The introduction of some critics to bad business failures in power   by misapplication of risk controls for bad debts, a guarantee of debt insurance and fraud, large financial institutions in the U.S. and other countries around the world face a credit crisis and a slowdown in economic activity. The effects quickly promoted and distributed ranged from a global shock resulting in a number of European bank failures and the decline in various in-dices, along with many reductions in fair value of stock and raw materials held. The sub prime mortgage crisis reached a critical stage in the first week in September 2008, presented by the contracted sharply on liquidity in global credit markets and insolvency threats to investment banks and other institutions. Observed by a critical analysis of the position with regard to the order of the Federal Reserve Bank began to raise the required level of about $ 10 million in early September 2008, just after the Democratic and Republican national conventions, and just before the stock market crash and the presidential debates.
Involvement of accounting for the financial crisis. Because of the global financial crisis, there was a major influence on the participation of the accounting and refer to the economy in world trade, there was no shortage of resources to measure the strength of the current position of Financial Institutions.

Negative connotations of the International Accounting Standards Board Accounting and Financial Accounting Standards Board (FASB) today announced further steps in response to the global financial crisis following their joint board meeting held in London on 23 and 24 March, 2009. These principles have helped establish the original form of financial statements. In the old format of the strategy of balanced sheet, there was no place to reflect economic events such as inflation / deflation, growth equity, currency fluctuations, interest rates and low mortgage   questions, but in the current strategy of reform, changes have sufficient on the basis of the involvement of accounting has been so many riots revolutionary. With reference to the global financial crisis, the IASB has been accepted in 2001 and is part of the establishment of standards by the International Accounting Standards Committee (IASC) Foundation and self-regulation of the private sector, non-profit.

IASB is firmly in the church, in the public interest, a single set of high quality, global accounting standards that provide transparent high quality glass and similar in order in the general purpose financial statements. With regard to the objective, the IASB approach wide public consultation, and seek cooperation of national agencies and intercontinental worldwide. Members come from nine countries and 14 has a range of professional experiences. They are appointed by and responsible to the Board of IASC Foundation, who are required to choose the best combination of technical expertise and diversity of international business and marketing experience. Since 1973, the U.S. Financial Accounting Standards Board, the selected organization in the private sector for establishing standards of financial accounting and reporting. The rules for the handling of financial information and is recognized as an authority empowered by the Securities and Exchange Commission and the American Institute of Certified Public Accountants.

These standards are important resources for operational cost reduction goals for the simple reason that investors, creditors, auditors and others rely on credible financial information, transparent and comparable. Structuring of work in progress, the two boards agreed to work together as soon as the common standards that deal with off-balance sheet activity and accounting for financial instruments. They will also work to analyze the accounting for loan losses in the financial instruments project. In addition, the municipalities have agreed to issue proposals to replace its standards on financial instruments with respective common standard for months and not years. As part of this project the boards will review the accounting for losses on loans, including models and expected losses. The meetings will continue to rely on the expertise offered by the financial crisis of the Advisory Group (FCAG), a high level advisory body formed to guide the boards in their joint response to the financial crisis. Composition of FCAG includes current and former investors, regulators, central bankers, finance ministers and others in the industry and the private sector.

Source: http://www.shvoong.com/business-management/management/1883273-accounting-implication-global-financial-crisis/#ixzz1ih476j3Z

Death of a Fruit Vendor Ignites a Chain of Public Protests across the Globe

On January 4, Mohammed Bouazizi, a 26 year old fruit vendor in Sidid Bouzid , a small town of Tunisia who had tried to self immolate himself  on December 17 earlier, died of his burn injuries. His death ignited wide spread public protests in Tunisia against the corruption ridden governance and finally led to the fleeing of its President, Zine El Abidine Ben Ali 10 days later. The success of public protests in Tunisia, fuelled and often coordinated by social media, inspired similar protests in Egypt soon thereafter, leading to a cascading chain of similar protests not only in the Middle East, but across the globe, including Europe, India, China, United States and Russia.

Bouazizi used to earn around $3-4 every day by selling fruits, an activity which was frowned upon by the Municipality officials. On Dec 17, 2010 as he brought fruits for trading with a debt, his fruits and his electronic scale was confiscated by Municipality staff, led by 46 year old Inspector, Ms Faida Hamdi, who slapped and abused him on the site. Bouazizi then went to the Municipal office to request the return of his goods, but was pushed back from the gates by the guards who mocked and laughed at him. Unable to take his frustration and insults, Bouazizi douzed himself with gasoline and immolated himself. He was admitted to a nearby Hospital where he succumbed on January 4.

Bouazizi’s self immolation had aroused local protests, and his story had been posted on the internet. His plight was already making rounds in the social media when he died. It was his death that suddenly triggered protests across Tunisia, largely from participation of unemployed youth, comprising nearly one-fourth of the working age poluation. Fuelled by the shock waves that spread with his funeral, mobs swelled and people, frustrated with corruption and poor governance, began to direct their ire against the dictatorial president Ben Ali, who fled soon thereafter, paving the way for democracy in Tunisia. Soon, the success of public protests proved to be highly contagious in a world, where large masses of people were fed up with a lot of things, across all political boundaries.

The public protests that followed made 2011 an year of protests. Biggest public triumph came in Egypt, where people fought a non-violent war with President Hosni Mobarak and won. Soon protests swelled across the Middle East and beyond, affecting places as far and wide as Europe, India and China. While protests outside the Middle East may not directly be a result of what happened in Tunisia, there was no doubt a great element of inspiration that they gathered from protests elsewhere.  

2011 was marked by hardships for the common man, as the long term impacts of past financial stress began to take their toll. 2011 began with busting of many asset bubbles, a sense of crisis, unemployment and rising food inflation. Unresponsiveness of dictatorships made them the target of people’s frustration setting up the stage where pent up anger was just waiting to find a target. What started with the self immolation and death of Mohammed Bouazizi actually became a showcase of public power in the age of social media sharing, making everyone to sit and take note.

