Greek Tragedy and Keys to Europe’s Treasury

The introduction of the Euro was the most audacious financial experiment in European history. 17 countries gave up their right to print money surrendering their domestic currencies to the European Central Bank (ECB). Greece, Portugal, Ireland and Spain are said to be the reasons behind EU’s current financial mess. Greece was projected to have a public debt to GDP ratio of about 135% for 2011. Deficit spending forced excessive borrowing to the extent that sovereign debt default became imminent forcing a freeze on funding, and a near collapse of Euro. Bailout packages saved the Euro and the affected countries from bankruptcy. A new treaty European Stabilization Mechanism (ESM) has been signed which will essentially hold the Keys to the Treasury of 17 member countries in the Euro Zone once it’s ratified. Based in Luxemburg, ESM which will become the dominant economic czar of the EU.

 

Some economists argue that single currency is only possible in a zone of economic homogeneity. With every crisis we learn that Europe has strong and weak countries. There are many countries in Europe, with different resources and different potentials of production. It is not fair to compare Greece, Portugal, Ireland and Spain with Germany. To understand the impact of a single currency, assume Country A (like Germay) and country B (like Bhutan) formulate a single currency called EuroTaka. Countries A and B can no longer print their own currency through their state banks, only a new central bank can do that. Only fiscal policies like Taxing, Spending, Subsidies etc, can be controlled by A and B. Consumers prefer products from country A due to superior quality, precision, price. Armed with a single currency EuroTaka there is no problem for B to import more from A. Country B agreed not to create a deficit above 3% of GDP but that was never going to be possible anyway and everybody knew it. B starts increasing its deficit spending. Loans are available to support ambitious expenses, so why slow down. B’s economy soon needs more money to manage its finances but economic benefits from social projects are not sufficient to keep up with debt obligations. Any material change in the carefully crafted funding strategy can destroy the game plan.

 

Trouble erupted first in the US, where large banks invested in real estate with very clumsy credit risks. Loan portfolio went from sour to toxic. US portfolio had a major impact on European banks, from Wikipedia:

Many European banks held assets in financially troubled American banks, and because the need to bail out troubled banks has worsened the budget deficit for governments. The size of the budget deficits has frightened investors, who have demanded higher interest rates from struggling governments. This in turn makes it difficult for governments to finance further budget deficits and service existing high debt levels.

 

Especially in countries where government budget deficits and sovereign debts have increased sharply, a crisis of confidence has emerged with the widening of bond yield spreads and risk insurance on credit default swaps between these countries and other EU members, most importantly Germany.

 

While the sovereign debt increases have been most pronounced in only a few eurozone countries, they have become a perceived problem for the area as a whole.

 

Concern about rising government debt levels across the globe together with a wave of downgrading of government debt for certain European states created alarm in financial markets. On 9 May 2010, Europe’s Finance Ministers approved a rescue package worth €750 billion aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility (EFSF).

 

In October 2011, eurozone leaders meeting in Brussels agreed on a package of measures designed to prevent the collapse of member economies due to their spiralling debt. This included a proposal to write off 50% of Greek debt owed to private creditors, increasing the EFSF to about €1 trillion and requiring European banks to achieve 9% capitalisation.

 

Despite the debt crisis in a number of eurozone countries the European currency remained stable,[7] trading even slightly higher against the Euro bloc’s major trading partners than at the beginning of the crisis.The three most affected countries, Greece, Ireland and Portugal, collectively account for six percent of eurozone’s gross domestic product (GDP).

 

Rescue packages come with a bitter pill for borrowing governments. Two things will almost always appear, cut in spending and raising of taxes. Meaning, jobs would be cut, people will pay more to government than consume for themselves, pay higher bills for electricity, water, gas etc. These are not popular measures by any standards, on the contrary such measures make room for instability. As the rescue package for Greece was announced there were protests in Athens, where 3 people were killed.

 

There is a consequence to sovereign default. Greek tragedy best explains that situation (from Wikipedia):

Japan, Italy and Belgium’s creditors are mainly domestic institutions, but Greece and Portugal have a higher percent of their debt in the hands of foreign creditors, which is seen by certain analysts as more difficult to sustain. Greece, Portugal, and Spain have a ‘credibility problem’, because they lack the ability to repay adequately due to their low growth rate, high deficit, less FDI, etc.

 

In May 2011, Greek public debt gained prominence as a matter of concern.The Greek people generally reject the austerity measures, and have expressed their dissatisfaction through angry street protests. In late June 2011, Greece’s government proposed additional spending cuts worth 28bn euros (£25bn) over five years. The next 12 billion euros from the Eurozone bail-out package will be released when the proposal is passed, without which Greece would have had to default on loan repayments due in mid-July.

