காணாமல் போகிறேன் .....

ஒரு முறை என் கேமரா
என்னை மீட்டு குடுத்தது;
ஒரு முறை என் புல்லாங்குழல்
என்னை மீட்டு குடுத்தது;
ஒரு முறை என் தோழி
என்னை மீட்டு கொடுத்தாள் ,
நான் தான் அடிக்கடி
தொலைந்து போகிறேன்.

Credit crunch for dummies

Once there was a little island country. The land of this country was the tiny island itself .The total money in circulation was 2 dollars as there were only two pieces of 1 dollar coins circulating around.
1) There were 3 citizens living on this island country. A owned the land. B and C each owned 1 dollar.
2) B decided to purchase the land from A for 1 dollar. So, now A and C own 1 dollar each while B owned a piece of land that is worth 1 dollar.
* The net asset of the country now = 3 dollars.
3) Now C thought that since there is only one piece of land in the country, and land is non producible asset, its value must definitely go up. So, he borrowed 1 dollar from A, and together with his own 1 dollar, he bought the land from B for 2 dollars.
*A has a loan to C of 1 dollar, so his net asset is 1 dollar.
* B sold his land and got 2 dollars, so his net asset is 2 dollars.
* C owned the piece of land worth 2 dollars but with his 1 dollar debt to A, his net residual asset is 1 dollar.
* Thus, the net asset of the country = 4 dollars.
4) A saw that the land he once owned has risen in value. He regretted having sold it. Luckily, he has a 1 dollar loan to C. He then borrowed 2 dollars from B and acquired the land back from C for 3 dollars. The payment is by 2 dollars cash (which he borrowed) and cancellation of the 1 dollar loan to C. As a result, A now owned a piece of land that is worth 3 dollars. But since he owed B 2 dollars, his net asset is 1 dollar.
* B loaned 2 dollars to A. So his net asset is 2 dollars.
* C now has the 2 coins. His net asset is also 2 dollars.
* The net asset of the country = 5 dollars. A bubble is building up.
(5) B saw that the value of land kept rising. He also wanted to own the land. So he bought the land from A for 4 dollars. The payment is by borrowing 2 dollars from C, and cancellation of his 2 dollars loan to A.
* As a result, A has got his debt cleared and he got the 2 coins. His net asset is 2 dollars.
* B owned a piece of land that is worth 4 dollars, but since he has a debt of 2 dollars with C, his net Asset is 2 dollars.
* C loaned 2 dollars to B, so his net asset is 2 dollars.
* The net asset of the country = 6 dollars; even though, the country has only one piece of land and 2 Dollars in circulation.
(6) Everybody has made money and everybody felt happy and prosperous.
(7) One day an evil wind blew, and an evil thought came to C's mind. "Hey, what if the land price stop going up, how could B repay my loan. There is only 2 dollars in circulation, and, I think after all the land that B owns is worth at most only 1 dollar, and no more."
(8) A also thought the same way.
(9) Nobody wanted to buy land anymore.
* So, in the end, A owns the 2 dollar coins, his net asset is 2 dollars.
* B owed C 2 dollars and the land he owned which he thought worth 4 dollars is now 1 dollar. So his net asset is only 1 dollar.
* C has a loan of 2 dollars to B. But it is a bad debt. Although his net asset is still 2 dollars, his Heart is palpitating.
* The net asset of the country = 3 dollars again.
(10) So, who has stolen the 3 dollars from the country ? Of course, before the bubble burst B thought his land was worth 4 dollars. Actually, right before the collapse, the net asset of the country was 6 dollars on paper. B's net asset is still 2 dollars, his heart is palpitating.
(11) B had no choice but to declare bankruptcy. C as to relinquish his 2 dollars bad debt to B, but in return he acquired the land which is worth 1 dollar now.
* A owns the 2 coins, his net asset is 2 dollars.
* B is bankrupt, his net asset is 0 dollar. ( he lost everything )
* C got no choice but end up with a land worth only 1 dollar
* The net asset of the country = 3 dollars.
************ **End of the story; BUT ************ ********* ******
There is however a redistribution of wealth.
A is the winner, B is the loser, C is lucky that he is spared.
A few points worth noting -
(1) when a bubble is building up, the debt of individuals to one another in a country is also building up.
(2) This story of the island is a closed system whereby there is no other country and hence no foreign debt. The worth of the asset can only be calculated using the island's own currency. Hence, there is no net loss.
(3) An over-damped system is assumed when the bubble burst, meaning the land's value did not go down to below 1 dollar.
(4) When the bubble burst, the fellow with cash is the winner. The fellows having the land or extending loan to others are the losers. The asset could shrink or in worst case, they go bankrupt.
(5) If there is another citizen D either holding a dollar or another piece of land but refrains from taking part in the game, he will neither win nor lose. But he will see the value of his money or land go up and down like a see saw.
(6) When the bubble was in the growing phase, everybody made money.
(7) If you are smart and know that you are living in a growing bubble, it is worthwhile to borrow money (like A ) and take part in the game. But you must know when you should change everything back to cash.
(8) As in the case of land, the above phenomenon applies to stocks as well.
(9) The actual worth of land or stocks depends largely on psychology.