Rulers across the world will fear the people’s power from here on and that may be greatest change brought about by Mohammed Bouazizi’s untimely and tragic death. The Times magazine named ‘the protestor’ the person of the year in 2011. Its editorial stated,

“Mr Bouazizi takes his place with other figures whose willingness to see through the charade of oppressive rule elevated them beyond the drudgeries and petty humiliations of commonplace existence.”

Event  # 2

Return of Muslim Brotherhood in the Middle East

More than seven decades after its creation, Muslim Brotherhood acquired the centre stage of Middle East political map after the public protests deposed some of the veteran dictators, while others were shaken and stirred into adopting a more tolerant stand. To many, this may be the real turning point of our history, and what happens next will be keenly watched by many observers.

Muslim Brotherhood is a highly fluid network spread across the world in different forms, formal and informal, that work with a common motive of restoring the status of Islamic community in global politics through all possible means. Its creation in 1928 by Islamic scholar, Hassan Al Banna,  was largely a response to the dissolution of Ottoman Empire in the First World War, that caused heartburn among the global Islamic community and dented their pride, leading to a reactionary pan-Islamic aspiration for dominance. Its motto says, “God is our objective; the Quran is our constitution, the Prophet is our leader; Jihad is our way; and death for the sake of God is the highest of our aspirations.” Its main objectives are introduction of the Islamic Sharia as “the basis controlling the affairs of state and society;” and unification of “Islamic countries and states, mainly among the Arab states, and liberating them from foreign imperialism”. In many ways, it is synonymous with pan-Islamism.

After the Second World War,  the Brotherhood was largely contained by the dictators of Middle East. It was banned and faced severe repression in Egypt after its failed coup in 1954 and has not been allowed to exist openly since then. From the 1980s onwards, it shunned violence and adopted a liberal attitude, often seeking the democratic route to its resurrection. Many feel that it played a very important role in public protests, not only in Egypt, but everywhere else in the Middle East. Some view its adoption of democratic card as a tool to gain acceptability among masses and make use of public anger against the dictatorial regimes. After deposing Mobarak, it has openly held to an alliance with the Military, reminding one of its similar alliance with Nationalist Military Officers in overthrowing Egypt’s monarchy in 1952 and its subsequent opposition to the secularist constitution, just prior to its failed coup and repression.

Muslim Brotherhood is also the biggest beneficiary from the events of 2011, throughout the Middle East, including Tunisia where it has already forced a return to Sharia as the state law. In Jordan, it has adopted a hostile stand and is in a state where it can bargain with the King. In Bahrain, Syria, Palestine, Kuwait and Oman too, it has strengthened its position.  How the future of a Middle East governed by Muslim Brotherhood unfolds, is for time to tell and world to watch. It can either go the way of Sudan, which has been ruled by Muslim Brotherhood proxies for a long time, or it may result in its modernisation and moderation, which will be the best news for people in a long time.

Whatever may happen, it is bound to be a different world henceforth.

Event # 3  

Greece Triggers Euro Crisis, Sends Shivers across Global Economy

The month of May saw angry Greek protestors running riots in the streets, vehemently rejecting the austerity measures proposed by the government to tackle its debt crisis. The Greek debt had risen to unsustainable proportions leading to speculation about possible defaults. S&P downgraded its credit rating to CCC, the lowest in the world. Along with similar concerns in Ireland and Portugal, it raised question marks over the financial stability of Eurozone itself. As European Union was unable to commit its resources to the vulnerable states in time, and the public protests grabbed more and more attention, the shivers sent stock markets crashing across the globe in one of the worst falls since 2008.

The European crisis resulted from two factors. The first was the rupture of the global asset bubble in 2007-08, resulting largely from investments from trade surplus nations, the Oil exporting countries and China. The second was the monetary union which was divorced from the fiscal policy, thereby preventing Eurozone countries from printing money and devaluing its currency, which could have countered their burgeoning trade deficits. By the end of the year, there were signs of another massive bail out, involving European Financial Stabilisation Mechanism, the European Financial Stability Facility, and the International Monetary Fund, but the crisis is far from over and its outcome will shape the world in future.  More importantly, both the underlying causes still remain and can spoil the scene in coming months and years.

However, in a world that is becoming more and more used to crises, especially of financial nature, what brings this event in this list, is its political aspects. Some Economists are already suggesting that affected countries may be allowed to return to their currencies and even default on their debts. The crisis has seriously undermined European unification plans, with many people in countries like Germany and Britain questioning the wisdom behind it. The prospect of citizens of these countries having to bear the cost of mess in other countries will not auger well for the stability of Eurozone. Worse, proposals like European Financial Transaction Tax, whose economic logic is highly doubtful, can worsen the situation by alienating certain countries even further.

Four years back, Euro was seen as an alternative to the monopoly of the dollar. Today, in spite of the crushing impact of four years of financial mess in United States, it is the Euro which is struggling to survive.

2012 may decide its fate.

Event # 4

The Unthinkable: S&P Downgrades US Credit Rating

A few decades from now, August 5 might be remembered as the Black Friday in the economic history of the United States. The global history, could however, have a different description for it, depending upon who is in the writer’s seat at that point of time. The unthinkable, that happened that day, was downgrading of US sovereign debt by Standard and Poors, one of the three top credit rating agencies. It was an appropriate climax after the week long political drama wherein the White House and the Congress were locked in an ugly stalemate over the reduction of fiscal borrowing and cutting of expenses.

Many argue that for all practical purposes, it was an inconsequential event. Similar downgrades in case of Australia, Canada and Japan had made little difference to their fortunes. It is true that heavens are unlikely to fall if one of the three As are removed from credit rating of US. In any case, all the three agencies had been talking about it since April, and to be fair enough, skies actually did not fall after the downgrading.

Yet, the event is a game-changer because it signals the onset of what had virtually become inevitable at least half a decade ago. The massive trade deficit, approaching a trillion dollars p.a., had become unsustainable long back, and was sustained only in the hope that the main creditors, notably China and oil exporting countries, were bound to lose as much if they ever tried to pull the rung under the feet of US economy. What August 5 demonstrated that you do not need them at all to do such a thing. The increasing unsustainability has not only become too prolonged and too obvious to trivialize, its insurmountable economic impacts are already there for all to see.

