowledge to solve industrial problems
How do you become one? By getting a master’s or a doctorate degree in applied mathematics, computer science, statistics or physics
Who needs applied mathematicians? Finance companies, internet companies, analytics companies are big recruiters. Also, software, life sciences, manufacturing, among other industries look to mathematicians
What is the salary like? The median salary in developed countries is slightly below $100,000 a year. In India, start-ups employ applied mathematicians at salaries higher than that of software engineers
What does the future hold? The demand is increasing. The Bureau of Labour Statistics, US, expects jobs for mathematicians to grow 22% till 2018
Big Data Crunchers As we collect and store huge amounts of data, scientists are developing mathematical techniques that can analyse this data. Most of them are at the confluence of mathematics and three different fields — statistics, computer science and physics Mathematics in Action
Analysing Real-time Data Infections in ICU is a major reason for infant mortality. IBM has developed a model to monitor 4,000 physiological parameters every second. It predicts an infection 24 hours before symptoms manifest
Thinking in Many Dimensions Some Microsoft mathematicians study space in 10,000 dimensions. It turns out that 10,000-dimension space is useful to analyse network traffic
Simplifying it With Complex System The New England Complex System Institute analysed the euro crisis and concluded that the crisis is real but market overreaction drove up the interest rates making politicians too to overreact

Mark thoma coin report

He is one of the respected minds in the US, from the university of oregon here is his report.
I haven't said anything about the platinum coin option, until now, because I am of two minds about it. One part of me says this is a very bad idea. We all understand the intent of the law that would allow this, to permit commemorative coins to be minted. Do we really want leaders who are willing to take advantage of any loophole to do things that are contrary to the intent of a law just because it suits their purposes? How can the public trust Democrats to be responsible if they are willing to do things like this? What other stunts might they pull? If they want to go to war, attack Iran for example, does this mean they will take a Bushian approach and 'just do it' no matter what the intent of the constitution is on these matters? I don't want those kinds of leaders.
But what do you do if the other side refuses to play by the traditional rules? What if they are already using tactics that push far beyond the intent of congressional rules to impose their will? If one side is ignoring the traditional rules of engagement and hiding behind trees rather than marching in straight battle lines, is it okay to do so yourself? If the other side tortures, does that mean you should?
For torture, the answer is no, but in this case I think the answer is different. The Republicans will not play by fair rules of engagement, and worse they have taken members of the public hostage as a way to win/influence the battle (Saddam's human umbrellas come to mind). If we don't get our way, we'll crash the economy and hurt people -- the threat is clear. Obama, in his role of leader of all, not just Democrats, has chosen to, in effect, pay the ransom by giving in on key issues. But if the hostages can be freed another way, one that avoids giving in to the hostage-takers, it ought to be considered.
So perhaps it's okay to match ridiculous tactics with ridiculous responses. Mint the coin, but make absolutely sure the public knows that it is only being done because the other side refuses to play fair, refuses to play by the explicit and implicit rules of political engagement. That's key to winning the battle for public.