Bail out is neccessary

I came upon this article by Scott A.Kjar

"Treasury Secretary Henry Paulson needs to change his reading list. Instead of reading the balance sheets and income statements of the failing banking industry, he needs to read Henry Hazlitt's classic book Economics in One Lesson. It will cost Paulson far less than the $700 billion that he is spending on the bailout, and he might just learn a little economics in the process.

Hazlitt delivers his "one lesson" in chapter 1, and proceeds to spend the rest of the book giving examples. His lesson, based on the work of Frédéric Bastiat, is that "the art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."

For example, in chapter 2, Hazlitt delivers the well-known "broken window fallacy" in which a hoodlum breaks a shopkeeper's window with a rock. The common folk see it as a tragedy, but an astute Washington bureaucrat could argue that it creates new jobs for glaziers. As Hazlitt points out, though, any resources that the shopkeeper spends on the new window would have been used elsewhere, perhaps for a new suit. So while the glazier gets new business, the tailor loses the same amount of business. There is no net benefit; in fact there is a net loss. Absent the hoodlum, the shopkeeper would have had both a window and a new suit; given the hoodlum, the shopkeeper has a window but no suit. Even though the damage was to the window, it is the suit that is lost to the shopkeeper and, hence, to society.

In chapter 6, entitled "Credit Diverts Production," Hazlitt discusses government lending policies, such as additional credit to farmers or business owners. However, he points out, the recipients of such programs are rarely the more-productive farmers and business owners. After all, the more-productive people are able to borrow their money from private lenders. It is only the less-productive individuals and firms, unable to get funds on the free market, that must turn to government.

For example, suppose that there is a farm for sale. A private lender would normally be willing to lend money to farmer A who has proven his abilities in the past, rather than to farmer B, who has demonstrated a lower level of productivity than has A. However, because government taxes citizens or borrows money itself in capital markets, private lenders have fewer funds available to lend to A. Instead, government lends the money to B on the grounds that B is underprivileged, in need of a hand, or some other politically based argument. The more productive borrower, A, loses out on the scarce land while the less productive borrower, B, gains the resources. Because the less-productive individual acquires the scarce resource, there will be less total production, and the entire society is worse off.

Further, Hazlitt states, the government takes bigger risks with taxpayers' money than private lenders take with their own money. Private lenders who make bad loans will go bankrupt and be forced out of business. But when the government gets involved, it lends funds for riskier ventures since the bureaucrats who approve the loan face no personal recriminations — much less loss of profit — for error.

In other words, private lenders would take Action A while government lenders would take Action B, and Action B is the less-productive path. After all, there is no need for government to take Action A: it can be handled quite well in the free market.

