EUSA vs Zimbabwe, Bailout vs But Out,and Other Fun Economy

The results of US and EU bailouts manifest in Mass Protests, the first Mass Strikes in the USA for Decades, a London Suburb where We The People gave a little taste of what is to come when they loose it, Mass Demonstrations and Clashes in Greece, Spain, Italy, and there is more to come in 2012. True, Occupy Wall Street and similar Manifestations in Europe are Trojan Horses, but they are an undeniable signal, indicating the fact that a large segment of otherwise well conditioned, placid populations have had so much of it that they are willing to get out into the streets and actually freeze and risk confronting the new Western Militarized Police Forces that would have left Orwell in astonishment.

The Western Bailout model had some other pretty consequences too. The Dow Jones finished 2011 at 12.217,5 which equaled a Dow/Gold ratio of 7.8, and during the first month of 2012 alone the Dow surged another 3 % DowNwards. The “real value” of the US Stock Market will most likely be ending 2012 with having lost some 85 % of it´s real value. So much to the BailOut Model of the EUSA.

I suggest that investment in Zimbabwe is a much more sound proposition than dealing in BailOut markets. Contrary to EUSAS bailouts that literally rip off entire populations, including medium and small investors who try to save for their family or otium, Zimbabwe seems to implement the model of Comply or BUT OUT.

Zimbabwe´s BUT OUT MODEL is among other manifesting in the fact that “undercapitalized banks” have been shown the boot that will be butting them out unless they comply with the regulations of Zimbabwe´s banking sector.

Yesterday the Governor of Zimbabwe´s Reserve Bank, Governor Dr. Gideon Gono informed journalists, and the banking sector, that there would be no other dead-line than the one already set at two weeks. By February 14 all undercapitalized banks should finalize their ongoing initiatives to meet minimum requirements, suggesting that some of the banks could merge, as he had advised before. In other incidents share holders would need to dilute their stake to inject fresh funds to save banks, instead of clinging to their shareholding.

The banks most likely to be confronted with Dr. Gono´s and Zimbabwe´s BUT OUT BOOT are Royal, ZABG and Genesis Investment Bank. Zimbabwe´s Finance Minister Tendai Biti advised that share holders should consider if it was wise to hold on to old ownership structures, and then to go under with a 100 % shareholding.

Comparing Zimbabwe´s sound BUT OUT MODEL, I would suggest that investing in Zimbabwe is a far more sound idea than investing at a drug and drug money dependent Wall Street, where the gamble is about whether one is lucky to invest in one of the crime cartels that are too big to fail – and even if one is lucky enough to win that gamble, one is assured that ones stock will be loosing 85 % of it´s real value during 2012 ?

Bailout ? Or But OUT !!! It´s Your Funeral so You decide for Yourselves. I know where I would be investing my money. Considering the Dow/Gold Ratio and the fact that we can expect the real value of EUSA´s stocks to loose 85 % in 2012, I´d invest in Gold, and keep a good part of it, safely at a Bank in Zimbabwe.

Source: Christof Lehmann (nsnbc Editor)



It is Santayana who rightly pointed out that those who forget their history are bound to repeat it. Despite all the negative aspersions that have been cast on history over time, especially given the biases that accompany some historical works, history as a record of a people’s past is something that cannot be taken lightly.

AAttending an event last week at the Nehru Memorial Museum and Library (where Prof. Sugata Bose launched his book His Majesty’s Opponent: Subhas Chandra Bose and India’s Struggle against Empire) happens to have been my waking call from a dogmatic slumber. The panel discussions, questions and contributions from the audience left a sour taste in my mouth. I used to be confident that I knew much about India’s pre and post colonial history from what I learned at school and could use these to analyse what is going on in their current political scene. I have never been more wrong. I realised how little I knew and how much was being left out. All through the discussions I could not help but remember Chimamanda in the Danger of a single story who points out that

“… There is a word, an Igbo word, that I think about whenever I think about the power structures of the world, and it is “nkali.” It’s a noun that loosely translates to “to be greater than another.” Like our economic and political worlds, stories too are defined by the principle of nkali. How they are told, who tells them, when they’re told, how many stories are told, are really dependent on power.”

