Archive for October 27th, 2008

Graham Turner on Keynes Misunderstood

October 27, 2008

Graham Turner on Keynes Misunderstood

Appropos the debate about Keynes below Graham Turner of GFC Economics and author of The Credit Crunch, submitted a fascinating article to the FT on this subject. In it he cites the experience of Japan’s failed attempt to kick-start the economy with public works expenditure in the 1990s.



” Between 1992 and 2002, eleven supplementary budgets were unveiled in a desperate bid to stimulate economic growth. These fiscal initiatives alone cost the taxpayer Y132.6tr. The budget deficit, using the OECD general government measure, soared to a peak of 8.0% of GDP by 2002. Between 1990 and 2005, the debt to GDP ratio climbed from 64.7% to an unthinkable 175.3%.


“And yet the policy failed, because it did not adhere to the prescription set out by Keynes. He was quite clear that the priority of any government or central bank should be to lower interest rates. Monetary policy should be the first line of attack during the onset of a depression.


” Furthermore, it might not be enough to get short term interest rates down. By 1933, short term interest rates had fallen sharply, but long term borrowing costs remained elevated. This was a major concern and strong area of disagreement at the time with classical economists. There was a problem with bond markets, Keynes argued. Investors might find it difficult to accept lower yields even as short term interest rates fell. This liquidity preference lies at the heart of Keynes’s most important and relevant lesson for today. But it is being ignored.

“Keynes succeeded in shifting the debate, and a deliberate policy to drive long term interest rates was
embraced in both the US and UK. The tide began to turn. The recovery was at times patchy. But there can be
no disputing the impact of this more radical monetary policy in providing some relief for economies scarred
by the stock market crash of 1929,and an intensifying depression. Furthermore, one can safely assume that
the policy would have been a good deal more beneficial if it had been implemented sooner. This policy of
quantitative easing can be a powerful antidote, but it has a limited shelf life. Leave it too late, and the impact
will inevitably be diluted, as deflation intensifies.

“Japan’s troubled experience highlights the perils of ramping up government borrowing before the full
range of monetary options has been exhausted.

“Every time the government announced more fiscal spending, the bond market would tumble and yields
would rise. That would drive up private sector borrowing costs, because lending rates were indirectly priced
off government bond yields. Within six to twelve months, corporate bankruptcies would start to rise again.

“This was a classic case of ‘crowding out’. The looser fiscal policy was accelerating the slide into deflation, as more and more companies defaulted. “

One of the hatemail sent to Seema Mustafa for her article

October 27, 2008

One of the hatemail sent to Seema Mustafa for her article on Rape of a Christian Nun in Orissa


———- Forwarded message ———-

From: B.V.Shenoy <>
Date: Mon, Oct 27, 2008 at 12:43 PM

27th October, 2008
Dear Seemaji,
Several points in your article, “IN DEFENCE OF SECULARISM” (NIE, 27th Oct.) call for the strongest possible rebuttal and countering. Therefore, please permit me to say the following:
1. The Orissa nun didn’t show any extraordinary courage in “coming out with her testimony”. She was actually paraded before the press by the Christian church leaders of Delhi. In fact, it was arrogant defiance by the church of the SC order to her to cooperate with the Orissa police in Orissa and also to pressurise the Supreme Court to revise its unpalatable order against CBI inquiry. She meekly submitted to the diktats of these cheerleaders and only read what was handed down to her to read. She also didn’t show any courage in answering the questions from the media. In fact, the media merely swallowed whatever was read to it by her and then she was whisked away. So much for the courage and “right to privacy”, the violation of both of which the church didn’t give a hoot about.  
2. It appears from your article that you went to Kandhamal with the sole purpose of collecting dirt against the Hindu groups. You, for instance, have nothing to say about the other “nun”, who was supposed to be a Hindu girl gang-raped and then burnt alive by the Bhajrangis, under the impression that she was a Christian nun. It was said to have been witnessed by a missionery priest. For several days, our secular media had gone ballistic and international with this juicy piece of sensation. Even the Vatican was very upset that the raped and murdered girl happened to be a Hindu, robbing it (the Vatican) of all its sensational international coverage. Perhaps this particular newsy item didn’t come on your radar as subsequently even the church leaders started contradicting the eye-witness priest and later it became evident that the whole thing was concocted by the church in Kandhamal!
3. You also seem to have nothing but contempt for the religious leaders, Christian as well as Muslim, who open dialogues with the RSS and the VHP. For your information, even the Christian leaders of Kerala thought it wise to “open” a dialogue with the RSS/VHP. The Roman Catholic church in Mangalore was the first to hold a dialogue with the Hindus and agree to “control” the delinquent factions of their church. They also had the grace to admit that the pentacostal and New Life churches had perhaps gone overboard with their “evangelical” activities. They had further owned up to the fact that these churches are a law unto themselves.  
4. The Greatest secular messiah, V.P.Singh thought nothing of joining hands with the BJP when it suited him. All the other leaders you have named are state leaders. But, there too, you have pointedly not mentioned the name of Naveen Patnaik. Why? Is he any less secular? And what about Karunanidhi? Also absent is the name of the secular icon, Deve Gowda. The point is that contrary to the media’s own formulations of secularism and Hindu-Right wing fundamentalism, the politicians of all hues, including that of Red, are nothing if not realists. And to them the BJP is a party eminently suitable to join hands with if it leads them to power.
Yours sincerely,



