European Union now speaks with one voice after the fall of Berlin Wall. North America always had one voice since late 18th century. Today these two economies, with their Western Allies with less than 15%
[1] of global population control more than 65%
[2] of global economy. And Asia, where from all the traditional religions emerged, with 4 billion+ population, roughly two-thirds of global population spread over 17% of world’ surface
[3], had a meager share of 22%
[4] in global economy. That too including Japan, which is the only significant Asian economy of size and scale that alone contributes to 45% of Asian economy.
And Asia has more than 70% of global proven oil reserves, and produces more than 50% of present global oil production, but consumes less than 50% of what it produces. And Asian economies hold a staggering $2.9 trillion dollar of foreign exchange reserves, unlikely that any of those currencies are Asian currency of significance.
And all the wars that I do recall in last thirty odd years were fought in Asia, barring one Yugoslavia. Barring one between Iraq and Iran, in all the rest US was involved. And now there is another Middle-East crisis.
What’s fundamentally wrong with this region? Wars are always bad, on top of it why do we fight in our own land? Does there exist an Asian identity anymore; or that’s more fragile than the identity of the UN? I wonder over these issues internally.
And at the same time I read in global news about US selling 66 F-16s to Taiwan and few more to Pakistan. Are we acting stupidly by squabbling within us and thereby allowing others to divide and rule us more, simultaneously allowing them to strip our assets, and allowing them free credit from our hard earned savings, without any real backing of our savings.
Why should I bother about all these? Because all these affected me in May 2006. I was financially killed in ruthless global financial markets.
I was happy in my own internal world in Kolkata and in IIT Kharagpur, in India amidst all global imbalances. Then the crash in Indian equity market took place in May 2006. I had leveraged long positions, that too un-hedged. Weaker hands are always eliminated by natural forces or by market forces. Market forces eliminated me. True, I played adventurously with my small money. This huge financial loss prompted me into stock taking of my life; and that of my surrounding world.
And then the realization came that we in Asia is fueling others consumption, by holding dollar whose real value no one knows in a ‘race to the bottom’
[5], and by selling crude against same dollar. And what are getting in return – F-16s from those who enjoy our oil and interest free loan against ‘fiat’ currency, and few wars in Asian lands killing innocent civilians and children.
One may rightly question the basic premise - what Asian identity I am talking here. China, the emerging super power is in mutual dispute with Japan and Taiwan, India is in dispute with Pakistan, Lebalnon and Palestinian are at war with Israel, Sunnis and Shias fight each other daily in Iraq where allied forces still exist there. Then there is potential nuclear dream of Iran and North Korea.
Few may rightly argue that without the western intervention, we would have killed each other. May be possible – but the time has come now to discuss, debate and choose our future.
I wondered on this game started by Hezbollah in Lebanon. Isn’t it another similar adventurous game in military world that I played and got killed in financial world? I had limited money, and had leveraged positions. I didn’t know how much money exist globally, more of US dollar, US indebtedness and how they finance that, and what it cost US to print and supply that dollar.
Isn’t it same that Hezbollah played an adventurous game without realizing how much military its opponents have, and what can the consequences be. On the face of it, this article does not pass any judgment whether the actions of Hezbollah was right or wrong. Killing innocents and children, anywhere at any part, is wrong. It’s first human blood, and then it’s the blood of an Israeli, a Lebanese or that of a Palestinian.
This article examines the reason of repetitive middle-east crisis from global financial imbalances, and west’s interest to fight in Asian land again and again.
I was long in the Indian derivatives market because I felt present US economy is not sustainable. I am sure about over-valuation of US dollar in global economy. There are many who feel so. But there is no alternative – what’s happening with dollar today can happen with Euro tomorrow. The answers of dollar still being high, unfortunately or fortunately rest with Middle-East, and with Asian economies like China and Japan, and also with military power of US. I don’t see any economic value in dollar with present deficits of US economy and its negative savings rate, and various estimates suggested total indebtedness of US economy from a moderate $ 53 trillion
[6] to something like $ 250 trillion
[7] when all hidden debts are accounted.
Compare that with total revenue of US Government to the tune of $ 2 trillion and running in deficit, over-valued and over leveraged US stock market and real estate market, negative US savings rate, fear of collapse of Social Security system as the Baby-Boomers near their retirement age
[8], global GDP of $ 44 trillion, and a global savings of $ 2 trillion. My research yielded me little help in finding the source of that huge indebtedness, a labyrinth of technicalities and fourth order derivatives
[9] followed. It does not make simple economic sense – it may justify some complex economic logic.
US economy in its present shape apparently showcases the Mother of all Enrons and their accounting principle.
And unfortunately it’s the citizens of oil exporting Middle-east, who safeguard the credibility of dollar in global financial markets, directly or indirectly pay a huge humanitarian price by trading crude in dollar. So do the Chinese and Japanese monetarily.
