Nitish Kumar’s Kiddishness

A well performing Chief Minister and a man with least petty political behaviour is finally jumping into the dirty political bandwagon. Nitish Kumar, Bihar C.M’s onslaught against Narendra Modi and trying to create a secular image will backfire on Kumar. The alliance between BJP and JD (U) can win majority of seats in the upcoming assembly elections. If Nitish Kumar thinks that he can win alone a majority then he is living in his sand castle when there is warning about political storm. It is better in the interests of Nitish Kumar to maintain silence and carry on with the alliance to continue the good work done for Bihar.
Shivanand Tiwary and Giriraj Singh debates in The Deccan Chronicle, 17 June 2010
To talk about this is to state the obvious. After five years of running a successful government in Bihar, with the cordial cooperation of a long-trusted, mature ally like the Bharatiya Janata Party (BJP), Mr Nitish Kumar certainly needs the BJP to win hugely in the forthcoming Assembly polls, and return to power.
In a coalition government, success springs from the healthy functioning of every link in the chain. We in the BJP are proud to have contributed whole-heartedly to the historic success story of Bihar’s National Democratic Alliance (NDA) government, and place it on the path of getting Bihar out of the list of “Bimaru” states. Mr Kumar and his Janata Dal-United (JD-U) have always been appreciative of the BJP’s concrete support.
Although JD(U), a regional party, and BJP, a national party, are two distinct entities with ideological differences, it is their coalition that has won the hearts of Bihar’s people. The empathetic coordination and understanding between them has made our two parties almost inseparable.
Without the BJP, it is unimaginable for Mr Kumar to return to power. That is simply because it was as much the BJP’s solid network of committed cadres across Bihar as the JD(U)’s regional appeal that ensured victories of candidates of both the parties in the past elections.
Shortly after Bihar’s 2005 Assembly polls, it was the BJP that played a crucial role in making Mr Kumar the Chief Minister in the face of stubborn internal bickering among JD(U) leaders who were unwilling to accept him as head of the JD(U)-BJP government. It is completely incorrect to describe the BJP as a weakened political force in Bihar. This impression is partly caused by the media’s projections of the NDA government in Bihar. Just because the face gets better visibility, and becomes the recognition point, it does not mean the rest of the body is defunct. The BJP is a cadre-based party. It functions in Bihar at the grassroots levels with the help of several cultural organisations working actively with a nationalist zeal. Our people are active in each of Bihar’s 54,000 polling booths and the Rashtriya Swayamsevak Sangh runs 32,000 schools across Bihar. The Chief Minister understands this.
The BJP has never compromised with its self-respect anywhere, including Bihar. With its sheer cadre strength, proven commitment, and greatly widened appeal in Bihar, the party’s future is very bright in this state.
Bihar needs Mr Nitish Kumar. His government’s epoch-making achievements have placed him in a class apart, making him the man that Bihar needs more than anything else. Being a leader who is naturally acceptable to every section of society, regardless of caste and religion in a fiercely identity-driven state, Mr Kumar is going to be the natural choice for Bihar’s electorate. Although he ran a coalition government, he strived hard to put the good of Bihar over everything else in the past five years. His successes are visible across the state after the long darkness of the 15 years of Rashtriya Janata Dal (RJD)-Congress misrule.
The JD(U) and the BJP in Mr Kumar’s coalition government have assiduously stuck to their common minimum programme so as to create development milestones in the face of obstacles by Opposition parties. But behind every success story written by this government stands the towering leadership and vision of the chief minister. To deny this is to falsify facts.
While the minorities and the dalits of Bihar had got almost nothing other than lofty promises and resounding pronouncements of secularism from previous governments, Mr Kumar’s vision and action gave them solid benefits and raised their self-confidence. It is Mr Kumar who, as the face of the JD(U)-BJP government, inspires faith and hope in Bihar’s Muslims. Bihar has been free from any communal tension in Kumar’s regime. Its dalits who wonder why other parties, involved in dalit politics did so little for them.
The JD(U), the senior partner in the state government, is on a superbly solid platform today. Last year’s Lok Sabha poll results bore ample evidence of this. While alliance with the BJP helped the JD(U) to come to power in the 2005 Assembly polls, the JD(U)’s reach has penetrated remote corners of the state due to the chief minister’s leadership, and the attention paid by his government to implementation of welfare projects. No other chief minister has visited as many villages and spoken to as many ordinary people individually as Mr Kumar.
Any comparison between Mr Kumar and Orissa’s Mr Naveen Patnaik (in the context of relations with the BJP) — however facile — must not overlook the fact that Mr Patnaik gained strength and legacy from his legendary father, while in Bihar Mr Kumar built his strength brick by brick. The people of Bihar are wise enough to decide for themselves.