 

On 13 June 2011, Standard and Poor’s downgraded Greece’s sovereign debt rating to CCC, the lowest in the world, following the findings of a bilateral EU-IMF audit which called for further austerity measures. After the major political parties failed to reach consensus on the necessary measures to qualify for a further bailout package, and amidst riots and a general strike, Prime Minister George Papandreou proposed a re-shuffled cabinet, and asked for a vote of confidence in the parliament. The crisis sent ripples around the world, with major stock exchanges exhibiting losses.

 

Greece’s first adjustment plan was launched in March 2010 with 80 billion euros in support from the European governments and 30 billion euros from the IMF. This adjustment program hoped to reestablish the access to private capital markets by 2012. However it was soon found that this process would take longer than expected. In July 2011 there was a new package instilled in which an extra 109 billion euros in support of Greece which included a large privatization effort. Some believe that this will cause more debt for Greece. With this new package it is projected that there will be a 3.8% decline in 2011 but a .6% growth in 2012, following with a 3.5% increase in 2013, where it will eventually plateau in 2015 at 6.4%.

 

Some experts argue the best option for Greece and the rest of the EU should be to engineer an “orderly default” on Greece’s public debt which would allow Athens to withdraw simultaneously from the eurozone and reintroduce its national currency the drachma at a debased rate. Economists who favor this approach to solve the Greek debt crisis typically argue that a delay in organising an orderly default would wind up hurting EU lenders and neighboring European countries even more.

 

In the early hours of 27 October 2011, Eurozone leaders and the IMF came to an agreement with banks to accept a 50% write-off of (some part of) Greek debt, the equivalent of €100 billion. The aim of the haircut is to reduce Greece’s debt to 120% of GDP by 2020.

 

One analyst who favors an “orderly withdrawal” wrote, “European Union has the free market economy as laid down principle. Meanwhile, almost everybody has understood that deregulation of banks, privatizations of infrastructures and the abolition of governmental functions lead to a harsh society, plagued by crises. These principles are outdated. The advocates of these principles will only be able to push them forward with violence. Greece won’t be the last victim”.

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Military Takeover in Pakistan by General Kayani

General Ashfaq Parvez Kayani.

Gen Kayani (from wikipedia)

Back in 2009 Indian analysts feared a military takeover in Islamabad after terrorist attacks on a visiting cricket team in Lahore. Pakistan Army was a better option for negotiations than civilian politicians. The reason for this bizarre admission is, the Generals of Rawalpindi control Pakistan, period. Here is an excerpt from a 2009 political analysis by Daily News & Analysis (DNA) based in New Delhi:

General Ashfaq Kayani is acceptable to the Americans and even New Delhi will not mind a military takeover in the present conditions, the former chief of an intelligence agency told DNA.

His comment came after the terrorist attack on Sri Lankan cricketers in Lahore on Tuesday.

“Our worst security nightmare is Pakistan collapsing, that is what they (the US) have to prevent first, if their Afghan strategy has to win,” he said.

The world cannot allow Pakistan to fall apart as a splintered country is even more dangerous for the international community.

India found it easier to deal with a military dictator like General Pervez Musharraf, simply because the government knew where the power-centre was. That the civilian government does not call the shots in Pakistan was made amply clear after the Mumbai terror attacks.

“Pakistan imploding is old news, it has been happening for long. It will not collapse right away, but steadily, one brick in the wall at a time,’’ said former diplomat Arvind Deo.

He blamed the US for continuing to throw money at Pakistan and pampering the military to fight against jihadis and Al Qaeda in Afghanistan and Pakistan. He agreed that India would suffer the most if Pakistan fell apart.

“Jihadi forces are in Lahore fighting to create a pure Islamic state. The civilian government has been unable to stop the tide,’’ said Deo.

Sociologist Dipankar Gupta said, “From the very beginning, Pakistan has not bothered to build institutions. It has relied too much on its security apparatus.”

“It’s a siege within now,’’ said strategic analyst K Subrahmanyam.

“The forces Pakistan had nurtured have now come home to roost. But we must have patience and give Pakistan time to make the right moves. Pakistan’s military was allowed to get away while playing with fire. Now we have to suffer.’’

November 27, 2011, NATO air strikes kill 28 Pak soldiers creating a deep rift between two countries. GHQ responds quickly by suspending NATO supply routes through NWFP, and by calling for the closure of Shamsi airbase used for launching Drone attacks by NATO/US. Earlier, Pakistan’s US Ambassador Hussein Haqqani was removed from his post for getting embroiled in a controversial “Memo” from Zardari in the aftermath of May 2nd US attack in Abottabad (Bin Laden’s excecution). Zardari allegedly wanted US protection fearing a military takeover by the angry Generals.