So it is with the current rash of bailouts. Whatever the final price tag — $500 billion, $750 billion, $1 trillion, more — the fact is that government gets its money either from taxes, borrowing, or the printing press. It is hard to raise taxes by $1 trillion on short notice, and since there is a small hurdle that slows the government's ability to print the money,[1] we know that government will issue bonds. In other words, government will borrow the money from private capital markets.

As Hazlitt points out, though, the private capital markets (those that aren't bankrupt and standing in line for a bailout) would otherwise lend their funds to more-productive ventures. If private capital wants to lend directly to the failing banks, it is already capable of doing so. The fact that such private capital is not lending to the banks is a clear indication that the government's current bailout is contrary to free-market principles.

The argument that the government is somehow pumping new capital into the market is absurd. Government is actually borrowing the money from the capital markets that it is in turn injecting into the capital markets. There is no additional source of funding; there is only a diversion of funds from more-productive outlets to less-productive outlets, with government acting as the middleman.

Treasury Secretary Henry Paulson needs to read this book.

So when Henry Paulson argues that it is necessary to pump money into credit markets to prevent them from freezing up, he doesn't bother to realize that the money he pumps into the credit markets is coming directly out of the very same credit markets. He is doing little more than rearranging the deck chairs on the Titanic; shuffling the money from one set of financial intermediaries to another does not increase either liquidity or solvency. It merely delays the problem for a few brief moments.

Even the failing banks pay lip service to their fiduciary responsibility, but any privately funded firm that took money from more-productive people to give it to less-productive people would soon go out of business. Only the government can violate Hazlitt's logic and survive, because only government can socialize its losses through the tax system."

Though his argument theoretically seem correct, I believe the bail out is necessary without which lot of banks would collapse and the one to be most affected would be the common man. The bailout might be helping the banks whose policies were managed by the greedy and dumb guys, who failed to foresee the catastrophe, but I don't find this reason to be strong enough for people who had invested in these institutions also to suffer. The increasing liberation policies and complex instruments make the functioning of banks and economics incomprehensible to an ordinary man and is really tough to expect him to analyze this situations beforehand, when seasoned economists themselves have been left confused. The bailout in turn must be followed by stricter regulations of the market and trail of those responsible.

International Peace By Mahatama Gandhi

I do not believe that an individual may gain spiritually and those that surround him suffer. I believe in advaita. I believe in the essential unity of man and for that matter of all that lives. Therefore I believe that if one man gains spiritually, the whole world gains with him and, if one man falls, the whole world falls to that extent. (SB, 27) There is not a single virtue which aims at, or is content with, the welfare of the individual alone. Conversely, there is not a single moral offence which does not, directly or indirectly, affect many others besides the actual offender. Hence, whether an individual is good or bad is not merely his own concern, but really the concern of the whole community, nay, of the whole world. (SB, 27) Though there is repulsion enough in Nature, she lives by attraction. Mutual love enables Nature to persist. Man does not live by destruction. Self. love compels regard for others. Nations cohere because there is mutual regard among individuals composing them. Some day we must extend the national law to the universe, even as we have extended the family law to form nations-a larger family. (SB, 22) Mankind is one, seeing that all are equally subject to the moral law. All men are equal in God's eyes. There are, of course, differences of race and status and the like, but the higher the status of a man, the greater is his responsibility. (MM, 137) My mission is not merely brotherhood of Indian humanity.

My mission is not merely freedom of India, though today it undoubtedly engrosses practically the whole of my life and the whole of my time. But through realization of freedom of India I hope to realize and carry on the mission of the brotherhood of man. My patriotism is not an exclusive thing. It is all-embracing and I should reject that patriotism which sought to mount upon the distress or the exploitation of other nationalities. The conception of my patriotism is nothing if it is not always, in every case without exception, consistent with the broadest good of humanity at large. Not only that, but my religion and my patriotism derived from my religion embrace all life. I want to realize brotherhood or identity not merely with the beings called human, but I want to realize identity with all life, even with such things as crawl upon earth. I want, if I don't give a shock, to realize identity with even the crawling things upon earth, because we claim descent from the same God, and that being so, all life in whatever form it appears must be essentially one. (MM, 135) It is impossible for one to be an internationalist without being a nationalist. Internationalism is possible only when nationalism becomes a fact, i.e., when peoples belonging to different countries have organized themselves and are able to act as one man. It is not nationalism that is evil, it is the narrowness, selfishness, exclusiveness which is the bane of modern nations which is evil. Each wants to profit at the expense of, and rise on the ruin of, the other. (MM, 134) I am a humble servant of India and in trying to serve India, I serve humanity at large....