A well performing Chief Minister and a man with least petty political behaviour is finally jumping into the dirty political bandwagon. Nitish Kumar, Bihar C.M’s onslaught against Narendra Modi and trying to create a secular image will backfire on Kumar. The alliance between BJP and JD (U) can win majority of seats in the upcoming assembly elections. If Nitish Kumar thinks that he can win alone a majority then he is living in his sand castle when there is warning about political storm. It is better in the interests of Nitish Kumar to maintain silence and carry on with the alliance to continue the good work done for Bihar.

Shivanand Tiwary and Giriraj Singh debates in The Deccan Chronicle, 17 June 2010

To talk about this is to state the obvious. After five years of running a successful government in Bihar, with the cordial cooperation of a long-trusted, mature ally like the Bharatiya Janata Party (BJP), Mr Nitish Kumar certainly needs the BJP to win hugely in the forthcoming Assembly polls, and return to power.
In a coalition government, success springs from the healthy functioning of every link in the chain. We in the BJP are proud to have contributed whole-heartedly to the historic success story of Bihar’s National Democratic Alliance (NDA) government, and place it on the path of getting Bihar out of the list of “Bimaru” states. Mr Kumar and his Janata Dal-United (JD-U) have always been appreciative of the BJP’s concrete support.
Although JD(U), a regional party, and BJP, a national party, are two distinct entities with ideological differences, it is their coalition that has won the hearts of Bihar’s people. The empathetic coordination and understanding between them has made our two parties almost inseparable.
Without the BJP, it is unimaginable for Mr Kumar to return to power. That is simply because it was as much the BJP’s solid network of committed cadres across Bihar as the JD(U)’s regional appeal that ensured victories of candidates of both the parties in the past elections.
Shortly after Bihar’s 2005 Assembly polls, it was the BJP that played a crucial role in making Mr Kumar the Chief Minister in the face of stubborn internal bickering among JD(U) leaders who were unwilling to accept him as head of the JD(U)-BJP government.
It is completely incorrect to describe the BJP as a weakened political force in Bihar. This impression is partly caused by the media’s projections of the NDA government in Bihar. Just because the face gets better visibility, and becomes the recognition point, it does not mean the rest of the body is defunct. The BJP is a cadre-based party. It functions in Bihar at the grassroots levels with the help of several cultural organisations working actively with a nationalist zeal. Our people are active in each of Bihar’s 54,000 polling booths and the Rashtriya Swayamsevak Sangh runs 32,000 schools across Bihar. The Chief Minister understands this.The BJP has never compromised with its self-respect anywhere, including Bihar. With its sheer cadre strength, proven commitment, and greatly widened appeal in Bihar, the party’s future is very bright in this state.—
Bihar needs Mr Nitish Kumar. His government’s epoch-making achievements have placed him in a class apart, making him the man that Bihar needs more than anything else.Being a leader who is naturally acceptable to every section of society, regardless of caste and religion in a fiercely identity-driven state, Mr Kumar is going to be the natural choice for Bihar’s electorate. Although he ran a coalition government, he strived hard to put the good of Bihar over everything else in the past five years. His successes are visible across the state after the long darkness of the 15 years of Rashtriya Janata Dal (RJD)-Congress misrule.
The JD(U) and the BJP in Mr Kumar’s coalition government have assiduously stuck to their common minimum programme so as to create development milestones in the face of obstacles by Opposition parties. But behind every success story written by this government stands the towering leadership and vision of the chief minister. To deny this is to falsify facts.
While the minorities and the dalits of Bihar had got almost nothing other than lofty promises and resounding pronouncements of secularism from previous governments, Mr Kumar’s vision and action gave them solid benefits and raised their self-confidence. It is Mr Kumar who, as the face of the JD(U)-BJP government, inspires faith and hope in Bihar’s Muslims. Bihar has been free from any communal tension in Kumar’s regime. Its dalits who wonder why other parties, involved in dalit politics did so little for them.
The JD(U), the senior partner in the state government, is on a superbly solid platform today. Last year’s Lok Sabha poll results bore ample evidence of this. While alliance with the BJP helped the JD(U) to come to power in the 2005 Assembly polls, the JD(U)’s reach has penetrated remote corners of the state due to the chief minister’s leadership, and the attention paid by his government to implementation of welfare projects. No other chief minister has visited as many villages and spoken to as many ordinary people individually as Mr Kumar.
Any comparison between Mr Kumar and Orissa’s Mr Naveen Patnaik (in the context of relations with the BJP) — however facile — must not overlook the fact that Mr Patnaik gained strength and legacy from his legendary father, while in Bihar Mr Kumar built his strength brick by brick. The people of Bihar are wise enough to decide for themselves.