She goes on to state that “Power is the ability not just to tell the story of another person, but to make it the definitive story of that person. The Palestinian poet Mourid Barghouti writes that if you want to dispossess a people, the simplest way to do it is to tell their story, and to start with, “secondly.”” It will be difficult to refute the fact that there exist just this power, one that will be a bit elusive to situate, that has directed the telling of the Indian story. Begin the Indian story with independence, the break-off of Pakistan and we have a different story with Nehru and Gandhi at the foreground of events. However, begin this story by integrating the great role that Netaji Bose played in the fight for decolonisation and the role his ideas would have played had he been alive at the moment of independence and the story takes a completely new dimension.

It will be difficult to say how events would have played out had Bose lived on to independence. That however, is not an area for my speculation. What I cannot seem to get over is how a man who was in the picture till 1946 and who won an election in 1939 against Gandhi’s candidate, Pattabhi Sitaramayya, should be so obscure. I was really nonplussed when I realised that many of my Indian friends also did not know of this great icon? I was the one telling them! What else did they not know? I began to ponder. This was the biggest problem about a story being told from one perspective – it “…creates stereotypes. And the problem with stereotypes is not that they are untrue, but that they are incomplete. They make one story become the only story.”

Some persons who know of Chandra Bose were bold in asserting that the man has been receiving recognition and that there are now monuments built in his honour and many people now bear his name. These are great ways of immortalizing a great man no doubt, but the million rupees question that ought to be asked is if Bose fought and died for India just so that he could be honoured. I certainly do not think so, as in his lifetime he did not seek personal agrandisment but sought the welfare of the Indian people. If there is one thing that should live on, it should not be simply the memory of a man, but the ideas that he sought to impart. Gandhi himself described Bose as a man whose ‘self sacrifice and suffering, drive, integrity and commitment to the national cause and the capacity to bind all Indians into one people were unsurpassed.” Strangely enough, it would seem that these wonderful qualities died with the man. We can all agree that many a great man has lived and died but their ideas are immortal. It is believed that Bose last words to his colleague, Habib-ur Rehman. were: ”I don’t think I will recover. So when you go back to India, do tell our countrymen that I tried my best to wrest freedom but they should continue their struggle until they succeed.”Another many-layered-hydraic question that needs answering is how ‘free’ India has become since gaining political ‘independence’.

If Keynes view that “Ideas shape the course of history” is anything to go by, then the question needs be asked as to What the implication is of the fact that India rode to independence on the tripod of three great ideological spheres but dropped one immediately on independence. What impact can it have on India as a rising power on the international scene? The answer to these questions inevitably will lay bare the fact that there is a logical jump from India’s pre-colonial history to her projections for future prowess.

Subhash Chandra Bose and Gandhi have been widely presented as having divergent views. While the two undoubtedly held different visions of how independence should look like, the common ground was that they were both great Indian Patriots who wanted the best for the Nation.  Bose who was influenced by the success of the five-year plans in the Soviet Union, advocated for a socialist nation with an industrialized economy. Gandhi was opposed to the very concept of industrialization. What independent india needed to have adopted is therefore a synthesis of all ideas so as to come out with a new thesis that will be peculiar to India, Bose had earlier made a solid argument that  “… common traits will form the basis of the new synthesis. That synthesis is called… “Samyavada” — an Indian word, which means literally “the doctrine of synthesis or equality.” It will be India’s task to work out this synthesis.” What I see today is clearly a failure by India to arrive at this synthesis and hence what I can conclude  is a failure at attaining independence. There seemed to have been only a transfer of power from the British to the Indians but the very structures which oppressed the Indian people under colonialism and which these great men fought to overcome seem to have been adopted if not fortified. It is my humble opinion then that if current trends persist, it will not be long before the ordinary Indians begin another struggle for ‘independence’ – albeit not from foreign oppressors but from internal structures that oppress them.

