Already politically empowered, have India’s Scheduled Castes and Scheduled Tribes also been economically empowered?

An important new study by economists Viktoria Hnatkovska, Amartya Lahiri and Sourabh B. Paul examines the economic performance of SC/STs by analyzing a large mass of data from five successive rounds of the National Sample Survey from 1983 to 2005.

The study is among the first to examine the behavior of wages, consumption, education and occupation choice for SC/STs compared with the rest of the population, exploiting the large and rich NSS data.

The study’s three principal findings are striking. First, it finds significant convergence in educational attainment and occupational choice over the period of the study. In 1983, non-SC/STs had, on average, 3.62 years of schooling, against 1.41 for SC/STs, a discrepancy of 157%. By 2005, non-SC/STs had 5.6 years of schooling on average, while for SC/STs it was 3.2 years, so the percentage gap had closed to 74%. Non-SC/STs still dominate white collar employment, which tends to be higher paying than blue collar and agricultural work, but the gap has narrowed from almost three times as many non-SC/STs in 1983 to about 1.5 times as many in 2005.

Second, the report finds a “statistically significant” movement towards convergence in wages between SC/STs and everyone else. A statistically significant finding is one in which we can have confidence that the results are genuine and not an artifact of measurement. In particular, the authors find that the “wage premium” – a ratio between the wages of non-SC/STs relative to SC/STs— has steadily declined from 36% in 1983 to 21% in 2005. To put things in perspective, the corresponding wage premium for white males over black males in the U.S. has stayed constant around 30% for the last several decades.

Third, the authors find that convergence in wage levels has been caused in large measure by educational attainment of SC/STs slowly catching up with the rest, although a gap remains.

But what explains these trends? Are wages converging principally because the education gap is closing (perhaps through caste-based reservation), or are other factors such as a lessening of discrimination against SC/STs responsible?

The authors show analytically that the majority of the wage gap can be explained by demographic characteristics, such as age, experience and whether people live in a rural or urban area. But the single most important determinant of the wage gap is the gap in educational attainment, the most important demographic difference. The implication is that the narrowing wage gap is indeed a result of the narrowing education gap.

The study also finds that caste-based reservation had a “negligible” effect on the wage gap. Because of its potential policy significance, this finding must be interpreted with caution. The finding is that reservation by itself cannot account statistically for much of the narrowing wage gap.  But that, of course, doesn’t mean that reservation isn’t important. One cannot rule out that reservation indirectly has led to a narrowing of the wage gap, working through the effect of allowing SCs/STs to catch up in terms of education and occupation choice.

There is corroborating evidence on the importance of reservation. For instance, the Indian Express reported recently that SC representation in upper-tier government jobs has increased almost eightfold, from 1.64% to 12.5% in the last 45 years. ST representation has grown almost 20 times. These figures reflect, in part, reservations of 15% and 7.5% for SCs and STs, respectively.

What lies behind these optimistic results? Leaving aside the debate about how big or small a role caste-based reservation has played, there are other market-based explanations that have played an important role, which the study highlights.

The most natural explanation, which is close to the heart of every free market economist, is that 20 years of economic liberalization have reduced the importance of caste and accentuated a move towards “market meritocracy,” where wages and incomes better reflect differences in education and other characteristics, not caste.

This reflects an idea proposed by the Nobel economist Gary Becker a half-century ago, that discrimination in any form becomes costlier when the market becomes more important, and so we will see less of it.

This is a plausible explanation but isn’t the only possibility. The study also flags the increased importance of community-based social networks bringing together SC/STs. Closer integration may lead to what economists call “network externalities,” so that every member of a group benefits more from interacting with their peers than if they were on their own.

The bottom line is that there’s convergence between SC/STs and everyone else, but convergence doesn’t mean they’ve completely caught up. Nor does it mean that caste-based reservation has not or will not continue to play a role.

Always Yours — As Usual — Saurabh Singh

Source: http://blogs.wsj.com/indiarealtime/2011/11/28/economics-journal-are-indias-poorest-catching-up/tab/print/

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“Three apples have changed the world. One seduced Eve, second awakened Newton, the third one was in the hands of Jobs.”

Much before embarking on the path of giving the world iconic products like Mac computers, iPod music players, iPhone mobile phones and iPad tablet PCs, this cult figure of the world of technology came to India in early 70s in search of enlightenment or ‘nirvana’ and went back unsatisfied.

He found India far poorer than he had imagined at that time and, ironically, years later in mid-2000s, when he thought of setting up a facility for Apple’s Mac computers, India appeared to be much less cost-effective to do business.

But, it was his unsatisfactory India visit of early 70s that could have been one of the major reasons for Jobs’ focus on the world of technology and eventually the setting up of the company called Apple.

His biography, titled ‘The Little Kingdom — The Private Story of Apple Computer’ quotes Jobs as saying that “It was one of the first times that I started to realise that maybe Thomas Edison did a lot more to improve the world than Karl Marx and Neem Kairolie Baba put together.”

Neem Karori Baba was the guru that Jobs, then 18, visited in India along with his college friend Dan Kottke. The American duo had come to India after they dropped out of college and Kottke eventually joined Jobs as the first employee of Apple.

“The hot, uncomfortable summer made Jobs question many of the illusions he had nursed about India. He found India far poorer than he had imagined and was struck by the incongruity between the country’s condition and its airs of holiness,” author Michael Moritz wrote in Jobs’ biography.

The book quoted Jobs as saying: “We weren’t going to find a place where we could go for a month to be enlightened” and said that by the time he returned to California “he was thinner, thanks to a bout of dysentery, had closely cropped hair, and was dressed in an Indian attire…”

Years later in 2006, there were talks about Apple mulling over a 3,000-strong workforce centre in Bangalore to support its Mac and other products and it was said that the company even hired an initial team of 30 people. But, the plans did not fructify and reports said that the company did not find India as cost-effective as it had thought it to be.

Ironically, Jobs died on a day when Indian government unveiled its own answer to iPad, with a price tag much lower than that of the iconic brand, in the form of Aakash, the world’s cheapest tablet PC.