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Only country which defends foreign criminals

India is the only country which defends foreign criminals and let down its own citizens. This is evident from every day functioning of the Government. The culpable act of killing 20,000 and disabling more than 5,00,000 people in 1984 in Bhopal by the Union Carbide factory continues to disturb us even after 26 years. The reason is that the government of India let off the chief criminal, Warren Anderson without any punishment. If this was a mistake in the past, you are mistaken. In the Nuclear Liability Bill passed few months back in parliament, the UPA government want to repeat the same mistake by pleading for peanut compensation in case of any disaster. Unless this act of sacrificing its citizens lives for the mere political survival is dropped Naxalism type of violence cannot be stopped.
Nandita Rao writes in The Deccan Chronicle on 9th June 2010
In the world’s worst industrial disaster, commonly known as the Bhopal gas tragedy, we as citizens of India lost much more than 20,000 lives. Over the last 25 years, slowly but steadily, in several rounds of litigation, we lost our hope in the rule of law and in the ability of the judiciary, the custodial of our Constitution, to protect us against the greed and money power of multinational corporations. Reviewing the failures of the justice system in the Bhopal Gas Tragedy is even more important today as we are debating the Nuclear Liability Bill which, in fact, is seeking to set maximum limits of liability on foreign companies and give them complete immunity from criminal prosecution.
In the context of Bhopal, for once the police authorities cannot be faulted as when the killer gas escaped from the Union Carbide India Ltd. (UCIL) factory on the night of December 2-3, 1984, killing thousands and affecting the lives and futures of lakhs of others, the station house officer of the Hanumanganj Police Station, Bhopal, at his own initiative lodged a first information report (FIR) for culpable homicide not amounting to murder (under Section 304A of the Indian Penal Code), which penalises an act done with the knowledge that such act is likely to cause death and carries a penalty of 10 years’ imprisonment. Not only was the police quick in lodging the FIR, but by December 7, 1984, all the accused, including Warren Anderson, CEO of Union Carbide Corporation (USA), and the top management of its Indian subsidiary, UCIL, were arrested.
The instinct of this relatively junior police officer, when he saw people being eaten up by this toxic gas, that what he had witnessed was more than an accident was proved to be correct when the case was transferred to the Central Bureau of Investigation as early as December 6, 1989. The government of India constituted a scientific and technical committee, known as the Vardarajan Committee, which after evaluation of the UCIL plant and events gave its unequivocal finding that the plant design approved and installed under the directions of Union Carbide Corporation (USA), signed and approved personally by Mr Anderson, was defective and likely to cause a back flow of water and alkaline substances that could lead to the methyl isocyanate (MIC) becoming explosive. The committee also found that the safety norms, mandatory for the use and storage of a substance as dangerous and lethal as MIC, had been flagrantly violated. Even basic precautions, such as maintenance of an empty container for diversion and storage in the event of an emergency, had not been complied with.
However, the Supreme Court of India in its three judgments, from 1989 to 1996, failed to see what was obvious to a police officer. When the Government of India — which had assumed jurisdiction over the claims of all the victims by virtue of the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 — approached the Supreme Court to ratify a settlement it had entered into with the primary accused, Union Carbide Corporation (USA), in settlement of claims, including withdrawal of criminal prosecution, a three-judge bench accepted as a full and final settlement a sum of $470 million as compensation, blindly permitting the compounding of a non-compoundable criminal prosecution in violation of the statutory law of the land. The Supreme Court was forced to review its judgment in 1991 as civil society and victims’ organisations refused to accept this blatant abdication of its constitutional duty to protect the rights of citizens. The trial against Union Carbide was restarted in 1991, only to be stalled again by the accused who again approached the Supreme Court seeking the quashing of the charges on the grounds that the evidence did not make out any case against them. And yet again, taking a U-turn, the Supreme Court in 1996, by a judgment delivered by three of its esteemed judges, came to the conclusion that (a) admitting that the plant was constructed on a defective design; (b) admitting that safety norms were flouted in its running; (c) admitting that the accused knew how lethal MIC was, it could not be said that while working this plant they had knowledge that it could cause such a disaster. Based on this finding, in the third and final round of litigation before it, the Supreme Court whittled down the charges from culpable homicide to causing death by negligence (from Section 304-Part II to Section 304A), an offence of a much lower grade with a maximum punishment of two years.
Unfortunately, this judgment of the Supreme Court went unchallenged by victims’ organisations and was not highlighted by the media, leading to the tragic verdict handed out by chief judicial magistrate P. Mohan Tiwari on Monday, sentencing the accused to two years’ imprisonment, and a fine of Rs 1 lakh. This judgment has left us angry, despondent, crying out that it is too little and too late. One wonders how, of the 11 judges of our Supreme Court who had the opportunity to do justice to the people of Bhopal, all choose to interpret the law hyper-technically, justifying the callousness with which life is treated in the Third World.
While our despondency is justified, there still exists a possibility offered by the law that could enable the Supreme Court to rectify its own judgments even today. Under Article 137 of the Constitution, the Supreme Court may entertain a curative petition and reconsider its judgment/order in exercise of its inherent powers in order to prevent abuse of its process, to cure gross miscarriage of justice. Such a petition can be filed only if a senior advocate certifies that it meets the requirements of this case. The Supreme Court’s rules set no time limit within which the judgment can be curated and, therefore, it would be open to the Supreme Court to reconsider the law laid down by it which refuses to acknowledge that the flagrant violation of safety norms, with full knowledge of the disastrous consequences by a multinational corporation, constitutes culpable homicide.