India, is undoubtedly one of the fastest growing economies in the world today, second only to China. Growing at a rate which economies like that of the UK can never reach again even if they are recovering from a recession, this is India’s opportunity to make sure that she handles her internal issues else they will continue to serve as distractions from her accessing opportunities abroad. China has already realised this and has been focusing great energy in the mitigation of inequalities that exist within her borders. India has got great potential, but unless she comes to her own and adopt the non-voilence of Gandhi in home affairs but the ‘radical’ ideas of Netaji to thread the paths of   international politics, she risks becoming a power that will contain within herself the seeds of her destruction.  Long gone are the days when military might was the criteria for being a global power but even at that, economic might without a viable political strategy will be only a short term project.

As an emerging power, India therefore needs to be more assertive in her role as a Nation that understands the language of strive. She cannot do this by taking a neutral stance in happenings around the world. It was the South African, Desmond Tutu who pointed out that “If you are neutral in situations of injustice, you have chosen the side of the oppressor. If an elephant has its foot on the tail of a mouse and you say that you are neutral, the mouse will not appreciate your neutrality.” As a future super power, India will need countries like Chile, Nepal, Afghanistan, Ivory Coast and even Libya and the time that she can get the support of such Nations is now, especially in the wake of several cases of gross violations of the right of sovereign States by the current world powers who have adopted the name “international community”. One lesson that can be drawn from the cold war is that no super power wants a rival. And will stop at nothing to stop any threats to the privileges of being a hegemon. For India therefore, to hinge the prospects of her becoming a superpower or getting a permanent seat in the UN security Council, (which she rightfully deserves)  to winning the favour of the US or Britain is to have lost it.

Aid, Politics and Development

When I first read Paul Collier‘s ‘The Bottom Billion: Why Poor countries are failing and what can be done about it“, I could not stop myself from clenching and unclenching my fists several times because of the vividness with which he captured certain situations I had witnessed and experienced. I could not wait to reach the portion of the book in which he discussed the second half of his subtitle “…What Can Be Done About it”  Collier does a good in presenting some very simple and arguably inexpensive solutions:

  • Aid agencies should increasingly be concentrated in the most difficult environments and accept more risk.
  • Appropriate Military Interventions  should be encouraged, especially to guarantee democratic governments against coups.
  • International Charters are needed to encourage good governance and provide prototypes.
  • Trade Policy needs to encourage free trade and give preferential access to Bottom Billion exports

I applauded to this and really found it difficult to think that there was a solution that could stray far from what he was proposing. My conviction was strengthened when I read  “Is Aid Oil? An analysis of whether Africa can absorb more aid.” (Do not mind the fact that I was anachronistic in my reading, I just happened to have seen the Bottom Billion first)The conclusion he arrives at is that

“Even though aid is not like oil, the scope for substantial expansion may nevertheless be limited by diminishing returns. The available evidence suggests that if aid is simply scaled-up proportionately, the incremental aid might indeed be much less effective, dollar-for-dollar, than existing aid.”

Fair enough, the argument in the Bottom Billion had support from an earlier document though it presented  Aid as  ‘Part of the Solution’  I thought I had found my ‘Holy Grail’. Could my quest for a solution to the African/Third world problems be over so soon? So I may have thought, until I had time to go through Heather‘s lectures and later participated in the seminar discussions. One of my Masters (the most sceptical of them all) had made it clear to me that

“When we run over libraries, persuaded of these principles, what havoc must we make? If we take in our hand any volume; of divinity or school metaphysics, for instance; let us ask, Does it contain any abstract reasoning concerning quantity or number? No. Does it contain any experimental reasoning concerning matter of fact and existence? No. Commit it then to the flames: for it can contain nothing but sophistry and illusion.”

Don’t get me wrong! Collier’s work is not a volume on divinity or school metaphysics (it is a very practical Economics textbook ‘that can be read even on the beach’ and one that I will love to read over and over) unfortunately it contains a lot sophistry and illusion. I am however not advocating like Hume that it be burnt because in that case, most of the volumes in the Social Sciences in recent years will be cast in to flames. (even Hume’s work will not have lived to tell its story) What I am simply trying to point out is that I accepted rationale of the book without subjecting it to critical judgement.