Things have hardly been normal since independence, starting with a history of military interventions. Political leaders have time and again failed to make much progress either. Corruption by jobless, and quite often incompetent persons, show up in a ‘rags to riches’ story, expensive cars, houses in posh areas and large windfall profits in commerce. Extravagant lifestyles of the rich and powerful politicians demonstrate the perceived benefit of being in politics.

Insecurity, mistrust and disgust for corrupt politicians are further corroborated by the politicians themselves. They accuse their rivals of exactly the same vices that caused public rancor against them, each calling his counterpart corrupt, incapable and treacherous. They provide that much needed credibility for a military intervention, to set things right. 

Since 9/11 and the aftermath of the US attacks in Afghanistan and Iraq, Pakistan Army slowly lost whatever prestige it had after its detestable part in the 1971 civil war against East Pakistan (now Bangladesh) followed by an ignoble surrender to India (90,000 Pak soldiers taken as POWs by India). Parvez Musharraf changed sides fast enough to go from holding a “Pak-Taliban Brotherly relationship” to “Talibans are Terrorists” to imprint his name amongst world’s top 10 hypocrites of all time.

What followed was a more deplorable state of affairs for his government. Sectarian in-fighting, terror attacks in mosques, factionalism, political assassinations, disunity, threats of external attacks, all combined to expose General Musharraf’s true nature as a failed con-man.  Pakistanis got rid of him, a little too late though. By the end of his rule, Americans had bases in strategic NWFP, Pakistan Taliban added to an existing long list of Jihadists and an economy badly in need of more funding.

Zardari – Gilani duo have pretty much lost their grip on Islamabad, starting with the execution of Bin Laden in Abottabad. Lahore rally of former cricketer Imran Khan drove that point home like a hammer. Satellite TV news programs made that clear as they brought politicians, analysts and academics from differing camps to debate and finally comment on its immense impact. Imran’s rally was quickly followed by Muslim League rally in Faisalabad lead by the Sharif brothers.

The removal of Hussein Haqqani was next. It is not difficult to guess who could have called the shots, especially after successful opposition parties’ show down against Zardari. It would not make sense for Zardari to fire his compliant envoy in the most important embassy outside Asia.

Pakistanis should be getting ready for another military takeover. After Ayub, Yahya, Zia and Parvez it will be Kayani’s turn to try and correct lots of things that went awfully wrong. All hopes are on him, dubbed as a professional soldier par excellence. But Kayani is a product of that same old military school that taught Musharraf backstabbing, Zia bigotry, Yahya barbaric mentality and Ayub egotism. Nothing less than a miracle can alter the time-honored tradition of Army Generals. There is too much at stake for change to happen.

Kayani will be faced with the issue, “what is good for US, is good for Pakistan”, therefore, Pakistan must bend backwards to please the US administration. Pakistan provides bases for US/NATO operations in Afghanistan, Iraq and maybe Iran in the future. It allows US Drones to kill innocent unarmed citizens. Vital supply lines to NATO in Afghanistan run through Pakistan. It protects foreign interests by killing its own citizens under the cover of “anti terror offensive”. They betrayed the fellowship of the brave soldiers.

Pakistan’s future is not in the hands of its Generals. People are making a noise loud enough to reach GHQ, “no more double talking, backstabbing, hypocrites please”. In a country where guns are louder than thunder, people’s voice matter little. It’s the Generals who call the shots, compelling others to obey them by force if necessary. It is this line of thinking that justifies being classified as “trash”. They really have had enough filth from their Generals and politicians alike. It is time for popular revolt to remove a nation’s burden of ambiguity and to usher in an era of internationalism, rule of law and support for righteousness.

