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Global Economy
<b>Dollar Up After S.Korea Signals Plans</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->The dollar posted its biggest daily fall in two months against major currencies on Tuesday as the market seized on reports that South Korea's central bank planned to spread its reserves, the world's fourth largest, among a greater variety of currencies.<!--QuoteEnd--><!--QuoteEEnd-->
<!--emo&:unsure:--><img src='style_emoticons/<#EMO_DIR#>/unsure.gif' border='0' style='vertical-align:middle' alt='unsure.gif' /><!--endemo-->

<b>Paul Wolfowitz Has New Goal, to Head World Bank</b>
Big News Network.com
<b>India 8th in billionaire club</b><img src='http://img.photobucket.com/albums/v130/indiaforum/billon.gif' border='0' alt='user posted image' />
<b>Wolfowitz tapped for World Bank</b> <!--emo&:o--><img src='style_emoticons/<#EMO_DIR#>/ohmy.gif' border='0' style='vertical-align:middle' alt='ohmy.gif' /><!--endemo-->
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->[In addition to Wolfowitz's strong support for the Iraq war, Steve Radelet, a senior fellow at the Center for Global Development and a former undersecretary at the Treasury, said last week the Europeans were nervous that Wolfowitz would prove similar to former World Bank head and Former Secretary of Defense Robert McNamara.

Radelet said McNamara was accused of channeling aid to nations based not on need but on their support of U.S. policy.

Although not a formal code, traditionally the United States chooses the head of the World Bank while the Europeans pick the head of its sister organization, The International Monetary Fund. Both the U.S. and the Europeans have veto power over each other's choices.
His appoint may affect India. He will twist India's arm on Indo-Pakis rivers and Dam issues. Lot of funds will be always on limbo based on who support Iraq war. It will be interesting to watch. Pakistan will be showered with goodies, no doubt. He is a hawk and never hesitates to show.
"Wolfowitz's Plot to Destroy OPEC" [2 newsclippings]

Friday, March 18, 2005
Wolfowitz's Plot to Destroy OPEC
And Why it was always Ridiculous
[From: Juan Cole Informed Comment www.juancole.com
18 March 2005]

Joe Conason presents some excellent reasons why Paul Wolfowitz should
not head the World Bank.

The BBC Newsnight reports the titanic struggle between the
Neoconservatives and Big Oil over Iraqi petroleum. If this story is
true, it is some of the best reporting to come out of the Iraq scandal
for months, and Greg Palast and his colleagues have scooped the
Washington Post and the New York Times.

It is a story that also has a bearing on Paul Wolfowitz's bid to
become chairman of the World Bank. I have some questions for him. Does
he want to reduce the Arabs to poverty? Is he hostile to the very
existence of OPEC and of producer cooperatives in primary commodities?
Does he favor the use of warfare by states to permit their
corporations to take over public energy resources in the Global South?
Are his economic policies going to be rooted in a desire to further
the interests of the Likud and other rightwing parties in the Global

As Palast tells the story, the Neoconservatives (presumably Wolfowitz,
Perle and Feith) and the Department of Defense were dedicated to
privatizing the Iraqi petroleum industry as a key plank of their Iraq
project. They hoped that Iraq's privately-owned (presumably by
American petroleum corporations) petroleum industry would secede from
the Organization of Petroleum Exporting Countries (OPEC) and would
pump large amounts of petroleum, refusing to stay within the bounds of
the Iraq OPEC quota. By setting quotas for members, OPEC attempts to
keep the price of petroleum from falling too far or from oscillating
too wildly.

That there was a cult of privatization at the Pentagon has never been
in doubt. Iraq has been a socialist country since at least 1968 (and
had elements of socialism in the period of military rule 1958-1968).
Most major industries were publicly owned. Moreover, the Iraqi
population liked it that way. Opinion polls show that 80% of Iraqis
think the purpose of a government is to take care of people.

Paul Bremer, the second US civil administrator of Iraq is a fanatical
laissez-fairiste. The privatizers would set up private corporations to
sell you creek water and oxygen if they could get away with it. In a
BBC interview, Jay Garner alleged that the Department of Defense
dissolved the Iraqi army and sent it home, causing all of us no end of
trouble, because they were afraid that retaining a large Baath
institution like that would form an obstacle to radical privatization.
Bremer wanted to allow foreign companies to buy any firm in Iraq and
to be able to expatriate profits immediately. (The abolition of
currency regulations, advocated by Washington Consensus free
marketeers, contributed to the meltdown of the East Asian economies in
1997; Malaysia escaped devastation by thumbing its nose at the
privatizers and slapping on currency controls. It turns out that if
there are no regulations about currency transfers, speculators take
advantage of it; Surprise!)