ECONOMICS

Principles of economics apply around the world and have applied over thousands of years of recorded history. They apply in many very different kinds of economies—capitalist, socialist, feudal, or whatever—and among a wide variety of peoples, cultures, and governments. Policies which led to rising price levels under Alexander the Great have led to rising price levels in America, thousands of years later. Rent control laws have led to a very similar set of consequences in Cairo, Hong Kong, Stockholm, Melbourne, and New York. So have similar agricultural policies in India and in the European Union countries. Differences in economic practices from one country to another are also revealing. There were economic reasons why manufacturing enterprises in the days of the Soviet Union kept almost enough inventory on hand to last a year, while inventories of supplies in some Japanese companies like Toyota are only enough to last a matter of hours, with new parts and equipment arriving at the factory at various times during the day, to be unloaded from trucks and installed immediately on cars as they are being assembled. Both of these very different inventory policies had a rational basis, given the very different kinds of economic systems in which they existed. Economics is more than just a way to see patterns or to unravel puzzling anomalies. Its fundamental concern is with the material standard of living of society as a whole and how that is affected by particular decisions made by individuals and institutions. One of the ways of doing this is to look at economic policies and economic systems in terms of the incentives they create, rather than simply the goals they pursue. This means that consequences matter more than intentions—and not just the immediate consequences, but also the longer run repercussions of decisions, policies, and institutions. Nothing is easier than to have good intentions but, without an understanding of how an economy works, good intentions can lead to disastrous consequences for a whole nation. Many, if not most, economic disasters have been a result of policies intended to be beneficial—and these disasters could often have been prevented if those who originated and supported such policies had understood economics. Many people agree on the importance of economics, but there is much less agreement on just what economics is. Among the misconceptions of economics is that it is something that tells you how to make money or run a business or predict the ups and downs of the stock market. But economics is not personal finance or business administration, and predicting the ups and downs of the stock market has yet to be reduced to a dependable formula. To know what economics is, we must first know what an economy is. Perhaps most of us think of an economy as a system for the production and distribution of the goods and services we use in everyday life. That is true as far as it goes, but it does not go far enough. The Garden of Eden was a system for the production and distribution of goods and services, but it was not an economy, because everything was available in unlimited abundance. Without scarcity, there is no need to economize—and therefore no economics. A distinguished British economist named Lionel Robbins gave the classic definition of economics: Economics is the study of the use of scarce resources which have alternative uses.     In other words, economics studies the consequences of decisions that are made about the use of land, labor, capital and other resources that go into producing the volume of output which determines a country’s standard of living. Those decisions and their consequences can be more important than the resources themselves, for there are poor countries with rich natural resources and countries like Japan and Switzerland with relatively few natural resources but high standards of living. The values of natural resources per capita in Uruguay and Venezuela are several times what they are in Japan and Switzerland, but income per capita in Japan and Switzerland is about double that of Uruguay and several times that of Venezuela.
The decisions that influence such outcomes are not only the decisions of individuals, or industrial or agricultural enterprises, or the policies of governments. Among the major decisions affecting economic outcomes are decisions about what kinds of enduring institutions a society has for making those decisions—what kind of economic system, operating within what kind of legal system, and controlled by what kind of political system. In analyzing all these decisions and examining the evidence of their consequences, it is crucial to keep in mind at all times that the resources being used are both scarce and have alternative uses. When a politician promises that his policies will increase the supply of some desirable goods or services, the question to be asked is: At the cost of less of what other goods and services? What does “scarce” mean? It means that what everybody wants adds up to more than there is. What this implies is that there are no easy “win-win” solutions but only serious and sometimes painful trade-offs. This may seem like a simple thing, but its implications are often grossly misunderstood, even by highly educated people. For example, a feature article in the New York Times laid out the economic woes and worries of middle-class Americans—one of the most affluent groups of human beings ever to inhabit this planet. Although this story included a picture of a middle-class American family in their own swimming pool, the main headline read: “The American Middle, Just Getting By.” Other headings in the article included: Wishes Deferred and Plans Unmet     Goals That Remain Just Out of Sight   Dogged Saving and Some Luxuries In short, middle-class Americans’ desires exceed what they can comfortably afford, even though what they already have would be considered unbelievable prosperity by people in many other countries around the world—or even by earlier generations of Americans. Yet both they and the reporter regarded them as “just getting by” and a Harvard sociologist was quoted as saying “how budget-constrained these people really are.” But it is not something as man-made as a budget which constrains them: Reality constrains them. There has never been enough to satisfy everyone completely. That is the real constraint. That is what scarcity means. Although per capita real income in the United States increased 51 percent in just one generation, these middle-class families “have had to work hard for their modest gains,” according to a Fordham University professor quoted in the same article. However, it is doubtful whether most other people in the world would regard Americans’ work in air-conditioned offices with coffee breaks as “hard” or their standard of living as “just getting by.” Still, the situation seemed to be viewed as not wholly satisfactory, and perhaps even puzzling, by the people themselves. The New York Times reported that one of these middle-class families “got in over their heads in credit card spending” but then “got their finances in order.”
“But if we make a wrong move,” Geraldine Frazier said, “the pressure we had from the bills will come back, and that is painful.”   To all these people—from academia and journalism, as well as the middle-class people themselves—it apparently seemed strange somehow that there should be such a thing as scarcity and that this should imply a need for both productive efforts on their part and personal responsibility in spending. Yet nothing has been more pervasive in the history of the human race than scarcity and all the requirements for economizing that go with scarcity. Regardless of our policies, practices, or institutions—whether they are wise or unwise, noble or ignoble—there is simply not enough to go around to satisfy all our desires to the fullest. “Unmet needs” are inherent in these circumstances, whether we have a capitalist, socialist, feudal, or other kind of economy. These various kinds of economies are just different institutional ways of making trade-offs that are inescapable in any economy. Economics is not just about dealing with the existing output of goods and services as consumers. It is also, and more fundamentally, about producing that output from scarce resources in the first place—turning inputs into output. Not only scarcity but also “alternative uses” are at the heart of economics. If each resource had only one use, economics would be much simpler. But water can be used to produce ice or steam by itself or innumerable mixtures and compounds in combination with other things. Nitroglycerine is a powerful explosive but it is also used medically to ease chest pains. Similarly, from petroleum comes not only gasoline, kerosene, and fuel oil, but also plastics and Vaseline. Iron ore can be used to produce steel products ranging from paper clips to automobiles to the frameworks of skyscrapers. How much of each resource should be allocated to each of its many uses? Every economy has to answer that question, and each one does, in one way or another, efficiently or inefficiently. Doing so efficiently is what economics is all about. Different kinds of economies are essentially different ways of making decisions about the allocation of scarce resources—and those decisions have repercussions on the life of the whole society. During the days of the Soviet Union, for example, that country’s industries used more electricity than American industries used, even though Soviet industries produced a smaller amount of output than American industries produced. More steel, cement, and other resources used for producing a given output likewise resulted in less output in the Soviet Union than in countries such as Japan or Germany. Such inefficiencies in turning inputs into outputs translated into a lower standard of living, in a country richly endowed with natural resources—perhaps more richly endowed than any other country in the world. Russia is, for example, one of the few industrial nations that produces more oil than it consumes. But an abundance of resources does not automatically create an abundance of goods. In early twenty-first century China, seven times as much energy has been used to produce a given value of output as Japan uses to produce that same value of output. Here again, huge differences in efficiency have meant huge differences in standards of living for millions of human beings. Efficiency in production—the rate at which inputs are turned into output—is not just some technicality that economists talk about. It affects the life of whole societies. When visualizing this process, it helps to think of the real things—the iron ore, petroleum, wood and other inputs that go into the production process and the food, furniture, and automobiles that come out the other end—rather than think of economic decisions as being simply decisions about money. Although the word “economics” suggests money to some people, for a society as a whole money is just an artificial device to get real things done. Otherwise, the government could make us all rich by simply printing more money. It is not money but the volume of goods and services which determines whether a country is poverty stricken or prosperous. Economics is not about the financial fate of particular individuals or particular enterprises. It is about the material well-being of society as a whole. When economists analyze prices, wages, profits, or the international balance of trade, for example, it is from the standpoint of how decisions in various parts of the economy affect the allocation of scarce resources in a way that raises or lowers the material standard of living of the people as a whole. Economics is not simply a topic on which to express opinions or vent emotions. It is a systematic study of what happens when you do specific things in specific ways. In economic analysis, the methods used by a Marxist economist like Oskar Lange did not differ in any fundamental way from the methods used by a conservative economist like Milton Friedman. It is these basic economic principles that this book is about. While there are controversies in economics, as there are in science, this does not mean that the basic principles of economics are just a matter of opinion, any more than the basic principles of chemistry or physics are just a matter of opinion. Einstein’s analysis of physics, for example, was not just Einstein’s opinion, as the world discovered at Hiroshima and Nagasaki. Economic reactions may not be as spectacular or as tragic, as of a given day, but the worldwide depression of the 1930s plunged millions of people into poverty, even in the richest countries, producing malnutrition in countries with surplus food, probably causing more deaths around the world than those at Hiroshima and Nagasaki. Conversely, when India and China—historically, two of the poorest nations on earth—began in the late twentieth century to make fundamental changes in their economic policies, their economies began growing dramatically. It has been estimated that 20 million people in India rose out of destitution in a decade. In China, the number of people living on a dollar a day or less fell from 374 million—one third of the country’s population in 1990—to 128 million by 2004, now just 10 percent of a growing population. In other words, nearly a quarter of a billion Chinese were now better off as a result of a change in economic policy.