After nearly fifty years of public life, I am able to say today that my faith in the doctrine that the service of cue's nation is not inconsistent with the service of the world ,ms grown. It is a good doctrine. Its acceptance alone will ease the situation in the world and stop the mutual jealousies between nations inhabiting this globe of ours. (MM, 135-36) Interdependence is and ought to be as much the ideal of man as self-sufficiency. Man is a social being. Without inter-relation with' society he cannot realize his oneness with the universe or suppress his egotism. His social interdependence enables him to test his faith and to prove himself on the touchstone of reality. If man were so placed or could so place himself as to be absolutely above all dependence on his fellow-beings he would become so proud and arrogant as to be a veritable burden and nuisance to the world. Dependence on society teaches him the lesson of humanity. That a man ought to be able to satisfy most of his essential needs himself is obvious; but it is no less obvious to me that when self-sufficiency is carried to the length of isolating oneself from society it almost amounts to sin. A man cannot become self-sufficient even

in respect of all various operations from the growing of the cotton to the spinning of the yarn. He has at some stage or other to take the aid of members of his family. And if one may take the help from one's own family, why not from one's neighbours? Or otherwise what is the significance of the great saying, 'The world is my family'? (MM, 136) Duties to self, to the family, to the country and to the world are not independent of one another. One cannot do good to the country by injuring himself or his family. Similarly one cannot serve the country injuring the world at large. In the final analysis we must die that the family may live, the family must die that the country may live and the country must die that the world may live. But only pure things can be offered in sacrifice. Therefore, self-purification is the first step. When the heart is pure, we at once realize what is our duty at every moment. (DM, 287) The golden way is to be friends with the world and to regard the whole human family as one. He who distinguishes between the votaries of one's own religion and those of another miss-educates the members of his own and opens the way for discord and irreligion. (MGP, I, 359) I live for India's freedom and would die for it, because it is part of Truth. Only a free India can worship the true God. I work for India's freedom because my Swadeshi teaches me that being born in it and having inherited her culture, I am fittest to serve her and she has a prior claim to my service. But my patriotism is not exclusive; it is calculated not only not to hurt another nation but to benefit all in the true sense of the word. India's freedom as conceived by me can never be a menace to the world. (SB, 43) We want freedom for our country, but not at the expense or exploitation of others, not so as to degrade other countries. I do not want the freedom of India if it means the extinction of England or the disappearance of English-men. I want the freedom of my country so that other countries may learn something from my free country, so that the resources of my country might be utilized for the benefit of mankind. Just as the cult of patriotism teaches us today that the individual has to die for the family, the family has to die for the village, the village for the district, the district for the province, and the province for the country, even so, a country has to be free in order that it may die, if necessary, for the benefit of the world. My love therefore of nationalism or my idea of nationalism, is that my country may become free, that if need be, the whole country may die, so that the human race may live. There is no room for race-hatred there. Let that be our nationalism. (SB, 43) There is no limit to extending our services to our neighbours across State-made frontiers. God never made those frontiers. (SB,44) My goal is friendship with the whole world and I can combine the greatest love with the greatest opposition to wrong. (SB, 152) For me patriotism is the same as humanity. I am patriotic because I am human and humane. It is not exclusive, I will not hurt England or Germany to serve India. Imperialism has no place in my scheme of life. The law of a, patriot is not different from that of the patriarch. And a patriot is so much the less a patriot if he is a lukewarm humanitarian. There is no conflict between private and political law. (MM, 133) Our non-co-operation is neither with the English nor with the West. Our non-co-operation is with the system the English have established, with the material civilization and its attendant greed and exploitation of the weak. Our non-co-operation is a retirement within ourselves. Our non-cooperation is a refusal to co-operate with the English administrators on their own terms. We say to them: 'Come and co-operate with us on our terms and it will be well for us, for you and the world.' We must refuse to be lifted off our feet. A drowning man cannot save others. In order to he fit to save others, we must try to save ourselves. Indian nationalism is not exclusive, nor aggressive, nor destructive. It is health-giving, religious and therefore humanitarian. India must learn to live before she can aspire to die for humanity. (SB, 113)