Obviously, the real prize in privatization would be the petroleum
industry. No other state-owned Iraqi industries are worth much, and
will be difficult to sell to private owners because they are bloated
bureaucracies and inefficient.

The prospect of the Iraqi petroleum going into foreign hands, however,
impelled many Iraqis to begin sabotaging the pipelines, or to support
the saboteurs. Palast reports,

Mr Aljibury, once Ronald Reagan's "back-channel" to Saddam, claims
that plans to sell off Iraq's oil, pushed by the US-installed
Governing Council in 2003, helped instigate the insurgency and attacks
on US and British occupying forces. "Insurgents used this, saying,
'Look, you're losing your country, you're losing your resources to a
bunch of wealthy billionaires who want to take you over and make your
life miserable,'" said Mr Aljibury from his home near San Francisco.
"We saw an increase in the bombing of oil facilities, pipelines, built
on the premise that privatisation is coming."

Iraq should be able to produce 3 million barrels a day, but it has
often only done a million or a million and a half because of sabotage,
reducing the Iraqi government income from petroleum to only $10
billion or so a year, when it could have been $20 billion or more.

According to Palast, it was the Coalition Provisional Authority
officials from a Big Oil background, like Philip Carroll, the former
CEO of Shell Oil USA, who told Bremer "No!"

The US petroleum companies haven't been interested in owning Middle
Eastern petroleum for decades. Most Middle Eastern oil producers
nationalized their industries in the 1970s. The US companies moved
into refining and distribution, which is plenty profitable. Trying to
own the oil fields had long caused them a lot of trouble. The attempt
of Prime Minister Mohammad Mossaddegh to nationalize Iranian oil in
1951-1953 had led to a US/UK boycott of Iranian petroleum and
ultimately a CIA-backed coup that ended the last democratically
elected government in Iran in 1953. Since that time, Middle Eastern
peoples had become much more politically and socially mobilized, and
popular demands for ownership of national resources became irresistible.

(Max Boot, who thinks Middle Easterners are just Filipino peasant
villagers circa 1902--poor, illiterate, unconnected and politically
naive--exemplifies the basic Neocon fallacy. The Neocons haven't even
caught up to the 1950s or read Karl Deutsch on the social mobilization
of the Global South. People can't be occupied so easily once they are
urbanized, industrialized, literate, connected by modern
communications, and politically aware. This is why Boot and Wolfowitz
did not anticipate a long-term guerrilla war in Iraq, or how savvy and
effective it would be. They really think they are Lord Curzon dealing
with backward WOGs).

So the Neoconservative/ Department of Defense plan to privatize the
petroleum industry was swimming against history, and proved impossible
to implement because a) the Iraqis wouldn't put up with it and b) even
US Big Oil could see that it was a disaster waiting to happen.

The other thing wrong with the Wolfowitz/Perle/Feith plan to destroy
OPEC via Iraq is that it cannot be done. If they thought it could be
done, they are ignorant of the petroleum industry and also of basic
economics. About 80 million barrels of petroleum are produced in the
world each day (it fluctuates, so this figure is inexact). The Saudis
can produce as much as 11 million of that (they are expanding capacity
now to 12 or 13). The Saudis can, however, get along with only
producing 7 million barrels a day (maybe even less at today's prices).
Most oil producers use a lot of their own petroleum. The US, Russia,
China, etc., produce petroleum but then they consume a lot of it
themselves. The Gulf producers, in contrast, have small populations
and cannot absorb much petroleum use, so they are the ones who can
export in large amounts.

The Saudis are now and for the foreseeable future the major swing
producer. It takes them three days to gear up production from 7
million barrels a day to 11, or to ratchet things back down. They can
put 5 million of the approximately 80 million on the market or take it
off, virtually at the stroke of a pen. Between this ability and their
influence in OPEC, the Saudis have some ability to influence (but by
no means control) petroleum prices.