Economics is a tool of analysis and a body of tested knowledge—and of principles derived from that knowledge.

Rage Against the Coin by Krugman

(From Talking Points Memo).
Well, the trillion-dollar-coin thing — deal with the debt ceiling by exploiting a legal loophole to have the Treasury mint one or more large-denomination coins, deposit them at the Fed, and use the cash in the new account to pay bills — has really taken off. Last month I spoke with a senior Fed official who had never heard of the idea; these days it’s all over.
There seem to be two kinds of objections. One is that it would be undignified. Here’s how to think about that: we have a situation in which a terrorist may be about to walk into a crowded room and threaten to blow up a bomb he’s holding. It turns out, however, that the Secret Service has figured out a way to disarm this maniac — a way that for some reason will require that the Secretary of the Treasury briefly wear a clown suit. (My fictional plotting skills have let me down, but there has to be some way to work this in). And the response of the nervous Nellies is, “My god, we can’t dress the secretary up as a clown!” Even when it will make him a hero who saves the day?
The other objection is the apparently primordial fear that mocking the monetary gods will bring terrible retribution.
Joe Weisenthal says that the coin debate is the most important fiscal policy debate of our lifetimes; I agree, with two slight quibbles — it’s arguably more of a monetary than a fiscal debate, and it’s really part of the broader debate that has been going on ever since we entered the liquidity trap.
What the hysterics see is a terrible, outrageous attempt to pay the government’s bills out of thin air. This is utterly wrong, and in fact is wrong on two levels.
The first level is that in practice minting the coin would be nothing but an accounting fiction, enabling the government to continue doing exactly what it would have done if the debt limit were raised.
Remember that the coin is supposed to be deposited at the Fed, which is effectively just a semi-autonomous government agency. As the federal government proper drew on its new Fed account, the Fed would probably respond by selling off some of its $3 trillion balance sheet. In effect, the consolidated federal government, including the Fed, would be financing its operations by selling debt instruments, just as always.
But what if the Fed decided not to shrink its outside balance sheet? Even so, under current conditions it would make no difference — because we’re in a liquidity trap, with market interest rates on short-term federal debt near zero. Under these conditions, issuing short-term debt and just “printing money” (actually, crediting banks with additional reserves that they can convert into paper cash if they choose) are completely equivalent in their effect, so even huge increases in the monetary base (reserves plus cash) aren’t inflationary at all.
And if you’re tempted to deny this diagnosis, I have to ask, what would it take to convince you? The other side of this debate has been predicting runaway inflation for more than four years, as the monetary base has tripled. The same people predicted soaring interest rates from government borrowing. Meanwhile, the liquidity-trap people like me predicted what would actually happen: low inflation and low rates. This has to be the most decisive real-world test of opposing theories ever.
So minting the coin would be undignified, but so what? At the same time, it would be economically harmless — and would both avoid catastrophic economic developments and help head off government by blackmail.
What we all hope, of course, is that the prospect of the coin or some equivalent strategy will simply take the debt ceiling off the table. But if not, mint the darn coin.

Source: Reuters

Global central bank chiefs gave lenders four more years to meet international liquidity requirements and watered down the measures in a bid to stave off another credit crunch. Banks won the delay to fully meet the so-called liquidity coverage ratio, or LCR, following a deal struck by regulatory chiefs meeting yesterday in Basel, Switzerland. They’ll be able to pick from a longer list of approved assets including equities and securitised mortgage debt as they seek to build up buffers of liquidity for use in a financial crisis. “This was a compromise between competing views from around the world,” Bank of England Governor Mervyn King said at a briefing following yesterday’s meeting. King chairs the Group of Governors and Heads of Supervision, or GHOS, which decides on global bank rules. “For the first time in regulatory history we have a truly global minimum standard for bank liquidity.” Banks and top officials such as European Central Bank President Mario Draghi pushed for changes to the LCR, arguing that it would choke interbank lending and make it harder for authorities to implement monetary policies. Lenders have warned that the measure might force them to cut back loans to businesses and households. “The new liquidity standard will in no way hinder the ability of the global banking system to finance a global recovery,” King said. “It’s a realistic approach. It certainly did not emanate from an attempt to weaken the standard.” Shares rise The Bloomberg Europe Banks and Financial Services Index rose as much as 2.1 per cent with Italy’s Banca Monte dei Paschi di Siena SpA leading gains at 19 per cent. Deutsche Bank AG added as much as five per cent and both BNP Paribas SA and Barclays Plc were up 4 per cent. “The loosening of liquidity rules has been long-signalled, and thus we wouldn’t expect a huge rally, but we have been badly wrong-footed in the past,” Sandy Chen, bank analyst at Cenkos Securities in London, wrote in a note to clients.

The decision to relax liquidity rules for banks may boost  pre-tax profit at Barclays by around four per cent, according to Andrew Lim, an analyst at Banco Espirito Santo SA. UK banks such as Barclays, which have built up large  reserves of high-quality liquidassets, will be among the biggest beneficiaries of global regulators’ decision to implement a watered-down version of the LCR, Lim said in a note to clients.

Credit squeeze Regulators at the Basel  Committee on Banking Supervision struggled throughout 2012 to revise the LCR.After failing to reach a final deal last month, it was left to central bank and regulatory chiefs on the GHOS to make a final decision. The LCR would force banks to hold enough easy-to-sell assets to survive a 30-day credit squeeze. It’s a key component of a package of capital and liquidity measures, known

as Basel III, drawn up to avoid a repeat of the 2008 financial crisis. Basel III has been subject to mounting criticism for its complexity, amid delays to its implementation in the European Union and US. The liquidity rule sets out a stress test that banks should apply to their books, assessing whether they would be able to generate enough cash from asset sales to meet their regulatory obligations. A draft version of the measure

was published by regulators in 2010, on the basis that it would take effect on January 1, 2015.

