1 The Guardian on the likelihood of a 1930s-like slump. The world risks sliding into a 1930s-style slump unless countries settle their differences and work together to tackle Europe’s deepening debt crisis, the head of the International Monetary Fund has warned. On a day that saw an escalation in the tit-for-tat trade battle between China and the US and a deepening of the diplomatic rift between Britain and France, Christine Lagarde issued her strongest warning yet about the health of the global economy and said if the international community failed to co-operate the risk was of "retraction, rising protectionism, isolation". She added: "This is exactly the description of what happened in the 1930s, and what followed is not something we are looking forward to." An IMF plan, agreed at the Brussels summit last week, involves obtaining €200bn from European countries and then asking the rest of the world to contribute. Beijing has so far proved reluctant to join in a rescue of the eurozone and has said it is up to Europe to sort out its own problems.
2 The BBC reporting on Fitch downgrade for six global banks. Fitch has downgraded six of the world's largest banks, citing the challenging financial markets. The banks are Bank of America and Goldman Sachs in the US, the UK's Barclays, France's BNP Paribas, Germany's Deutsche Bank and Switzerland's Credit Suisse. Fitch cut the "issuer default ratings" at the banks, which "reflect the ability of an entity to meet financial commitments on a timely basis". Last week, ratings agency Moody's downgraded France's three big banks due to their difficulty borrowing money.
3 BBC’s Robert Peston arguing that banks are eurozone’s faultine. If the latest EU council has failed to solve the eurozone debt crisis in a sustainable way, what could shock eurozone governments into effective evasive action – or in a worst case, be the explosion that causes the disintegration of the eurozone? The most likely disaster would be a big bank - or banks - running out of money. Conventional dollar funding of eurozone banks has almost completely dried up. The ECB is lending more and more euros to commercial eurozone banks. But the ECB can only lend against the security of assets that are pledged to it by the banks. It does not give unsecured loans.
Now banks all over the eurozone, in Greece, Cyprus, Portugal, Ireland, Spain and Italy (as the most extreme examples), are only alive at the moment thanks to the sheer scale of the money they've been able to borrow from the ECB and from their respective national central banks. What is keeping regulators around the eurozone on red alert is the danger that the banks under their scrutiny will run out of eligible collateral, and will no longer be able to borrow from the central bank. To state the obvious, when a bank can't borrow from anywhere, even from the central bank, to repay its own debts as they fall due, well that's what causes panic and bank runs - because no one would leave their money in a bank that can't repay its debts.
What's the solution? What's the circuit breaker that would prevent the tumbling dominoes of bank and sovereign defaults? It's the same as it ever was: mutualisation of all the eurozone's debts, which in practice means that the mighty German sovereign balance sheet would stand behind the enormous liabilities of the rest of the eurozone. Here is the simple equation which makes it quite hard to be optimistic about what lies ahead for the eurozone: the stability of the eurozone probably requires Germany to underwrite more-or-less all eurozone sovereign debts, to end the contagion from weak sovereigns to weak banks; but that won't happen unless and until there is an all-powerful finance minister (in effect) for the whole of the eurozone, to reassure Germany and the German people they wouldn't be throwing good money after bad.
4 The Khaleej Times on the rule of law and Arab Spring. In the long run, the rule of law is the ideal framework for a culture that is committed to tolerance and open to diverse viewpoints. It can prevent “political thuggery” used to intimidate opponents and competitors, and/or the misuse of religion as a policy instrument to prohibit freedom of expression. Looking ahead to the days following Arab elections, we know that the rule of law remains weak in most Arab countries. Arabs now have a golden opportunity to begin reshaping their future by evaluating candidates and new ruling parties in accordance with their commitment to these principles. This would be a way to prevent winners from abusing their new-found powers by building a new dictatorship and thus blocking future free elections, or prejudicing their outcomes. Without striving for the rule of law, we effectively guarantee a return to the starting point — and new monopolies on power in the Arab world.