Apple on Wednesday announced the death of its visionary co-founder Steve Jobs.

“We are deeply saddened to announce that Steve Jobs passed away today,” the company’s board of directors said in a statement.

“Steve’s brilliance, passion and energy were the source of countless innovations that enrich and improve all of our lives. The world is immeasurably better because of Steve.”

The Silicon Valley icon who gave the world the iPod and the iPhone resigned as CEO of the world’s largest technology corporation in August, handing the reins to current chief executive Tim Cook.

Jobs had battled cancer in 2004 and underwent a liver transplant in 2009 after taking a leave of absence for unspecified health problems. He took another leave of absence in January, his third since his health problems began, before resigning as CEO six weeks ago. Jobs became Apple’s chairman and handed the CEO job over to his hand-picked successor, Tim Cook.

The news Apple fans and shareholders had been dreading came the day after Apple unveiled its latest version of the iPhone, just one in a procession of devices that shaped technology and society while Jobs was running the company.

Jobs started Apple with a high school friend in a Silicon Valley garage in 1976, was forced out a decade later and returned in 1997 to rescue the company. During his second stint, it grew into the most valuable technology company in the world with a market value of $351 billion. Only Exxon Mobil, which makes it money extracting and refining oil instead of ideas, is worth more.

Cultivating Apple’s countercultural sensibility and a minimalist design ethic, Jobs rolled out one sensational product after another, even in the face of the late-2000s recession and his own failing health.

He helped change computers from a geeky hobbyist’s obsession to a necessity of modern life at work and home, and in the process he upended not just personal technology but the cellphone and music industries. For transformation of American industry, he ranks among his computer-age contemporary, Microsoft Corp. co-founder Bill Gates and other creative geniuses such as Walt Disney that left an indelible imprint on the world. Jobs died as Walt Disney Co.’s largest shareholder, a by-product of his decision to sell computer animation studio Pixar in 2006.

Perhaps most influentially, Jobs in 2001 launched the iPod, which offered “1,000 songs in your pocket.” Over the next 10 years, its white earphones and thumb-dial control seemed to become more ubiquitous than the wristwatch.

In 2007 came the touch-screen iPhone, joined a year later by Apple’s App Store, where developers could sell iPhone “apps” which made the phone a device not just for making calls but also for managing money, editing photos, playing games and social networking. And in 2010 Jobs introduced the iPad, a tablet-sized, all-touch computer, that took off even though market analysts said no one really needed one.

Steven Paul Jobs was born Feb. 24, 1955, to Joanne Simpson, then an unmarried graduate student, and Abdulfattah Jandali, a student from Syria. Simpson gave Jobs up for adoption, though she married Jandali and a few years later had a second child with him, Mona Simpson, who became a novelist.

Steven Paul Jobs was adopted by Clara and Paul Jobs of Los Altos, Calif., a working-class couple who nurtured his early interest in electronics. He saw his first computer terminal at NASA’s Ames Research Center when he was around 11 and landed a summer job at Hewlett-Packard before he had finished high school.

Jobs enrolled in Reed College in Portland, Ore., in 1972 but dropped out after a semester.

“All of my working-class parents’ savings were being spent on my college tuition. After six months, I couldn’t see the value in it,” he said at a Stanford University commencement address in 2005. “I had no idea what I wanted to do with my life and no idea how college was going to help me figure it out.”

When he returned to California in 1974, Jobs worked for video game maker Atari and attended meetings of the Homebrew Computer Club with Steve Wozniak, a high school friend who was a few years older.

Wozniak’s homemade computer drew attention from other enthusiasts, but Jobs saw its potential far beyond the geeky hobbyists of the time. The pair started Apple in Jobs’ parents’ garage in 1976. Their first creation was the Apple I – essentially, the guts of a computer without a case, keyboard or monitor.

The Apple II, which hit the market in 1977, was their first machine for the masses. It became so popular that Jobs was worth $100 million by age 25. Time magazine put him on its cover for the first time in 1982.

During a 1979 visit to the Xerox Palo Alto Research Center, Jobs again spotted mass potential in a niche invention: a computer that allowed people to access files and control programs with the click of a mouse not typed commands. He returned to Apple and ordered the team to copy what he had seen.

It foreshadowed a propensity to take other people’s concepts, improve on them and spin them into wildly successful products. Under Jobs, Apple didn’t invent computers, digital music players or smartphones – it reinvented them for people who didn’t want to learn computer programming or negotiate the technical hassles of keeping their gadgets working.

“We have always been shameless about stealing great ideas,” Jobs said in an interview for the 1996 PBS series “Triumph of the Nerds.”

The engineers responded with two computers. The pricier one, called Lisa, launched to a cool reception in 1983. A less-expensive model called the Macintosh, named for an employee’s favorite apple, exploded onto the scene in 1984.

The Mac was heralded by an epic Super Bowl commercial that referenced George Orwell’s “1984″ and captured Apple’s iconoclastic style.

“In the ad, expressionless drones marched through dark halls to an auditorium where a Big Brother-like figure lectures on a big screen. A woman in a bright track uniform burst into the hall and launched a hammer into the screen, which exploded, stunning the drones, as a narrator announced the arrival of the Mac.”

There were early stumbles at Apple. Jobs clashed with colleagues and even the CEO he had hired away from Pepsi, John Sculley. And after an initial spike, Mac sales slowed, in part because few programs had been written for the new graphical user interface.

Meanwhile, Microsoft copied the Mac approach and introduced Windows, outmaneuvering Apple by licensing its software to slews of computer makers while Apple insisted on making its own machines.

Software developers wrote programs first for Windows because it had millions more computers. A Mac version didn’t come for months, if at all.

With Apple’s stock price sinking, conflicts between Jobs and Sculley mounted. Sculley won over the board in 1985 and pushed Jobs out of his day-to-day role leading the Macintosh team. Jobs resigned his post as chairman of the board and left Apple within months.