BREATHER FOR BANKS

The Basel Committee has agreed to ease a new rule forcing banks to build cash buffers to protect against anymonth-long market squeeze. The Liquidity Coverage Ratio (LCR) rule is one of the world's

main regulatory responses to the financial crisis. Here's what the main changes are:

COMPLIANCE:Instead of full compliance in January 2015, banks will have to hold only 60 per cent of their buffer by then, rising 10 per cent annually thereafter to full compliance by January 2019

ELIGIBLE ASSETS: The list of assets eligible for inclusion is widened from highly rated government and corporate debt to include retail mortgage backed securities, lower rated corporate debt and

shares. New inclusions face a 25 to 50 per cent discount

BUFFER COMPOSITION:At least 60 per cent of the buffer must still be in highly-rated government debt and the newly eligible assets cannot count for more than 15 per cent of the overall buffer

SIZE OFBUFFER:The stress scenario a bank must use to determine the size of its buffer, aimed at keeping the bank funded for 30 days in a squeeze, is eased, meaning the overall buffer will be smaller

LIQUIDITY: Explicit acknowledgement that the liquidity buffer can be tapped to below minimum levels

in times of stress, even during the phase-in period, a provision aimed at helping banks in stressed

euro zone countries in particular

Blinds

Thanks to the defence ministry’s (MoD’s) outdated belief that it must fill the order book of Bharat Electronics Ltd (BEL), India’s military remains handicapped in night-fighting against all its likely adversaries. Even jihadis infiltrating across the Line of Control into J&K have been found to have better night vision devices (NVDs) than the lavishly funded Indian Army that is tasked to intercept them.

Worryingly, this disadvantage could continue. The reason: the MoD is set to tailor its future requirements of NVDs to what BEL can supply, rather than to what the army badly needs. In a proposed MoD tender for 45,000 NVDs, an initial buy that would expand into contracts worth thousands of crores of rupees, BEL is asking MoD officials to water down the specifications of the “third-generation” NVDs that the army badly wants. While the army wants NVDs with a “Figure of Merit” (or FOM) rating of 1700 plus, BEL wants the specifications set at FOM 1400 plus. That is because BEL does not have the ability to deliver FOM 1700 plus NVDs in the quantities that the army wants.

Peering through an NVD with FOM 1400 plus, a soldier can see clearly at dusk or dawn, and enjoy acceptable vision with a quarter moon or brighter.FOM 1600 plus permits clear vision even in starlight, that is, on a clear night with no moon. But the army wants FOM 1700 plus, which would allow soldiers to see clearly in pitch darkness, like on heavily clouded, moonless nights, or at night in a thick jungle. These, the army rightly points out, are the conditions that it often operates in. In response to this demand, two Indian companies – BEL and Tata Power’s Strategic Electronics Division (Tata Power SED) – confirmed to the MoD’s Services Capital Acquisition Plan Categorisation Committee (SCAPCC) that they could supply the army with NVDs with a rating of FOM 1700 plus. On BEL’s part that was apparently a bluff — because now, with procurement being finalised, MoD officials are getting quiet requests from BEL to dilute the specifications so that it can remain in the race.

BEL’s apparent inability to supply NVDs with FOM 1700 plus comes despite the MoD having twice splashed taxpayer money on foreign night vision technology for the Bangalore-headquartered defence public sector undertaking (DPSU). In the 1990s, Dutch company Delft provided “second-generation” technology, setting up a joint venture with BEL before walking out of it. As recently as 2010-11, the MoD handed more than ~100 crore to French company Photonis to give BEL “supergen” technology rated at FOM 1250 plus. Once again BEL failed to absorb this technology; it did not enhance its own technological capabilities in night vision; and it did not evolve the received technology into more advanced versions. Today the MoD no longer has the option of spending more public money on a newer generation of technology for BEL. That is because state-of-the-art night vision technology is closely guarded. The United States government, which controls the world’s most advanced night vision technology that is developed by the world’s leading companies like ITT and L-3, seldom allows the export of technology better than FOM 1250 plus. Where Washington does permit export, eg for night vision goggles for Pakistan army units that are fighting Taliban groups in the tribal areas along the Afghanistan border, there is strict End User Monitoring (EUM), in which US military officials physically inspect the equipment to ascertain that it has not been supplied onwards to some undesirable party. For a prickly New Delhi, EUM would be completely unacceptable. Even BEL’s earlier supplier, Photonis, would now probably be unable to supply BEL with advanced night vision technology, since American companies are making a strong play for buying the French company, thereby making it subject to US export control laws. Reuters has reported that Photonis is on sale and US banker Rothschild, which has enduring links with American defence companies, is advising on the sale. Given BEL’s increasingly constrained situation, the army brass has strongly backed Tata Power SED for supplying the army with its next generation of night vision equipment. Senior generals who handle procurement say they are pleased at the way the Tata company has partnered with German company Harder Digital, which will transfer technology to Tata Power SED for manufacturing and maintaining “third-generation” FOM 1700 plus night vision equipment in India. The German government – which has thrown off traditional restraints in emerging

as a strong defence technology partner for India – has already permitted Tata Power SED to import into India NVDs with a specification of FOM 1700 plus. Making the arrangement even more attractive, Berlin is not demanding End User Monitoring. The German authorities have indicated they would be content with an End User Certificate from New Delhi, certifying that the Indian military would not supply the NVDs onwards. Tata Power SED has written to the MoD, detailing its readiness to supply the army with NVDs of the latest generation. Given that public tenders issued recently by Pakistan, and even Bangladesh, indicate that these countries are procuring “third-generation”

NVDs, it is difficult for South Block to dilute the specifications to cater for BEL’s lack of capability. For

decades, while the MoD’s wayward child has fronted the import of foreign technology and sub-systems,

passing them off as “indigenous”, the MoD has continued to feed the DPSU with orders, ensuring healthy

profit at the cost of defence readiness and selfreliance. But a changing MoD and a more assertive

army may be unwilling to allow that any longer.

Sugar

How does Government control Sugar industry?