Fifty years from now, US credit downgrading will be remembered as the first formal sign of an end of a golden era of economic  growth in the United States. It is not the downgrade that matters, it is what it signals that will change the world in just a few decades to come.

Events # 5

China Lambasts US after Downgrading

Within hours of the S&P downgrade, China came out with its first attack on the US economic policies, a move that is significant from the point of view of changing Chinese assertiveness viz a viz the United States, and indicates a paradigm shift in Chinese stand. It signals China’s newfound confidence with which it is ready to assert itself and challenge the United States in its struggle for global ascendancy.

Xinhua , the official Chinese news agency wrote that China had “every right now to demand the United States address its structural debt problems and ensure the safety of China’s dollar assets. International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.”

For over a decade now, United States has been trying its best to pressurise China into freeing its currency from the fixed exchange rate that is has maintained in spite of massive trade surpluses and an unprecedented foreign exchange reserve. Economists tell us that it is impossible to have a fixed exchange rate, capital mobility and monetary autonomy.  China has defied this principle in real life by adopting complex capital control policies that allows free capital inflows , relatively free remissions but very strict control over outflows of indigenous capital coupled with an undervalued currency that ensure huge trade surplus. What is more important, though, is that with its deft diplomatic handling of US policy of engagement, it has been able to successfully prevent any fall out of its clever currency manipulations, for almost a decade.

Since the seventies when the Nixon-Kissinger initiatives, often termed as the ‘policy of engagement’ allowed it to get away with its stubborn policies in a way not even the best of US allies could hope to get away with. Since the beginning of the last decade, as its economy finally began to function in full gear, it hardened its stand over the exchange rate probably after realizing that any compromise then would allow its advantages to fizzle out, just as it happened with Japan in the 1980s. The Japanese Yen which was at 240 to a dollar on September 22, 1985, on the day of Plaza Accord, appreciated to 200 yen to a dollar by the year end and further to a level of 155 yen/dollar by August, 1986. US Government tried the same tactics with China, but China withstood all its pressure tactics. Ten years hence, United States has lost the sting in its economic tale, and China knows its time is just round the corner.

Chinese call for a new reserve currency of the world was hardly taken seriously by Western analysts. The next couple of years may well force them to change their opinion. That day, they will understand the significance of Chinese statement on August 6.

Event # 6

Anti Wall Street Protests Shake the Global Capitalist Empire

Ten years back, if somebody had wondered whether capitalism will survive, people would have laughed at him. They might have laughed him off on September 17 too, when led by Canadian based Adbusters Foundation, a thousand Americans gathered in Zuccotti Park to march towards Wall Street for a peaceful occupation against the injustices caused by the modern economic order. However, within a few weeks it was clear that it is not a matter that can be laughed away.  Over the period of next few weeks, the movement became widespread across the developed world, with the popular slogan of “We are the ninety nine percent”.

By October 5, the number of protesters had swelled to over 15000. On October 15, tens of thousands of protesters were swarming through 900 cities across the world. The protests targeted London Stock Exchange, Times Square in New York city, European Central Bank in Frankfurt and Switzerland’s financial hub in Zurich. There were also protests in Tokyo, Sidney, Hong Kong, Taipei, Hamburg, Madrid, Paris and Sao Polo. By October 29, over 2000 cities were witness to the largest ever public show of dissatisfaction with unbridled market freedom – the very pillar on which whole capitalist ideology is based. 

Mikhael Gorbachyov, compared it with Perestroika and the dissolution of Soviet Union, but it will be too premature to write an obituary of capitalism as yet. What may have happened however, is that the halo around the market has been broken. One hopes that from here on, markets will be treated just like markets – nothing more and nothing less. One also hopes that removing that almost religious veil around them will allow analysts to understand the pros and cons of market more objectively, make allowance for their failures and plan for them in advance. Lastly, one hopes that economists around the world will finally understand and appreciate that very basic difference between a consumer market and asset market, and realise that asset markets, governed by expectations are always prone to failures and always do so in a cyclical manner, that in a world of surplus production, asset bubbles will always happen the moment public memory of earlier bubble and bust begins to fade, and that with time, asset markets will govern our economy far more than the consumer markets.

One hopes that the wake up call given by the protests will bring revolutions in economics, finance and management rather than the politics of the world.

Event # 7

Osama Killing in Pakistan Blows the Lid off a Generation of Lies & Deceit

On May 2, 2011, a joint covert operation by US marines and Central Intelligence Agency, in a small town of Abbottabad in Pakistan ended in the killing of world’s most wanted fugitive, Osama Bin Laden. The event should have been a signal for the return of peace, particularly in the subcontinent. Instead, it had only made the situation more unstable, volatile and unpredictable. Maybe after a few decades, someone would ask as to whether it might have been better to leave the poor assassin in his hole, retired as he was, instead of blowing the hornets’ nest with all its consequences.

It has been an open secret for over two decades that Pakistan has become the terrorism capital of the world, aided by a complex interplay of forces, both internal and external, that thrived by its status and made the best of it for their own narrow interests. Ever since Osama disappeared from the bombed sites of Afghanistan, there has always been speculation that Osama had found shelter in Pakistan.  In an extremely complex set of loyalties and massive double agent-ships or even multiple agent-ships, it is impossible to say who knew all that and who did not. From Islamabad to Kabul to Saudi Arabia to Washington, nobody may ever know as to who was doing what. Most scaring, probably, is the apprehension that even the people who were protecting or targeting him, had no idea on whose side they might have been working for. It is equally difficult to say whether Osama was found by his killers, or sacrificed by those who promised to protect him, and with whose knowledge, or without it.

The killing of Osama became an event worth this list, not because it will close the Al Qaida chapter, but because it bring to fore all the lies and deceits that were always part and parcel of the United States – Pakistan alliance, and not necessarily from one side. It was by and large the turning point in their relationship that perhaps both have been anticipating to happen any moment. Several subsequent events, like the memogate and the NATO attack that killed 24 Pakistani soldiers are only a manifestation of what had become inevitable with Osama’s killing in Pakistan. From here on, diplomatic relations may soon be mended, but the blind alliance that once existed is unlikely to get resurrected in near future. The events of the last two decades only confirm the theory that Pak-Afghan corridor has always been one of the most stubborn ones to be subjugated, throughout the history of mankind.