“What had been the focus of my entire adult life was gone, and it was devastating,” Jobs said in his Stanford speech. “I didn’t see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.”

He got into two other companies: Next, a computer maker, and Pixar, a computer-animation studio that he bought from George Lucas for $10 million.

Pixar, ultimately the more successful venture, seemed at first a bottomless money pit. Then came “Toy Story,” the first computer-animated full-length feature. Jobs used its success to negotiate a sweeter deal with Disney for Pixar’s next two films. In 2006, Jobs sold Pixar to The Walt Disney Co. for $7.4 billion in stock, making him Disney’s largest individual shareholder and securing a seat on the board.

With Next, Jobs was said to be obsessive about the tiniest details of the cube-shaped computer, insisting on design perfection even for the machine’s guts. He never managed to spark much demand for the machine, which cost a pricey $6,500 to $10,000.

Ultimately, he shifted the focus to software – a move that paid off later when Apple bought Next for its operating system technology, the basis for the software still used in Mac computers.

By 1996, when Apple bought Next, Apple was in dire financial straits. It had lost more than $800 million in a year, dragged its heels in licensing Mac software for other computers and surrendered most of its market share to PCs that ran Windows.

Larry Ellison, Jobs’ close friend and fellow Silicon Valley billionaire and the leader of Oracle Corp., publicly contemplated buying Apple in early 1997 and ousting its leadership. The idea fizzled, but Jobs stepped in as interim chief later that year.

He slashed unprofitable projects, narrowed the company’s focus and presided over a new marketing push to set the Mac apart from Windows, starting with a campaign encouraging computer user to “Think different.”

“In the early days, he was in charge of every detail. The only way you could say it is, he was kind of a control freak,” he said. In his second stint, “he clearly was much more mellow and more mature.”

In the decade that followed, Jobs kept Apple profitable while pushing out an impressive roster of new products.

Apple’s popularity exploded in the 2000s. The iPod, smaller and sleeker with each generation, introduced many lifelong Windows users to their first Apple gadget.

ITunes, in 20XX, gave people a convenient way to buy music legally online, song by song. For the music industry, it was a mixed blessing. The industry got a way to reach Internet-savvy people who, in the age of Napster, were growing accustomed to downloading music free. But online sales also hastened the demise of CDs and established Apple as a gatekeeper, resulting in battles between Jobs and music executives over pricing and other issues.

Jobs’ command over gadget lovers and pop culture swelled to the point that, on the eve of the iPhone’s launch in 2007, faithful followers slept on sidewalks outside posh Apple stores for the chance to buy one. Three years later, at the iPad’s debut, the lines snaked around blocks and out through parking lots, even though people had the option to order one in advance.

The decade was not without its glitches. Apple was swept up in a Securities and Exchange Commission inquiry into stock-options backdating in the mid-2000s, a practice that artificially boosted the value of options grants. But Jobs and Apple emerged unscathed after two former executives took the fall and eventually settled with the SEC.

Jobs’ personal ethos – a natural food lover who embraced Buddhism and New Age philosophy – was closely linked to the public persona he shaped for Apple. Apple itself became a statement against the commoditization of technology – a cynical view, to be sure, from a company whose computers can cost three or more times as much as those of its rivals.

For technology lovers, buying Apple products meant gaining entrance to an exclusive club. At the top was a complicated and contradictory figure who was endlessly fascinating – even to his detractors, of which Jobs had many. Jobs was a hero to techno-geeks and a villain to partners he bullied and to workers whose projects he unceremoniously killed or claimed as his own.

Unauthorized biographer Alan Deutschman described him as “deeply moody and maddeningly erratic.” In his personal life, Jobs denied for two years that he was the father of Lisa, the baby born to his longtime girlfriend Chrisann Brennan in 1978.

Few seemed immune to Jobs’ charisma and will. He could adeptly convince those in his presence of just about anything – even if they disagreed again when he left the room and his magic wore off.

“He always has an aura around his persona,” said Bajarin, who met Jobs several times while covering the company for more than 20 years as a Creative Strategies analyst. “When you talk to him, you know you’re really talking to a brilliant mind.”

But Bajarin also remembers Jobs lashing out with profanity at an employee who interrupted their meeting. Jobs, the perfectionist, demanded greatness from everyone at Apple.

Jobs valued his privacy, but some details of his romantic and family life have been uncovered. In the early 1980s, Jobs dated the folk singer Joan Baez, according to Deutschman.

In 1989, Jobs spoke at Stanford’s graduate business school and met his wife, Laurene Powell, who was then a student. When she became pregnant, Jobs at first refused to marry her. It was a near-repeat of what had happened more than a decade earlier with then-girlfriend Brennan, Deutschman said, but eventually Jobs relented.

Jobs started looking for his biological family in his teens, according to an interview he gave to The New York Times in 1997. He found his biological sister when he was 27. They became friends, and through her Jobs met his biological mother. Few details of their relationships have been made public.

But the extent of Apple secrecy didn’t become clear until Jobs revealed in 2004 that he had been diagnosed with – and “cured” of – a rare form of operable pancreatic cancer called an islet cell neuroendocrine tumor. The company had sat on the news of his diagnosis for nine months while Jobs tried trumping the disease with a special diet, Fortune magazine reported in 2008.

In the years after his cancer was revealed, rumors about Jobs’ health would spark runs on Apple stock as investors worried the company, with no clear succession plan, would fall apart without him. Apple did little to ease those concerns. It kept the state of Jobs’ health a secret for as long as it could, then disclosed vague details when, in early 2009, it became clear he was again ill.

Jobs took a half-year medical leave of absence starting in January 2009, during which he had a liver transplant. Apple did not disclose the procedure at the time; two months later, The Wall Street Journal reported the fact and a doctor at the transplant hospital confirmed it.

In January 2011, Jobs announced another medical leave, his third, with no set duration. He returned to the spotlight briefly in March to personally unveil a second-generation iPad .

In 2005, following the bout with cancer, Jobs delivered Stanford University’s commencement speech.

“Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life,” he said. “Because almost everything – all external expectations, all pride, all fear of embarrassment or failure – these things just fall away in the face of death, leaving only what is truly important.”

Always Yours —- As Usual  —- Saurabh Singh

Send your comments at  managementteacher@gmail.com

Note: It includes information from numerous sources, and I thankfully acknowledge them as it would have, really been tough to complete this comprehensive information, without their contributions.

In late evening, when I had just pressed the shut down button of my workstation, a colleague of mine entered the office chamber (Officially allotted to me to work).Hello, was the first word uttered out by her and before I could ask the purpose, she herself expressed that she planned to have my company while walking back to home, at least the part of distance that was common to we both. I welcomed the idea and also thanked her for the same. Thus the journey homewards started. While on walk the momentary silence was done away by my colleague, when she requested the permission to ask question that was coming to her mind. I agreed to help her to the limited capacity of mine.

 Probably it was the prices of yellow metal that were troubling her and my colleague wanted to know, where the prices are expected to move in future and why. This I am inferring from the talks that continued.

She started the conversation by posing her curiosity as ahead: “Where do you see the price of gold going in the days to come?”

Since, at that moment, I was not exactly focusing on ‘investment advisory’, so I responded by saying that “on a broad level, the price are supposed to continue their northward journey.”

It seems that my response confused her a bit, as she soon came up with another question that “what I mean, when I say a broad level.”

I got the point and then explained to her that “the prices of any commodity do not move in a straight line. When I say on a broad level, it means that the prices will keep moving northwards, but in between they may drop as well, but they will pick up again, and thus will continue to scale up.”

It seems, that she was not ready to buy anything that I said, therefore, she questioned that what lay behind my confidence, which she visualized while I was answering her first curiosity.

Suddenly I realized that majority of investors; rarely scan the external and vital economic variables that are often of political nature. This made me aware that now I need to go bit detailed and also in a manner that she could easily comprehend.

“Well, I was just reading through some material and I realized that there is another solid reason for gold prices to go up,” I told her.

“Is it something other than all the money printing that is happening and is likely to happen in the days to come, all around the world?” she asked.

“Yes”, I answered.

“So what is this new reason?” she was now more curious.

Now I started by posing a question as ahead “Ever heard of Hugo Chavez?” Pat came the reply, “nope” with a supplementary question that now who’s he?

“He is the President of Venezuela, a country in South America.”                                

Probably she got a bit more confused and said that she knew that, but expressed her surprise on the issue that what “Venezuela” has got to do with the price of gold.

This made me aware that now my job was to explain history, international polity, and international trade, cost of transaction and accounting to her, and all this in very limited time of few minutes. I knew that I may be bombarded with whorls of questions.

 I started with letting her know that Venezuela has the 15th largest gold reserves in the world amounting to 401.1 tonnes. A lot of this gold is lying abroad in banks in New York, London and Zurich.

“But why will a country keep its gold overseas?” she interrupted.

 I started to introduce her with history. I said that “a part of the reason comes from history. Till August 15, 1971, the world was on a gold standard. Paper currencies were ultimately convertible into gold. This meant that countries had to settle their deficits in gold.” I followed this by giving an instance from international trade. I asked her to assume that England and Germany are exporting and importing goods from each other. At the end if France exports more to England than England to France, there is a deficit.” This means that England had to pay France. This payment was to be made in gold. A look at her face made me feel that she has now started picking up what I was attempting to explain. I carried on by adding that “now this meant that gold had to be physically moved from England to France, which of course was a pain. Movement meant cost of insurance as well as security.”

She was prompt in asking that “what was the way out?”

 I added for these reasons “a lot of this gold is simply stored overseas at the Federal Reserve Bank of New York (a part of the Federal Reserve of the United States, the Central Bank of the US).”

“How do you think this is going to help?”

It’s simple; I added and just narrated what Peter Bernstein writes in his book “The Power of Gold”. For example, if England lost gold to France, a guard at the Federal Reserve had merely to bring a dolly to England’s closet, trundle the gold to the French closet, and note the change in the bookkeeping records.’

She got the point, and allowed my request to take her back to Hugo Chavez.

The deliberations continued further, certainly with some statistical inferences. Estimates suggest that nearly 211 tonnes of the 400-odd tonnes of gold that Venezuela has are with banks abroad. Chavez has asked this gold to repatriated back to Venezuela.”

Now this brings a twist in the story, and the discussion to follow will also attempt to answer possible reason for Hugo Chavez’s such an act.

 ”Chavez has had an anti-US stance for years and may feel that because of that Venezuela runs the risk of its gold being seized.”

“Gold Seized? Why would such happen and does the possibility of such an act exist?” was the latest in series of questions.

“It sure is. I explained the same by making her aware of the ongoing Libyan foreign exchange reserves crisis, which happens to be an outcome of its foreign reserves being seized by allied nations with declaration of war earlier this year.”

 “But what has all this got to do with the price of gold? To me it’s as simple as me wanting to have gold in my own locker rather than the bank locker.”

I agreed to her statement, while continuing to explain by adding that all is not that straightforward as concluded by her, though to some extent she was correct. The straight forward part of transaction would be limited to 99 tonnes of total 211 tonnes lying abroad, as this 99 tonnes are deposited with the Bank of England in London. Repatriating that back to Venezuela would be a straightforward process.”

 Now comes the not so straight forward part, which happens to be of the tune of 112 tonnes of the gold and same is lying abroad with what are known as bullion banks. J P Morgan is one of them. Estimates suggest that Venezuelan gold worth $807 million (or around 450,000 ounces of gold) is lying with it.”

 She was instant, and argued that this should also be as straight forward as it is in the case of Bank of England, London, while simultaneously her facial expressions conveyed me that she wanted to know, if I dare to differ from her opinion. Certainly, I had to differ, and added that things are not always as simple as they seem to be. The statistics again came handy in quoting that “estimates suggest that the total amount of physical gold with J P Morgan currently stands at around 338,303 ounces (1 troy ounce equals 31.1 grams).”