• There is a lot of control by the government both state and centre over the sugar industry.
• To look at this one must look into the production lineup of sugar.
• Let us understand the sugar producing process first.
• This simple diagram will explain the process

Now the government control on the major aspects can be visualized easily. So the control by government at every stage is:

Stage #1: Crops and Farmer

The farmers must sell their produce to the nearest mill. And just the converse of this, the sugar mills have to purchase sugarcane from reserved areas.

Stage #2: Sugar Mills:

Distance	Mills must have a distance of 15kms between them.
Pricing of Sugar	The mill owners must compensate the farmers according to 2 different norms for giving them the sugarcane – FRP and SAP.(explained below).
Pricing of Other products	The other products such as Molasses, Bagasse, Press Mud are very useful side products of sugar industry. Their remuneration to the farmer is not fixed and varies with the time.
Levy of Sugar	The mill owners must give 10% of their production to the central government which they use to supply to the state governments for their state Public Distribution Systems (PDSs).
Packaging	The sugar must be packaged in jute bags. (this is done to promote labour intensive jute industry.)
Market	The market is also heavily government controlled. The export and import of sugar is decided by the government depending upon the domestic demand.

Before going into the recommendations of the committee let us look at the difference between FRP and SAP.

What is FRP and SAP?

• The FRP and SAP are prices set by the different governments at which the mill owners will reimburse the farmers.
• This is the minimum price that they pay to the farmers for the sugarcane.

FRP	SAP
Fixed Remunerative Package	State Administered Price
Central Government issues price.(Has no voice)	State government issues price(Has most voice).
Generally lower.	Generally higher.(To fulfill the votebank issues as sugarcane farmers form a large votebank).

When the state government issues its SAP then the mills in the state are bound to pay by that amount only. This was held valid in a Supreme Court judgment in 2009.

Rangarajan Committee:Recommendations

Remembering the earlier diagram of the sugar process and the government control, the Rangarajan committee report recommendations can be easily mapped.

Government Control	Recommendation	Remarks
Sugar crop area	Do away with reserved area. Give farmer option to trade with any mill.	Empowering the farmer to do better business.
Mill distance	Do away with minimum distance between mills.	To enable competition.
Pricing of Sugar	1. Give the farmers FRP price at the 1st stage and do away with SAP.2. Share 70% of the sold value of sugar+molasses+bagasse+press mud at the 2nd stage.	Double stage strategy to have better cash flow to mills.Putting proper system for remuneration.
Packaging	Do away with the jute packaging	Can save about 1000 crores.
Levy of Sugar	Do away with the 10% sale to the central government. Instead, pass on the subsidy to state government, which can buy the sugar from the market and give it subsidized.	Can ease central subsidy tension. The levy savings is about 2000 crores.
Market	Ease the market control of government on export and import.	The move is to help India(17% of world production) to enable its exports(only 4% of world export), but leaving it all to the market is risky.

• This is similar to many other committees formed by the government to recommend the sugar industry decontrol. Committees under Mahajan (1998), Tuteja (2004), Thorat (2009) and Nandakumar (2010) had similar recommendations.
• So most probably these recommendations will also bite the dust like others.

India Truth

The UN’s human-rights chief calls rape in India a “national problem”. Rapes and the ensuing deaths (often from suicide), are routinely described in India’s press—though many more attacks go unreported to the public or police. Delhi has a miserable but deserved reputation for being unsafe, especially for poor and low-caste women. Sexual violence in villages, though little reported, keeps girls and women indoors after dark. As young men migrate from the country into huge, crowded slums, their predation goes unchecked. Prosecution rates for rape are dismally low and convictions lower still—as in many countries.Indian women also have much else to be gloomy about, especially if they live in the north. Studies and statistics abound, but India is generally at or near the bottom of the heap of women’s misery. A UN index in 2011 amalgamated details on female education and employment, women in politics, sexual and maternal health and more. It ranked India 134th out of 187 countries, worse than Saudi Arabia, Iraq or China. India’s 2011 census confirmed an increasingly distorted sex ratio among newborn babies in many states, as parents use ultrasound scanners to identify the sex of fetuses and then abort female ones. India is missing millions of unborn girls. Discrimination continues throughout life. Boys in villages are typically fed better than girls and are more likely to get an education. Women are routinely groped and harassed by men on buses and trains. Many Indian brides still pay dowries. The misery of daughters-in-law abused after moving in with their husbands’ extended families is a staple of crime reports and soap operas.
Amid this sea of misery, the anonymous medical student’s fate stood out chiefly because she was representative of India’s emerging middle class. A student of physiotherapy, she was attacked going home from an early-evening cinema screening of “Life of Pi”. She was with a male friend, a young engineer. As someone doing what people like her do across the world every night of the week, she was the friend, sister or daughter of an entire social group. As in the campaign against corruption during the past few years, the protesters’ fury was fanned by non-stop television and press coverage. The street protests were so intense that worried officials resorted to tear gas and curfew-like restrictions in parts of Delhi. The strength of their reaction means that something good may yet come from this crime. There is no reason to think that India is destined to abuse women. Its biggest religion, Hinduism, is relatively tolerant towards them. India already has a liberal constitution and a host of progressive laws, for example against sex-selective abortion and against dowries. The country has role models: a decent crop of high-ranking women politicians, civil servants, judges and journalists. Time is on their side As India shifts from being a poor, mostly rural place to an urban, wealthier and modern one, more women will study, take paid jobs and decide for themselves whom to marry or divorce and where to live. Already, many of the growing band of educated, connected and active Indians are infuriated by the failure of politicians to look after them. They deplore venal party politics. They will increasingly demand that politicians deal with the things that matter to them. The scandal could thus prove a first step on the road to getting the police to take rape seriously and to enforcing the laws protecting women. But the journey will be a long one. Violence against women tends to reflect how they are treated across society. Attitudes, therefore, matter. India’s film and music industries, for example, should stop depicting men who assault women as macho heroes. The press should drop the use of coy phrases such as “Eve-teasing” when it really means sexual harassment. Those who witness men groping women could confront them. The families of victims of sexual crime should dwell less on the shame they feel they have incurred and more on how to prosecute offenders. The pity is that to change attitudes to rape so many young women have had to suffer and die.

