News Checker

Read News, Share news, Tell the truth.

Wednesday, November 10, 2010

Full Report: Chinese Credit Rating Institute Downgrades Us's Credit Rating

Surveillance Report for Sovereign Credit Rating

The United States of America Sovereign Credit Rating:
Local currency/outlook: A+/negative
Foreign currency/outlook: A+/negative
Rating date: November, 2010
Analyst: LU Sinan, DU Mingyan

Rating History:
Local currency/outlook: AA/negative
Foreign currency/outlook: AA/negative
Rating date: June, 2010

Dagong has downgraded the local and foreign currency long term sovereign credit rating of the United States of America (hereinafter referred to as “United States” ) from “AA” to “A+“, which reflects its deteriorating debt repayment capability and drastic decline of the government’s intention of debt repayment.

The serious defects in the United States economic development and management model will lead to the long-term recession of its national economy, fundamentally lowering the national solvency. The new round of quantitative easing monetary policy adopted by the Federal Reserve has brought about an obvious trend of depreciation of the U.S. dollar, and the continuation and deepening of credit crisis in the U.S. Such a move entirely encroaches on the interests of the creditors, indicating the decline of the U.S. government’s intention of debt repayment. Analysis shows that the crisis confronting the U.S. cannot be ultimately resolved through currency depreciation. On the contrary, it is likely that an overall crisis might be triggered by the U.S. government’s policy to continuously depreciate the U.S. dollar against the will of creditors.

The rating bases for downgrading the sovereign credit rating of the United States by Dagong are as follows:

I. The U.S. government has not introspected on the question of the development and management model of the national economy from the global strategic perspective, which makes it very difficult for the U.S. to fundamentally change the passive situation of economic development.

After the outbreak of the financial crisis, the United States government has adopted a series of policies and measures aiming at rescuing the crisis and recovering the economy, such as: the government has purchased bad assets directly, injected capital to financial institutions and entity enterprises seriously hit by the crisis, increased investment in social security, education and energy, cut the tax rate of low and middle income families, and adjusted financial supervision, etc.. Looking at the effects, the U.S. government's efforts have achieved little success, falling short of initial expectations. The credit crunch is still proceeding and even deepening. The development course of credit crisis has shown a chart of debt crisis - economic crisis - monetary crisis - overall crisis. Currently, the U.S. credit crisis has developed into the monetary crisis phase. In order to rescue the national crisis, the U.S. government resorted to the extreme economic policy of depreciating the U.S. dollar at all costs and this fully exposes the deep-rooted problem in the development and the management model of national economy. It would be difficult for the U.S. to find the correct path to revive the U.S. economy should the U.S. government fail to understand the source of the credit crunch and the development law of a modern credit economy, and stick to the mindset of traditional economic management model, which indicates that the U.S. economic and social development will enter a long-term recession phase. The main evidences for this judgment are as follows:

First, the credit expansion policy has changed both the economic fundamentals and the operating mechanism of the U.S. economy. It is a basic state policy of the U.S. to take credit expansion as an engine of economic development. As a result of the highly developed domestic credit policy, the credit relations between the creditors and debtors have become the basic economic relations between social members. In addition, an international credit system, with the U.S. at the core, has been built up on the basis of international credit expansion, and international credit relations have become the basic economic relations between the United States and other members of the international community. Thus, the formation of the U.S. economic foundation has been changed, and credit relations have become a dominant driving force for economic and social development, the paradoxical movement of credit relations determines the direction of U.S. economic and social development. Due to the abuse of credit, the United States became a net debtor country in 1985. From then on, its economic and social activities have been completely based on the huge amount of debts. The status of the creditor-debtor relations not only influences the development model and performance of the U.S. economy, but also constitutes the basis for the nation to choose economic regime and make strategic choices.

Credit expansion has also changed the forming mechanism of United States credit demand, and the market has become the governing force to create the credit demand.

The U.S. globalization of social credit has also reached a high level, 30% of which comes from foreign capital. Therefore, the national capacity to adjust social credit demand through monetary policy instruments such as the money supply and interest rate has been greatly weakened. The change in the forming mechanism of credit demand has fundamentally strengthened the dominant role of market in the economy, which indicates the market-oriented social credit relationship would fully influence the U.S. economic and social development. The status of credit relationships in the United States restricts the country’s creative capability of actual value by affecting its economic structure. The heavy debt burden which exceeds the real debt repayment capability forces the state apparatus to satisfy the country’s capital demand in the manner of surpassing the speed of value creation by the real economy. The over-expansion of virtual economy is the result of the paradoxical movement of the credit relationship in the United States. Thus, Dagong believes that as long as the policy of credit expansion remains intact in United States, the development model of financialization of the national economy would not be changed and the key factors to induce long term economic recession would continue to play a role.

Second, the economic financilization and industrial hollowing-out in the United States has broken the normal relationship between the financial system and real economy, leading to the pursuit of the virtual wealth. As social capital was largely sucked into the financial system, the value of a huge amount of financial assets operating away from the underlying assets and basic economy is amplified in a surprising manner, making people more concerned about the increase in virtual wealth and less interested in creating real wealth; and a large number of entities were transferred overseas, resulting in a serious industrial hallowing-out, thus the country’s creative capability of actual wealth has been severely weakened. In addition, as the government has long relied on borrowing to carry out its administrative functions, it would gradually lose the autonomy to manage the economy though effective exploration of fiscal policy, and finally has to resort to the banknote printing machine, like killing the goose that lays the golden eggs. The improvement in the creative capability of actual wealth depends on the reasonable positioning of the financial system and real economy, and the adjustment process will determine the U.S. economic recovery and vision for future development.

Third, the U.S. global hegemonic strategy has consumed enormous national financial resources, but its own capacity of wealth production is insufficient to support its huge strategic target. The dependence on issuing national debt or U.S. dollars to carry out its strategy not only lacks sustainability, but also becomes the root of yielding fiscal deficit. A balance of state revenue and expenditures is advantageous to the sustained development of the U.S. economy. However, it is almost impossible for the U.S. government to abandon its global strategy. Hence, it will become a long-term factor to hinder the U.S. economy.

Fourth, long-term dependence on the U.S. dollar depreciation to export debt is not only harmful to the creditor’s interests, but is also unable to solve its debt dilemma. The problem of the national development strategy is that it causes the U.S. government to bear a huge debt burden; however the U.S. government is unwilling to adjust its strategy to reduce debt; rather, it believes that exporting debt through the U.S. dollar depreciation is more compliant with the interests of the United States. Although the U.S. dollar depreciation forces creditors to transfer their interests to the US, it will reduce the market confidence in U.S. dollars, which may trigger the trend of selling U.S. dollars. Hence, it will change the international currency system pattern, and the U.S. dollar hegemonic status will be shaken inevitably, which will ultimately affect the backflow of U.S. dollars, hindering the international financing channel of the U.S. government directly, and reducing its debt income. The debt income concerns the prosperity of the United States. To avoid the outbreak of debt crisis, it has to issue additional currency to solve the problem of insufficient debt income. Hence, the U.S. dollar starts a new round of depreciation, circulating on and on, which intensifies the risk of debt repayment inevitably.

Fifth, the reform of financial and rating systems has failed to fully reflect the essential requirements of the credit economy, and it is difficult to establish a basic service system of national economy that accommodates the development law of a credit economy, so as to push the U.S. economy into a path of revival. "Financial Regulatory Reform Act" is the main measure of the U.S. government to prevent further crisis, but its content shows that they have not really found the root of the problems within the U.S. financial system. The root cause of credit crisis can not be eradicated by simply resting on regulatory reforms.

The U.S. financial system has created a myriad of financial products, which attract the continuous influx of global USD capital. Foreign capitals make up the most important part of the U.S. economic ecosystem, and it is the driving force of this very system to obtain capital revenue through credit expansion, but the consequent problems are serious:

(1) social capitals are encouraged to engage in financial speculations, and the pursuit of virtual wealth rather than material wealth is not conducive for the United States to enhance its capacity of value creation; (2) credit activities have deviated from the proper role of supporting the development of real economy, the social credit demand is mainly determined by the market, and the extra credit created by the market becomes hot money that jeopardizes the country’s economic development. Furthermore, the government’s ability to regulate social credit is largely impaired by financial innovation products; (3) the financial system is composed of complicated credit relationships, which exacerbates the asymmetry of credit risk information and augments the probability of systemic risks.

The development of credit socialization should not suggest any change in the orientation of financial services. The essence of finance lies in the credit relations between the creditors and debtors. This relationship constitutes the whole of the social credit system, providing a system for distribution of funds for the real economy to create social wealth. As a result of the pursuit of value adding by means of credit innovation, the scale of social credit in the United States is in wild expansion, so that the threat of systemic credit risk becomes a constant phenomenon. With the continued depreciation of U.S. dollar, once its dominant position around the world is severely challenged, the financial system that relies heavily on the strong dollar will no longer support the national economy to operate in the current model. In this context the government will have to rebuild the national economic system, the social cost of which will be enormous. The U.S. government failed to make a master plan for the reform of the financial system from a strategic level, and the principles as well as the approach of the reform are ambiguous.