5 Bikram Vohra in The Khaleej Times about the fairness craze sweeping India, titled ‘India’s colour of pure evil’. While Anna Hazare bleats on about his crusade against corruptio, there is a more insidious ugliness creeping into the Indian psyche. Some months back I wrote a piece expressing disappointment that a fine actor like Shah Rukh Khan thought it fit to sell skin fair cream to people who are naturally brown and darker by equating it with success at work and love. Last week, in India I was inundated by this fixation because it has now reached an ugly crescendo on TV and is reflected in sales rising exponentially to 18% per cent annually. In India, the finesse is so evilly refined that the thrust of the campaigns belittle men who use female skin whiteners and not male equivalents. The idiocy of this pigment war in a nation where 85% of the 1.2 billion are dark translates into sales crossing $430 million and growing.
Traditionally, Hinduism has never shown a preference for skin colour. Wikipedia says, “dark skinned people can be found in all castes of Hindu society. In the Mahabharata, Krishna was of dark complexion but was an epitome of beauty. The incarnation of Vishnu, Krishna himself (widely revered by Vaishnavites), was said to be “as black as a full raincloud”. One research paper says, “Individuals in South Asia have tended to see whiter skin as more beautiful. This was most clearly visible in British India, where skin color served as a signal of high status for the British. Few people are aware that two black cheerleaders (recruited from London) were banned from performing at the Indian Premier League cricket. Why? They were considered ‘too dark’. Elisha and Sherin were told to sit out and the stunned twosome wept bitterly. An organiser for IPL reportedly said: “The people here do not want to see dark people. They want beautiful white girls...” Who worked that one out?
According to a recent study by Hindustan Lever, men in southern states like Tamil Nadu, Andhra Pradesh, Karnataka and Kerala are enthusiastic users of skin whitening creams. Tribals are the biggest takers as they migrate from the rural areas to urban enclaves. The innocently believe they will have a better chance of getting jobs. But for celebrities to endorse this crime is unacceptable.
6 The Straits Times on Amazon selling over a million Kindles each week. Amazon said it is selling more than one million Kindles a week and the new Kindle Fire tablet computer is its top-selling item. 'Kindle Fire is the most successful product we've ever launched - it's the best-selling product across all of Amazon for 11 straight weeks,' Amazon Kindle vice president Dave Limp said. Besides the Kindle Fire, which went on sale in mid-November, Amazon offers a range of Kindle electronic book readers. (The clock ticking away for newspapers? )
7 Saswato R Das in The Times of India on the holy grail of Higgs hunters. Scientists at the European Organisation for Nuclear Research (CERN) - the world's largest particle physics laboratory near Geneva - have announced that they might finally have detected the elusive Higgs boson particle. This could be the fulfilment of a multi-decade quest in particle physics. For almost four decades, physicists have been hunting for this particle, nicknamed the ''God particle" by Nobel laureate Leon Lederman. The Large Hadron Collider (LHC) at CERN is the biggest, most complicated and most powerful atom smasher in the world, which can accelerate protons to 99.9999% of the speed of light. It was built at a cost of approximately $6 billion largely to detect the Higgs boson.
Now, it looks like the Higgs boson has been glimpsed in the debris of particle collisions within the LHC. Some may wonder, what is the big deal? Though it may sound esoteric and arcane, modern physics has led to tremendous leaps in technology, which have changed our lives. The entire electronics industry was spawned thanks to understanding gleaned by physicists. The World Wide Web was created at CERN. Accelerator science has led to many improvements in medical imaging, which routinely saves lives.
Without modern physics, it's doubtful there would have been companies like Google, Microsoft and Intel. No Apple or Facebook, no iPad or iPhone. There would be no Silicon Valley. (Of course, it has not been all good - Hiroshima and Nagasaki were also produced by modern physics.) More than anything else, a glimpse of the Higgs boson vindicates a huge body of intellectual work. So hard won, even this tantalising sighting is a tribute to what the human mind has accomplished: that, from a set of equations derived on a page, we can understand the basic workings of the universe, and build hugely complicated machines that can simulate fundamental physical processes. As the LHC goes to work to try to irrefutably confirm the detection, we should celebrate this achievement.