History may just repeat itself. If it does, repercussions are likely to be felt far and wide.

Event # 8

Saudi Arabia Grants Women the Right to Vote

In a speech broadcasted on television on September 15, King Abdullah, the absolute monarch of Saudi Arabia, granted women a right to vote in the next municipal elections, which are scheduled in 2015. The event may not be of any importance directly to the world, or even to the women of Saudi Arabia, who must travel with a male sponsor called “mahram”, must always be segregated from males other than family and do not yet have a right to drive.

Still, it is an event worth recording for posterity, as it happened in the centre of Wahaabi fundamentalism, and was announced by the only person in this world who has the power to control it. Ever since the discovery of gas in the deserts of Arabia and the steady flow of petrodollars there from, the Islamic ideologies are interpreted and dictated around the world, through a Salaafi-Wahaabi prism that is intolerant to every other version of Islam. King Abdulla’s insulation from it is derived from the historical bond that his family shares with Wahaabi ideologues since 1744, when his ancestor Mohammad Bin Saud made a pact with Mohammad Ibn Abd-Al Wahaab, the founder of Wahaabism, whereby they promised that Saud’s family will hold political power, while Wahaab’s family will be in-charge of religious hierarchy of Islam. Notably, that happened at a time, when even the family of Wahaab had expelled him and refused him support or sympathy, while other Muslim scholars were literally asking for his head.

If there is someone that can bring changes to the fanatic Muslim orthodoxy across the world, most of which is sponsored, supported and enforced by Wahaabi ideologism powered with petrodollars, it is the King of Saudi Arabia. With Arabic spring lurking in its background, one hopes that more good news will flow from the kingdom soon.

Who knows….. 2012 may see Saudi women driving, even if it is necessarily under supervision of a mahram. That  small step can bring about changes that the whole armed forces of NATO will never be able to dream of.

Event # 9

Durban Climate Conference Celebrates Extension of Status Quo

After two weeks of hectic negotiations that almost ended in disaster, last minute hectic negotiations saw the global community finally arrive at a deal that was considered a success, if only because it averted the disaster of total disagreement between developed and developing countries. On December 10, the conference finally concluded with three major agreements. The Kyoto Protocol, expiring in 2012, got a new lease of life, this time for five years. There was an agreement to establish a Green Climate Fund for $100 billion for aiding developing countries, and lastly, there was a general agreement to seal a new agreement by 2015 that would impose responsibilities not only on the developed world, but also the developing countries like China and India, and become implementable by 2020.

These outcomes are little more than an extension of the status quo because of the devil in the details. The differentiation of developed and developing country has again been associated with historical responsibilities and cumulative contribution to pollution. It is an issue where countries have gone back on their word earlier. United States signed the convention in 1992, but went back on its commitment later citing it undemocratic, as the legally binding targets did not include developing countries. So far as Kyoto Protocol is concerned, United States is out of it, as is Canada. Japan and Russia are against it, and emerging states like China and India are not covered by it.

Not much to cheer for then, except that they agreed to agree some other day.

One hopes that day does come in our lifetime. If that happens, we will fondly remember the crisis management of December 10 and credit those who were involved with saving the planet.

If it does not, then god save us.

Event # 10

South Sudan Finally Secedes – After Over 2 Million Casualties

On July 7, South Sudan finally broke off the union that was forced upon it in 1956. During the intervening period, all except a decade has been consumed by a never ending civil war between the North and the South. The Second Civil War, that broke out in 1983, had already consumed more than two million lives, while more than double that number were forced to take refuge. With secession and independence, probably there will be an end to killing and other human right violations that have become a norm rather than an exception during the last three decades. However, there are many signals that do not bode well. Already there are clashes between tribal fraternities, and there is a real possibility that they may become worse.

While for the rest of the world, most of the events on this list are not exactly a matter of life and death, for the people of South Sudan, it is an event which will decide their longevity and survival. If the new country is able to embark on a sensible path with certain degree of harmony and peace, it can reap very rich dividends, thanks to its rich oil wealth. On the other, if its internal strife continues to take its toll, it may deteriorate into yet another nightmare – this time even without the massacres of Arab Janjaweed.

On a more optimistic note, South Sudan’s independence may be the most promising event of the year that was 2011.

There is always a silver lining among the dark clouds!

Madoff tried to protect his family from publicity by pleading guilty, but, instead it has had the opposite effect.  Two books were written, including a memoir by his wife, entitled The End of Normal.   Ruth Madoff recounts her troubled relationship with her husband.

The loss of billions of dollars has been the main cause of the economic crisis in the United States and throughout the world and has had a devastating effect on many families, causing them to lose homes and entire life savings.  While some of the victims have been compensated for their losses, some may never be compensated.

The Ponzi scheme holds many lessons for mankind, but sadly, even the size of the losses and the untold damage to the families involved, will not turn many people away from investing their money unwisely in the future.  This has been true throughout history as people seem to be entranced with get-rich-quick schemes.

The reason for losses include failure to properly investigate the structure and method of investment, failure to investigate the parties who offer the investment, the failure to understand how the money is invested, and the failure of the investment professionals to disclose all of the risks involved in investing money with them.

Other famous money scandals over the years include the Tulip Bulb Bubble, the Tyco and WorldCom scandals and the Charles Ponzi schemes, after which the “Ponzi” scheme derived its name.   Here is the definition of a Ponzi scheme from Wikipedia:

 “A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation. The Ponzi scheme usually entices new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent. Perpetuation of the high returns requires an ever-increasing flow of money from new investors to keep the scheme going.”

In conclusion, despite the warnings of investing in Ponzi schemes, individuals may overlook the risks in favor of the possibility of the high returns.