The ongoing reform aimed at practical interests is one that addresses the symptoms not the cause. Such a reform can not adapt to the historical requirement necessary for the recovery of the U.S. economy and improving the U.S. economic system. The crisis triggered by the failure of its credit rating system has almost destroyed the U.S. financial system. However the current reform measures do not address the fundamental problems and the U.S. rating system, tested by the financial crisis, is going to lose a historical opportunity of recovery. The main problem in the U.S. credit rating system is it treats the CRAs as general players in the market and does not encourage competition amongst them, and such a mechanism cannot ensure the CRAs will fulfill their public responsibilities. The U.S. credit rating systems lack of institutional guarantees to reveal credit risk cannot provide reliable credit risk information to the public and it is falling behind the development of the credit system. Therefore, to a certain extent, the credit system cannot provide effective funding to support the economic recovery and development.

Dagong believes that the deep-rooted reason for the credit crisis that happened in the United States is that the current model of economic development and management has deviated from the laws of credit economic development. Radically, it is the problem in the idea of governing the country and national strategy. The fact that the traditional way did not save the United States economy further proves that the U.S. government lacks the capability to rule the country by following the law of credit economy. The economic recovery in the U.S. depends on the change in the way of thinking of its government; however such a change is very difficult to realize whether the Republican or Democratic Party is in power. Therefore, the U.S. government will follow its lingering notion, consequently the economic recovery will last a long time and the government’s debt repayment capability will deteriorate even further.

II. Subject to the economic development model of the United States, the credit crisis is far from over, and the U.S. economy will be in a long-term recession.

The key economic data of the United States in three consecutive years since the financial crisis indicates a declining or slight recovery trend in GDP, the size of the banking industry and fiscal revenue, money supply, unemployment rate, fiscal deficit and the outstanding government debt remain at a high level. Adopting the extreme measure of continuous issuance of currency in the context of unconventional use of monetary and fiscal policies to save its economy indicates that the credit crisis in the U.S. financial field is evolving into a national crisis. The root cause is that something is wrong with the economic development model adopted by the United States. The consequent imbalance in the national economic structure requires the government to adjust its economic strategy in order to realize a new balance and create a new economic architecture for economic recovery. Therefore, Dagong analyzes and judges the prospects of the U.S. economy from the following aspects:

First, the motivational force of the U.S. economic growth is credit expansion and at present the huge debt is the result of long-term accumulation of credit expansion. Gone are the basic conditions that the economic recovery is realized through repeated use of credit expansion. Therefore, it is impossible for the U.S. economy to generate a driving force for healthy development unless it can return to the real economy and discover new areas of value creation. As of the end of 2009, the total debt, including that of the U.S. government, enterprises and household, amounted to 52.3 trillion U.S. dollars, while the GDP was just 14.3 trillion U.S. dollars in the same period. Without a massive increase in the real value of domestic production, it is impossible for the United States to acquire the capability of paying off its stock debt by relying solely on its current capability of value creation. Therefore, the U.S. economy would be bound to sink even deeper into the mire if it continues to rely on the credit expansion model of economic development.

Second, the U.S. capability of creating real wealth can not support its huge consumption. Under the current circumstance it is difficult to increase the speed of wealth growth; the only correct way out of debt reduction is mitigation of expenditure. Since the U.S. government will not adjust its national strategy, it is inevitable for the United States to increase debt or transfer debt by depreciating the U.S. dollar. The inevitability of such a move makes the dominant factor in the lasting stagnancy of the U.S. economy. In the components of the U.S. GDP in 2009, the financial services sector accounted for 21.4% while the real economy sector accounted for 65%.The total output value of the U.S. financial services industry is composed of two major parts: one is the transferred production value, most of which comes from value distribution of participating in international production. Another part is the inflated value originated from credit innovation, which belongs to bubble value. In addition, due to the high economic financialization, more than half of the profits in the real economy come from the returns of financial activities. If we exclude the factor of virtual economy, the U.S. actual GDP is about 5 trillion U.S. dollars in 2009, per capita GDP about $ 15,000. Meanwhile, the total domestic consumption was 10.0 trillion U.S. dollars and government expenditure was 4.5 trillion U.S. dollars. The production capacity of real value in the national economy is the material base to arrange social distribution and consumption. As the U.S. government arranges its budget according to the GDP including the virtual value, its revenue must fall short of its expenditure, so the socialization and normalization of debts will exacerbate the environment of economic development. It is predicted that the average real GDP per year of the United States will not reach 6 trillion U.S. dollar and per capita GDP will be less than 20,000 in the coming 3-5 years.

Third, the international division of labor and the import and export policies will make it difficult for the United States to realize balance of international payment. Based on the U.S. industrial structure, exports are mainly comprised of high-tech products, but the U.S. limits the export of technical products for strategic reasons; however, what the U.S. needs the most are daily necessities and energy, etc. In this case, imports are rigid, while exports are elastic. On the one hand, American products are not essential items for many countries; on the other hand, due to the policy restraint, it is difficult to effectively raise the export volume, all of these causes the U.S. to have long-term structural trade deficit. Ever since 1983, the current account deficit of the United States has been increasing by an average of 20% year on year. Even if considering the stimulation effect of U.S. dollar depreciation to export, the current account deficit is expected to maintain 4% of GDP for the next 3-5 years. The U.S. dollars outflow through current account deficit flows back to the United States through the capital account and financial projects, which supports its financial system to realize the transfer of international production value to the U.S. The U.S. imbalance of trade becomes an international wealth plundering system by exchanging domestic necessities with the export of the U.S. dollars. It is the barometer to measure whether the U.S. has the creative capability of actual value.

Fourth, it is difficult for the renewable energy development strategy to become the new focus of economic growth. The renewable energy development strategy proposed by the Obama administration is beneficial to inspiring people’s confidence in economic recovery, but it is still impossible to become an effective power to reverse the American economic development situation in a moderately long time, because the U.S. lacks the strategic investment capability that would make renewable energy an industry to transform the national economy. In addition, it is confronted with the formidable competition from Northern Europe in terms of the new energy technologies. Therefore, this strategy will exert very weak influence on changing the American economic structure and development model within a long period of time.

In general, it is difficult for the current economic structure used in U.S. economic development model to create sufficient material base to support its domestic consumption. Virtual economy gives tremendous impact on the safety of the national economic system.

The reform of the development model of the national economy forms the decisive factor to stop the economic recession and to realize the sustained development of the national economy in the post-crisis era.

III. Continuous economic downturn leads to increasing risks in the financial system and the trend of the U.S. dollar depreciation will cripple the value transfer capability of the financial system to attract dollar capital reflow.

After the crisis, the stability of the American financial system has not improved fundamentally; rather, it will face increasingly more serious rising trend of risks. After the financial crisis broke out in 2008, the large scale bailout program of the Federal Reserve and the U.S. government temporarily stabilized the financial system; the too-big-to-fail financial institutions benefited a lot. However, there are still toxic assets such as the huge financial derivatives hidden in the financial system waiting for effective disposal, and the future deleveraging process will take time. In addition, the long term high unemployment rate caused a rise in loan defaults. By the end of Q2 2010, the default rate of bank loans in the United States has achieved 7.32%, increasing for 17 consecutive quarters, in which the default rate in the housing loans has increased to 11.4%. Since the government withdrew the housing stimulus measures in April 2010, the real estate market has been in recession and the problem of foreclosure tends to become serious. It is estimated that the banks will face the repurchase pressure of nearly 220 billion U.S. dollars worth of real estate mortgage bond, which cannot be satisfied by the current provision for repurchase.

On the basis of 140 cases of bank failure in 2009, another 86 banks went bankrupt in the first half of 2010 and the current number of troubled banks has reached nearly 500. The end of 2010 is likely to witness a new rise in bankruptcy for small and medium-sized banks in the U.S.

The U.S. monetary policy used in dealing with the crisis has almost lost its effect in promoting economic growth. As a new economic driving force has not formed in the United States, the declining intention of individual consumption and corporate investment leads to the shrinking of monetary demand. Although the continuous loose monetary policy of the Federal Reserve has largely increased the basic monetary supply, it has failed to promote the expansion of domestic credit scale. The insufficient credit demand of real economy combined with the bank’s mood of reluctant lending during the period of economic downturn due to asymmetry of credit risk information, has resulted in the decreasing credit scale in the United States. Following the 10.3% decline in the amount of commercial bank credit and leasing in 2009, another 7.2% decline happened in the first three quarters in 2010 on a year-on -year basis. The large amount of liquidity accumulated within the financial system is mainly used for speculative financial transactions and flowing into foreign markets, which is neither conducive to promoting the development of real economy nor helpful for improving the chronic overexpansion of virtual economy.

The Federal Reserve’s monetary policy of continuous quantitative easing has temporarily reduced the long-term debt interest rate, but the consequent dollar depreciation trend will trigger the financial system’s long-term recession. The monetary policy of a new round of quantitative easing launched by the Federal Reserve on November 3, 2010 plans to release another 600 billion U.S. dollars of long-term U.S. treasury bond by the end of June next year. The direct objective of this policy is tomaintain the current low yield of the Treasury. The continuous U.S. economic downturnand the government’s increasing debt burden have undermined the foreign investors’ confidence in the Treasury. These investors turn to buy gold to avoid risk, which pushesup the price of gold and increases the pressure of a rise in long-term interest rate.