Iraq can only produce about 2.5 to 3 million barrels a day now if
there is no sabotage. With the investment of billions and lots of
security and rebuilding, they might get that up to 5 million a day
within 5 years. It would take them 15 to 20 years to have a capacity
similar to that of Saudi Arabia. In the meantime, OPEC countries will
probably increase their capacity by 20 million barrels a day,
completely offsetting any Iraq increases. Moreover, Iraq is a real
country, with a population of 25 million and many industries, and Iraq
will use a lot of its own petroleum. What it has available for export
will be only a portion. Iraq will never be the kind of swing producer
that Saudi Arabia is.

There are already a lot of countries that are not in OPEC and pay no
attention to quotas. They haven't destroyed OPEC, and one more (Iraq)
wouldn't, either. The cartel effect of OPEC is simply not that great,
and oil prices have fluctuated dramatically every decade since it was
formed. OPEC has mostly failed even to dramatically influence, much
less control prices. In 2004-5, Bush administration policies in Iraq
plus a rise in demand from China and India plus strikes and other
problems in places like Nigeria and Venezuela put the petroleum price
up to as much as $55 a barrel, whereas OPEC's target for many years
was $25 a barrel. The Neocons by their Iraq war have managed to double
OPEC's income, beyond even what OPEC wanted!

So Iraqi petroleum cannot destroy OPEC for the foreseeable future,
even if whoever was in charge of it wanted too. In fact, there is
every reason for any Iraqi government to want to keep petroleum
publicly owned, and to cooperate with OPEC in attempting to smoothe
out extremes in the price cycle.

Primary commodities suffer from big swings in prices. You see this in
coffee and cotton, too. There are booms and then busts and then booms.
If you are a producer, this rollercoaster ride is inconvenient and
could bankrupt you some years. High prices bring in more money but
also bring lots of new competitors who can only compete when the
prices are high because of natural disadvantages. Really low prices
are devastating. So coffee growers, petroleum producers, and other
primary commodity producers often form cartels in an attempt, not so
much to keep prices high, as to keep them from jumping all around.
With the exception of the DeBeers diamond racket in South Africa, most
cartels have only a minor effect on price cycles.

Now the Neocons are all becoming Greens and arguing for solar or other
forms of power in order to cut down on US oil dependence. This is code
for making sure the Arabs cannot use petroleum to influence the US in
the Arab-Israeli dispute. I'm all for getting off the carbon-based
treadmill. But petroleum has other uses than providing energy,
especially petrochemicals, and Arab producers are going to be rich off
such uses for decades or centuries.

The story Palast tells isone of crackpotism run wild, and it would be
more than tragic if it is what dragged us into the Iraq quagmire.


Secret U.S. Plans For Iraq's Oil
By: Greg Palast
Reporting for BBC Newsnight

03/17/05 - "BBC" - The Bush administration made plans for war and for
Iraq's oil before the 9/11 attacks sparking a policy battle between
neo-cons and Big Oil, BBC's Newsnight has revealed.

Two years ago today - when President George Bush announced US, British
and Allied forces would begin to bomb Baghdad - protestors claimed the
US had a secret plan for Iraq's oil once Saddam had been conquered.

In fact there were two conflicting plans, setting off a hidden policy
war between neo-conservatives at the Pentagon, on one side, versus a
combination of "Big Oil" executives and US State Department "pragmatists."

"Big Oil" appears to have won. The latest plan, obtained by Newsnight
from the US State Department was, we learned, drafted with the help of
American oil industry consultants.

Insiders told Newsnight that planning began "within weeks" of Bush's
first taking office in 2001, long before the September 11th attack on
the US.

An Iraqi-born oil industry consultant Falah Aljibury says he took part
in the secret meetings in California, Washington and the Middle East.
He described a State Department plan for a forced coup d'etat.

Mr Aljibury himself told Newsnight that he interviewed potential
successors to Saddam Hussein on behalf of the Bush administration.

Secret sell-off plan

The industry-favored plan was pushed aside by yet another secret plan,
drafted just before the invasion in 2003, which called for the
sell-off of all of Iraq's oil fields. The new plan, crafted by
neo-conservatives intent on using Iraq's oil to destroy the Opec
cartel through massive increases in production above Opec quotas.