With the reserves the Asian economies hold, amounting to a staggering $2.9 trillion
[10], Asia can potentially buy out all the gold that’s on Earth, the currency with which human civilization lived its life, barring last odd 35 years. And much of that gold is in Asia itself. Or Asia could alternately buy out Microsoft, Exxon-Mobil, GE, Royal Dutch Shell, BP, Wal-Mart, Google and all the available gold for sale globally with central bankers of western economy. And Asia has the oil reserves, and the markets of China and India that can sustain and propel the growth for coming many years. And in-spite of all that, a staggering 800 million people, more than that of US and Europe, live below $1 a day in Asian region. I wonder over that too.
But we don’t export F-16s to any at the name of human rights and democracy and American value of Liberty.
And here we look at the wars that we fight in our Asian land for others’ causes by acting as a pawn to global powers. And we look at the present Middle-East crisis, the real war and the proxy war being fought by Lebanese civilians and Israeli Civilians against both those two armies and Hezbollah.
There are terrorisms elsewhere in the world too – in CIS countries, in India, and even in Africa. However US attention and B2 bombers never bombed those terrorists elsewhere, barring Afghanistan. And Afghanistan is not far off from Middle-East. There was reported usage of banned DU weapons, which falls under Weapons of Mass Destruction as per US Federal code definition in 2 out of 3 categories in various Middle-east conflicts. As these DU weapons are radioactive and chemically toxic; it fits the definition of poisonous weapons banned under the Hague convention too
[11].
I am against human killing human beings, more so innocent civilians and children getting killed in the name or war against terror or in the real war against falling dollar. And I am against organized marketing campaign and propaganda of using civilian killings to justify more innocent killing. Any human being ought to be.
I have been following this present Middle-East crisis through Western Media (BBC and CNN). Unfortunately for Asia, we don’t have mind-share as Asian citizens as I don’t recall any Asian media of credibility. Aljazeera’s attempt is at best to put itself as the Muslim (Arab) voice of Middle-East, and can not be stated as the voice of Asia.
We badly need a voice of Asia who would analyze global events at the perspective of Asian interests. Present world is now under the influence of Western (US) economic forces and its accounting principles, its military prowess and its media control.
To get an alternate picture of this Middle-East crisis, I at times follow Aljazeera.net, and found an article which talks about that deliberate or unintentional bias of Western Media. The article was titled ‘Watching American TV in Beirut’
[12]. There was a similar article in the Khaleej Times on 23rd July titled ‘Helping ourselves’.
[13] This article ended with a question: ‘When will the Arabs and Muslims realise that solutions to their problems lie within themselves?’.
This article poses that question in a larger Asian level – ‘When will the Asians and all Asian nations realize that solutions to our problems lie within ourselves’.
At times I get a feeling that few nation-states enjoy this earth fully and another 5%
[14]; and rest of the world as hungry dogs fight for another few odd % of this world. The world is anyway getting exploited beyond its sustainable limits. The ‘have nots’ remain ‘have nots’ and the ‘haves’ have it all. And we realize that this credit driven consumerism is not sustainable for Mother Earth and Human Civilization, but don’t do anything meaningful about that.
What we don’t realize in developing world is that we are not fighting against any human beings. What we don’t realize that we should be actually fighting the oppression by dollar as the only global currency with ‘seignorage’ right with Fed, and thereby with US Government. Rest of the world today is in a mad ‘race to the bottom’ to get few scrambles of that dollar.
Only Asia can change that; and can change that fast enough. Only if Middle-East adapts to a sustainable currency (better a gold standard dominated one) in exporting their oil; and export-dependent Asian economies adopting the same gold standard eventually.
US know it too well too. And that’s why we have a proxy war against terror in the Middle East behind the real war against falling dollar. And this war in some pretext or other would continue as long as America knows Dollar is too weak purely on numbers of economics. And the support of the petro-dollar alone, and temptation of growth amidst poverty in Asia which puts Asian nations into this race to the bottom to have export competitiveness can make dollar survive for some more time. It’s a tactics to buy time hoping that in between US fiscal and trade deficits may improve; or bigger geo-poltical events reshape the world.
War has always been good for the US economy. US was the biggest beneficiary of 2nd world war because it was fought elsewhere. Iraq and Afghanistan war revived US economy post the dot-com meltdown. Dollar was gold before 1971; Nixon changed the rule by converting gold to dollar. And now with crude is dollar game; US knows that its economic and military power is in the hands of those very region and religion that produces black-gold. US and west's reliance on black-gold is not for their imports and energy security alone; but more to maintain their currency valuations; and thereby gaining global acceptance on US credibility and thereby in dollar.