Kandhamar Nun Showed How, It is for Us to Learn The Lesson – By

October 27, 2008

Kandhamar Nun Showed How, It is for Us to Learn The Lesson


By Seema Mustafa


It took a lot of guts for the Orissa nun to come out with her testimony. I had visited the exact spot in Kandhamar district, just days after she was raped, and the burnt jeep, the desecrated statues of Jesus Christ, the broken windows bore testimony to the gruesome violence in the name of religion. Villagers looked on from a distance but when we went and spoke to them the story came pouring out. Yes a priest and nun were caught by the mobs, they were stripped and beaten, they were paraded through the village to the market place where the police stood and watched, and yes the nun was raped.

And what has happened since? Nothing. For days and weeks the Navin Patnaik government stood by and did nothing to protect the poorest of the poor as they were killed, and turned out of their houses just because they were Christians and refused to give up their faith. The attackers speak of conversion, but there has been no forcible conversion, only conversion under Article 25 of the Indian Constitution that gives every single religion in this country the right to preach and propagate. The force was being used then, and is being used now, to beat Christians into renouncing their religion and embracing the Vishwa Hindu Parishad and RSS version of Hinduism.

The nun was not in hiding, she was in hospital, physically and mentally traumatized. She was treated for not just the bleeding wounds but also for the mental trauma, and has only just about recovered sufficiently to come out in public with her story. It took courage, and she should be respected for what she did. Not just for herself, not just for the Christians but for women and humanity. Her right to privacy has to be respected, and it is now for this UPA government that somehow still claims it is secular to ensure that she and the other victims of the horrific violence in Orissa and Karnataka must not be dragged through the coals. The nun is right, and any one who has visited Kandhamar can vouch for this. It is not safe for her to even step inside that state, let alone the district and be questioned by a police force that has done great disservice to the uniform by allowing the mobs to terrorise and brutalise a community.

Some sections of the Christian community, probably in sheer desperation, opened dialogue with the RSS and its ilk. Others criticized them, for they know that this dialogue is false insofar as the RSS and its front organizations are concerned, and its leaders use it to project themselves as one, secular and two, as alternatives to the state with the power to restore peace. Some time ago, religious Muslim leaders too opened this dialogue with the RSS and even attended BJP conferences and meetings to prove their “we are all one” point. In some ways they are, because fundamentalism regardless of the religion gets together at some point, particularly when it has to counter its real opponent: secularism.

Secularism is an ideology that works around the fundamental principle of equality and justice. It is unfortunate that those in power today cynically exploit this to suit their ends. The BJP is more honest, it does not even bother to pay lip service to the cause, and basically denounces all those who do not agree with its divide and rule policy as pseudo secularists or anti-nationals. The Congress remains as hypocritical as always, and has become an expert at fiddling while mobs destroy lives and homes. The regional parties are not exactly communal but are totally opportunistic using specific vote bank policies with more dexterity now than even the Congress did in its better days. The regional leaders do not hesitate to join up with communal parties as and when it suits them but to give them their due, the Nitish Kumars, Chandrababu Naidus and Mayawati’s do manage to preserve some levels of communal amity. After all today the unrest amongst the minorities is greatest in Congress ruled states and not inBihar, or for that matter Uttar Pradesh (except for Azamgarh that had a direct link with Delhi) where despite the large Muslim population, the atmosphere is more peaceful and harmonious.

Union Home Minister Shivraj Patil has disappeared from view. His greatest achievement has been to escape the axe after he assured Congress president Sonia Gandhi that his loyalty to her could never come under question. Prime Minister Manmohan Singh is wandering the world, earning accolades for the nuclear deal and for growth gone wrong. Parliament in a parliamentary democracy has been diminished as an institution. The government is directly responsible. It has done away with the monsoon and winter sessions. It has reduced the sittings this year to just 40 days. The country is reeling under the impact of violence, inflation and a collapsing economy. But the government does not feel that there is any need for Parliament to discuss these and any number of burning issues, as it does not want to be held accountable for non governance. It does not care for either Parliament or for parliamentary democracy as under the Congress, the executive has been given the full mandate to be reckless.

India is a pluralistic state. It is any number of states and any number of peoples all rolled together under one nation, one flag and one Constitution. Its oxygen is freedom based on justice and equality. It will disintegrate and die if it is deprived of any of these, and is compelled to adopt a monolithic mantle that is totally unnatural to its existence. Fundamentalist groups insist on imposing their ideologies, their religions, their thoughts, their justice, their vision on people, even as they create the concept of the ‘other’ and try and unite their supporters to combat the opponents. If India has to survive and flourish as a healthy, breathing, vibrant democracy, secularism has to be protected and nurtured.

The nun from Kandhamar has shown us how. It is for us to learn the lesson.