The sell-off was given the green light in a secret meeting in London
headed by Ahmed Chalabi shortly after the US entered Baghdad,
according to Robert Ebel. Mr. Ebel, a former Energy and CIA oil
analyst, now a fellow at the Center for Strategic and International
Studies in Washington, flew to the London meeting, he told Newsnight,
at the request of the State Department.

Mr Aljibury, once Ronald Reagan's "back-channel" to Saddam, claims
that plans to sell off Iraq's oil, pushed by the US-installed
Governing Council in 2003, helped instigate the insurgency and attacks
on US and British occupying forces.

"Insurgents used this, saying, 'Look, you're losing your country, your
losing your resources to a bunch of wealthy billionaires who want to
take you over and make your life miserable," said Mr Aljibury from his
home near San Francisco.

"We saw an increase in the bombing of oil facilities, pipelines, built
on the premise that privatization is coming."

Privatization blocked by industry

Philip Carroll, the former CEO of Shell Oil USA who took control of
Iraq's oil production for the US Government a month after the
invasion, stalled the sell-off scheme.

Mr Carroll told us he made it clear to Paul Bremer, the US occupation
chief who arrived in Iraq in May 2003, that: "There was to be no
privatization of Iraqi oil resources or facilities while I was involved."

The chosen successor to Mr Carroll, a Conoco Oil executive, ordered up
a new plan for a state oil company preferred by the industry.

Ari Cohen, of the neo-conservative Heritage Foundation, told Newsnight
that an opportunity had been missed to privatize Iraq's oil fields. He
advocated the plan as a means to help the US defeat Opec, and said
America should have gone ahead with what he called a "no-brainer"

Mr Carroll hit back, telling Newsnight, "I would agree with that
statement. To privatize would be a no-brainer. It would only be
thought about by someone with no brain."

New plans, obtained from the State Department by Newsnight and
Harper's Magazine under the US Freedom of Information Act, called for
creation of a state-owned oil company favored by the US oil industry.
It was completed in January 2004, Harper's discovered, under the
guidance of Amy Jaffe of the James Baker Institute in Texas. Former US
Secretary of State Baker is now an attorney. His law firm, Baker
Botts, is representing ExxonMobil and the Saudi Arabian government.

View segments of Iraq oil plans at www.GregPalast.com/opeconthemarch.html.

Questioned by Newsnight, Ms Jaffe said the oil industry prefers state
control of Iraq's oil over a sell-off because it fears a repeat of
Russia's energy privatization. In the wake of the collapse of the
Soviet Union, US oil companies were barred from bidding for the reserves.

Jaffe said "There is no question that an American oil company ...
would not be enthusiastic about a plan that would privatize all the
assets with Iraq companies and they (US companies) might be left out
of the transaction."

In addition, Ms. Jaffe says US oil companies are not warm to any plan
that would undermine Opec, "They [oil companies] have to worry about
the price of oil."

"I'm not sure that if I'm the chair of an American company, and you
put me on a lie detector test, I would say high oil prices are bad for
me or my company."

The former Shell oil boss agrees. In Houston, he told Newsnight, "Many
neo-conservatives are people who have certain ideological beliefs
about markets, about democracy, about this that and the other.
International oil companies without exception are very pragmatic
commercial organizations. They don't have a theology."

Greg Palast's film - the result of a joint investigation by BBC
Newsnight and Harper's Magazine - will broadcast on Thursday, 17
March, 2005.

You can watch the program online - available Thursday, March 17 after
7pm EST for 24hrs - from the Newsnight website:

The Greatest Stock SHOCK
of the Last Seventy Years


Retirement-bound baby boomers to trigger the greatest stock market reversal in 70 years.

Why the inevitable result could erase a decade's worth of profits overnight.

How a handful of visionary investors will grab $2-for-$1 gains as most investors struggle to break even.

What you MUST DO now to avoid the carnage and make once-in-a-decade profits in 2005.

Plus five cash-on-cash stocks to triple your wealth in the coming storm

Dear Investor,

There's a huge new shock headed for Wall Street - one that will blindside millions of investors.

That's why it's urgent to evaluate your holdings now and reposition them, as I'll show you in this letter.

You see, there's a stunning stock reversal fast approaching - one that will affect everything you own over the next 7-10 years...completely change the rules of successful investing...and send ill-prepared investors to the poorhouse.