Especially for a highly-indebted economy as the United States, a large amount of financial derivative contracts in the financial system is related with the interest rate; the increase of long-term interest rates will cause another big fluctuation in the financial system, restrict the economic recovery, and increase the government’s burden of debt service. The Federal Reserve’s monetary policy can temporarily decrease the long-term interest rate, but it can also trigger the dollar’s depreciation and reduce the attraction of dollar-denominated assets to foreign investors. From June, 2010 until now, the U.S. dollar index has dropped about 6% and has depreciated 15% relative to the Euro, 11% relative to the Sterling Pound, 13% relative to the Yen, 18.5% relative to the Australian dollar, 11.4% relative to the Korean Won. The dollar’s continuous depreciation will cripple the value transfer capability of the U.S. financial system to attract the dollar capital to reflow, and the status of the U.S. as the global financial center is on the decline. Therefore, the room for implementing of monetary policy in the United States is increasingly being squeezed. On the one hand, the long-standing quantitative easing policy will only play a temporary role in decreasing interest rate, as a consequence the dollar depreciation is not conducive to the financing requirement of the United States as the largest debtor country and the interest assertion of the creditor will be the potential pressure to the increasing interest rate. On the other hand, the long-term economic downtown makes it impossible for the government to increase interest rate and regain a strong dollar policy. In this dilemma, any policies chosen by the Federal Reserve will hurt itself. Though it is likely for the current loose monetary policy to postpone the occurrence of the difficulties, yet in the long run, it will be proven to be a practice resembling drinking poison to quench thirst.

IV. New round of liquidity injection can not substantially reverse the trend of increasing the federal government’s fiscal deficit and debt burden in the long term.

The U.S. Monetary Authority launched the monetary policy of a new round of quantitative easing, announcing the release of a large amount of federal government Treasury bond continuously. However, it only has a limited positive influence for easing the current embarrassed fiscal conditions of the federal government. In 2009, the U.S. increased another 1 trillion U.S. dollars fiscal deficit in response to the financial crisis, making the ratio of year-end fiscal deficit to GDP a record 10.6%, and consequently led to more difficult fiscal operation for the government. Under these circumstances, the Federal Reserve took the measure of direct debt monetization, on the one hand, financing for the federal government’s fiscal deficit, and on the other hand, keeping the U.S. Treasury interest rate at a low level. The federal government’s financing cost and interest burden, therefore, are both controlled at relatively favorable levels.

Additionally, further depreciation of the U.S. dollar is inevitable due to the liquidity increased by the monetary policy of a new round of quantitative easing, and the U.S. government’s current debt burden, to some extent, is expected to be released. By the end of 2009, the balance of the U.S. government’s outstanding debts reached 12.3 trillion U.S. dollars, of which over 7.8 trillion U.S. dollars debts were held by the public including foreign investors. This is to say, if the U.S. dollar depreciates by 1%, the actual decrease of government’s debt burden will exceed 123 billion U.S. dollars, about 5.5% of its fiscal revenue in 2009. The U.S. base currency will be supplied with an increase of 30% on the existing basis in the coming eight months, therefore, in full consideration of such factors as economic recession and slowdown of currency circulation caused by shrinkage of private credit, a conservative estimate would be U.S. domestic inflation increase of about 1.5 percentage points and U.S. exchange rate index down approximately 10% before Q2 2011. As a result, federal debts will actually be reduced by over 250 billion U.S. dollars.

Public creditors’ interests are invisibly eroded due to the depreciation of U.S. dollar; especially the foreign creditors will suffer even greater losses from fluctuation of U.S. dollar exchange rate. Although the federal government could ease its actual debt burden to some extent via this channel, its sovereign credit will be adversely affected as it ignores the responsibilities of credit contracts and the legitimate rights and interests of creditors.

For a long time, the U.S. authority has not been temperate in its government credit expansion, resulting in large fiscal deficit and increasingly high government debts in consecutive years. Under current governance framework in the U.S., rigid expenditure accounted for a larger proportion of the fiscal expenditure to satisfy its global hegemonic strategy, which, on one side, increased the difficulty for the U.S. federal government to optimize its fiscal expenditure structure and control deficit growth, while, on the other side, made the federal government unable to have sufficient operating space in smoothing economic periodic fluctuation by fiscal policy instruments so that sustainable and steady economic growth cannot be guaranteed. After the breakout of the global financial crisis, the weak economic growth in the U.S., increase of the fiscal expenditure and the launch of the monetary policy of a new round of quantitative easing will all drive the U.S. debt burden to increase further. The pattern that the U.S. government has of a high fiscal deficit and heavy debt burden is essentially because of its terribly-flawed development model of debt economy, which can not be significantly improved by simply increasing channels for issuance of the U.S. dollar. Dagong predicts that the U.S. fiscal deficit will remain moderately high in 2010 and 2011, about 10.8% and 8% of the year’s GDP respectively. The federal debts will also increase in 2010 and 2011 on the basis of 2009, and the ratio to the year’s GDP will be as high as 95% and 97% respectively.

V. In essence the depreciation of the U.S. dollar adopted by the U.S. government indicates that its solvency is on the brink of collapse, therefore it wants to cut its debt through the act of devaluation with the national will; such a move has severely harmed the interests of creditors. The whole world, consequently, will have to face a period of dramatic adjustment of interest pattern.

The status of the U.S. dollar as the dominant international reserve currency determines that its depreciation gives an inevitable impact to the interests of all creditors.

In addition to the shrinking of creditors’ assets, the utter chaos in the international currency system triggered by the depreciation of the U.S. dollar will definitely damage the interests of all the creditors in the world at various levels. Together with the possibility of inflation in the future, the wealth of creditors will be plundered once again by the malicious act of currency devaluation conducted by the U.S. government after it suffered the losses during the financial crisis since 2007.

The value fluctuation of the world’s major currencies caused by the continuous devaluation of the U.S. dollar will push the adjustment in world interest pattern through the value comparison of the monetary system. The essence is to transfer the interests of the creditors to the debtor free of charge, and that will fundamentally destroy the international credit system and global economic system comprised of the creditor system and debtor system, resulting in an overall crisis around the world.


Dagong believes that the occurrence and development process of the credit crisis in the U.S. resulted from the long-standing accumulation of the contradictions in its economic system; the U.S. debt burden can be relieved only to a certain extent through large-scale printing and issuance of the U.S. dollar; however the consequent decline of the U.S. dollar status and national credit will block the debt revenue channel which is vital to the existence of the United States to a greater extent. The potential overall crisis in the world resulting from the U.S. dollar depreciation will increase the uncertainty of the U.S. economic recovery. Under the circumstances that none of the economic factors influencing the U.S. economy has turned better explicitly it is possible that the U.S. will continue to expand the use of its loose monetary policy, damaging the interests the creditors. Therefore, given the current situation, the United States may face much unpredictable risks in solvency in the coming one to two years. Accordingly, Dagong assigns negative outlook on both local and foreign currency sovereign credit ratings of the United States.

Labels: ,

Thursday, September 16, 2010

After US$10 Usless Brick, India's US$35 Tablet is a Copy of Chinese product

Indians and Indian government are always ambitious even their capability is low. Many readers may still remember India's US$10 computer project turned out to be a useless brick in early 2009. Indian government anounced to the world loudly that India designed a tablet of a price tag of US$35 in July 2010. The tablet news made the world astonish about India's innovation since the Union Minister for Human Resource Development of India showed the world a real thing.

But the bubble did not last long. Now the world know that India's US$35 tablet is actually HiVision's Speedpad, or a copy of it. HiVision is a Chinese company that displayed the Speedpad in CeBIT, 2010. The Hivision SpeedPad has a 7-inch 800 x 480 resolution LCD touchscreen, Samsung ARM11 800MHz processor, 2GB of storage, 256 DDR2 RAM and runs Android. It has WiFi b/g, external 3G, Bluetooth and GPS dongle connectivity and also features a 4200mAh battery good for 6 hours of use between charges. Other goodies include web browser, email, webcam and a few other choice applications. HiVison's Speedpad has a sale tag of less than US$100.

Labels: , , ,

Wednesday, July 14, 2010

Uighur Terrorists: Western World Shot Their Own Feet Again

The arrests on July 8th, 2010 of three men in Norway and Germany accused of orchestrating a terrorist bomb plot seemed like another routine raid by a Western government in the continuing campaign against groups linked to Al Qaeda. But one detail stuck out: Norwegian officials said one of the men was a Chinese Uighur, and all three supposedly belonged to Turkestan Islamic Party that advocates separatism in western China.

Terrorism experts say the plot in Norway indicates that Al Qaeda and the few members of the Turkestan Islamic Party, or TIP, who trained in the tribal areas of Pakistan see some mutual benefit in cooperating. The use of relatively obscure ethnic Uighur recruits could allow Al Qaeda to penetrate more deeply into the West. (Source)

Even US declared Turkestan Islamic Party as one terrorist group, but the organization is considered as a tool to damage China, its members and organizations are still under protection in US and European countries.

Taliban is an old story that tells how western countries lifted a stone that would hit their own feet, Turkestan Islamic Party is just another one, but I guess it would not be the last one.

Labels: , ,

Friday, April 23, 2010

India's railway plan: Loud Thunder, little rain again

Last time, I wrote about India's insufficient action to fulfil its ambitious plan for adding power generation capacity. The same story is happening in India's railway system without any exception.