Now, it seemed that she was out of reasons, as she expressed her ignorance about having to come across any news in media regarding, such a huge bank robbery in which approximately 1,11,697 ounce or 3473.8 kilo grams worth gold was looted.  I had to instantly chip in by saying that, this is not a case of bank lifting, but a way of functioning of financial system in general and banking sector in particular. Let me add an example to illustrate it? I sought her permission. The phenomenon goes as explained ahead [the attempt was to explain the process by making it as easy as possible, so that even a novice can understand].

“Central banks around the world had a huge amount of gold lying in their vaults, not earning any return. The end of 2007 witnessed the stock of gold with central banks around the world rising to 32,000 tonnes of gold.”

 I requested her to be more attentive to whatever I was going to add now. Out of the 32,000 tonnes gold held, the Central Bank lent approximately 14,000 tonnes to Bullion Banks like J P Morgan. James Turk and John Rubino in their coauthored book The Collapse of the Dollar, have argued that “lending, for instance, involves the central bank transferring gold to a major private bank, known as bullion bank, which pays the central bank a small-but-positive interest rate, then sells the gold in the open market.”

In this manner “central banks convert the gold into cash and then deploy this cash, somewhere to earn some positive rate of return. This based on a very fundamental assumption that idle assets provide no return, and there is fair possibility that such assets may ultimately add up some cost to the holder.” These costs may range from cost of storage to cost of security. As per meaning conveyed by the operative word “lending”, since the gold has been lent, therefore, the central banks have all the rights to, and can demand it back, whenever they want.

She chipped in by adding that probably “this is what Venezuela is doing right now”; and thus conveyed me a feeling that she was sincerely following the every single word uttered by me. 

 I nodded in agreement and continued further by adding that, since, the bullion banks have promised to return the borrowed gold to the central banks so they will have to return the same. In prevailing situations these bullion banks are not having the volume of gold that was lent to them by Central Bank. In financial and monetary world, this position is conveyed by the term ‘short’, and this means that these bullion banks are ‘short’ gold.

Now comes a significant turn in events, that may work as catalyst to force the prices of gold to break the roof. As the situation deliberated above suggests that, in case, sometime in future, these bullion banks are asked to deposit the volume of  gold lent to them by central bank, they will be left with no choice and would be obligated to buy gold in order to repay the central banks’.”

“So, as I can get, it goes like, that in such a scenario the bullion banks like J P Morgan will now have to buy back gold from the market in order to repay the Venezuelan government, given the situation that Venezuela has around 450,000 ounces of gold deposited with J P Morgan, whereas J P Morgan at present has only 338,303 ounces of gold in its accounts/ record books,” she added.

Exactly, I said in agreement, and carried the deliberations forward by adding, that this buying will lead to the price of gold rising further. I knew that now she has got answer to her question, but then too, I continued it by saying that this is only one part of the story.

Much like a child, who is curious to know about everything, she was now eager to learn that what the remaining part of story was now. She requested me to unfold the other part of the story.

I continued by giving her a reference of a report titled “Thing That Make You Go Hmmm” , and told that this report points out, ‘Chavez’s move could set in motion a chain of events whereby Central banks who store the bulk of their gold overseas in ‘safe’ locations scramble to repossess their country’s true ‘wealth’. If that happens, the most high-stakes game of musical chairs the world has ever seen will have begun’,” I said.

“This sounds very scary”, she added.

“Yes, you are very much correct while mentioning that the report further states that ‘any delay in repatriating Venezuela’s gold could potentially start a frantic scramble by central banks to claim their physical. God save the scenario, but if it actually happens, rest assured that gold price will be on fire. A scenario will take place, which has neither been seen in past, nor even imagined.

It will give birth to an economic tsunami of magnitude, which will turn the great economic recession witnessed by world or even the jasmine revolution and contribution of social media to same to seem dwarf.

Don’t be surprised if I that there is enough in media to believe U S Govt. Manufactured Fake Gold

Perhaps, there are only few who can imagine the magnitude of risk, specifically if they are not linked to foreign trade. Let me illustrate it. It’s one thing to counterfeit a twenty or hundred dollar bill. The amount of financial damage is usually limited to a specific region and only affects dozens of people and thousands of dollars. Secret Service agents quickly notify the banks on how to recognize these phony bills and retail outlets usually have procedures in place (such as special pens to test the paper) to stop their proliferation.

This is the most sacred of all commodities because it is thought to be the most trusted reliable and valuable means of saving wealth.

A recent discovery — in October of 2009 – has been suppressed by the main stream media but has been circulating among the “big money” brokers and financial kingpins and is just now being revealed to the public. It involves the gold in Fort Knox — the US Treasury gold — that is the equity of our national wealth. In short, millions (with an “m”) of gold bars are fake!.Who did this? None, but the United States Government, as claimed by Chinese Authorities.

Background
In October of 2009 the Chinese received a shipment of gold bars. Gold is regularly exchanges between countries to pay debts and to settle the so-called balance of trade. Most gold is exchanged and stored in vaults under the supervision of a special organization based in London, the London Bullion Market Association (or LBMA). When the shipment was received, the Chinese government asked that special tests be performed to guarantee the purity and weight of the gold bars. In this test, four small holed are drilled into the gold bars and the metal is then analyzed.

Officials were shocked to learn that the bars were fake. They contained cores of tungsten with only a outer coating of real gold. What’s more, these gold bars, containing serial numbers for tracking, originated in the US and had been stored in Fort Knox for years. There were reportedly between, 5600 to 5700 bars, weighing 400 oz. each, in the shipment!

At first many gold experts assumed the fake gold originated in China, the world’s best knock-off producers. The Chinese were quick to investigate and issued a statement that implicated the US in the scheme.