India is the only country which defends foreign criminals and let down its own citizens. This is evident from every day functioning of the Government. The culpable act of killing 20,000 and disabling more than 5,00,000 people in 1984 in Bhopal by the Union Carbide factory continues to disturb us even after 26 years. The reason is that the government of India let off the chief criminal, Warren Anderson without any punishment. If this was a mistake in the past, you are mistaken. In the Nuclear Liability Bill passed few months back in parliament, the UPA government want to repeat the same mistake by pleading for peanut compensation in case of any disaster. Unless this act of sacrificing its citizens lives for the mere political survival is dropped Naxalism type of violence cannot be stopped.
Nandita Rao writes in The Deccan Chronicle on 9th June 2010

In the world’s worst industrial disaster, commonly known as the Bhopal gas tragedy, we as citizens of India lost much more than 20,000 lives. Over the last 25 years, slowly but steadily, in several rounds of litigation, we lost our hope in the rule of law and in the ability of the judiciary, the custodial of our Constitution, to protect us against the greed and money power of multinational corporations. Reviewing the failures of the justice system in the Bhopal Gas Tragedy is even more important today as we are debating the Nuclear Liability Bill which, in fact, is seeking to set maximum limits of liability on foreign companies and give them complete immunity from criminal prosecution.
In the context of Bhopal, for once the police authorities cannot be faulted as when the killer gas escaped from the Union Carbide India Ltd. (UCIL) factory on the night of December 2-3, 1984, killing thousands and affecting the lives and futures of lakhs of others, the station house officer of the Hanumanganj Police Station, Bhopal, at his own initiative lodged a first information report (FIR) for culpable homicide not amounting to murder (under Section 304A of the Indian Penal Code), which penalises an act done with the knowledge that such act is likely to cause death and carries a penalty of 10 years’ imprisonment. Not only was the police quick in lodging the FIR, but by December 7, 1984, all the accused, including Warren Anderson, CEO of Union Carbide Corporation (USA), and the top management of its Indian subsidiary, UCIL, were arrested.
The instinct of this relatively junior police officer, when he saw people being eaten up by this toxic gas, that what he had witnessed was more than an accident was proved to be correct when the case was transferred to the Central Bureau of Investigation as early as December 6, 1989. The government of India constituted a scientific and technical committee, known as the Vardarajan Committee, which after evaluation of the UCIL plant and events gave its unequivocal finding that the plant design approved and installed under the directions of Union Carbide Corporation (USA), signed and approved personally by Mr Anderson, was defective and likely to cause a back flow of water and alkaline substances that could lead to the methyl isocyanate (MIC) becoming explosive. The committee also found that the safety norms, mandatory for the use and storage of a substance as dangerous and lethal as MIC, had been flagrantly violated. Even basic precautions, such as maintenance of an empty container for diversion and storage in the event of an emergency, had not been complied with.
