1 Global growth – now or never (Stephen S Roach in Khaleej
Times) Predicting sources and timing of the proverbial next crisis are near
impossible, but there are two destabilising scenarios to ponder: First, the
full risks of a sovereign debt overhang haven’t played out yet. With long–term
government interest rates remaining low, there’s a false sense of complacency.
In 2011, debt exceeded 100% of GDP for the broad collection of so-called
advanced economies for the first time since the end of World War II. The
overly-indebted can finesse this problem for the time being, but probably not
much longer.
Second, the world’s
most important economic relationship between the US and China could fall victim
to its own set of imbalances. Particularly troublesome is Washington’s
bipartisan penchant for China bashing, with demands that China be forced to
raise the value of the renminbi or face trade sanctions. This is the wrong
response. The US suffers from a multilateral trade deficit – characterised by
imbalances with 88 countries in 2010. Washington must come to grips with its
own unprecedented shortfall in national saving. Lacking saving and still
wanting to grow, the US must import surplus saving from abroad – running
massive current account and multilateral trade deficits to attract the foreign capital.
The global rebalancing agenda would be better served if the
US-China trade relationship were recast as an opportunity. For a growth-starved
US economy hobbled by sluggish consumer demand, exports could become an
important source of growth. China is America’s third largest and most rapidly
growing export market. The US focus needs to shift toward market access –
ensuring that its companies have a fair shot at Chinese markets as that nation
ushers in what could be the greatest consumption story of the modern era.
In short, the outlook for sustainable world growth depends
critically on how the US and China address rebalancing imperatives. Advanced
economies, especially the US, must consume less and save more. The developing
world, especially China, has no choice other than to draw down its excess
saving and consume more. The sooner the world faces up to these urgent
rebalancing imperatives, the better.
2 Banking reputation at ‘new low’ (The Guardian) Stephen
Hester, chief executive of Royal Bank of Scotland, admitted that the reputation
of the banking industry had plunged to a new low, as the bailed-out bank was
hit by a string of charges caused by computer mistakes and mis-selling of
financial products – with more to come from the Libor scandal. First-half
losses widened to £1.5bn from £794m at the same time last year.
In light of the Libor rate-rigging scandal which is about to
engulf RBS, the bank's senior independent director, former Standard Life boss
Sir Sandy Crombie, is conducting a review of the "culture and values"
of the bank. Results were hit by the enforced payout of £125m to compensate
customers who fell victim to a computer meltdown in June – a cost that could
yet rise and which Hester described as a "significant blot" on the
bank's reputation. Another hit from the mis-selling of payment protection
insurance took its total charge for this debacle in the past 18 months to
£1.3bn.
Admitting that the reputation of the industry was at
"new lows", Hester added: "This is dangerous because customer
trust is a prerequisite for a successful banking sector and an effective
banking sector is so important to economic stability and growth. We are in a
chastening period for the banking industry. The consequences of the sector's
past over-expansion are still being accounted for, probably with some way still
to go."
3 Guns and India MPs (BBC) Why do so many Indian
parliamentarians need guns? And why are guns being sold to MPs who have
criminal cases pending against them? Nobody quite knows. But the government's
reply to a freedom of information request on gun ownership among MPs has
revealed some startling facts: 756 guns were sold to MPs and VIPs - usually
politicians - in India between 1987 and 2012. Eighty two MPs purchased guns
being sold off by the state between 2001 and 2012. Eighteen of these 82 MPs
have criminal cases pending against them. They include charges of murder,
attempt to murder and kidnapping. One of these MPs - Atiq Ahmed from Uttar
Pradesh - has 44 criminal cases pending against him.
These mostly imported guns were seized by customs and then
sold to MPs - at well below the market price until a few years ago. Curiously,
only MPs can buy these confiscated weapons. Ordinary citizens, according to the
watchdog Association for Democratic Reforms, are not eligible even if they have
firearms licences.
In a new report, the watchdog raises some pointed questions.Why
should guns be sold only to MPs when many of them already enjoy police
protection at state expense? Why are guns being sold to MPs who have
"serious criminal charges" pending against them? The government and
the MPs have no answers yet. Right to information activist Ambrish Pandey, who
unearthed the information, believes the sale of guns to MPs is a result of an
"ad hoc, discretionary and opaque policy of allotment".
India's democracy is already facing a serious challenge from
criminalisation of politics. Nearly a third of MPs - 158 out of 543, to be
precise - in the lower house face criminal charges in more than 500 cases. Seventy-four
of them face very serious charges, such as murder and abduction.
4 India’s federal crisis (AG Noorani in Dawn) The framers of
India’s constitution never imagined that the states would become so assertive.
They set up a highly centralised federation. It worked fine so long as Congress
hegemony lasted. In 1967, it lost power in the states of the entire northern
belt. Prime Minister Indira Gandhi welcomed a “more practicing federation with
multiple parties and coalitions in power.” Five years later, however, she said,
on Feb 3, 1972, that it was necessary that the state governments should be “in
tune” with the government at the centre, accept its policies and be willing to
implement its programmes.
Her conversion to a brazenly anti-federal approach was
induced by her election victory in 1971, when she gained a massive majority in
the Lok Sabha. There began an era of ‘ready-made chief ministers’ in the states.
This era continued right till 1989, including during the tenure of Prime
Minister Rajiv Gandhi (1984-1989) There was a break from 1977-80 when an
unsteady coalition of Congress opponents wielded power. The PV Narasimha Rao
government of the Congress (1991-96) survived on defections. From 1996 to this
day, India has been ruled by ramshackle coalitions, either with the BJP as the
main partner (1996-2004) or the Congress from 2004 onwards.
During this entire phase the letter of the constitution had
not changed. But radically altered politics changed the federation to a degree
none had imagined before. This is likely to continue, for the era of a single
party’s majority in the Lok Sabha seems to have ended. Coalitions which would
include powerful regional parties will govern India. All over the world units
of federations are clamouring for greater power, especially in Canada and
Australia. It is a matter of time before the states in India unite to present a
Magna Carta for the redressal of their long-felt grievances.
5 Tackling cancer through cloud computing (Khaleej Times) A 17-year-old
girl who won this year’s annual Google Science Fair has written a cloud-based
computer program that makes breast cancer detection less invasive. Brittany
Wenger, the Palo Alto, California student made it to the science talent
competition for kids aged 13 to 18, by creating computer programs coded to
think like the human brain and then used them to locate mass malignancy in
breast tissue samples. She called it the “Global Neural Network Cloud Service
for Breast Cancer”.
Traditional methods of finding mass malignancy use a
minimally invasive, but painful, biopsy called a fine needle aspirate (FNA). A
section of the medical fraternity now insist that analyzing tissues collected
with this method isn’t always effective and often calls for further invasive
procedures. The teenager tested her method with 7.6 million trials to see how
accurately it would detect cancerous tumors and was amazed to find it succeeded
97.4 % of the time with 99.1% sensitivity to malignancy when analyzing samples
collected from FNA.
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