8 The Hindu story, ‘Crunch time for India firms as debts come due. Billionaire Anil Ambani's Reliance Communications, India's No.2 mobile carrier, has a $925 million US dollar convertible bond maturing in March at a conversion price of Rs 654 - more than nine times its current stock price. With India's economic growth buckling and the rupee at an all-time low, other companies, too, are expected to struggle to meet debt obligations in the coming months. Seeking to finance acquisitions and their aggressive expansion, Indian companies raised funds through foreign currency convertible bonds (FCCBs) and bank loans before the financial crisis struck in 2008. Many of those debts need to be repaid next year, and the timing could hardly look any worse. The Indian rupee has nosedived and is Asia's worst performing currency this year, and the stock market has dropped by more than a fifth, making it even tougher for debt-laden companies already reeling under weak business growth.
9 The Deepika reporting on Italy freeing prisoners owing to the government’s financial stress. Italy is freeing 3,300 prisoners facing 18 months or less in jail, in the backdrop of the financial crisis. These prisoners will be under house arrest for the rest of their jail terms. The government hopes to save $ 495,000 each week from the decision. Italy has 68,000 prisoners across 206 jails. (I couldn’t spot this story anywhere else.)
10 The Deccan Chronicle editorial on India MPs’ unacceptable behaviour. Our elected representatives are a privileged lot. Their sense of entitlement is such that they expect ordinary citizens to bow and scrape. But the manner in which some Bihar MPs threw a tantrum because they didn’t get air-conditioned first class seats in a Delhi-bound train surpasses all norms of public behaviour. It didn’t matter to them that a special coach couldn’t be attached due to a technical problem. For them, the idea of travelling in a “lower” class coach was simply unacceptable. The very notion of a “very important person” in a democratic republic sounds bizarre, but it has become a part of our public life that we cannot seem to get rid of. How deeply ingrained this is was reinforced by the railway minister’s response: instead of asking his fellow MPs to understand the situation, he straightaway suspended a senior railway official. Is it any wonder that people are disgusted? Politician-bashing is in the air, and while not all of it is justified, the political class might do well not to give further ammunition with such acts.
11 Ekalavya column in The Business Line, ‘Prime ministerial rope trick’. Robert Walpole became Prime Minister of England in 1715 because his King didn't know English. This was because in their usual practical way, the English had imported George I from Hanover in Germany. Their Parliament had passed a law in the previous century saying only Protestants could be kings. Very soon, Walpole became the most important minister and then the primus inter pares (first among equals). Out of this peculiarity, the cabinet system of government was born.
It has lasted because it works. If it hadn't, it would have morphed into something else — just as it is doing in India.
In 1947, India suddenly popped up on the scene. We replaced the king or queen with a President. And for a while it worked. But it suffered from a fatal flaw. Would the Prime Minister collude with the President of the country or the party? Britain had opted for the latter way back in the mid-19th century but India was still young, and starry-eyed about such things. Indira Gandhi solved the problem by becoming the president of the party; so, Prime Minister Indira Gandhi could collude with Congress president, Indira Gandhi, while formally taking orders from the President of the country — who she decreed was bound by her advice! Improvisation of the highest order, just as the George I-Robert Walpole one had been. No one knew what was going on.
But times change, people change, and above all needs change. In 2004, another tweak was needed, and given. It was an extraordinary example of the sort of ingenuity you can expect when Indian and Italian brains come together to create a new illusion. Thus, just as before, the Congress President and the Prime Minister remained the same person but a virtual Prime Minister, who lived in a different house, was manufactured. This took India right back to the Georgian era of England when the King still had a major say in policy and governance. It took the illness of George III, who also lost America in 1776, to finally settle power on Parliament acting through the Prime Minister and the government. We are getting there, too.
12 Financial Chronicle on FDI in China falling for first time in 28 months. China’s economic growth could be slowing further as data on Thursday showed the first year-on-year drop in foreign direct investment in 28 months and a fresh fall in new orders signaled a further contraction in factory activity. The data highlights increasing risks to China’s growth emanating from a deterioration in developed market economies while domestic demand is being dented by government efforts to rein in rampant real estate inflation. Still, total FDI in the year to date of $103.8 billion suggest 2011 is poised to be a record-breaking year.
Thank you, Anupshah.
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