However, the Supreme Court of India in its three judgments, from 1989 to 1996, failed to see what was obvious to a police officer. When the Government of India — which had assumed jurisdiction over the claims of all the victims by virtue of the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 — approached the Supreme Court to ratify a settlement it had entered into with the primary accused, Union Carbide Corporation (USA), in settlement of claims, including withdrawal of criminal prosecution, a three-judge bench accepted as a full and final settlement a sum of $470 million as compensation, blindly permitting the compounding of a non-compoundable criminal prosecution in violation of the statutory law of the land. The Supreme Court was forced to review its judgment in 1991 as civil society and victims’ organisations refused to accept this blatant abdication of its constitutional duty to protect the rights of citizens. The trial against Union Carbide was restarted in 1991, only to be stalled again by the accused who again approached the Supreme Court seeking the quashing of the charges on the grounds that the evidence did not make out any case against them. And yet again, taking a U-turn, the Supreme Court in 1996, by a judgment delivered by three of its esteemed judges, came to the conclusion that (a) admitting that the plant was constructed on a defective design; (b) admitting that safety norms were flouted in its running; (c) admitting that the accused knew how lethal MIC was, it could not be said that while working this plant they had knowledge that it could cause such a disaster. Based on this finding, in the third and final round of litigation before it, the Supreme Court whittled down the charges from culpable homicide to causing death by negligence (from Section 304-Part II to Section 304A), an offence of a much lower grade with a maximum punishment of two years.Unfortunately, this judgment of the Supreme Court went unchallenged by victims’ organisations and was not highlighted by the media, leading to the tragic verdict handed out by chief judicial magistrate P. Mohan Tiwari on Monday, sentencing the accused to two years’ imprisonment, and a fine of Rs 1 lakh.
This judgment has left us angry, despondent, crying out that it is too little and too late. One wonders how, of the 11 judges of our Supreme Court who had the opportunity to do justice to the people of Bhopal, all choose to interpret the law hyper-technically, justifying the callousness with which life is treated in the Third World.
While our despondency is justified, there still exists a possibility offered by the law that could enable the Supreme Court to rectify its own judgments even today. Under Article 137 of the Constitution, the Supreme Court may entertain a curative petition and reconsider its judgment/order in exercise of its inherent powers in order to prevent abuse of its process, to cure gross miscarriage of justice. Such a petition can be filed only if a senior advocate certifies that it meets the requirements of this case. The Supreme Court’s rules set no time limit within which the judgment can be curated and, therefore, it would be open to the Supreme Court to reconsider the law laid down by it which refuses to acknowledge that the flagrant violation of safety norms, with full knowledge of the disastrous consequences by a multinational corporation, constitutes culpable homicide.

Divorce – The Inevitable Reality

Marriages are made in heaven but broken in earth. In the fast moving consumer world, wedded ones have limited choice or no choice. Work, little joy and madness continues to circulate. After all this is the general pattern of life in the every phase of human civilzation. If this pattern goes on routinely there is no reason to complain. Unfortunately this is found to be missing in this ultra modern world. With Double Income No Kids (DINKs)as the common feature of many families, restlessness is the everyday matter. With both husband and wife working and encountering troubles at the work place life cannot be easy for many. Do we have a choice? Can we dump the cosy life to sail together? If we want to sustain luxurious life styles, rarely we can avoid division in the family and human feelings.

Deirdre Blair writes in The Deccan Chronicle on 5 June 2010

THERE’S an old French expression I found useful when I wrote a book about couples who divorced after long marriages: “I wasn’t holding the candle”. It means that I couldn’t know what happened between the two people in a marriage, so how could I possibly know why they split?