And that's a shame, because while this reversal will mean financial ruin for many Americans...

...the trouble is all quite easily avoidable. In fact, once you understand what is happening and why, you can turn this shock to your advantage and safely accumulate all the wealth you and your family will ever need.

But mark my words, most investors, playing by yesterday's rules, will earn nothing but heartbreak. And the retirement of 76 million baby boomers is threatened by one of the greatest economic shifts our nation has ever seen:

The fact that dividend-paying stocks will outperform growth stocks for the rest of your investing life!

It's an incredible paradox, I know, because it runs counter to everything you've ever learned about investing.

But if you'll take a few minutes to hear me out, you'll not only discover what I'm saying is true, but also see a dramatic wealth-building opportunity unfolding right before your eyes.

In fact, just last year, as the Dow, NASDAQ and S&P 500 all muddled slightly higher, dividend-paying stocks out-gained all the indexes by more than 60%-to-200%.

That's right, dividend-stocks won out better than 2-to one! While at the same time, many of America's most-revered growth stocks - like Cisco, Intel, Merck, Pfizer and JDS Uniphase - collapsed 20% on average!

And this is no one-year fluke, my friend. But a powerful new mega-trend that will continue unchecked for the next 7-10 years.
The Reason Is Simple

We're right smack dab at the beginning of one of the greatest economic shifts our economy has ever seen, as millions of retirement-age investors are about to pull trillions of dollars out of the growth market to generate income for their retirement.

This is the same money, mind you--the very same IRA, investment, and 401(k) money--that flooded Wall Street and not only pushed the indexes to new heights...

...but also fueled the great bull market of the 1990s, and made visionary investors rich beyond their wildest dreams.

Yet, in the next 10 years, half of this capital will be out of growth stocks for good. And within a decade after that, all of it will be sitting in income-producing stocks and bonds.

Do you realize what this growth stock "pullout" means?
The inevitable chain reaction will reverse the fortunes for growth stocks for years to come...

...while at the same time putting powerful upward pressure directly under the safest and highest-yielding dividend stocks.

Mark my words: If you fail to reposition your assets now, you will find the stock market a better place to lose a fortune than to make one.

You'll crawl into retirement with a fraction of the assets you have now. And you'll kick yourself for not taking the actions I spell out in this Special Report - just a small part of the service I provide to my Profitable Investing readers.
Your Next Move Will Determine
Your Future Wealth

You can be one of them by accepting your risk-free trial subscription to profitable Investing now.

For the past 18 months, as I've been telling my readers about the great growth stock "pullout" that's at hand, we've grown more than 60% richer investing in a handful of select income stocks that are set to skyrocket again as yield-hungry baby boomers bid our holdings higher.

Mark my words: If you take an ownership position -- even a small one -- in any of my top income stocks now, you'll grasp your share of the even-bigger boom that lies ahead and reap several decades' worth of profits while many others lose their shirts.
Where the Big Money Will Be Made
Surprise Winners & Losers for 2005
America's Most Accurate Stock Advisor Predicts Income Stocks Will Again Beat Growth Stocks $2-to-$1 in 2005

By Mike Bell
Editor, Investor Alert

NEW YORK, N.Y. -- "The biggest stock market losers for 2005 will be the big-name growth stocks that everyone thinks are going to take off... while the biggest winners will be a handful of dividend-yielding opportunities," claims Richard Band, editor of America's top-rated investing advisory, Profitable Investing.

Band, who has accurately predicted every market trend since 1991 and has handed his readers more than 60%-to-200% profits over the past two decades, may be right.

Over the past 12 months, bluechip dividend stocks have outperformed growth issues by $2-to-$1.

Band believes this isn't just a one-year anomaly but a major new trend that will continue to make rising income stocks the best-performing investments for years to come.
Cash Is King

According to Band, this new trend will be driven by nearly 50 million retirement-bound baby boomers who are about to funnel $6 trillion out of pure growth stocks into high-yielding investments to replace their lost work income.

"This is the same 401k, IRA and investment money that fueled the 1995-2000 bull market. As you'll see, it's about to get yanked out of growth stocks as yield-hungry Baby Boomers scramble to secure a rising source of income to fund their retirement."

According to Band, this growth stock "pullout" will send P/Es on growth stocks plummeting while raising the fortunes of top income stocks.
Bill Gates Agrees

Band is not alone in his thinking.