Farmville

In August, Adam Hamnett of Greater Manchester went on trial for robbing a blind man so he could afford to buy virtual animals on Farmville before murdering a friend who threatened to report him.  The nonsense surrounding Farmville, however, doesn’t stop there.  Take CEO Mark Pincusof Zynga, the company behind Farmville, who will ‘Pass Go’ and collect nearly $1 billion dollars in revenue at the end of this year.  Pincus is the Scrooge behind a series of shady money plays in Zynga.  Back in March, he walked away with $109 million dollars when he sold nearly 8 million shares back to the company at a rate of 40% higher than the set IPO.  Sure, entrepreneurship should be awarded, but I’m not quite sure virtual farming falls under that umbrella. 

Alec Baldwin

Baldwin’s petty circus act on American Airlines wasted fuel, cost time, hampered others’ travels, and, not to mention, was downright childish.  Lil Wayne finally got nailed with a $1.1 million dollar tax lien for dodging the IRS, as if he can’t afford a small cut.  The list goes on and on when it comes to celeb idiocy.  Why celebrities continue to get away with absurdity and still make millions a year off of pretending to be someone else on the big screen is beyond me.  Perhaps Occupy and everyone else complaining about the economy should start boycotting films and albums produced by and involving celebrities who do just as much damage to our economy as Bush did to our national reputation and Unsolved Mysteries to our trust in strangers. 

Girls Gone Wild

Sexis an old, booming industry.  Funny thing is, during bad times, it’s industries like booze and porn that flourish. Sad fact.  Estimates put the porn industry at a total value of around $10 billion dollars annually.  Big hotels like Hilton and Marriot reported last year that 50 percent of their guests purchased pay-per-view adult entertainment, totaling nearly 70 percent of in-room profits.  Sites like XTube rake in about $150,000 dollars in cuts and fees (not work- cuts and fees) monthly from amateur porn flicks.  Next take billionaire Joe Francis, godfather of Girls Gone Wild, who owes 30 million dollars in taxes and by now you should be wondering what the hell is going on.  Americans are busy whining about the economy (with 50% in the low-income bracket) and how they can’t afford basic necessities but it looks like they’ve got enough fiscal padding to afford a nightly coach-down.  Occupy the peep show maybe? 

Animal Inheritance

You’d think people would start second-guessing the way our entire world works when you read up on animal inheritance.  In 2007, billionaire Leona Helmsley left $12 million dollars to her Maltese.  Oprah Winfrey has reportedly left $30 million dollars in care to her dogs when she kicks the bucket.  Drew Barrymore willed a $3 million dollar house to her dog when it apparently saved her life in a house fire.  We have poverty and economic issues everywhere but tolerate people turning their pets into millionaires… what gives.

Comfort – Need Vs. Want

American society is litigious because people have become increasingly whiney. Why? Because comfort is an assumed right, no matter affordability or excess.  If comfort was meant to be an inalienable right the weather would have come with an HVAC system.  Comfort is fine and dandy, but wasting money on massaging mattresses, 30 minute hot showers, and big screen TVs so one can feel like a feudal overload is overkill.  Even Darth Vader didn’t have that kind of luxury on the Death Star.  Senior Magazine contributor Craig Nathanson makes a brilliant point in the difference between ‘need’ and ‘want’. 

“We need food, clothing, shelter, reliable transportation, education, enrichment, and the technology necessary to do our work. Also, we need the occasional small indulgence to treat our children and ourselves.

We do not need 500 cable TV channels, brand new luxury cars, 5,000-square-foot homes in exclusive neighborhoods, lavish ski vacations, and smart phones that do everything but think for us.”

Bad Habits

I’m a dipper, but I’ve got no sympathy for tobacco users.  Wasting money on a product that increases your chances of cancer falls under plain stupid.  According to the ACDE, more than 47 million people in the US smoke.  That’s roughly 1 in 4 people.  Yet at the same time, Americans want affordable health care for everyone.  Hard to provide affordable health care to anyone when a quarter of your population intentionally adopts bad health habits.  According to the Gallup-Healthways Index, 63% of adult Americans are overweight or obese.  Again, what makes you entitled to affordable health care if you don’t bother taking care of yourself?  Plus, if Americans can afford to indulge, economically we’re truly not hurting, now are we…  Occupy should consider moving out of Freedom Plaza and into buffets and stores that sell XXL. 

-         The situations are worsening;

-         High government borrowing

-         High inflation

-         Extra subsidy for buying electricity from the quick rental power plant

-         Electricity price increasing to cover up high price which is due to high oil price

-         Budget subsidy.

These problems are identified by the experts from the point of views they belong to. Not explaining the total situation is not complete economic analysis, as the blind man’s identifying the animal by touching a specific part.

Why and how individual people in Bangladesh have been living with such a poor income- could be the clue of the answer. This is genetically or cultural or habitual matter of fact that Bengalese people are savings prone, whatever they earn, some part of it must go for savings. That’s why if macro economic inflation could be checked country’s people would never know what a bad economy is going on overseas. Even this time, when Americans have suffered so much; we were relatively less affected. But when the inflation now increasing breaking all the records due to ill management of the government the bite seems deeper to feel the commoners.

The same could be true if the government had saved some resources of good times. For the current problem, rather crisis is due to private and public over expenditures. So, the solution lies how efficient and effectively the stakeholders could squeeze the spending horse. We all know the subsidy would be made up by two options- either selling off properties and assets, or borrowing from outside. The continuous subsidy made us all in trouble and best example USA and Greece. And rectifying this super subsidized economy would automatically creates havoc on the regular standard of living, for which people are not responsible in any way.

Tragedy is that although the country’s people suffer, corporates not affected, rather got benefits from both the businesses (Bonuses and benefits) and governments (Bailout package). Americans protested against it in such a big size, which is historically second to Vietnam War protest. For Bangladesh, though the public spending information is available somehow, but the private spending nature is difficult to identify. Though there are tools in economics to calculate it approximately, which says the public subsidy or budget subsidy and private subsidy equal to current account deficits? Meaning the current accounts deficit conforms of the amounts that private citizens lost in the way of subsidy which is saved from the surplus income. In Bangladesh’s case this subsidy is derived from the over investment to Quick rental power plant (QRPP). Government while failed to meet the continuous and uninterrupted supply of electricity allowed private investors to set up QRPP, which boosted the oil import with World market of oil prices going up and subsidy increased almost non-stopping.  At the same time the required investment to other sectors were lagging. Since the power problem will not be finishing soon, we can be sure that the other sectors will have dry investment; consequently, other industrial growth and employment will be less hopeful.