BTW, new data released by India government shows that India added only 9585 mw of new power capacity in 2009-2010 fisical year (india's fisical year ends in March), against the overall target of 14,507 MW.

The achievement during 2008-09 was 31 per cent (3,454 MW against a target of 11,061 MW) and 57 per cent in 2007-08 (9,263 MW against a target of 16,335 MW).(Source)

You cannot imagine that a country of 1.1 billion population could only build 513 km of new railways in 2 years, but its leaders are still shamelessly talking about improving infrastructure quickly and bragging that India is catching up with China.

For a convenient comparison, China built more than 30,000km of new railways in the 30 years before the reform. That means China built more than 1,000 km of new line each year 30 years ago.

In 2009 alone, China constructed new railroad lines of 5,461km, 4,063km of new double lines. Total of 5,557 km of new lines were put into operation, including 2,319 km of new high-speed lines. 8,849 km railways were electrified in 2009 alone. (Source)

The following reports came from here.

Indian Railways could achieve only 28 per cent of the total 11th Five-Year Plan (2007-12) targets in the first two years.

"Performance of the Railways, in the first two years of the plan period, was much below the proportionate targets as it could achieve only 28 per cent of total plan size," according to the latest report of the Comptroller and Auditor General of India.

It was planned to add 2,000 kms of new lines, convert 10,000 km of metre/narrow gauge into broad gauge, double the 6,000 km of single track and electrify 3,500 km of routes during the 11th Plan.

However, in the first two years of the plan period, 513 km (25.65 per cent) of new lines, 2,612 km (26.12 per cent) of gauge conversion, 789 kms (13.15 per cent) of doubling and 1,299 km (37.11 per cent) of electrification was completed.

The report revealed that out of 144 ongoing railway projects, six projects have been delayed by over 10 years.

The anticipated cost of completion of these projects has been revised to Rs 13,055.47 crore (Rs 130.55 billion) from original cost of 3,463.60 crore (Rs 34.63 billion).

The 11th Plan size of Rs 2,33,289 crore (Rs 2,332.89 billion) envisages financing of Rs 63,635 crore (Rs 636.35 billion) through general budgetary support, Rs 90,000 crore (Rs 900 billion) through internal resources and Rs 79,654 crore (Rs 796.54 billion) through extra budgetary resources.

Labels: , , ,

Tuesday, April 20, 2010

Human rights? 1140 people were killed by Indian railway in 15 months in Chennai ONLY

The list of people run over by trains in Chennai had crossed 1140 in the last 15 months.

According to official data, more than 275 people were killed on Chennai Beach-Mount section, the highest in EMU sector, followed by 204 accidents between Pazhavanthangal and Maraimalai Nagar, falling under Tambaram Railway Police Station during the period of January 2009 and March 2010.


Labels: , , ,

Superpower? 300m Indians go hungry everyday! Worse than Zimbabwe

According to the Global Hunger Index, India ranks 65th out of 88 countries, with a hunger rate of 23.9.

India, which was largely unaffected by the recent global economic slowdown, however, appears to have made little progress in tackling hunger and malnutrition. The situation remains 'alarming' in the country on this front.

Countries like Uganda (38th); Mauritania (40th); Zimbabwe (58th) and many others have a better record than India on this front. Even war-torn nations have managed to combat the scourge of hunger quite well, while India -- even though it boasts of being the second fastest growing economy in the world -- languishes far behind and millions in the country go hungry.

21 per cent of the Indian population was undernourished (between 2003 and 2005), 43.5per cent Indian children under the age of five were underweight (between 2002 and 2007) and the under five-years age infant mortality rate in 2007 was 7.2 per cent.

In September 2009, Prime Minister Manmohan Singh projected a food stock of 50 million tonne. Yet, close to 300 million Indians go without food every day!

According to the World Bank, 46 per cent of Indian children below the age of five are underweight, and the World Food Program says that close to 30 per cent of the world's hungry live in India.

According to the 2008 Global Hunger Index, which is calculated by the International Food Policy Research Institute, India has close to 350 million people who are food insecure -- in other words, who are not sure where their next meal will come from.

To put that into context, that is the same as the entire populations of Germany, France and the United Kingdom all going hungry.


Labels: , ,

Wednesday, March 31, 2010

CNN is getting punishment, will Google follow?

CNN used to be a No. 1 news provider in US since many viewers believed it was a neutral and reliable news resources. But this is gone. CNN now is a propganda machines whose reports cannot give its viewers a neutral picture about what is happening in and outside US. The best example is what it reported about the terrorist attack happened in China's Tibet on March 14, 2008. This can be found here.

Along with other western propaganda institutes, CNN's biased reports caused the angry among oversea Chinese who can access the news from both China and western world and are more familiar with China's affairs. Young Chinese students in western countries unprecedentedly walked to streets to protest the anti-China propagandas. Some Chinese even setup a website ( This website now has many readers.

CNN is now like a propaganda machines in old Soviet Union. The decrease of its market share is very predictable.

Google is now following CNN's steps. It has "sucessfully" changed its image from a tech company to a political propaganda machine. That's why it gets few supports from Chinese, even liberal Chinese, when it declared retreat from China market.

The world need neutral news media. Those media, like CNN and Google, will be punished by the market sooner or later.


Wednesday, March 24, 2010

Innovative: India's TATA Nano can set fire on itself

TATA auto is one of India's top auto makers. When it released the super-mini, scooter-sized Nano "car" in 2009, Indians and some western media cheered for its "innovation" and bragged for its quality and claimed it would go to US and EU market soon.

Nano is far more than innovative in calling a big scooter a car. Beyound many's imagination, Nano can creatively sets fires on itself even when it is still brand new and parked on parking lot.

In the year of its release in 2009, three of the Nano "cars" were caught in flames. More important is that all while the cars were parked when the accidents happened. Tata Motors said that the three incidents were the result of a faulty switch placed near the steering wheel, but that those problems have been fixed.

Even TATA claimed it fixed problem, A brand new Tata Nano went up in flames only minutes after it was delivered to a customer again on March 22, 2010. Satish Sawant, an insurance broker, has become the latest in a growing string of Tata Nano customers to see his new car burning in flames at the roadside, 45 minutes after he bought his "car".

So far Tata had sold 26,000 Nano "cars", but 4 of them was caught in fire! That's really a high ratio

As a main auto maker and the biggest industrial conglomerate in India, TATA's quality is still so miserable. The lesson here is: Remember that India cannot make quality products. If you want to BBQ yourself, go to buy a Nano "car".

Labels: ,

Monday, February 08, 2010

The Number of China's Patent Filings was More Than 10 Times of India's

THE number of applications for international patents fell by 4.5% in 2009 compared with the year before to 159,000 as companies in Western countries cut back on R&D spending during the recession. Yet applications from east Asian economies, including Japan and South Korea, increased slightly, while those from China soared by 30%. Since 2005 applications from China have grown by 210% as the country has developed a home-grown high-tech sector. Source

International patent filings experienced a sharper than average decline in a number of industrialized countries. For example, the filing rate dropped by 11.4% in the USA and by 11.2% in Germany in 2009.

Declines were also experienced in the United Kingdom (-3.5%), Switzerland (-1.6%), Sweden (-11.3%), Italy (-5.8%), Canada (-11.7%), Finland (-2.2%), Australia (-7.5%) and Israel (-17.2%).

The United States of America (USA) maintained its top ranking (annex 2), filing just under a third of all international applications in 2009 (45,790), followed by Japan (+3.6%, 29,827 applications), Germany (-11.2% or 16,736 applications), ROK (+2.1%, 8,066 applications), China (29.7%, 7,946 applications), France (+1.6%, 7166 applications), United Kingdom (-3.5% or 5,320 applications), the Netherlands (+3.0% or 4,471 applications), Switzerland (-1.6% or 3,688 applications) and Sweden (-11.3% or 3,667 applications).

Panasonic Corporation (Japan) returned to the top spot in the list of PCT applicants, nudging Huawei Technologies, Co., Ltd. (China) into second place. Panasonic Corporation had 1,891 PCT applications published in 2009, China's Huawei Technologies Co. Ltd. had 1,847, followed by Robert Bosch GMBH (Germany, 1586 applications), Koninklijke Philips Electronics N.V. (Netherlands, 1,295 applications) and Qualcomm Incorporated (USA, 1280 applications). Four Japanese companies, Panasonic Corporation (ranked 1st), NEC Corporation (ranked 8th), Toyota Jidosha Kabushiki Kaisha (ranked 9th) and Sharp Kabushiki Kaisha (ranked 10th) featured in the list of top 10 largest filers.

The University of California accounted for the largest number of applications published in the category of educational institutions. Most top-filing universities, however, experienced declines in the number of international patent filings in 2009.

The largest number of international applications received from developing countries in 2009 came from the Republic of Korea (8,066) and China (7,946) followed by India (761), Singapore (594), Brazil (480), South Africa (389), Turkey (371), Malaysia, (218), Mexico (185) and Barbados (96).

Developing countries make up over 78% of the membership of the PCT, representing 112 of the 142 countries that have signed up to the treaty and accounted for 14% of the total number of filings (with China and ROK accounting for 10%). Source

Patent filing with patent offices in their own countries

The above data came from WIPO. There are also big difference between the patent filings inside China and India. The latest data was for 2007 but it was published in 2008.