That hasn’t stopped speculation about Al and Tipper Gore, who are behaving with grace and dignity as they keep to themselves their reasons for ending 40 years of marriage. Public reaction has followed a pattern, beginning with shock and disbelief: “They seemed like the ideal couple, so perfect together”. Outrage came next: “Was it all a sham, especially that kiss on the convention stage?” And finally fear: “Are all marriages doomed to wither and die — and will mine be among them?”

But such questions expose just a few widespread but unrealistic assumptions about late-life divorce. Divorce lawyers tell me the fastest-growing segment of their clientele is the middle-aged and elderly. And their divorces do not all that often involve husbands running off with someone new, leaving wives alone and bereft. A 2004 AARP survey of 1,147 people who divorced in their 40s, 50s or 60s found that women initiated late-life divorces more often than men did, and if the divorced women wanted a new partner, they usually found one.

For my book, I interviewed 126 men and 184 women who divorced after being married 20 to 60-plus years. And what surprised me most was the courage they showed as they left the supposed security of marriage. To them, divorce meant not failure and shame, but opportunity.

“People change and forget to tell each other”, Lillian Hellman said. Still, many couples seem to have an “aha!” moment when they realise that it’s time to split up. No matter how comfortably situated they are, how lovely their home and successful their children, they divorce because they cannot go on living in the same old rut with the same old person.

Men and women I interviewed insisted they did not divorce foolishly or impulsively. Most of them mentioned “freedom”. Another word I heard a lot was “control”; people wanted it for themselves for the rest of their lives. Women had grown tired of taking care of house, husband and grown children; men were tired of working to support wives who they felt did not appreciate them and children who did not respect them. Women and men alike wanted time to find out who they were.

One spouse might have wanted to keep working while the other wanted to retire. Often, there was an emotional void; one would say that the other “doesn’t see me, doesn’t know who I am”, while the other hadn’t a clue: “I thought everything was just fine; we never argued, we don’t fight”. One grew disenchanted with the wrinkled person across the dinner table and wanted someone new and exciting.

I talked to men who were serial marry-ers with trophy wives they abandoned, as one of them put it, the minute the woman “got broody and wanted babies”. And I found women who wanted a man who would take them dining and dancing, but then go home to his own bed and leave them alone until the next party.

Many stories ended with some rendition of, “It’s my time and if I don’t take it now, I never will”. No matter whether they had spent years gearing up for divorce or decided on the spur of the moment after one minor disagreement too many, few had regrets. Men who wanted new companionship easily found it, and women who wanted new partners had them within two years.

Divorce is easier now. Our retirement years are longer and healthier. Both men and women often have enough money to make changes. And the stigma of divorce has long since faded. A century ago, Elizabeth Cady Stanton called it a “social earthquake”. But several decades later, Margaret Mead thought every woman needed three husbands: one for youthful sex, one for security while raising children and one for joyful companionship in old age. In the 21st century, Margaret Drabble, the British novelist, calls life after divorce “the third age”. The heroine of her novel The Seven Sisters says, “Our dependants have died or matured. For good and ill, we are free”.

So let us not feel shocked or sad about the end of Al and Tipper Gore’s marriage. Let us instead wish them well, and hope that they might enjoy their third age, individually and in peace.

No Pardon for Chamelon Economists

The global economy is a Frankenstein monster. No wonder it is destroying its creators. The self praising economists are singing a different tune after their creation is collapsing. Who prescribes the economic module for the world? The so called brilliant economists are chameleons. One colour in front of the government and the other behind the government. These chamelon economists are sought after everywhere for their stupid noises about global economy. What is the point in talking high if they are not able to provide the right guidance to the suffering economy? To this question they will simply wash off their hands by saying that “the proletariats won’t listen to their suggestions”, “the Brettonwood Institutions controlled by America is the real operator”. How long these excuses will be accepted? Despite getting chances to rescue the ailing economy these economists are making huge media noises and minting enough wealth out of the global distress. No pardon for them.