Interpretations

Why is Egypt so much poorer than the United States? What are the constraints that keep Egyptians from becoming more prosperous? Is the poverty of Egypt immutable, or can it be eradicated? A natural way to start thinking about this is to look at what the Egyptians themselves are saying about the problems they face and why they rose up against the Mubarak regime. Noha Hamed, twenty-four, a worker at an advertising agency in Cairo, made her views clear as she demonstrated in Tahrir Square: “We are suffering from corruption, oppression and bad education. We are living amid a corrupt system which has to change.” Another in the square, Mosaab El Shami, twenty, a pharmacy student, concurred: “I hope that by the end of this year we will have an elected government and that universal freedoms are applied and that we put an end to the corruption that has taken over this country.” The protestors in Tahrir Square spoke with one voice about the corruption of the government, its inability to deliver public services, and the lack of equality of opportunity in their country. They particularly complained about repression and the absence of political rights. As Mohamed ElBaradei, former director of the International Atomic Energy Agency, wrote on Twitter on January 13, 2011, “Tunisia: repression + absence of social justice + denial of channels for peaceful change = a ticking bomb.” Egyptians and Tunisians both saw their economic problems as being fundamentally caused by their lack of political rights. When the protestors started to formulate their demands more systematically, the first twelve immediate demands posted by Wael Khalil, the software engineer and blogger who emerged as one of the leaders of the Egyptian protest movement, were all focused on political change. Issues such as raising the minimum wage appeared only among the transitional demands that were to be implemented later. To Egyptians, the things that have held them back include an ineffective and corrupt state and a society where they cannot use their talent, ambition, ingenuity, and what education they can get. But they also recognize that the roots of these problems are political. All the economic impediments they face stem from the way political power in Egypt is exercised and monopolized by a narrow elite. This, they understand, is the first thing that has to change. Yet, in believing this, the protestors of Tahrir Square have sharply diverged from the conventional wisdom on this topic. When they reason about why a country such as Egypt is poor, most academics and commentators emphasize completely different factors. Some stress that Egypt’s poverty is determined primarily by its geography, by the fact that the country is mostly a desert and lacks adequate rainfall, and that its soils and climate do not allow productive agriculture. Others instead point to cultural attributes of Egyptians that are supposedly inimical to economic development and prosperity. Egyptians, they argue, lack the same sort of work ethic and cultural traits that have allowed others to prosper, and instead have accepted Islamic beliefs that are inconsistent with economic success. A third approach, the one dominant among economists and policy pundits, is based on the notion that the rulers of Egypt simply don’t know what is needed to make their country prosperous, and have followed incorrect policies and strategies in the past. If these rulers would only get the right advice from the right advisers, the thinking goes, prosperity would follow. To these academics and pundits, the fact that Egypt has been ruled by narrow elites feathering their nests at the expense of society seems irrelevant to understanding the country’s economic problems. Egyptians in Tahrir Square, not most academics and commentators, have the right idea. In fact, Egypt is poor precisely because it has been ruled by a narrow elite that have organized society for their own benefit at the expense of the vast mass of people. Political power has been narrowly concentrated, and has been used to create great wealth for those who possess it, such as the $70 billion fortune apparently accumulated by ex-president Mubarak. The losers have been the Egyptian people, as they only too well understand. We’ll show that this interpretation of Egyptian poverty, the people’s interpretation, turns out to provide a general explanation for why poor countries are poor. Whether it is North Korea, Sierra Leone, or Zimbabwe, we’ll show that poor countries are poor for the same reason that Egypt is poor. Countries such as Great Britain and the United States became rich because their citizens overthrew the elites who controlled power and created a society where political rights were much more broadly distributed, where the government was accountable and responsive to citizens, and where the great mass of people could take advantage of economic opportunities. We’ll show that to understand why there is such inequality in the world today we have to delve into the past and study the historical dynamics of societies. We’ll see that the reason that Britain is richer than Egypt is because in 1688, Britain (or England, to be exact) had a revolution that transformed the politics and thus the economics of the nation. People fought for and won more political rights, and they used them to expand their economic opportunities. The result was a fundamentally different political and economic trajectory, culminating in the Industrial Revolution. The Industrial Revolution and the technologies it unleashed didn’t spread to Egypt, as that country was under the control of the Ottoman Empire, which treated Egypt in rather the same way as the Mubarak family later did. Ottoman rule in Egypt was overthrown by Napoleon Bonaparte in 1798, but the country then fell under the control of British colonialism, which had as little interest as the Ottomans in promoting Egypt’s prosperity. Though the Egyptians shook off the Ottoman and British empires and, in 1952, overthrew their monarchy, these were not revolutions like that of 1688 in England, and rather than fundamentally transforming politics in Egypt, they brought to power another elite as disinterested in achieving prosperity for ordinary Egyptians as the Ottoman and British had been. In consequence, the basic structure of society did not change, and Egypt stayed poor. In England in 1688 and in France with the revolution of 1789. This will help us to understand if the situation in Egypt has changed today and whether the revolution that overthrew Mubarak will lead to a new set of institutions capable of bringing prosperity to ordinary Egyptians. Egypt has had revolutions in the past that did not change things, because those who mounted the revolutions simply took over the reins from those they’d deposed and re-created a similar system. It is indeed difficult for ordinary citizens to acquire real political power and change the way their society works. But it is possible, and we’ll how this happened in England, France, and the United States, and also in Japan, Botswana, and Brazil. Fundamentally it is a political transformation of this sort that is required for a poor society to become rich. There is evidence that this may be happening in Egypt. Reda Metwaly, another protestor in Tahrir Square, argued, “Now you see Muslims and Christians together, now you see old and young together, all wanting the same thing.” We’ll see that such a broad movement in society was a key part of what happened in these other political transformations. If we understand when and why such transitions occur, we will be in a better position to evaluate when we expect such movements to fail as they have often done in the past and when we may hope that they will succeed and improve the lives of millions.

Rape Culture and history by Wolf

The crime seems incomprehensible. A 23-year-old physiotherapy student is dead, 12 days after having been raped for more than an hour by six men in a bus traveling on main roads in the Indian capital. Her internal injuries from the iron rod that her attackers used were so severe that doctors had to remove her intestines in their effort to save her life.