6th Caliphate in Tunis

The Arab Spring started in Tunisia creating a domino effect on Egypt, Syria, Libya and Yemen. It is once again at the center of another controversy. But this time it is different. Since the collapse of Ben Ali regime analysts worried about the coming change in Tunisia’s political landscape, mainly due to the largest political party, Ennahdah. An Islamist party having ties with Muslim Brotherhood, Hamas and other Islamist parties. Tunisia since independence from French protectorate in 1956 remained a Republic ruled by dictators. Secularists enjoy a relative majority in capital Tunis but the mass people outside support Islamists. Ennahda proved this with their 40% majority in recent general elections. Hammadi Jebali is the General Secretary of Ennahdah who at a press conference declared that we were about to witness the return of the Caliphate in the form of the 6th Khilafah State. Not unexpectedly, his remarks drew criticism from the secular parties and journalists. Foreign media (especially Washington Post and The Telegraph) showed measured tone in their criticism. Below is the copy of the official message from Tunisia-Live.net “With deep roots in the fight against anti-Muslim oppression, Hamadi Jebali emerged from years in jail under the regime of Zine Ben Ali as a man of compromise and the moderate face of Tunisia’s Ennahda Islamist party. However, on November 13, 2011 Jebali spoke at a rally in Sidi Dhaher (governorate of Sousse) together with a parliamentary deputy from the Palestinian party Hamas. Jebali referred to the present time as “a divine moment in a new state, and in hopefully a 6th Caliphate,” and that “the liberation of Tunisia will, God willing, bring about the liberation of Jerusalem.” The statement caused a stir among the Tunisian political class as well as among the general public.” Jebali is tipped to be the future Prime Minister of Tunisia. He will also be heading the new committee to draft a new constitution for Tunisia. His statement may have been a slip, but it was the first time since the end of WWI that an elected statesman from a muslim country has called for return of Caliphate at a press conference. The sentiment was picked up by other Islamist parties in Tunis, Cairo and Damascus. It would not be surprising now to hear Turkeye inviting other Muslim leaders to a Summit in Istanbul. GCC countries are drafting a proposal for unification with Riyadh as their new capital. Think about regional spheres of unification as the first step, North Africa under Egypt, GCC under Saudi Arabia, Fertile Crescent under either Iraq or Syria, and Central cum South West Asia under Turkeye. SE Asia and South China Sea countries under a Malaysia. Five countries are critical in such regional unification, ie Saudi Arabia, Pakistan, Iraq, Syria and Egypt. A global Islamic political party should be able to take the lead by offering a common platform for distributing a common idea to the people of these countries. Within a few years Muslim world has undergone a fundamental change in its politics. Hammadi Jebali sure knows the climate of the muslim world like an Arab trader his deserts.

READ & ENLIGHTEN yourself in the name of your LORD

Islam did not introduce any new religion. Disbelievers of Makkah opposed the Holy Prophet (swm) because they blindly followed the religions of their forefathers. They were stuck in the past, unable to grasp new ideas. They earned the title of “JAHIL” thanks to their ignorance and backwardness.

The word ‘Quran does not mean ‘Book, ‘Kitab means Book. It is also not a scripture, ‘Mushaf means scripture. Quran implies reading, reciting or in a larger context recitation with understanding. God’s message did not come to serve any particular group, His Words are for all people. Language of the Quran is classical Arabic, which is different from modern Arabic, using more allegory, descriptive and narrative phrases. To understand the Quran requires a close study of Holy Prophet Muhammad (swm)’s mission and struggles.

The Holy Prophet (swm) was meditating in a cave when he received the first revelation. Was it a custom among Arabs to meditate? Budhists are known for meditation not Arabs. Prophet Muhammad (s) had an unusual curiosity for 7th centuryArabia. Meditation helps search for inner peace, spirituality, religion, God, eternal life, calmness, relaxation, and tranquility. It makes the mind enter an ideal level for “thinking’ clearly. It flushes out all the negative thoughts and brings in positive energy. He (s) must have thought about the social conditions in his surroundings, searching for the Truth, wanting to know the real purpose of life in this world. Syedena Muhammad (s) was ‘thinking’, asking questions, searching for answers, looking for solutions to life’s problems. At such an higher thought level Holy Prophet Muhammad (swm) received the first Word of God.

God’s first instruction to humanity is ‘READ. Literacy and education are similar but not equal. An illiterate man can still choose to be educated. Recite, contemplate, understand etc are all connected to Read, and to become an educated personality who lives in a civilized world. Otherwise man will live in ignorance, living under the mercy of another man, in a humiliated status of slavery, mental or physical.

God’s first order for humanity is to break free from slavery. Man should never be subjugated by another man, or nation, or by any system made by another man. To live an honorable life is the birth right of every person. The Holy Prophet (s) searched for answers and he got it from God, “READ” –  IQRA, liberate yourself from all forms of slavery.

Recite in the name of your Lord who created –

Created man from a clinging substance.

Recite, and your Lord is the most Generous –

Who taught by the pen –

Taught man that which he knew not.

(Holy Qur’an, Surah Alaq, 96, 1-5)

The Holy Qur’an is the Word of God Almighty, a Guidance for mankind, to change their conditions, from darkness to light. The message of the Holy Qur’an is one of constant change, always flowing away from stagnation, running towards progress. The exalted Prophet (s) was the chosen leader for this Qur’anic movement. He (s) would fight against all odds to set up the final message of God on earth. Qur’anic generation was born in Makkah with the prophethood of Muhammad (s) for all mankind and for every generation and for all times. Prophets before him came and established religious rites, rituals and basic laws of governance. But Prophet Muhammad (s) had the most challenging assignment of them all. He (s) had to struggle against all the established priesthoods, idols, mental stagnation and blind followings. He (s) had to deliver the Quran for mankind to continuously keep reforming themselves and to fight against the forces of evil. This Quranic message was the mission for the last Prophet of God, Muhammad (swm).