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26/11 and 9/11: dangers of Bushspeak

After the terrorist attack of 26/11, the mood and rhetoric in India are reminiscent of the US after 9/11. As in the US then, outraged Indians swear “never again.” The phrase “War on Terror,” invented in the US after 9/11, is now being used widely in India. This is a dangerous, militaristic mood. It led More >

Militants get stronger, states weaker

After the Mumbai terrorist attack, every Tom, Dick and Harry has become a counter-terrorism expert. Drawing room experts and newspaper columnists hold forth on how incompetent the authorities are, and how the attack could have been foiled if only this strategy or that institution had been in place. Alas, modern technology and communications are every More >

Electoral mood is anti-incumbent

A story doing the rounds in New Delhi is that the Congress Party has commissioned a secret opinion poll for the coming state elections, which predicts that the BJP will be voted back to power in Madhya Pradesh and Rajasthan, while the Congress will retain power in Delhi. This opinion poll suggests that incumbents will More >

Building Infrastructure is not Keynesian

Across the globe, politicians from Manmohan Singh to Barack Obama plan to boost government spending to revive flagging economies. Especially popular are big infrastructure projects, widely seen as an excellent way to give a Keynesian boost to economies. Yet this represents a misunderstanding of Keynes. In a recession, many things fall together—production, employment, prices and More >

An Indian American president?

The world is still marveling at the political revolution represented by Barack Obama becoming the first black US President. But while that celebration continues, some readers must be wondering about the next possibility—when will a person of Indian descent become President of the US? This issue is not fantasy. It is in fact quite topical, More >

The celebration and the hangover

The US has always had two very different faces, one internal and one external. Internally, it has been a global beacon of democracy, empowerment, and equal rights for the powerful and powerless. Externally, it has used its military and economic power to bully others into submission, sometimes gently and sometimes bloodily. Its internal face is More >

Risks of crony capitalism

Should the government assist Indian banks and companies that have borrowed billions abroad, and suddenly find it difficult to repay maturing loans because the global financial crisis has frozen money markets? Russia and Mexico have thrown lifelines to their debt-laden companies. Korea has guaranteed $ 100 billion of foreign bank loans. Should India do something More >

Where McCain scores over Obama

Barack Obama looks certain to beat John McCain and become the next US President. Most Indians will be delighted. An Obama victory will symbolize the vanquishing of racism and the dismal Bush legacy. Besides, McCain is a military hawk, especially on Iraq. Obama is not exactly a dove, but is far less a military adventurer More >

Who murdered the financial system?

Leftists claim that the global financial crisis was caused by reckless deregulation and greed. Rightists blame half-baked financial regulations and perverse incentives. Actually, the financial sector is deeply regulated, with major roles for both the state and markets. It was not one or the other that failed but the combination. The best metaphor for the More >

Case against cutting petrol price

When oil cost $ 145/barrel in June and I predicted a price crash below $ 100/barrel, some jeered at my optimism. But oil crashed to just $ 65/barrel last week. Domestic prices of petrol and diesel are pegged to a global oil price of $ 61/barrel. If the world price falls below this—and some economists More >

What microfinance can teach Wall Street

Big financial institutions of all sorts are in dire straits across the globe. But one category remains unaffected—micro-finance. Even as the global financial system freezes and giants like Lehman Brothers collapse, micro-finance institutions (MFIs) are expanding unfazed. Famous financiers face defaults big enough to wipe them out, but MFIs report virtually zero default. This is More >

Pains of a slowing miracle economy

I am not usually a pessimist. But I predict that India will suffer a lot of pain in the next 18 months, as the economy slows down along with the current global slowdown. The US, Europe and Japan are sinking into recession together. Forget claims that India has decoupled from the US and can keep More >

The Perils of Inclusive Loans

Inclusive finance—giving loans to everybody, including the poor­­­—is desired by politicians in India, and in all democracies. Yet the current US financial crisis shows the perils of taking this goal too far. The crisis arose from the bursting of a housing bubble. That bubble was created, fundamentally, by government policies and institutions seeking home ownership More >

The End of the Beginning

The US government and Congress are creating a $ 700 b. rescue package to resolve the worst financial crisis since the Great Depression. Will it stabilize the US and world economies? For an answer, remember Winston Churchill’s words in 1942. “This is not the end. It is not even the beginning of the end. But More >

Is America becoming socialist?

Socialists, like Hugo Chavez in Venezuela or Indira Gandhi in India, are famous for nationalising the biggest corporations. But the US governmenthas taken over three of its biggest corporations within two weeks. Has the US turned socialist? American right-wingers moan that this is indeed the case. Meanwhile, Indian leftists are stunned at nationalisation in a More >