A big chunk of subsidy is going to gas and oil sectors to show them profitable, hence, the subsidy figure would be many millions more in the coming years, experts believe. Meanwhile World Bank and International Monetary Funds suggest cutting more budget subsidy and zeroing subsidy on the oil, gas and power. It means rise up prices of that items that would be boomerang and uncomfortable for the government politically.

More danger is foreign remittance flow is drying out quick which growth rate was 33% in 2008, 19% in 2009, now 2% in 2010. In 2011 it could be a little bit higher as expected but it is doubtful it would be able to cope up with the increasing import expenditure. Meaning this year’s current account subsidy would be increased again. The financial discipline that was built up in this last seven year would be in jeopardy.

This seems like irrelevant which way the expenditures are going- power, food importing or something else, but matter is whether expenditure exceeding income or not. Coat must be cut according to cloth. Obstacle is the Revenue department has done their excellent job lately increasing the revenues by collecting direct and indirect taxes. So, more increasing of income would not be possible as it is overstretched, and people are over taxed. The rest is government expenditure, how wisely it could be controlled, that is austerity measures is the ultimate panacea. Meaning cropping the ambitious big budgeted projects, resource allocation is an important element in macro economic management. Economic and fiscal policy is needed to be well synchronized and integrated.

Again government is doing it by borrowing funds from the central bank, which is more devastating and intriguing factor to inflation surge, and loan to private sector diminishing gradually, and rate of interests increased. When private businesses cannot borrow, central bank increase the money flow which means adding to inflation rate further. It’s a vicious circle scenario that Bangladesh is in.

To rectify, government is needed to take steps carefully, shunning the ambitious projects and good wills are important. Time is important and running out to wake up and act, for that political compromise and joint actions is more important than ever.

 It was first the idea of home ownership. As the mortgage crisis began to occur, the dream of owning a home seemed more and more impossible. Than the idea of being middle class has become more and more impossible. Growing up, there was not a wide expansion between upper class and lower class. If you were in between the two you were considered middle class. Being middle class was not a bad thing, as you were still able to make it financially and still be able to have sight of the American dream. As I have gotten older, that idea of the middle class has slowly depleted. People who were rich to begin with have gotten richer and hard working Americans have gotten poorer. The people who are supposed to be the backbone of our society are being used by the Upper class to make them advanced in society. It has become quite an embarrassment and exact example of the greed our country is capable of.

Somewhere along the lines of attempting our own American dream, many Americans have become obsessed with greed. It seems to have taken hold in the 1980’s, when American excess was the norm. Here, our stock markets soared and we were seen as the country of excess. Everything had to be bigger. We needed the best cars, and the best homes. We didn’t just need one home either. Oh no. We needed a vacation home and a home away from our vacation home. Just watch some of the latest reality shows to see how insane our meaning of living has gone. Do we really need four different cars to feel special about ourselves? As this idea of greed took hold of the American psyche, we lost touch of out innate human ability to treat others with respect and help those less fortunate.

The American public today does not want to help others. The news is more concerned when bad news happens, because it’s a ratings boost. What has happened to this country? Are we are so fickle and angry at ourselves that we feel the need to make others do the same. Do we really have no confidence in ourselves that we feel we have to flaunt our own self worth? It appears that as the American super power has soared, we have become victim to our own self worth. We struggle as a nation to discover that line between ultimate greed and our own pursuit of the American dream. The difference that today has is that it has become the norm to step on the poorer communities in order to achieve your own financial gain. In the fifties, this would have never happened.

We are unable to go back to the fifties and have that great American Dream ambiance. What we can do, as a nation, is include everyone in all decisions. That is hard with six million and counting individuals, but politicians need to be more open to not just helping poorer individuals but also helping to advance people from poverty. A country is only as strong as its own people are. If there becomes a larger gap between upper and lower class, than America, as a country has begun to look more like a monarchy than democracy. True, we do not have a monarch, but it begins to look that all favoritism for individuals begins to go towards upper class. This is a very difficult economy to survive in currently, and we all need to work together for the better good of the country. This country was founded for the people and by the people. It’s time the people took back this country.

Thoughtful people, ones who might know others who are out of work, struggling financially, or perhaps facing foreclosure characterize the economy as in a state of malaise – recession is a word bandied about. Those who are actually unemployed, in foreclosure or declaring bankruptcy use more emotionally charged words, words like: crisis, disaster, depression. We know something isn’t quite right, but despite the audacious rhetoric to the contrary, few understand the root cause of the global conflagration: concentration of power.

The misuse of power has hastened the demise of every great empire the world has ever known and for good reason. Power corrupts and absolute power corrupts absolutely. Nowhere is this adage more evident than in the American political economy. Power concentrated in the hands of the few destroys the aspirations and moral fabric of the many. Without hope and opportunity a society dies.

The issue however, is not that the titans of greed – the masters of Wall Street, the financial elite, and their political puppets – are wreaking havoc. The storm troopers are not yet breaking down doors and confiscating wealth and power. We, the people, cede it freely. In our misguided search for comfort and conformity we give away our power. We are abandoning responsibility and in so doing are relinquishing power.

The consequences of this course are truly dire. One by one, and collectively through our American democracy, we are committing suicide. Confused and frail we are concentrating wealth and power at an unprecedented rate.

For two centuries the American mystique was one of opportunity – the chance to make something of one’s life by dreaming great dreams and acting boldly to make them come true. The free market sorted the wheat from the chaff. People knew, at least in America, they had a chance. The egalitarian ethic enshrined in our founding document, the Declaration of Independence, guaranteed a shot. People flocked to the United States from every corner of the globe to try. An individual could aspire to achieve anything here. America was once synonymous with opportunity. Now, not so much.