According to global research and analytics firm Evalueserve, India filed 35,000 patent applications during the fiscal year 2007-08, whereas China had more than 2.45 lakh applications in 2007.

In 2007, filings by domestic applicants in China accounted for 62.4 percent of the 20-year patent applications with the S.I.P.O.

During the same period, the year-on-year increase in domestic 20-year patent application filing in China was at 25 percent, whereas that of foreign filings stood at 4.5 percent.

On the other hand, only 24,505 patent applications were filed at the I.P.O. in 2005–06. Among them, domestic applicants filed about only 20 percent (4,855 applications) while foreign applicants filed 80 percent (19,650 applications). (Source)


When Indian and western media often tag Indian economy as knowledge-based economy while tell the world that China is only a copycat. But China's filed 7,946 patent application in 2009, and India only did 761 in the same year. The number of China's patent filling was than 10 times of India's while China's economy was about 4 times of India's (US$ 4.9 trillion VS US$1.28 trillion).

The trend difference of patent application in the two countries are obvious. From year 2004 to 2009, The numbers of India's patent filings were: 724, 679, 836, 901
1070, 761. During the same period, the numbers of China's patent filings were: 1706, 2512, 3937, 5465, 6128,7946. This is a great leap forward. Source and source.

Comparing with China's achievement, India's so-called knowledge-based economy is simply another joke for the world.

India was even not in Top 15 countries by the number of patent filling in 2009

Labels: , , , ,

Thursday, February 04, 2010

US thinktank: On religious discrimination, India next only to Iraq

  NEW DELHI: For India, international recognition of its free and pluralistic society has always been hard to come by and while things are changing,

  they are clearly changing slowly. A study carried out by Washington-based Pew Research Centre, the highly respected US thinktank, said India is next only to Iraq when it comes to social hostility and religious discrimination perpetrated by individuals and groups.

  The study titled `Global Restrictions on Religion' took into account the situation in as many as 198 countries, North Korea being the only notable exception, to derive the conclusion. India was just below Iraq and well above countries like Saudi Arabia and Afghanistan when it came to social hostility in the country. Pakistan is at the third place right below India.

  The study, which claims to cover 99.5% of the world population, deals with restrictions imposed on religion not just by social groups and individuals but also by the government. Even in the case of government induced restrictions, India fares badly with its position in the top 40 countries out of the 198 mentioned.

  Even though the report says that "the highest overall levels of restrictions are found in countries such as Saudi Arabia, Pakistan and Iran, where both the government and society at large impose numerous limits on religious beliefs and practices'' India is ranked well above them in the social hostility index.

  While India has fared badly on both, China has done remarkably well when it comes to social hostility even though it has done badly in the government imposed restrictions section. "Vietnam and China, for instance, have high government restrictions on religion but are in the moderate or low range when it comes to social hostilities. Nigeria and Bangladesh follow the opposite pattern: high in social hostilities but moderate in terms of government actions,'' it says.

  The report clubs India with Sri Lanka, Ethiopia and Bangladesh as countries where large segments of the population want to protect the special place of one particular religion. This is how it explains the high social hostility index for these countries. "Many of the restrictions imposed in these countries are driven by groups pressing for the enshrinement of their interpretation of the majority faith, including through Shariah law in Muslim societies and Hindutva movement in India which seeks to define India as a Hindu nation,'' says the report.

  In preparing this study, states the report, the Pew Forum devised a battery of measures, phrased as questions, to gauge the levels of government and social restrictions on religion in each country. "To answer these questions, Pew Forum researchers combed through 16 widely cited, publicly available sources of information, including reports by the US State Department, the US Commission on International Religious Freedom, the UN Special Rapporteur on Freedom of Religion or Belief, the Council of the European Union, the United Kingdom's Foreign and Commonwealth Office, Human Rights Watch, the International Crisis Group, the Hudson Institute and Amnesty International,'' it states.

  QnA: Although India is called a secular country, in reality have we ever been secular?


Labels: ,

Wednesday, February 03, 2010

India has a huge market? Don't Fool the World

Indians are always bragging that India is a comsumer market and has huge middle class ( some even put the number of middle class in India as ridiculous 300 million).

Sales of some brands in India in 2009

For the 12-month period ended December, 2009, BMW sold 3,619 luxury cars in India, as compared to the 3,247 luxury units that Mercedes Benz sold.

Mercedes ended 2009 with 38% of the pie against BMW's 40% with the third German luxury carmaker Audi claiming the rest. From the calculation, Audi only sold about 2000 cars in India. Source

In 2009, Volvo only sold a pitiful 140 cars in India. (Source).

Sales of same brands in China in 2009

For those who don't know how small India's market size is, I give you some more data on the sales of the same brands in the same year (2009) in China. You can find the clue by doing simple comparison. Basically, tiny Indian market can be ignored.

Mercedes-Benz sold a record 68,500 cars in China last year, it said in a statement late on Monday, beating its previous target of 65,000 units.

Sales of Volkswagen AG's Audi premier brand rose 32.9 percent to 158,941 units. Source

BMW's deliveries in 2009 climbed 38 percent in China to 90,500 vehicles and 24 percent in India to 3,600. Source

According to the Volvo's news release, the company sold 22,405 cars in China in 2009. (Source)

The size of whole auto market in 2009

As auto market in whole, China became the largest auto market in the world. In 2009 passenger car sales soared to 10.3 million in China and total vehicle sales are estimated at 13.6 million, the China Passenger Car Association said. That represents growth of about 45 percent from 2008.

By contrast, U.S. sales of cars and light trucks plunged 21 percent in 2009 to 10.4 million as a shaky economy kept buyers away from showrooms. It was the first time any country bought more cars than Americans. (Source)

Only 1.4 million cars were sold in Inddia in 2009 according to a Bloomberg News calculation of data released by the Society of Indian Automobile Manufacturers on Jan. 8 2009. (Source). That number is really pityful and embarrassing for a country of 1.1 billion population.

Labels: , , ,

Tuesday, January 12, 2010

Google Has Business Problems, Not Political Problems

David Drummond, Corporate Development and Chief Legal Officer, published his new article on google blog. He said google is considering the exit from Chinese market. His excuse is that the censorship from Chinese government.

Is this true? Maybe not.

Google has been experiencing huge business presure in Chinese market due to the existence of Chinese search-engine provider that domintates there for long. Google tried hard to break into the fast expanding market with huge investment, but little progress has been made.

Kai-Fu Lee is an oversea Chinese, who is one of the most prominent figures in the Chinese internet sector. Google hired him when he was a corporate vice president of interactive services in microsft. This caused a 2005 legal dispute between Google and Microsoft. Dr. Lee became the founding president of Google China, serving from July, 2005 through September 4, 2009.

Dr. Lee quited his job in Google, why? Dr. Lee said he wanted to pursue his own oppertunities in China. But some thing Google really does not want to acknowledge: Business failure in China.

China has the censorship system there for long time, even before Google started its business in China. We all know that Chinese web contents are becoming more and more open or you can say that much fewer censored contents that before. The fact no one can deny is that Google tried to copperated with the system when the system was much stricter. It is rediculous for Google to speak out moral judgement openly today. Would Google have the thought of exiting from Chinese market if its business had done well there? No way!! What I can say is that Google is having business trouble in China rather than political trouble.

Google is really of such a high moral standard? Maybe, maybe not. Chinese government acused the search engine has too much pornographic contents on its Chinese web.

I just give readers of an exmple to show the difference of astonishing difference between Google's Chinese web and its English web. Both seach the key word "Perfect-G":

This comes from its English version search engine.

This from its Chinese Search engine. (WARNING: 18+ pictures will show up)

You can tell that Google behaves much better in US, but not so much to Chinese users.

It is well known that in Chinese market of internt content providers, Chinese companies are doing better than those from US. I just gave you some examples:
In instant messenger service: China's QQ beats any US IM service providers.
In E-business, China Alibaba and Taobao (Actaully Alibaba owns Taobao) beats Ebay

This situation is not simply caused by political reasons. There are cultural reasons behind. Search engine market may experience political problems, but how about instant messenger service and E-commercial service? I doubt any censorship involved.

Google has to admit it is a business loser in Chinese market. No scapegoat is needed, Period!

Tuesday, January 05, 2010

India's plans are often ambitious, But Can be fulfilled?

Indians often talk about how wonderful India will be and how fast they are developing. This makes world believe India is almost a superpower. How this can happen? Their government always give Indians big hopes, and Indians take those plan as reality. But the truth is very different. Let me give you one example from India's electricity industry.

India is awfully short of electricity. In 2007, India had only a total of power generation capacity of 130,000MW (similar as UK's capacity, but UK has tiny population comparing with India's.).

In May 2007, India prime minister gave Indians a big promise: India planed to add 78000 MW new capacity with some effort during the 5 years ending in March 2012. Can this be a possible mission for India?

I found one sentence like this in an article that was published in March 2009: (Source)

"India’s track record in adding power generating capacity is unenviable. In the five years to 2007, the country added 20,950MW of capacity, against a target of 41,110MW. "

Another report in July 2009 told the similar story: (Source)

In 2007/08 (Means April 2007 to March 2008, India's fisical year) India produced only 77 percent of the revised target of 12 GW and last year (2008/09) it was only 46 percent of the targetted 7.53 GW.