What the Chinese Uncovered

Roughly 15 years ago — during the Clinton Administration [think Robert Rubin, Sir Alan Greenspan and Lawrence Summers] — between 1.3 and 1.5 million 400 oz tungsten blanks were allegedly manufactured by a very high-end, sophisticated refiner in the USA [more than 16 Thousand metric tonnes]. Subsequently, 640,000 of these tungsten blanks received their gold plating and WERE shipped to Ft. Knox and remain there to this day.

According to the Chinese investigation, the balance of this 1.3 million to 1.5 million 400 oz tungsten cache was also gold plated and then allegedly “sold” into the international market. Apparently, the global market is literally “stuffed full of 400 oz salted bars”. Perhaps, its worth is as much as, 600-billion U S dollars.

Always Yours — As Usual — Saurabh Singh

 RELATED LINKS FOR READERS WHO WANT TO GO IN MORE DETAILS TO BEFORE COMMENTING ON STORY

1. http://etfdailynews.com/2011/08/17/venezuelan-president-hugo-chavez-sends-precious-metal-etfs-a-wakeup-call-gld-iau-slv-gdx-agq/
2. http://philosophers-stone.co.uk/wordpress/2011/08/hugo-chavez-gold-runs-bank-runs-and-bank-holidays/
3. http://profit.ndtv.com/news/show/chavez-officially-nationalizes-venezuela-s-gold-industry-174207
4. http://notime4bull.com/aggregator/sources/13
5. http://mikepiro.com/blog/as-chavez-pulls-venezuelas-gold-from-jp-morgan-is-the-great-scramble-for-physical-starting/
6. http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/traders-brace-for-venezuela-gold-transfer/article2134031/print/
7. http://www.bighaber.com/haber/chavez-to-nationalize-venezuelan-gold-industry-1072000.html
8. http://www.advisorperspectives.com/commentaries/global_082611.php
9. http://americasfinancialmeltdown.blogspot.com/2010/11/below-is-antiwar_4391.html
10. http://mikepiro.com/blog/ron-paul-audit-federal-reserve-gold-stores/
11. http://www.freedomsphoenix.com/News/061976-2009-11-26-us-govt-manufactured-fake-gold.htm
12. http://www.the-boondocks.org/forum/index.php?t=msg&&goto=157202#msg_157202s
    

Veteran social activist Anna Hazare refused to come out of Tihar jail on Tuesday evening saying he wants an unconditional release and unconditional permission to go ahead with his indefinite fast at Jai Prakash Narayan Park in New Delhi.

Earlier, Delhi Police Commissioner B K Gupta issued a release warrant of Anna and his associates after police decided to withdraw its case against them.

Delhi Police sources said that warrants of release have been sent to Tihar Jail authorities for freeing Hazare and his seven associates who were held this morning ahead of their plans to launch an indefinite strike for a strong Lokpal.

The sources said the decision to release was taken after government is understood to have come to the conclusion that keeping him in jail would create unnecessary law and order situation.

Tihar jail sources said that all the eight had been kept in separate lock ups and would be freed soon. Hazare and his associates had refused to take food during their detention under judicial remand.

Earlier, Anna Hazare was on Tuesday sent to seven days’ judicial custody at Tihar jail after he refused to sign a personal bond and come out on bail following his arrest.

The veteran anti-corruption crusader was sent to jail no. four at Tihar where former Commonwealth Games Organising committee head Suresh Kalmadi has also been lodged.

Hazare, who was arrested in the morning on grounds of apprehension of breach of peace following his intention to defy prohibitory orders to go on indefinite hunger strike, was produced before a special executive magistrate.

‘Hazare refused to give undertaking not to defy Section 144′

Gupta said the police was prepared for his being released on a personal bond if the Gandhian would have given an undertaking that he will not defy Section 144 of the CrPC that prohibits gathering of five or more people and also ask his supporters not to do so.

Sources said since Hazare refused to give an undertaking, the magistrate remanded him to a seven-day judicial custody.

He will be taken to Tihar jail where he will spend time in judicial custody. Three other leading activists of the team Hazare — Kiran Bedi, Arvind Kejriwal and Manoj Sisodia — were also sent to judicial custody on similar grounds.

Nearly 1400 activists were detained in various parts of the city when they came out in support of Hazare, who had planned to launch the fast at J P park near Ferozeshah Kotla and Delhi Police Commissioner B K Gupta said they would be released after “some time”.

Protest march from India Gate to Parliament planned

Meanwhile, hours after the detention of Anna Hazare, his aides on Tuesday vowed to take out a protest march to Parliament House from India Gate on Wednesday in defiance of prohibitory orders clamped in the high-security area as part of a country-wide agitation against the police action.

“A protest march will also take place tomorrow from India Gate to Parliament House,” lawyer Prashant Bhushan, a key member of Hazare’s anti-graft campaign, told mediapersons in New Delhi.

He said protests have been planned across the country to vent their anger “peacefully and in a non-violent” manner against the detention of Hazare and his supporters.

‘There is no freedom for Delhi police’

Alleging that the action against Hazare was taken at the behest of the central government, Bhushan said, “The decision to detain Hazare or to deny permission for his protest were taken by Cabinet ministers. It is not the Delhi police which is taking these decisions. There is no freedom for Delhi police. It has become a puppet, an ornament in the hands of Central government.”

He said students of Delhi University will protest outside Chhatrasal Stadium, which has been turned into a special jail, and court arrest while another protest will be organised at Pragati Maidan from where the activists will take a march to Jai Prakash Narain Park.

Prohibitory orders have already been imposed in the localities mentioned by Bhushan.

Anna shares jail with Kalmadi, Kejriwal with Raja

In a related development, Anna Hazare will share space with A Raja and Suresh Kalmadi both accused in the high-profile scams in Tihar jail.

“Anna Hazare has been lodged in jail number four where Suresh Kalmadi and Kalaignar TV Managing Director Sharad Kumar are lodged,” Deputy Inspector General (Tihar) R N Sharma told PTI in New Delhi.

Anna will be with his associates Rajesh, Suresh Pathare and Manish Sisodia in a cell of the prison which houses 2,231 inmates.