And it’s unfortunate that West needs to intervene and broker peace deal in our crisis. It’s Asian blood, no different than any other human blood flowing in Asia; and ‘Only Bush has the power to stop the killing’
[15]. Unfortunately, as the news-article stated in the end ‘The rest of us (global citizens, Americans or more for Asians?) can only hope someone gives him (President Bush) a history book to read.’
In April 2002, Henry C K Liu wrote in Asia Times that ‘US Dollar hegemony has got to go’
[16]. Since then the financial condition of US indebtedness has only deteriorated, and deteriorated fast; and that of Asian economies have improved. In one fiscal year, in 2004 total US indebtedness increased by $11 trillion, almost equaling its GDP
[17]. And the country has gone to a point of almost no return.
And as long as Asia holds on US dollar as Foreign Exchange reserve and thereby feed US on credit, as long as Middle-Eastern oil exporting countries sale their oil in dollar, and as long as the proxy wars are fought in Asian ground, US dollar holds on as a global currency.
And speculations are always rife that a bigger geo-political event in Middle-East Asia can take crude to $ 200 or more. I now know everything is possible in financial markets. In any such eventuality, the Asian economies like China, India, Japan, South Korea would be hurt the most. Because whatever be the price of crude in dollar, it only takes Fed and US Government the printing cost to print that money, whereas Asian economies need to earn that money. As I finish reach the end of this article, I see another news in Kjaleej Times Online – ‘US rushing arms to Israel amid Lebanon bombing’
[18].
I am sure that a lot of wars can be averted and a lot of financial imbalances can be corrected if we could go back to the gold standard. It would happen some day; question is when. And that would also stop this credit driven consumerism that’s no more sustainable. We can’t eat today fruits of tomorrow.
Let’s go back to old-gold standard globally, and help human civilization with better equality, and sustainability.
[1] This includes population of EU, North America and other Western economies like UK, Switzerland, Sweden, etc.
[2] List of countries by GDP (nominal) http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29
[3] ‘Rural poverty in Asia’ http://www.ruralpovertyportal.org/english/regions/asia/index.htm
[4] ‘The Changing Role of the IMF in Asia and Global Economy’ by Rodrigo di Rato, IMF (in 2003) http://www.imf.org/external/np/speeches/2006/061306.htm
[5] ‘Asia Times: US dollar hegemony has got to go’ by Henry C K Liu dated 11th April 2002 http://www.atimes.com/global-econ/DD11Dj01.html
[6] From USATODAY.com ‘The looming national benefit crisis’ (March 2004) http://www.usatoday.com/news/nation/2004-10-03-debt-cover_x.htm
[7] ‘The gigantesk tower of debts in the USA will make us tumble’ – RINF alternative news’ by Rene Delavy. Source: http://www.rinf.com/columnists/news/the-gigantesk-tower-of-debts-in-the-usa-will-make-us-tumble
[8] "As a nation, we may have already made promises to coming generations of retirees that we will be unable to fulfill," Federal Reserve Chairman Alan Greenspan told the House Budget Committee in February 2004 from USATODAY.com ‘The looming national benefit crisis’ (March 2004) http://www.usatoday.com/news/nation/2004-10-03-debt-cover_x.htm
[9] The Fed, the Constitution, derivatives and Enron, http://myhomelender.com/fed.html
[10] ‘Asia ex-China’s FX reserve down in June on sell off’ from Reuters dated July 10, 2006
http://asia.news.yahoo.com/060710/3/2mygu.html[11] Source: NucNews.Net…archives, for research, and Education
http://nucnews.net/nucnews/2006nn/0601nn/060111nn.txt[12] By Habib Battah, posted on 20th July 2006. http://english.aljazeera.net/NR/exeres/AEEFA95C-1ED7-4BD0-9CE5-7FEEC2613B68.htm
[13] Khaleej Times Online – Helping Ourselves 23rd July 2006 http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=data/weekend/2006/July/weekend_July43.xml§ion=weekend&col=
[14] ‘I want the Earth Plus 5%. The Truth about money, credit and the deficit’ http://www.relfe.com/plus_5_.html
[15] Yahoo News dated 21st July ‘Only Bush has the power to stop the killing’ by Richard Reeves http://news.yahoo.com/s/ucrr/20060721/cm_ucrr/onlybushhasthepowertostopthekilling
[16] ‘Asia Times: US dollar hegemony has got to go’ by C K Liu dated 11th April 2002 http://www.atimes.com/global-econ/DD11Dj01.html
[17] From ‘2004 – The Year In Review’ in Bullion Management Services Inc.
http://www.bmsinc.ca/content/view/182/46/[18] ‘US rushing arms to Israel amid Lebanon bombing’ source AFP dated 23rd July 2006 http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=data/middleeast/2006/July/middleeast_July473.xml§ion=middleeast