I do not want England to be defeated or humiliated. It hurts me to find St. Paul's Cathedral damaged. It hurts me as much as I would be hurt if I heard that Kashi Vishvanath temple or the Jumma Masjid was damaged. I would like to defend both the Kashi Vishvanath temple and the Jumma Masjid and even St. Paul's Cathedral with my life, but would not take a single life for their defense. That is my fundamental difference with the British people. My sympathy is there with them nevertheless. Let there be no mistake on the part of the Englishmen, Congressmen or others whom my voice reaches, as to where nay sympathy lies. It is not because I love the British nation and hate the German. I do not think that the Germans as a nation are any worse than the English, or the Italians are any worse. We are all tarred with the same brush; we are al! members of the vast human family. I decline to draw any distinction. I cannot claim any superiority for Indians. We have the same virtues and the same vices. Humanity is not divided into watertight compartments so that we cannot go from one to another. They may occupy one thousand rooms, but they are all related to one another. I would not say: 'India should be all in all, let the whole world perish.' That is not my message. India should be all in all, consistently with the well-being of other nations of the world. I can keep India intact and its freedom also intact only if I have good will towards the whole of the human family and not merely for the human family which inhabits this little spot of the earth called India. It is big enough compared to other smaller nations, but what is India in the wide world or in the universe? (SB, 171-72) Not to believe in the possibility of permanent peace is to disbelieve in the godliness of human nature. Methods hitherto adopted have failed because rock-bottom sincerity on the part of those who have striven has been lacking. Not that they have realized this lack. Peace is un-attained by part performance of conditions, even as a chemical combination is impossible without complete fulfillment of the conditions of attainment thereof. If the recognized leaders of mankind who have control over the engines of destructions were wholly to renounce their use, with full knowledge of its implications, permanent peace can be obtained. This is clearly impossible without the Great Powers of the earth renouncing their imperialistic design. This again seems impossible without great nations ceasing to believe in soul-destroying competition and to desire to multiply wants and, therefore, increase their material possessions. (MM, 59-60) I do suggest that the doctrine [of non-violence] holds good also as between States and States. I know that I am treading on delicate ground if I refer to the late war. But I fear I must in order to make the position clear. It was a war of aggrandizement, as I have understood, on either part. It was a war for dividing the spoils of the exploitation of weaker races-otherwise euphemistically called the world commerce.... It would be found that before general disarmament in Europe commences, as it must some day, unless Europe is to commit suicide, some nation will have to dare to disarm herself and take large risks. The level of non-violence in that nation, if that event happily comes to pass, will naturally have risen so high as to command universal respect. Her judgments will be unerring, her decisions firm, her capacity for heroic self-sacrifice will be great, and she will want to live as much for other nations as for herself. (MM, 60-61) One thing is certain. If the mad race for armaments continues, it is bound to result in a slaughter such as has never occurred in history. If there is a victor left the very victory will be a living death for the nation that emerges victorious. There is no escape from the impending doom save through a bold and unconditional acceptance of the non-violent method with all its glorious implications. (MM, 63) If there were no greed, there would be no occasion for armaments. The principle of non-violence necessitates complete abstention from exploitation in any form. (MM, 63) Immediately the spirit of exploitation is gone, armaments will be felt as a positive unbearable burden. Real disarmament cannot come unless the nations of the world cease to exploit one another. (MM, 63) I would not like to live in this world if it is not to be one world.