This week’s session did a lot to wake me up from my ‘dogmatic slumber’. I wonder why I kept looking at things in isolation. Aid in isolation is wonderful; Politics – especially international politics – in isolation is a den of wolves where only the fittest survive – Development in isolation… can development be isolated? I don’t know! It seems to be a thing of the future. But when we put the three together and what do we get? Aid that has to pass through some political machinations to bring about development. I was therefore both thrilled and amazed when I looked at the propositions that Heather wanted to be discussed during the seminar session:

1. Aid has a negative impact on politics in developing countries.

2. Aid has a positive impact on politics in developing countries.

3. Aid has no impact on politics in developing countries.

I was thrilled because I noticed that the propositions stood a chance of getting wide support and this meant a good avenue for exciting debate. I was however amazed because Hearther added that “You *must* come to a consensus on this, and so this will involve some friendly debating. You will also be expected to back up your position with examples.” Wow!!! A consensus on such extreme propositions… that was where the difficulty was surely to come… and it did come.

First of all, there was need to distinguish between Official and Non Official Sources of Aid, there was further need to distinguish between Grants and loans, Humanitarian and food Aid, Tied and Untied Aid, Project and Programme Aid, Basket Funds, Budget support, just to name a few. In attempting to do so it became clear that one could not dispute the fact that different types of Aid had different effects and varies from place to place.

The only area we could arrive at a consensus – or let me say where I could agree with the group – was the fact that Humanitarian Aid and other Relief Aid Agencies like the Red Cross, Islamic Relief and Christian Aid were doing a wonderful job and had a positive impact on the politics of developing countries albeit usually unintentionally, and should get all the support they need to continue. Unfortunately we could not have a synoptic view of other forms of official aid. The main reason I differed with others or anyone who thinks aid has any positive impact on the politics of developing nations is the fact that there is nothing positive to show for it. Let us leave all rhetorics aside and look directly at all the countries that have been receiving aid since their creation… there is none that I know that has really achieved better political structures because of aid… if anything I know of so many who have become more corrupt because of the availability of disposable income made possible by aid.

But Why Aid?
Why should rich countries be so concerned about giving aid to poor countries. Why not “teach the people how to fish rather than giving them fish”, why is it that China is one of the highest recipients of aid is also offering aid to Cameroon, or why should one bother to give aid to a country like Cameroon whose president can afford a holiday in which he spends over £25,000 a day for three weeks (or whose national football team can afford to stay in the 2nd most expensive hotel during the South African World cup tournament – beaten in class and only by Japan). What is the rationale behind giving aid to countries even when it is common knowledge that the money will find its way to a Swiss bank with the first available transaction? What in God’s name is the reason that aid is given with conditionalities that will have rippling effects for future generations who will not even be able to account for the aid? If Brundtland’s definition that “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” is anything to go by, then I will be bold to say here that aid is not sustainable, especially aid that has anything to do with the politics of third world nations.

But… is there any room for optimism… yes I think so but from two different unrelated perspectives: first is the fact that most of the taxpayers in the rich nations are beginning to question the usefulness of aid. For example some British people have recently been questioning the rationale behind aid when is was not bringing any positive reports. The report I read from a daily said that Britain will stop giving aid to China and Russia and will freeze its level of aid to India at 280 million a year for four years. The article called for a stop to all foreign aid since “… aid has been propping up dictators for years, with the cash ending up in Swish bank accounts, not in the stomach of those who need it most… it is time we stop sending bribes to these rich despots…”

The second reason for my optimism is fueled by Collier in a talk in which he states that Aid can only be a solution to the poverty of poor nations if it follows a recipe which is a combination of two forces that changed the world for good, – the alliance of compassion and enlightened self-interest. Compassion is necessary because a billion people are living in societies that have not offered credible hope and Enlightened self-interest, because the continuation of such economic divergence for another 40 years combined with social integration globally,  will be a nightmare for the children of the rich nations. Hence he feels that “We need compassion to get ourselves started, and enlightened self-interest to get ourselves serious. That’s the alliance that changes the world.”

Before I begin to get upbeat, it will be good for me to pause a little and wait for next week’s lecture in which a case study of Zimbabwe will put most of these arguments into perspective.