The prevailing sentiment in America today is to secure trinkets and demand comfort. Government and industry provide. The people’s role is to consume. We accept bread for sustenance and entertainment for substance instead of a life of inspiration, challenge and creativity. We are lost. The spoils go to the privileged few – an offering, an expense, a dowry of sorts from the distracted and disillusioned masses.

Avarice, arrogance, complacency and fear are the four horsemen of this apocalypse. Desires are infinite yet advancing presents peril and requires effort. For many, rather than risk loss, settling seems attractive. This tendency offers an opportunity for those with drive. The arrogant come to understand and embrace fear as the ultimate weapon to manipulate compliance. Those granted power dispatch misguided solutions to relive conditions we impose upon ourselves.

Each individual, each of us, is the master of our own destiny. We create the reality we experience. The only way we control the power, however, is to take full responsibility for it. If we seek to right our course, we must embrace this truth individually and collectively.

The greatness of America was an intrinsic recognition of the power and promise of the individual. Every man and woman ultimately crafted and created his or her own dream, realized his or her own potential, forged his or her own life. We hide from this truth today. Rather than face an obstacle we reject responsibility and look outside ourselves for relief. We look to others, to industry, and to government to save us from discomfort – each time becoming less responsible and growing more feeble.

To resolve the economic crisis we must address the cause: concentrated power. We, the people, must accept responsibility for the conditions we brought about and in so doing reclaim our power. Only then can we create a new reality.

2011 has been a year of revolutionary events so far. We have seen events which no one could have even predicted till a few months ago. They have taken place in different aspects of social life including political power plays and financial turmoil. What underlines these events is the wide spread reaction of the common men and women on the street, who till last year, were supposed to accept everything that came their way as a fait accompli. Not any more in 2011. The year marks an ascendance of common man and woman and their concerns about their destiny.

The Arab Spring of 2011

It all began with unprecedented expression of public anger against the rulers in the Middle East. Beginning with Tunisia, the protests quickly spread to the rest of the region, in the process, scalping the heads of some of the legendary political heavyweights like President Ben Ali of Tunisia, President Hosni Mubarak of Egypt and recently Muammar Gaddafi of Libya. All of these dictatorial stalwarts, who had successfully kept hold on their political castles and ruthlessly wiped out any challenges to their authority, were suddenly at a total loss on how to deal with mass public outrage against them. The spread of Arab Spring and its consequences are still not over yet, as battles are fought in Syria, pressure mounts over Saudi rulers for liberalisation and others like Jordanian rulers manoeuvre their wealth and influence to create goodwill and survive.

The results have already been unprecedented. Democracy seems to be the buzz world, even though it is still far from reality even in Egypt, where Democrats, Military and Islamists are locked in a triangular struggle for one-upmanship. The biggest revolution has come in Saudi Arabia, where the women have finally been given a right to vote, even though several other basic rights like driving a car are still denied to them. Other regimes are also moving towards grant of democratic rights to its people including women.

All these developments in the region, which holds the key to global oil economy as well as world peace is nothing short of revolutionary, making 2011 a turning point in historical annals of the future.

The European Summer of 2011

Events in Europe in 2011 are still in the process of unfolding, and no one knows where they will end up. Whatever may be their eventual outcome, they have already sent shivers in the global economic architecture. Greece, Spain and Ireland face critical crisis related to fulfilling their debt obligations, casting a dark and dangerous shadow over the economic well being of whole of European Union and in turn affecting the business sentiment and investments across the globe. The Economic crisis in many of these countries as well as in some of the other European countries is largely a result of failure of measures taken by the governments after the 2008 crisis. Many of these measures were taken will little or poor understanding of the economic problem related to asset bubble and busts , thanks largely to the fallacious dependence of the global economic community on the Rational Expectations Theory, in spite of surmounting evidence that modern economies run primarily on expectations which are largely heuristic and not always rational.

Europe also witnessed unprecedented public protests this summer, which, according to some, might have been inspired by the events of the Middle East. This must also be the first time when European public is getting inspired by the democratic sentiment of the people in Middle East. There were wide spread protests in Greece and Spain that continued across the summer and also aroused protests at a smaller level in several other countries, raising possibilities of Arab Spring getting extended into a European summer.

While protests in Europe so far have been more of ceremonial and demonstrative nature, things can get far worse if economic situation deteriorates further. In the middle of the crisis, there are very few calming influences, and proposition for ad hoc, half baked measures like the European Financial Transaction Tax can make things even worse. Already a segment of British politicians are questioning the rationale of monetary union in Europe. One could day that the European Summer of 2011 is not over yet.

The US Fall of 2011

The most recent events that mark the revolutionary game changing nature of world history this year are taking place across the Atlantic Ocean. 2011 will be remembered as the year of humbling for US economic might. The downgrading of US rating by S&P from AAA to AA+ may not have anything to do with public protests, but it has everything to make people restless and desperate. An event that questions the six decade long American dominance over the global economy, it also provides a  glimpse of the affairs that are just beginning to unfold. For over a decade, the United States had being preaching China over its policies. Now, after the downgrade, it was China’s turn, as it openly criticised the United States for its inability to manage its own affairs, blamed it for destabilizing the global economy and called for urgent remedial action!

Since the August downgrade, the US Equity markets have been tumbling, in turn eroding precious wealth and savings of the American people. Already wary of the ways of the financial managers and their manoeuvring, people are protesting in mass against their greed in the first week of October. The ire of the people was directed against the Wall Street merchants this time. In an ‘Occupy Wall Street March’, five thousand people marched to the Wall Street, something not very common, in the heart of the capital of capitalist nerve centre. Their anger can cause greater devastation to the destiny of capitalist market based economy than anything else could, including the threats from communism in the last century or the twin strikes of nine eleven by Islamic terrorists.

Where is 2011 going to Take Us?

The Arab Spring agenda is still on its course as more of its ramifications keep unfolding. The European Summer continues to be characterised by hot moods and cold economy. However the greatest of all these game changing events may be just beginning to take place in the United States, where on one hand, people appear to be fed up with the inequalities that prosper in a free market regime, and on the other hand, a communist China seeks ascendance over capitalist United States to bring an old, long forgotten story back to the global centre stage.