Illustration by Paul Lachine

Indians, it seems, have had enough. Dozens of large and increasingly angry demonstrations have been held to demand that the government ensure women’s security and stop treating rapists with impunity. While the authorities have sought to quell the protests – cordoning off central New Delhi and subjecting the rest of the city to traffic restrictions – violence has escalated. After a policeman died, live ammunition was fired into the crowds – killing a journalist, Bwizamani Singh, and provoking a rebuke from Reporters without Borders.

 is not simply the high rate of rape in India that is driving the protests’ virulence. In a passionate speech, Kavita Krishnan, Secretary of the All India Progressive Women’s Association, spoke to the deeper issue behind the protests: the blame-the-victim culture in India around sex crimes. She notes that government and police officials recently insisted that most rapists cannot be prosecuted in India, because, as one official put it, they are known to the women attacked. Other officials have publicly suggested that victims themselves are “asking for it” by their use of freedom of movement.

This return to pre-feminist discourse is not confined to India. Italy is having a similar debate about whether women’s clothes and behavior invite rape. Even in Sweden, activists complain, rapes in which the men know their assailants go unprosecuted, because the victims are not seen as “good girls.”

Krishnan assailed the fact that the conviction rate for rape prosecutions in India has fallen from 46% in 1971 to just 26% today (which, it should be noted, is higher than the conviction rates in the United Kingdom, Sweden, and the United States). Indeed, the fact that most rapes are committed by men who are known to the victim should “only make it easier to apprehend the rapist.” Instead, women who go to the police are urged not to file a complaint. “Strange people will begin to assemble at the station out of nowhere to ‘explain’ to you” why that advice is correct.

The problem, Krishnan points out, starts at the top. In the midst of the protests, Delhi Police Commissioner Neeraj Kumar sparked further outrage by suggesting that women carry chili powder to deter would-be rapists. And, at a press conference, he said that women should not roam around without male escorts. Otherwise, whatever happens to them is their own fault.

Now, with the protests continuing in the aftermath of the victim’s death, officials are emphasizing the need for measures to guarantee the “safety and security” of women. But, as Krishnan notes, “the word ‘safety’ with regard to women has been used far too much.” Indian women have heard it all their lives. “It means,” she says, “You behave yourself. You get back into the house. You don’t dress in a particular way. Do not live by your freedom…. A whole range of patriarchal laws and institutions tell us what to do in the guise of keeping us ‘safe.’”

The six men accused of the bus attack have been arrested and charged with murder, and the government has ordered an inquiry into how rape cases are handled. But the government’s critics remain skeptical of official intentions, noting that only 600 rapes per year are reported in the capital, despite the thousands that are estimated to occur annually.

Deeper truth underlying the protests can be found on blogs, where young Indian men and women bemoan the fact that travel guidebooks routinely warn women about pervasive sexual harassment in India, and advise them to move around in groups. Movies, religion, music, and women themselves are all blamed for male sexual violence against women, but rapists are not held responsible. A “male-cosseting culture,” as one blogger put it, in turn supports a rape culture.

The connection between rape, male privilege, and female sexual vilification was one of the key insights of feminists in the 1970’s – an insight that they thought had been successfully applied to cultural debate about rape, and to law. In India – as in Italy, Sweden, and around the world – women and men who support freedom of movement and safety from sex crimes are being forced to refight that battle. One hopes that the protests in India will inspire the West to emulate the protesters’ lack of complacency.

In the developing world, women are in special jeopardy. Their embrace of autonomy and mobility risks putting them in conflict with a law-enforcement establishment and media that still view women through a pre-feminist lens: “good girls” who stay at home should not be raped, while “bad girls” who stake a claim to public space are fair game

News Europe 2013 Soros

Xenophobia and extremism are symptoms of societies in profound crisis. In 2012, the far-right Golden Dawn won 21 seats in Greece’s parliamentary election, the right-wing Jobbik gained ground in my native Hungary, and the National Front’s Marine Le Pen received strong backing in France’s presidential election. Growing support for similar forces across Europe points to an inescapable conclusion: the continent’s prolonged financial crisis is creating a crisis of values that is now threatening the European Union itself.When it was only an aspiration, the European Union was an immensely attractive idea that fired many people’s imagination, including mine. I regarded it as the embodiment of an open society – a voluntary association of sovereign states that were willing to give up part of their sovereignty for the common good. They shared a common history, in which the French Revolution, with its slogan of liberty, equality, and fraternity, left a lasting legacy. Building on that tradition, member states formed a union based on equality and not dominated by any state or nationality.
The euro crisis has now turned the EU into something radically different. Far from being a voluntary association, the eurozone is now held together by harsh discipline; far from being an association of equals it has become a hierarchical arrangement in which the center dictates policy while the periphery is increasingly subordinated; instead of fraternity and solidarity, hostile stereotypes proliferate.

The integration process was spearheaded by a small group of farsighted statesmen who subscribed to open-society principles and practiced what Karl Popper called “piecemeal social engineering.” They recognized that perfection is unattainable; so they set limited objectives and firm timelines – and then mobilized the political will for a small step forward, knowing full well that when they achieved it, its inadequacy would become apparent, requiring further steps. That is how the European Coal and Steel Community was gradually transformed into the EU.

France and Germany used to be in the forefront of the effort. As the Soviet empire disintegrated, Germany’s leaders recognized that German reunification was possible only in the context of a more united Europe, and they were prepared to make considerable sacrifices to achieve it. When it came to bargaining, the Germans were willing to contribute a little more and take a little less than others, thereby facilitating agreement.

At the time, German statesmen would assert that Germany had no independent foreign policy, only a European one. This stance led to a dramatic acceleration in European integration, culminating in the adoption of the Maastricht Treaty in 1992 and the introduction of the euro in 1999. A period of consolidation (which included the introduction of euro banknotes and coins in 2002) followed.

Then came the crash of 2008, which originated in the United States but caused greater problems in Europe than anywhere else. Policymakers responded to the collapse of Lehman Brothers by announcing that no other systemically important financial institution would be allowed to fail, which required substituting state credit for frozen markets.