Elites, Politics and Development

Last week, the contention was on whether politics can be pro-poor. While I am yet to come to a conclusion about that, the issue has shown itself to be a real can of worms. The bringing in of elites into the discussion ultimately raises the questions – what have elites got to do with development? And to answer this question another needs to be answered first… who are the elites? These are surely very complex questions and made more so by the fact that I had been following a debate on the Economist with the motion This House Believes That the Global Elite Serve the Masses. I could not help but marvel at the coincidence that the Economist should choose such a topic on the same week that I am grappling with understanding the role of elites in development. It however, became less of a surprise when I followed the massive arguments on both sides, which in one way or the other, pointed to the fact that elites are a massive influence on how the future of the world is to be shaped.

The proposer of the debate felt that the “modern subsidised elite… provide goods and services that the masses value. And, for all we know, the consumer surplus may exceed the subsidy. What is more, the élite pay high taxes that subsidise the consumption of the masses. In America, the bottom 50% of earners pays no federal income tax at all, while the top 10% pay 50% of the national total. In Britain, most people consume more than they earn.” Wow! I literally clapped for him… but not until I read the opposition’s remarks that “Instead… look more closely at the record of the elite in recent years… the question should not be whether such ideas are beneficial but whether the elite could have done better. In many respects their record in recent years, particularly in the West, is poor. Economic growth could arguably have been faster and technological progress more pervasive. The average growth rate in the Western economies is much slower than it was in the 1950s and 1960s.”

Caught within the ‘fly bottle” of this debate, it was not surprising that I had some difficulties at the beginning of Tom’s lecture. From his definition of elites, my mind immediately became flooded with questions… is the concept of ‘elite’ the same in the Western world as it is in Africa? Do they have similar roles to perform? Are the expectations from the masses the same? Is there any such thing as ‘global elite’?

Then I got it! There lies the main area of my confusion… the use of the word ‘global’ in the debate motion and the fact that the Moderator, Proposer and Opposition all failed to capture what they meant by ‘global’. Their arguments failed to reflect the universal nature of the proposition. Maybe by luck or by design, this realisation made it relatively simpler for me to follow the discussions during the seminar. I had arrived at certain conclusions though:

First, there is a marked difference between the African elite and that of the West. This is not only from the perspective that the African elite “…tend to be especially powerful. (And) often command a particularly large slice of the national income, and the influence that goes with it.” (Hossain and Moore, 2002) But most especially that their histories are very different. While it would seem the problem of elite’s participation in the political and/or economic development of the western countries could be seen as an issue that is beginning to decline, the situation of the African elite is different in that their roles were defined by the very process of their creation – to be one that exploits rather than help the masses. Fanon clearly stated that the mission of these national bourgeoisie “has nothing to do with transforming the nation” as it is content with playing “the role of the western bourgeoisie’s business agent” and serving as the local instrument of neo-colonialism. Nkrumah, one of those who was quick to spot this a long time ago pointed out that the African elites (bourgeoisies) were a far more serious problem  than colonialism for while colonialism had been slavery from without, neo-colonialism was slavery from within, and as such more dangerous. (Nkrumah, 1965, 50) Jean-Paul Sartre, who calls them the “manufactured native elite”, cogently explains that

The European elite undertook to manufacture native elite. They picked out promising adolescents, branded them as with a red-hot iron, with the principles of western culture; they stuffed their mouth full with high-sounding phrases, grand glutinous words that stuck to the teeth. (Sartre; Preface  to Fanon; p. ix)

These native elites did not limit themselves to high-sounding phrases but in many other ways mortgaged the economies of their countries in a bid to maintain their privileges. This is because the African elites or bourgeoisie:

…lacks something essential to a bourgeoisie: Money. The bourgeoisie of an underdeveloped country is a bourgeoisie in spirit only….consequently, it remains at the beginning and for a long time afterwards a bourgeoisie of the civil service… will always reveal itself incapable of giving birth to an authentic bourgeoisie society with all the economic and industrial consequences which this entails.

Until there is a good and accountable partnership between the government and the people with whom sovereignty resides and through some process of direct dialogue and initiative, a few individuals will continue to present their ideologies and selfish interests as national creed, thereby eroding the powers of the people[i]

[i] Francis O.C Njoku; Development and African Philosophy, p.182