Former Indian Revenue Services officer Arvind Kejriwal has been lodged in jail number one with former Telecom Minister A Raja and MD of D B Realty Shahid Balwa are lodged.

Navin, Dada Thakare and Pathare were accompanying Kejriwal in the cells of this jail which has 1,543 prisoners.

All the eight were brought at 4.15 pm and were quietly sent to their cells.

Always Yors —- As Usual— Saurabh Singh

Source: Rediff

The good news is that citizens are finally refusing to accept corruption as routine anymore and are demanding immediate accountability from those who they elect. Today, for the first time in independent India’s history five corporate CEOs, one IAS officer and several senior politicians find their new address as Tihar Jail No. 1. This could well be dubbed as India’s second  independence struggle, but this time it’s not against foreign rule, but for for freedom from corruption by our own rulers, and has begun in right earnest in 2010.

There are four immediate steps, which can be taken to control corruption.

First, the government must notify the rules for the confiscation of assets of corrupt officers in the Benami Transactions (Prohibition) Act, 1988. This will allow the state to confiscate properties into an escrowed account where no claimant shows up, and if he does, then the tax laws can be invoked to inquire into the source of income for purchase of the property.

 Second, India must enact strong anti-perjury laws to stop frivolous, false complaints under oath; this would be a necessary step to prevent witnesses and complainants from frequent retractions which one currently observes in court.

Third, reversing the onus of proof. The accused must demonstrate why illegal cash
or real estate suspected to belong to them is not theirs or face confiscation. Today, the standard of evidence followed is cumbersome. Taking cues from the US system, one must trace the money trail rather than paper trails of files of decision-making.

Lastly, posting the right man for the right job. When one outstanding officer, Bishwajit Mishra, was posted in Bellary, he disciplined Reddy’s minions and recovered dues of Rs 20 crore in 10 days flat before he was transferred out.

Justice Santosh Hegde, U V Singh, Vipin Singh and their team have done yeoman service. They have painstakingly sifted through voluminous bank records of over 40 lakh entries, reconciling millions of transactions from one benami account to the other, one benami company to the other, till it reached the eventual beneficiary, as is shown in the report.

It recounts how Reddy started the ‘zero-risk system’ whereby he would use government officers to procure permits for other mining companies, ensuring safe transport of illegally mined ore to a destination of their choice. For a payment of 40% of the prevailing global market price of iron ore or sharing an equal amount in volume, he had created a different kind of single-window system – for bribes!

Companies that initially refused were later forced to sign zero-risk contracts with Reddy. Rs 40,92,88,860 was the amount paid as ‘risk amount’, Rs 62,92,36,810 was paid for illegal iron ore trading and about Rs 2,46,62,377 was paid to 617 officials in just five years.

This apart, the report says Rs 4,79,03,917 was paid to “G J Reddy Sir” by cheque (and many times more by cash). Now, the time has come to use the fullest extent of various penal provisions of the law to recover the money. Thus, perhaps for the first time, actual value has been imputed to the extent of bribery in just one sector of the economy, that too in one state.

It also appears from the report that Yeddyurappa brought enormous transparency into bribe-taking by having his sons take the bribe by cheque into a family trust, turning a blind eye to the rape of the treasury by his colleague and his own family.

He was clearly told in writing on file by his outstanding team of officers including the chief secretary and others that denotifying land after a Section 16(2) stage of Land Acquisition Act is violative of Supreme Court judgments. Yet, he brazenly went ahead, denotified it, sold it back to the same mining company and received a ‘donation’ by cheque! Despite L K Advani’s repeated sane counsel and warnings, the misdemeanour continued for he thought the buck would never stop. But it did.

 It remains to be seen that India’s second war for independence would spread further or soon the principal culprits will be forgotten, witnesses will be purchased or will ‘voluntarily’ withdraw their statements, bail would be granted by friendly judges, back-door deals for mutual protection will be struck across party lines, some elections will be won, and the same people will be back in power. And show  must keep going on and on.

These view reflect the agreement with views presented are vies of the author.

Always Yours — As Usual — Saurabh Singh

The Reason Behind the Phenomenon has been detailed below in Issue and It’s possible reason Format.

What is the crisis about?

Since 1917, the US Congress has stipulated that there has to be a statutory limit on US public debt (debt of US federal govt). This limit has been periodically raised and now stands at $14.3 trillion (95% of the US GDP). The US will hit this limit on Tuesday, Aug 2, unless Congress approves a fresh hike. But the Republican-controlled House of Representatives and Democrat-controlled Senate haven’t been able to work out a consensus

Why are they fighting?

The Republicans want any debt limit hike linked to deep cuts in govt spending. They want the increase to be effective for a year, with fresh discussions after that. The objective is obviously to make it an issue ahead of the 2012 presidential elections. Democrats favour tax increases and a one-shot raising of the ceiling. They are also opposed to any cuts that could jeopardize the economic stimulus and welfare payments

What happens if debt ceiling is not raised?

US govt can’t pay     employees, social security benefits, defence contractors, medical insurance bills and interest to lenders. Credit rating will plunge from top ‘AAA’ to bottom D’
What will be the global impact?

Govts, investors and businesses across the world will stop investing in US bonds. There will be panic in financial markets globally, with investors exiting equities for safe havens like liquid cash and gold

Does it affect India?

Indirectly, though much less than countries/blocs with big trade and debt dealings with US, like EU and China. Still, a worldwide downturn could hit Indian exports and FDI flows

When did this debt accumulate?

 Barack Obama (fighting recession, wars in Afghanistan and Iraq) $2.4tn

George W Bush (wars and tax cuts) $6.1tn

Bill Clinton $1.4tn

George Bush $1.5tn

Ronald Reagan $1.9tn

Earlier $1tn

Whose money has the US taken?

Foreign countries (including China $1.2 tn) $4tn

US public and cos $3.6tn

US federal system $6.2tn

Always Your — As Usual Saurabh Singh

Wall Street is set to close its worst three months in a year as July draws to a close next week after a roller coaster ride for markets. Whacked out fund managers hitting the beach in August may find themselves fiddling with their BlackBerrys more than the little umbrella in their cocktails.