That means in the two years between April 2007 and March 2009, India only added 12,703MW capacity.

Is India's plan really that ambitious? Since Indians often said India will surpass China. I can tell you some related numbers about China:

At the end of 2008, China has total power capacity of 792,530 MW (camparin with India's about 150,000 MW). China addded 90,510 MW capacity in 2008 alone. (including hydropower of 20,100 MW, windmil of 4,660 MW). (Source)

Labels: , , ,

Sunday, February 15, 2009

Open Letter: A Sikh Leader Begs Clinton To Intervene In India

Dr. Gurmit Singh Aulakh reminds Hillary Clinton that her husband has condemned the murder of Sikhs during his visit to India in the year 2000, and accuses the Indian government has murdered over 250,000 Sikhs since 1984, more than 300,000 Christians in Nagaland, over 90,000 Muslims in Kashmir, tens of thousands of Christians and Muslims throughout the country.

The Honorable Hillary Clinton

Secretary of State

Government of The United States
2201 C Street NW
Washington, DC 20520

Dear Secretary of State Madam Clinton,

Congratulations on becoming the U.S. Secretary of State. Yours is a very important job, protecting the people of the United States by carrying out diplomacy and foreign policy to protect our national security.

I know that you are aware of the troubled situation in South Asia. As you know, India and Pakistan have had a longstanding dispute. You may remember when an Indian official was quoted as saying that Pakistan should be made part of India. You may also remember that it was India that set off the nuclear arms race in South Asia.

You may also have noted that India opposed your action sending Ambassador Richard Holbrooke to the region and that it publicly told President Obama to stay out of the situation in the region.

You are also aware of the repression of minorities in India. Your husband, former President Clinton, wrote in the foreword to Madeleine Albright’s book about the massacre in Chithisinghpora:

“During my visit to India in 2000, some Hindu militants decided to vent their outrage by murdering 38 Sikhs in cold blood. If I hadn’t made the trip, the victims would probably still be alive. If I hadn’t made the trip because I feared what militants might do, I couldn’t have done my job as president of the United States.”

The Indian government has murdered over 250,000 Sikhs since 1984, more than 300,000 Christians in Nagaland, over 90,000 Muslims in Kashmir, tens of thousands of Christians and Muslims throughout the country, and tens of thousands of Tamils, Assamese, Manipuris, and others.

A report issued by the Movement Against State Repression (MASR) shows that India admitted that it held 52,268 political prisoners under the repressive “Terrorist and Disruptive Activities Act” (TADA) even though it expired in 1995.

Additionally, according to Amnesty International, there are tens of thousands of other minorities being held as political prisoners. MASR report quotes the Punjab Civil Magistracy as writing “if we add up the figures of the last few years the number of innocent persons killed would run into lakhs [hundreds of thousands.]”

The Indian Supreme Court called the Indian government’s murders of Sikhs “worse than genocide.”

I urge you to use your influence as Secretary of State to end the repression of minorities in India.

As you know, many minorities, including the Sikhs of Khalistan, the Christians of Nagalim, the Muslims of Kashmir, and others throughout the subcontinent, are fighting for their freedom from India. In all, there are 17 freedom movements. I call for the release of all of India’s political prisoners. In addition, I respectfully urge the Administration to support a free and fair plebiscite on the issue of independence for Khalistan. There should also be similar plebiscites for Kashmir, Nagaland, and every other nation that seeks its freedom from Indian rule. It is essential that the United States use its influence to promote its ideals of freedom.

Thank you for your attention and congratulations again on becoming Secretary of State.


Dr. Gurmit Singh Aulakh
Council of Khalistan

CC: Secretariat, G-8 member countries.


Labels: , ,

Sunday, November 30, 2008

Brutal Killings In Kashmir

When the world is paying attention to what was happening during Nov. 26-Nov. 30, 2008 in Mumbai where about a dozen of militants attacked the Indian financial center. People should open their eyes and put the incident in a larger background.

In India, Hindus kill Muslims, Hindus kill Christians, Muslims kill Hindus, Government kills people in Kashmir who want their freedom, Government kills Maoists who are struggling for their very basic living, government kills seperatists who want their own rights on their own land, ........ Two words can describe India precisely: Big chaos. Don't believe what I am saying, go to use google for yourself.

Here is a report about what is happening in Kashmir.

2261 women martyred, 22671 widowed, 9843 molested in IHK

Srinagar, November 25 (KMS): In occupied Kashmir, 2261 women were among 92670 civilian martyred during the last 19 years due to the unabated acts of Indian state terrorism. Indian troops molested 9843 women during the period and the state terrorism rendered 22671 women widowed.

This has been revealed in a report issued today by the Research Section of Kashmir Media Service on the occasion of “International Day for the Elimination of Violence against Women”. The report maintained that Kashmiri women have been one of the worst affectees of the harrowing conflict in the occupied territory since January 1989.

According to the report, Indian troops have been routinely involved in sexual harassment of Kashmiri women to suppress the ongoing liberation struggle. It further pointed out that although men have been subjected to the cases of disappearances largely, but women have been adversely affected because of being related to the disappeared persons as wives, daughters, mothers and sisters. The report stated that women constitute a considerable number of mental patients, which is well over one hundred thousand, due to the violence perpetrated by the troops.

Labels: ,

Friday, October 17, 2008

Man Booker Prize winner Aravind Adiga lays bare the truth of India's poverty

  India, which for decades after independence was shackled in the Western imagination to images of grinding poverty, is suddenly seen through the equally distorting lens of Bollywood glitz and Bangalore call centres; headline-grabbing corporate takeovers and endless seminars discussing when (not if) India will become the next global superpower.

  In the space of a decade, the poor of India - who today still account for as many as 800 million of the country's 1.1 billion population - have been virtually erased from our perception of the world's largest democracy.

  But enter now, centre-stage, after winning the Man Booker prize, 33-year-old Aravind Adiga and his novel The White Tiger.

  A book which, if the critics are to be believed, lays bare the troubled reality of modern India to a world that has become so entranced by the mantra of its economic ''miracle" that it has forgotten the grinding reality of life for most Indians.

  The novel certainly affected the chairman of the judges, Michael Portillo, who said that the book about a poor, rural rickshawallah being corrupted by his move to the big city, had challenged his own assumptions about India and poverty itself.

  "It changed my view of certain things," he said, explaining why Adiga's book had won, "like what is the real India and what is the nature of poverty."

  Stories have always trumped statistics when it comes to getting a message across, and Adiga's novel, which his publishers reckon could sell 500,000 copies in Britain alone, has the power to encourage the world to take a more realistic view of modern India in all its corrupt complexity.

  But while facts and figures might be dry compared with Adiga's narrative, they are also worth repeating because they reveal how India's economic success has failed to deliver enough to the country's poor.

  Despite the much-vaunted decades of seven per cent economic growth, and the rise of a middle class, the ''dark side", (Mr Portillo's phrase) of India remains.

  In modern, nuclear-capable India, 63 infants die per 1,000 live births. In war-torn Eritrea the figure is 45. In India, 400 out of 100,000 women die in childbirth. In Botswana, the figure is 100.

  And despite a decade of economic expansion, a staggering 47 per cent of India's under-threes remain malnourished.

  Only on Wednesday, an international study found that the level of hunger in the Indian state of Madhya Pradesh is comparable with that of war-ravaged Ethiopia. Punjab, the best-placed in the survey of 17 Indian states, still ranks below Gabon, Honduras and Vietnam.

  It is this kind of poverty that forces millions of poor Indians to migrate every year to the slums of cities such as Mumbai, India's commercial and entertainment capital, where nearly half the population live in stinking, narrow-alleyed shanties.

  It isn't just the smell of human faeces that makes the outsider dizzy, but the jarring proximity of those rich and poor worlds which, thanks to the prevalence of television and migration to the cities, are now starting to collide in India.

  One encounter during my four years in India as The Daily Telegraph's correspondent illustrates the widening gulf.

  I spent a day interviewing a young man and his wife, Subir and Shenaz, who made their living sorting rubbish in a Mumbai slum near the city's airport.

  For 12, sometimes 16 hours a day, they sifted Mumbai's household waste for metal scraps - a bed spring, the aluminium collar of a light bulb, a copper solenoid from an old transistor radio - anything that might be worth a few rupees from a scrap dealer.

  They lived in conditions in which Europeans are not allowed to keep animals. Their ''house" was a wooden box no more than 10ft square, perched on the edge of an open sewer.

  Here they sat sifting hour after hour, Shenaz, herself running a fever in the Mumbai summer heat, nursing a sickly baby as she worked, actually and metaphorically at the bottom of India's billion-man economic dust-heap.

  Surely village life was preferable to this, I wondered? Shenaz smiled. "Here we eat every night," she said, "and, until I fell sick, we even saved some money." She hadn't come to Mumbai for pity or charity - there was none on offer if she'd wanted it - but for opportunities that her rural village could never give her or her child.

  Subir explained that they had hoped Mumbai was going to provide them with a better life, but that he'd spent all his money paying bribes at the local state hospital to get treatment which, legally, he should have had for free.

  It was a story typical of the petty corruption that blights the lives of India's impoverished masses. One day, the couple said, they wanted their child to go to school and learn to read and write - something they had never been given the chance to do.