Jayati Ghosh writes in The Deccan Chronicle on 1 June 2010

In the global economy, the past few months have been as bizarre as anything that could be imagined. And nowhere is this more evident at the moment than in Europe where the crazy and unsynchronised tango between financial markets and governments now threatens the lives of ordinary citizens. Consider the fear that is now supposedly spooking the markets, that of the possibility of sovereign default. At the frontline in Greece, the country that is being asked to impose an unbelievably severe austerity package that is bound to cause employment and incomes to spiral downwards, in return for a supposed “improvement” in state finance, which are nonetheless projected to be in parlous condition for years to come. Just behind Greece come the next line of countries under attack, currently Spain and Portugal, and quite soon possibly the United Kingdom. Other governments that have been implementing draconian budget cuts already, like Ireland, Estonia and Latvia, still find it hard (and getting harder) to borrow money for new public debt.

Now, even countries that do not seem to be under pressure from financial markets (like France) and those that cannot possibly be under pressure because they have large current account surpluses (like Germany) are also announcing budget cuts and moves to fiscal austerity. The funny thing is that the more the governments announce budget cuts and other measures to squeeze out savings in the economy, the worse the hit that their bond markets seem to take. Interest rate spreads have been rising and signs of investor panic in sovereign debt markets spread just as governments try to placate markets by bowing to their pressures to cut government deficits. So, instead of being rewarded for good behaviour by the financial markets, they are being further punished. What exactly is going on? It is really a case of the stupidity of markets being magnified by the apparently even greater stupidity of economic policymakers, who seem to be undertaking kneejerk responses to changes in market sentiment, rather than engaging in strategies based on an appreciation of actual macroeconomic processes. As a result, their actions serve to generate precisely the opposite tendency from what was desired, thereby causing further financial panic. Consider the current situation. The global economy is recovering from a major recession but the recovery is fragile, uneven and easily reversible.

It is fairly obvious — and indeed was universally recognised in the midst of the financial crisis in 2008 — that when private economic agents are caught in a liquidity trap or in a deflationary spiral, governments must increase their own spending and ease access to credit to keep the economy going. If they also cut spending and tighten monetary policy, they will worsen the downswing and possibly even cause a deep depression. In other words, macroeconomic policy should be countercyclical, not procyclical. The only way this can be avoided is if the economy concerned tries to rely on global markets and increase its net exports, or if the attempt at stabilisation somehow makes the economy appear very attractive to foreign investors who rush in to invest (which is typically very unlikely in a stagnant or declining market). The dependence upon foreign markets is why the International Monetary Fund typically has advised this brutal combination of fiscal and monetary tightening to countries in deficit, effectively bringing on even sharper slumps in many of the countries that have taken their medicine. But, obviously, this is not something that all countries together can hope to do. So if all countries expect that external markets will save them, then all of them will sink together. But that is precisely what all the economies in Europe are collectively expecting. This has another predictable result, which is that the attempt to reduce the fiscal deficit can become self-contradictory.

Governments cut their spending and impose austerity measures. This then reduces incomes and employment immediately, and over time through the negative multiplier effects. As a result, government tax revenues come down. This can even lead to a worse fiscal deficit than before, as many countries have found in the past. In fact it is well known that since tax revenues go down in a crisis or a recession, the fiscal deficit is bound to increase. Policies that aggravate the slump will only make it worse. Now consider how this plays out in interaction with private financial markets. When private investors apparently decide that a country’s level of government debt is “too high” or that it has current account or fiscal imbalances that are “too large”, the spread on interest on that government’s debt rises. Bond yields rise as bond prices fall. The country finds new borrowing more difficult and/or more expensive. The government then decides that it has to cut back on spending in order to reduce the deficit. The markets (or at least the financial media) applaud this decision. But then the cutbacks cause more economic pain in terms of reduced incomes and employment, which makes the growth prospects worse. So financial markets respond by further increasing the spreads on government debt! And so on. In fact, the prescription for austerity in these countries is bizarre because it undermines the foundations for economic growth without which they will never be able to repay existing debts.

This ridiculous drama can go on for a while, and the only thing that can stop it is decisive government action. But such is the control of the financial markets that they seem to have come to completely dominate public policy discussion, at least in Europe where these basic economic processes seem to have been forgotten. We have got to the point where even the US government is concerned at how this completely slavish and illogical response will threaten global economic recovery. What is even more amazing is that surplus countries in Europe, like Germany, are also opting for fiscal austerity measures, even though these will definitely rebound adversely on growth in the entire region. As long as this peculiar combination of mercantilist expectation of exports saving all economies and emphasis on fiscal austerity in the midst of the downswing persists, it is hard to see how the world economy can really recover.