Shortly thereafter, however, German Chancellor Angela Merkel asserted that such guarantees had to be provided by each state individually, not by Europe collectively. That marked the beginning of the euro crisis, because it exposed a flaw in the single currency of which neither the authorities nor financial markets were aware – and which is still not fully recognized today.

By creating the European Central Bank, the member states exposed their own government bonds to the risk of default. Developed countries that issue bonds in their own currency never default, because they can always print money. Their currency may depreciate, but the risk of default is absent.

By contrast, less developed countries that borrow in foreign currencies may run out of currency reserves. When a fiscal crisis hit Greece, the financial world suddenly discovered that eurozone members had put themselves in the position of developing countries.

There is a close parallel between the euro crisis and the Latin American debt crisis of 1982, when the International Monetary Fund saved the international financial system by lending just enough money to the heavily indebted countries to enable them to avoid default. But the IMF imposed strict austerity on these countries, pushing them into a prolonged depression. Latin America suffered a lost decade.

Today, Germany is playing the same role as the IMF did then. The setting differs, but the effect is the same. The euro crisis pushed the financial system to the verge of bankruptcy, which has been avoided by imposing strict austerity and lending countries like Greece just enough money to avoid default.

As a result, the eurozone has become divided into creditors and debtors, with the creditors in charge of economic policy. There is a center, led by Germany, and a periphery, consisting of the heavily indebted countries. The creditors’ imposition of strict austerity on the periphery is perpetuating the eurozone’s division between center and periphery. Economic conditions are continuing to deteriorate, causing immense human suffering. The innocent, frustrated, and angry victims of austerity provide fertile ground for hate speech, xenophobia, and all forms of extremism.

Thus, policies designed to preserve the financial system and the euro are transforming the EU into the opposite of an open society. There is an apparent contradiction between the euro’s financial requirements and the EU’s political objectives. The financial requirements could be met by replicating the arrangements that prevailed in the global economy in the 1980’s and dividing the eurozone into a center and periphery; but that could not be reconciled with the principles of an open society.

There are ways in which the policies pursued to preserve the euro could be modified to meet the EU’s political objectives. For example, individual countries’ government bonds could be replaced by Eurobonds. But, insofar as the contradiction remains, the political objectives ought to take precedence. Unfortunately, that is not the case. The financial problems are pressing – and monopolizing politicians’ attention. Europe’s leaders are so preoccupied with the crisis of the day that they have no time to ponder the long-term consequences of their actions. As a result, they continue on a course that perpetuates the division between center and periphery.

This is such a dismal prospect that it must not be allowed to happen. Originally, the EU was conceived as an instrument of solidarity and cooperation. Today, it is held together by grim necessity. That is not the Europe we want or need. We must reverse this intolerable transformation. We must find a way to recapture the spirit of solidarity and shared values that once inspired the European imagination.

 

The HORIZON the zone

45-year-old businessman, has bought 25 traditional insurance policies for
his retirement. These policies start maturing
every year from the time he turns 61 years till 85
years, thereby providing him sufficient income for his retirement.

Shweta Rao, a 36-year old school teacher has
invested ~3 lakh in an eight-year fixed deposit
scheme which offers 9 per cent interest. Rao was
sold on the idea that the FD amount would double in
time when her only son would begin his college education
and so hopes to use it for the same.
Aman Sood, a 29-year-old software professional,
has been investing a large part of his savings in
stocks every month since last year, as he intends to
buy his own house in the next two years and wants
funds to make the downpayment for the property.
While it is good that these people have a specific
goal and they have started investing for the same,
they have not selected the right investments for
their goals. While it is important to set goals in the
first place, it is equally important to estimate the
time frame in order to establish the year when you
would like to achieve your goal/s.

For example, buying a house is a goal, but buying
a house after three years is a specific goal. So once
your time frame is established the next critical factor
is selecting the right asset for investing. Given
below are a few guidelines which can help you invest
prudently to achieve your goals.
Short term goals: Short term period can range
from one month to up to three years. Usually, short
term goals can be buying a car or house, going on a
foreign vacation, house repairs, and so on. When
you are sure about these short term goals, it is better
to invest in safe instruments such as fixed deposits
and debt mutual funds for lumpsum investments.
For monthly investments debt mutual funds or
bank recurring deposits are better. If you happen to
fall in the 30 per cent tax bracket then debt mutual
funds will be most ideal as you can take advantage
of lower taxation and indexation benefits available
in these funds.
Stocks and equity mutual funds should be
avoided for short term goals due to their volatile
nature. Stock trading is a highly skilled activity
which requires time and regular study. Often people
buy stocks with the intention to earn very high
returns in the short term. But this could result in
loss on your investment.
Medium term goals: These are goals within the
time frame of three to seven years. Some of the
above mentioned goals can also fall in this category.
People in the lower tax slabs and looking for
highest safety can go with fixed deposits, while
those in higher tax brackets should invest in long
duration debt funds and balanced mutual funds with 70 per cent allocation
to debt funds and 30 per cent in balanced mutual funds.
Debt funds can comprise dynamic bond and income opportunities category
including fixed maturity plans (FMP).
Currently, even income and gilt funds,under the debt funds
category, offer good investment opportunities,since interest
rates are expected to fall. This will benefit these funds. But one must understand these funds well before
investing as one will need to exit these long duration
funds when interest rates bottom out.
Long term goals: Having a time horizon of more
than 7-10 years can be categorised as long term goal.
Ideally, goals such as children’s education, retirement,
and so on are long term goals and, therefore,
one should add equity in one’s portfolio as equity has
been the best performing asset over the long term.
Rather than buying investment oriented insurance
plans for long term goals one can create a diversified
portfolio of Public Provident Fund, stocks and
equity mutual funds. Don’t forget to add 5-10 per
cent of gold in your portfolio as it is a very good
hedge against inflation.
Systematic investment plans in equity mutual
funds will enable you to create a good corpus and
the compounding factor will come in play in your
portfolio. If you don’t have the knowledge to pick
stocks then stick with good performing equity
mutual funds.
For those in the higher income brackets and with
huge surpluses, property can also be a good option.
Seek expert opinion of a real estate consultant before
you finalise the property.
By categorising your goals as per time horizon
you can avoid any nasty surprises related to your
investments.