“I need a vacation, man. After all the stuff that’s happened in the last three months I’m pretty much shot, I’m getting weird,” said one New Jersey-based fund manager, who was packing his bags for a destination in the Caribbean as temperatures topped 100 degrees Fahrenheit in New York City.

With euro zone leaders having reached a deal for yet another bailout for debt-laden Greece, investors will be free to chew over the rancor in Washington with even more attention.

Negotiations between President Barack Obama and the top Republican in the House of Representatives, John Boehner, still looked far from a deal to avert a looming US default, lawmakers said on Friday, raising the likelihood of more volatility next week if no solution is reached over the weekend.

“It’s likely an agreement in any form will cause a relief rally for equities,” said global head of sales trading at Dahlman Rose in New York.

“Coming on the heels of overall pretty good earnings numbers and some sort of resolution in Greece and that could make for a rally in the market,” he said.

But on the other side of the coin, the prolonged and partisan dispute over solving the country’s debt crisis means there is still a big downside risk.

“Who knows where that is going to go,” as per an analyst at MF Global in Chicago. “We’re vulnerable to a buyers’ strike if we don’t get any news.”

In addition, the corporate earnings season suggests other risks could dog the market. Despite generally good results so far, there have been some worrisome signs. The S&P 500 rallied 6% in the run-up to reporting season, but earnings misses from big industrial names like Rockwell Collins and Caterpillar Inc weighed on the Dow and S&P 500 on Friday.

Earlier in the week several big consumer names such as Whirlpool and Pepsi warned about sluggishness in developed markets, sending their shares sharply lower.

“The market still has a high degree of skepticism in it,” said the analyst, summing up the earnings season so far.

As per him, he will be closely following earnings from sector and economic bellwethers next week. Those include the package delivery company UPS, chipmaker Texas Instruments, and online retailer Amazon.

Around 30 percent of the S&P 500′s USD 12.3 trillion market caps have reported earnings so far. They have outpaced consensus estimates by 3.8%, and only 7% have missed estimates, according to data from Morgan Stanley.

But share prices of those that have fallen short of estimates have taken a severe beating. Given the fragile sentiment a few more prominent misses could derail the market.

“The market is punishing these misses more than it is rewarding beats, an asymmetry we have been calling for and we forecast will continue,” wrote Morgan Stanley’s US equity strategist in a note to clients.

“Our view remains that first half of the year numbers are achievable but the second half of the year looks challenged,” he said.

Next week is also a big week for economic data. Fears of a slowdown in the economy have been a large driver of market volatility over the last few months, and the coming releases will be parsed very closely.

They include early regional manufacturing data from Chicago and New York, a reading of consumer sentiment, and a first reading of US growth for the second quarter, expected to show the economy grew just 1.9% in the period.

Bob Doll, chief equity strategist at Blackrock, one of the world’s largest fund managers with around USD 1.6 trillion of equities under management, said this week that the US economy is at a critical juncture.

Doll points out that since 1960 every time year-on-year growth has fallen under 2% the US economy has gone into recession.

“Our bottom line view is that investors should maintain a reasonably constructive bias toward risk assets, but should also be prepared to scale back exposure if evidence of economic growth acceleration does not materialize.”

Always Yours — As Usual —- Saurabh Singh

Note: Compiled from published News and Views

“Crude oil prices peaked to US $ 100 – 115 a barrel in April and May 2011 and moved downwards after that to touch a rate of US $ 90 – 92 per barrel in June 2011. In such a scenario, price increase by the Union Government should have been announced in April – May 2011, but the same did not occur. The Government found June 2011 to be the auspicious time for announcing price hike when the prices had nearly normalized. What could have been the motive for doing so? Simple answer is that April – May 2011 was the time when five states were going to elect the assembly members. The states being, West Bengal, Tamil Nadu, Assam, Kerala and Puducherry. ”

“If one goes by what the campaign managers of Congress had to say on the Rahul Gandhi’s much publicized kisan padyatra-(which as claimed was undertaken to champion the cause of the farmers of the region) -  was conceived to detract the public attention from the issue of hike in petroleum products and their possible spiraling effect on inflation. This yatra detracted the lot of electronic media attention from the campaign that opposition forces such as BJP and Left were seeking to build up on the oil price hike related issues. ”

“Since the Oil shock of 1973, USA strategically took measures to control the oil market by keeping continued focus on West Asian Region. In 1980, Jimmy Carter, the then President of USA declared Persian Gulf an exclusive zone of American influence and created a rapid deployment of forces, which latter turned into what is known as US Central Command or CENTCOM.  ”

“As is being believed by majority that skirmish in Libya is behind recent spurt in prices, should correct their facts. Libya produces less than 3 per cent of global petroleum output. Where as Saudi Arabia has already made up for the current shortfall and its excess stocks are more than that of Libya and Algeria put together. In fact in present situation too oil production at many of Libyan facilities continues even in civil war there. ”

“The argument being forwarded by few is that rising demand from China and India has forced an upward trend in oil prices is also unjustified. Though these two countries do account for growing share of global demand, but then same is counterbalanced by slower demand from USA and Europe.”

“There is still a wide spread perception that cartel of Oil Exporting Countries can manipulate and influence the prices by changing the level of their supplies. Reality today is much different. The OPEC has turned from being a cartel to being a minor player today. Non OPEC countries now account for increasingly significant proportion of global supply. Russia has already snatched the title of being largest supplier of crude oil from Saudi Arabia since 2009.  ”

Many more such instances may be quoted. It’s not being quoted in anticipation that the variety of above instances is good enough to comprehend that nearly none of the factors assumed or arguments forwarded are capable of forcing any kind of hike in prices of the crude oil.

Then what is it, which is responsible for hike in crude oil price?

…….any guesses, if not, then storm your grey matter and keep visiting this place in hope of getting answer to this simple question.

Always Yours — As Usual —- Saurabh Singh