  The couple were angry. Looming over their hovel on the gantry of a nearby flyover was the grinning face of India's playboy billionaire, Vijay Mallya, owner of the Kingfisher beer brand and often described as "India's Richard Branson".

  From a giant billboard Mr Mallya could be seen exhorting Mumbai's upper classes to "Fly the Good Times" on his recently launched airline, itself a beacon of the new, booming India.

  So what, I wondered, did Subir think of that poster? Did he find it an inspiring emblem of a new, prosperous India or a galling, taunting reminder of the fact that there was absolutely no chance that he'd ever be ''flying the good times" in one of the planes that came thundering over the tin roof of his shack every five minutes.

  He didn't take long to give his answer. "I don't want to go flying in a plane," he said, "I just want enough money to eat and to buy medicine for my wife. One day I want my son to go to school. Today I cannot even afford to give her a sweet for the Eid festival. There is no honour in this life."

  None of this is to understate the undoubted progress India has made over the past two decades, but merely to temper the notion that India is on the cusp of becoming a developed nation, where poverty will be eradicated and everyone has a mobile phone.

  The fact is that hundreds of millions of Indians live, like Subir and Shenaz, a barely sustainable existence. Amid all the celebration of India's progress, Adiga's novel will perhaps provide a reminder to the wider world of how far India still has to come.


Labels: , ,

Sunday, October 12, 2008

Indian Economy Is In Trouble

India's industry, Infrastructure growth nosedives

Amidst crisis in the global financial markets, India on Friday reported a sharp drop in industrial growth to 1.3 per cent in August from a high of 10.9 a year-ago.

The manufacturing sector put out a dismal performance growing by a mere 1.1 per cent as against 10.7 per cent in the same period a year ago.

The growth in key infrastructure industries too dipped to 2.3 per cent in August 2008, compared with 9.5 per cent in the same period last year.

The cement sector declined to 1.9 per cent against 16.7 per cent in August 2007, while coal output dropped to 5.9 per cent compared with 8 per cent in the corresponding year.

Finished (carbon) steel growth also declined to 4.4 per cent in August, from 9.6 per cent in the same month last year.

For the April-August period of 2008-09, crude oil production registered a negative growth of 0.9 per cent, against one per cent during the same period last year, while petroleum refinery products dropped to 4.8 per cent from a healthy 10.4 per cent in the same period last year.


Weakening currency

The weak currency ended Oct. 8 at 48 rupees to the dollar, its lowest level in 5½ years. The rupee has taken a 21% dive since January.


The currency reached a record low of 49.26 per dollar in intraday trading on Fridaqy (10-10-2008).


Stock market is in nerve

On Friday, Except Ranbaxy Laboratories and State Bank of India, all the other 28 stocks in the Sensex basket ended lower. Among the major losers, Reliance Communications crashed 21.02% at Rs237.40, ICICI Bank plunged 19.71% at Rs364.10, Reliance Infrastructure slumped 19.26% at Rs515.30 and JP Associates crumbled 16.27% at Rs76.15. Tata Steel plummeted 14.99% at Rs287.50, Hindalco Industries dropped 11.18% at Rs80.65, HDFC shed 8.98% at Rs1719.20, DLF tanked 8.79% at Rs281.65, BHEL declined 8.28% at Rs1,345.85 and Larsen & Toubro lost 8.02% at Rs889.15. Other heavyweights also came under sustained selling pressure and lost around 5-7% each.

Realty stocks were battered the worst. Orbit Corporation tanked nearly 19.45% at Rs87.50, IndiaBulls Real Estate plummeted 19.45% at Rs95.45, Mahindra Lifespace Developers slumped 17.49% at Rs211.55, Peninsula Land dropped 16.05% at Rs28.25, Anant Raj Industries lost 15.07% at Rs80 and Unitech slipped by 12.38% at Rs82.80. Akruti City, Omaxe, Parsvnath Developers and Phoenix Mills declined over 1-8% each.


Labels: , ,

Indian Satyam banned from World Bank For Installing Spyware

NEW YORK: Satyam Computer Services has reportedly been banned from doing any off-shore work with the World Bank after the Bank's forensic experts discovered that spy software was covertly installed on workstations inside the bank's Washington headquarters, allegedly by one or more contractors from Satyam Computer Services.

According to a Fox News report, the forensic analysis was conducted after a major breach of the bank's treasury network in Washington in April this year. Upon its discovery, insiders report, bank officials shut off the data link between Washington and Chennai, India, where Satyam has long operated the bank's sole offshore computer centre responsible for all of the bank's financial and human resources information.

Satyam was also banned from any future work with the bank. "I want them off the premises now," Zoellick reportedly told his deputies, according to Fox News. But at the urging of CIO De Poerck, Satyam employees remained at the bank as recently as Oct 1 while it engaged in "knowledge transfer" with two new India-based contractors. The software enabled every character typed on a keyboard to be transmitted to a still-unknown location via the internet.

Fox News claims that outsiders have raided the World Bank Group's computer network, one of the largest repositories of sensitive data about the economies of every nation, repeatedly for more than a year. It is still not known how much information was stolen. But sources inside the bank confirm that servers in the institution's highly restricted treasury unit were deeply penetrated with spy software last April. Invaders also had full access to the rest of the bank's network for nearly a month in June and July.

The contract, which began at $10 million and grew to more than $100 million by 2007, was suddenly not renewed this year.


Labels: ,

Wednesday, July 02, 2008

India's Economy Hits the Wall

Growth is slipping, stocks are down 40%, and foreign stock market investors are fleeing. Businessmen blame the ruling coalition for failing to make reforms.

Just six months ago, India was looking good. Annual growth was 9%, corporate profits were surging 20%, the stock market had risen 50% in 2007, consumer demand was huge, local companies were making ambitious international acquisitions, and foreign investment was growing. Nothing, it seemed, could stop the forward march of this Asian nation.

But stop it has. In the past month, India has joined the list of the wounded. The country is reeling from 11.4% inflation, large government deficits, and rising interest rates. Foreign investment is fleeing, the rupee is falling, and the stock market is down over 40% from the year's highs. Most economic forecasts expect growth to slow to 7%—a big drop for a country that needs to accelerate growth, not reduce it. "India has gone from hero to zero in six months," says Andrew Holland, head of proprietary trading at Merrill Lynch India (MER) in Mumbai. Many in India worry that the country's hard-earned investment-grade rating will soon be lost and that the gilded growth story has come to an end.

Global circumstances—soaring oil prices and the subprime crisis that dried up the flow of foreign funds—are certainly to blame. But so is New Delhi. Much of the crisis India faces today could have been avoided by skillful planning. India imports 75% of its oil to meet demand, which have grown exponentially as its economy expands. The government also subsidizes 60% of the price of such fuels as diesel. In 2007, when inflation was a low 3%, economists such as Standard & Poor's Subir Gokarn urged New Delhi to start cutting subsidies. Instead, the populist ruling Congress government spent $25 billion on waiving loans made to farmers and hiking bureaucrats' salaries.

Botched Opportunities
Now those expenditures, plus an additional $25 billion on upcoming fertilizer subsidies, is adding $100 billion a year—or 10% of India's gross domestic product, or equivalent to the country's entire collection of income taxes—to the national bill. This at a time when India needs urgently to spend $500 billion on new infrastructure and more on upgrading education and health-care facilities. The government's official debt, which dropped below 6% of gross domestic product last year, will now be closer to 10% this year. "Starting last year, the government missed key opportunities" to fix the economy, says Gokarn. In fact, he adds, "there has been no significant reform done at all in the past four years"—the time the Congress coalition has been in power.

Even the most bullish on India are hard-pressed to recall any significant economic reforms made in the recent past. A plan to build 30 Special Economic Zones is virtually suspended because New Delhi has not sorted out how to acquire the necessary land, a major issue in both urban and rural India, without a major social and political upheaval. Agriculture, distorted by fertilizer subsidies and technologically laggard, is woefully unproductive. Simple and nonpolitical reforms, like strengthening the legal system and adding more judges to the courtrooms, have been ignored.

A June 16 report by Goldman Sachs' (GS) Jim O'Neill and Tushar Poddar, Ten Things for India to Achieve Its 2050 Potential, is a grim reminder that India has fallen to the bottom of the four BRIC nations (Brazil, Russia, India, and China) in its growth scores, due largely to government inertia. The report states that India's rice yields are a third those of China and half of Vietnam's. While 60% of the country's labor force is employed in agriculture, farming contributes less than 1% to overall growth. The report urges India to improve governance, raise educational achievement, and control inflation. It also advises reining in profligate expenditures, liberalizing its financial markets, increasing agricultural productivity, and improving infrastructure, the environment, and energy use. "The will to implement all these needs leadership," points out Poddar. "We have a government in New Delhi with the best brains, the dream team," he says, referring to Oxford-educated Prime Minister Manmohan Singh and Harvard-educated Finance Minister P. Chidambaram. "If they don't deliver, then what?"

Disillusioned Business
More worried than most are India's businessmen, who have turned in stellar performances with their investment and entrepreneurial drive and begun to look like multinational players. For them, there's plenty at stake. But lack of infrastructure, from new ports to roads, along with an undeveloped corporate bond market and high prices for real estate, commodities, and talent, are causing them to hit "choke points and structural impediments all over. We will lose years," says Bombay investor Chetan Parikh of of Jeetay Investments.