Irrespective of wherever we may end, 2011 has already ensured its place in history!

There was a famous quote that comes from the Chinese philosopher Confusious: “Born in Adversity, Die in Euphoria”

Yes, some of the world is in danger. When the British are crunching on the archaic treasures that their progenitors brought to them, the Chinese were fighting their way through to become powerful and wealthy. When the Greeks are making big holes in their balance sheet, the Germans are building powerful workforce that can economically stand on a global bases. When the United State of America is printing money for its own purpose, the people of America is suffering.

Now that is where everything is going to go wrong.

QDII is already killing many people, now the collapse of large nations economy is also getting a little insane compare to the uprising second world nations.

After the second world war, Britain was under great depression. I mean for the first time in its history, it was defeated economically by the United State of America. It remains small. The world was then split into two by the Democrates and the Communist fighting for the control over the world. Nuclear cold war erupted in the 60’s and the United State swear to ‘God’ that they will fight against the ‘red Devil’ of the east(or west, depend on where you are).

But many people question the fall of Britain. The answer is simple. It is because Britain succeed in colonizing the other area of the world.

Many had suggest that it was the World War that causes Britain to fall. There is no doubt to that, but it is driven more by the fact of its success of being a mugger of the world. Smuggling all kinds of treasures and resource from the world, Britain became one of the most powerful nations in all time between the seventeenth century to the beginning of the twentieth century. The power of Britain was, however, shared upon many western nations between the world war. Countries fought for their own fame and glory, where Britain remains as a colonizers even till the beginning of the Second World War. It was their people who crunch all this away.

Research had shown that Britain after the Industrial Revolution was wealthy not only materially but also economically. The wealth they bring back home from the colonies brings them a strong economic power to sustain their high standard living. As time passes, Britain was able to use large amount of capital to support their health care, public transport and other public service sectors. This success eventually become the worse nightmare that Britain would ever had.

It is time for a change.

After the second world war, Britain start to face problem. The independent of colonies such as India cut off the extra income that Britain receives every year. The end of WWII was also a lethal wound to Britain not only in military sector but also in economic sector. The heavy burden of paying back war dept for Britain into a chronic recession, and this is the end of the first modern economical power to rule the world.

Now as end approach closer to Britain, this lovely peaceful harmonious live shall end for a while. The high living standard and highly expense of public service force Britain to cut the benefit it had once promise for its people. The debt has to be paid, the Utopia has to come to an end.

When Britain is fading into its Dystopia, the United State seem to have another different approach.

Oh yes, the United State. How brilliant it has become after the Second World War. In the late 50’s and early 60’s, the quote of “American Dream” flourish in many houses all across the continent. For the first time the United State of America become the place where wealth lay and spread between its people. It was an golden age of happiness for the Americans even though the Russians who are in great poverty was about to launch a few nuclear missiles across the Pacific to hunt the Democrats down.

But it is time for dream to be woken by the devil within humanity. The destruction that was caused in the economic crisis around the world gives the United State a fatal blow. Yes, it is a lethal one that almost made the entire nation untenable. However there is even more to come.

QDI

QDII

These two master card that the government played with the world kills the Americans. By printing worthless money, the government think it is the best solution to withstand the economic position of Amercia, but it is becoming worthless as ever. 

Double digit growth for three decades

China is the only country in the world to enjoy a double digit economic growth in the last three decades. It is the world’s second largest economy, next to USA. But China does not face any debt crisis as USA is facing. This is because of savings by Chinese people and the family system in vogue in China. USA should learn these lessons from China in order to retain its premier position in the world economy.

Image via Wikipedia

Slowdown in economy

But now China’s economy seems to be slowing down. For the fourth continuous month, manufacturing activity slowed in July. PMI dipped to a 29 month low of 50.7. For the quarter ended June, China’s GDP grew by 9.5%. Previous quarter figure was 9.7% and 2010’s fourth quarter figure was 9.8%. This is not a real slowdown in economic growth for China. China is restructuring its economy to grow on a balanced scale in future. During this restructuring process, it is inevitable that the economy will slowdown.

China wants to reduce investments

Investment contributed to more than 50% of China’s GDP growth. China wants to bring this percentage down. In the Western regions of China, investment contributes as much as 70% of GDP. Repayment risk is involved if investment is relied too much. China has a huge foreign currency reserves of $3.2 trillion (India has $330 billion or one tenth of China). If investments are to be reduced, they should be compensated by some other item.

Saving rate in China high

Domestic consumption can take this place to a great extent. India and China are endowed with huge population which means a huge domestic market for goods and services. But unlike the Americans, Chinese families are not great spenders. They are conservative in nature and save a lot of money for their future. This is because there are no social security schemes in China to take care of healthcare and post retirement life of the elders. Chinese save 30% of their income. Americans save nothing, but borrow and spend. This is the big difference. China or India will never land in the same difficult as USA has landed. But Standard & Poor does not know about this and rates China and India below that of USA.

Negative contribution by foreign trade in China

Chinese export competitive edge is also dwindling fast. Once Chinese were able to flood the nook and corner of America with its goods ranging from baby toys to electronic consumer goods. Today, Chinese currency Yuan is rising against the dollar. This coupled with rising labour costs in China has diminished the export competitive edge of China. Comparing year-to-year, exports increased by 35.8% in March, 29.9% in April, 19.4% in May and 18.9% in June. This declining trend is a worrisome feature of Chinese economy. For the first half of 2011, foreign trade contributed a negative 0.7% to GDP growth.

Chinese economy will not crack like that of USA

Urban migration is a part of Chinese economy. In the past decade, 170 million people have moved to cities from rural areas. In the next two decades, 360 million more people will migrate to cities. In many developed countries, urbanisation is 70% and above. In China, this percentage will be 50% by 2015. China is firmly en route to acquire the status and characteristics of a truly developed society with less risk of a financial collapse we are witnessing in USA and European countries. The present slowdown in some sectors if Chinese economy will not adversely affect it unless some political crisis happens.