Sanjay Kirloskar, chief executive of Kirloskar Brothers (KRBR.BO), a premier $470 million maker of water pumps, already has $100 million in overseas contracts. Yet few infrastructure contracts have come from New Delhi. Kirloskar had hoped to be part of a grand project linking India's rivers, but those plans have been on hold for four years. "The infrastructure growth we had hoped for has not come about," he says. "Instead, we will now expand overseas more than in India."

Such constraints on growth at home will have an impact. Corporate earnings growth is likely to dip, says Merrill Lynch's Holland, who now predicts just 10% growth, instead of the previous year's 20%. That slowdown makes it less attractive for foreigners to invest in India's stock market. Already this year, foreigners have taken $5.5 billion out of the market, compared with the $19 billion they invested last year. Gagan Banga, chief executive of India Bulls Financial Services, an emerging finance and real estate giant, points admiringly to China's ability to maintain its growth momentum for a decade, while India's has not been able to hold up for even three years. "Serious companies are going to grow at a much slower pace, and some may even de-grow this year," he says. Unless major policy decisions are made by New Delhi immediately to keep the economy on the growth path, he says, "India will slow down even further."

New Delhi defends its four year reign in India. "We've had 9% growth for four years in a row," says Sanjaya Baru, media adviser to Prime Minister Singh. "That is unprecedented." He attributes it to the increasing rate of investment, up from 28% of GDP to 35% currently, "close to most ASEAN economies," though he admits that a large part is from the private sector. "Yes, there is a fiscal problem, but there's a price to be paid for coalition politics," adds Baru. So having growth drop "from 9% to 7% is not grim."

Social Backlash?
Chetan Modi, head of Moody's India, says the increasingly high cost of doing business in India may force global investors who had set up base in India—especially financial-services players—to move to more affordable and efficient hubs, such as Singapore and Hong Kong. If the economy slows and inflation continues to accelerate, says Sherman Chan, economist at Moody's, "social unrest is possible."

In fact, India is becoming a dangerous social cauldron. The wealth harvested by the reforms of previous governments has made itself evident in the luxury cars and apartments in India's big cities, leaving much of India full of aspirations but few means to achieve them. There is a severe shortage of colleges, yet a plan to build 1,500 universities gathers dust. The Communists in the ruling coalition are against both globalization and industrialization, so without new factories being built, employment growth has been almost stagnant, rising to just 2%—a disappointing rate in a country where an estimated 14 million youths enter the workforce every year, but just 1 million get jobs in the regulated, above-ground economy.

Meanwhile, few expect any bold moves New Delhi, especially with national elections due in 2009 and five important state elections scheduled before the end of this year. Thus far, the ruling Congress party's record has been poor; it has lost almost every state election this year and is likely to lose all five of the upcoming ones.

The big hope for a return to the course of reform in India, businessmen hope, will be a new government in New Delhi next year. The gravest danger is that India's messy coalition politics will bring into power another indecisive alliance that will keep the country in policy limbo for another five years. If so, says S&P's Gokarn, it's a meltdown scenario: growth slipping below 6.5%, accelerating the chances of India reverting to its 1991 status when it was plunged into a balance-of-payments crisis.


Labels: , ,

Nearly 80 pct of India lives on half dollar a day

Seventy-seven percent of Indians -- about 836 million people -- live on less than half a dollar a day in one of the world's hottest economies, a government report said.

The state-run National Commission for Enterprises in the Unorganised Sector (NCEUS) said most of those living on below 20 rupees (50 US cents) per day were from the informal labour sector with no job or social security, living in abject poverty.

"For most of them, conditions of work are utterly deplorable and livelihood options extremely few," said the report, entitled "Conditions of Work and Promotion of Livelihoods in the Unorganised Sector", seen by Reuters on Friday.

"Such a sordid picture co-exists uneasily with a shining India that has successfully confronted the challenge of globalisation powered by economic competition both within the country and across the world."

Around 26 percent of India's population lives below the poverty line, which is defined as 12 rupees per day, said officials.

Economic liberalisation since the early 1990s has created a 300 million-strong middle class and led to an average annual economic growth of 8.6 percent over the last four years, but millions of the country's poor remain untouched by the boom.

According to the report, based on data from 2004-2005, 92 percent of India's total workforce of 457 million were employed as agricultural labourers and farmers, or in jobs such as working in quarries, brick kilns or as street vendors.

The report said the majority of those working and living under "miserable conditions" were lower castes, tribal people and Muslims and the most disadvantaged of these were women, migrant workers and children.

"This is the other world which can be characterised as the India of the Common People, constituting more than three-fourths of the population and consisting of all those whom the growth has, by and large, bypassed," said the report.

The NCEUS report, which was presented to Prime Minister Manmohan Singh on Wednesday, recommends the government provide social security benefits such as maternity and medical expenses as well as pensions to people working in the unorganised sector.


Labels: , ,

Wednesday, June 18, 2008

Guardian: Down with the Dalai Lama

By Brendan O'Neill

Why do western commentators idolise a celebrity monk who hangs out with Sharon Stone and once guest-edited French Vogue?

Has there ever been a political figure more ridiculous than the Dalai Lama? This is the "humble monk" who forswears worldly goods in favour of living a simple life dressed in maroon robes. Yet in 1992 he guest-edited French Vogue, the bible of the decadent high-fashion classes, which is packed with pictures of the half-starved daughters of the aristocracy modelling skirts and shirts that most of us could never afford.

He claims to be the current incarnation of the Tulkus line of Buddhist masters, who are "exempt from the wheel of death and rebirth". Yet he's best known for hanging out with clueless western celebs like Richard Gere and Sharon Stone (who is still most famous for showing her vagina on the big screen). Stone once introduced the Dalai Lama at a glittering fundraising ball as "Mr Please, Please, Please Let Me Back Into China!"

The Dalai Lama says he wants Tibetan autonomy and political independence. Yet he allows himself to be used as a tool by western powers keen to humiliate China. Between the late 1950s and 1974, he is alleged to have received around $15,000 a month, or $180,000 a year, from the CIA. He has also been, according to the same reporter, "remarkably nepotistic", promoting his brothers and their wives to positions of extraordinary power in his fiefdom-in-exile in Dharamsala, northern India.

He poses as the quirky, giggly, modern monk who once auctioned his Land Rover on eBay for $80,000 and has even done an advert for Apple (quite what skinny white computers have got to do with Buddhism is anybody's guess). Yet in truth he is a product of the crushing feudalism of archaic, pre-modern Tibet, where an elite of Buddhist monks treated the masses as serfs and ruthlessly punished them if they stepped out of line.

The Dalai Lama demands religious freedom. Yet he persecutes a Buddhist sect that worships a deity called Dorje Shugden. He outlawed praying to Dorje Shugden in 1996, and those who defied his writ were thrown out of their jobs, mocked in the streets and even had their homes smashed up by heavy-handed officials from his government-in-exile. When worshippers complained about their treatment, they were told by representatives of the Dalai Lama that "concepts like democracy and freedom of religion are empty when it comes to the wellbeing of the Dalai Lama".

As the Dalai Lama tours Britain, lots of people are asking: why won't Brown receive him at Downing Street? I have a different question: why should Brown, who for all his troubles is still the head of an elected political party, meet with an authoritarian, fame-chasing, Apple-loving monk?

The Dalai Lama has effectively been turned into a cartoon good guy. In America and western Europe, where backward anti-modern sentiments are widespread amongst self-loathing sections of the educated and the elite, the Dalai Lama has been embraced as a living, breathing representative of unsullied goodness. Despite the fact that he advertises Apple, guest-edits Vogue and drives a Land Rover, he is held up as evidence that living the simple eastern life is preferable to, in the words of Philip Rawson, westerners' "gradually more pointless pursuit of material satisfactions". Just as earlier generations of disillusioned aristocrats fell in love with a fictional version of Tibet (Shangri-La), so contemporary un-progressives idolise a fictional image of the Dalai Lama.

Most strikingly, the Dalai Lama is used as a battering ram by western governments in their culture war with China. The reason he is flattered by world leaders and bankrolled by the CIA is not because these institutions care very much for liberty in Tibet, but rather because they want to ratchet up international pressure on their new competitors in world politics: the Chinese. You don't have to be a defender of the authoritarian regime in Beijing (and I most certainly am not) to see that such global sabre-rattling is more likely to entrench tensions between the Tibetan people and China, and increase instability in world affairs, rather than herald anything like a new era of freedom in the east.

Far from "helping Tibet", the slavish western worshippers of the Dalai Lama are helping to stifle the development of a real, lively movement for liberty and democracy in the Tibetan regions. One author on the Tibetan independence movement argues that "the Dalai Lama's role as ultimate spiritual authority is holding back the political process of democratisation", since "the assumption that he occupies the correct moral ground from a spiritual perspective means that any challenge to his political authority may be interpreted as anti-religious".

At least one reason why the Dalai Lama can pose as "the ultimate spiritual authority" and all-round supreme leader of Tibetans and their future is because influential elements in the west have empowered him to play that role. In doing so, they have been complicit in the infantilisation of the Tibetan people. Tibetans now suffer the double horror of being ruled by undemocratic Chinese officials on one hand, and demeaned by the Dalai Lama and his western supporters on the other.


Labels: , ,