Band believes that Microsoft's Bill Gates, and the world's richest man, saw the shift on the horizon, and took quick action and started paying investors to stay with him.

"Just like Gates captured market share for desktop computing, he's now out to capture the shift in investors to income stocks, too. By creating an income stock, he's doing just that and positioning Microsoft as a retiree's new best friend."
Who Will Profit?

According to Band, the biggest stock market winners for 2005 winners will be a handful of select rising dividend stocks.

You don't have to be a computer scientist to figure out why.As throngs of baby boomers shift from growth to income stocks, they're going to need a rising source of income to replace their salaries, protect them from inflation, and give them the growth they need to enjoy their golden years to the hilt.

For these reasons, Band believes that a select group of rising income stocks will be the biggest profit-takers.
Top Picks

Band believes that companies like Kinder Morgan (NYSE: KMP) will be a magnet for investment.

It's no wonder.

The company's stock yields roughly 6.3%, about four-fifths of which is tax-deferred.

That's four times more than the S&P yielded.

"As a long-term investment, this dividend king has even outperformed Cisco, Intel and Microsoft over the past five years by $5-to-$1. In fact, if you had invested $10,000 in this dividend king in 1997, you'd now be sitting on a whopping $132,600, including reinvested dividends. What's more, every $1 you invested back then would -- hold on to your hat -- be handing you an incredible 35% annually in dividends!"

Kinder Morgan is just one of five "cash on cash" stocks that Band wholeheartedly recommends for 2005.

"These are the kinds of opportunities investors will flock to in the months and years ahead. Investors who own them now should beat the market by $2-to-$1 in 2005 and enjoy a rising dividend yield that should hit 16% in the next few years."

Investors who would like to receive Band's complete profit forecast for 2005 can get one by following this link.

Right off the bat, a number of high-yielding blue-chip stocks with long histories of rising dividends will be take-it-to-the-bank-winners.

The reason is simple:

These stocks solve the biggest problem retirement-bound baby boomers face: Finding a rising and secure source of income to replace their paychecks.

And if you're currently retired -- or close to it -- you know exactly what I mean.

That's why, as I look over my list of top winners, I feel like we're about to hit the lottery again this year. That's because over past 18 months, my top five cash-on-cash companies have not only handed my readers average gains of 64%...

...but have also given them a rich source of rising income that's on track to deliver more than 16% in annual dividends for every dollar they invest now.

That's why I call them "cash-on-cash" stocks. They hand you an immediate return for every single dollar you invest in them now--along with a juggernaut of capital growth that you won't find in any other investment on Wall Street.

And it's all because income--more than anything else--is about to become the #1 goal for the world's largest and richest group of investors: America's 76 million baby boomers.

Thankfully, you couldn't ask for a better time to begin owning these companies. Here's why:

The leading edge of baby boomers (those born between 1946 and 1964) will turn 59 years old next year. Do you realize what this means? You'll be truly getting in on the ground floor of a 20-year trend that will drive income stocks skyward.

What's more, Wall Street is totally blind to what's going on. That's because they're too focused (as they've always been) on companies' quarterly returns instead of the big picture. This is why they can't see the forest for the trees when it comes to the underlying trends that will ultimately affect your financial future.

As a result, you can still buy these companies for 1/10 of what they'll be worth in the future...and lock in a rising source of income that could hand you 15%, 20% or even 30% in annual future dividends for every $1 that you invest now.

As you'll see, by simply repositioning your assets now, you'll easily double, triple or even quadruple your wealth before most investors wake up and realize what's going on.

For over two decades, my readers have earned $10 for $1 investing light-years ahead of the most powerful trends of our time.

And I can tell you with absolute certainty that when you join us, you'll easily pyramid your wealth year after year as every graduating class of baby boomer retirees funnels their money out of growth stocks and into income stocks.
How You Can Get In on the Ground Floor of This Exciting Boom Now
<!--QuoteBegin-acharya+Mar 21 2005, 04:13 AM-->QUOTE(acharya @ Mar 21 2005, 04:13 AM)<!--QuoteEBegin--> The Greatest Stock SHOCK
of the Last Seventy Years
We're right smack dab at the beginning of one of the greatest economic shifts our economy has ever seen, as millions of retirement-age investors are about to pull trillions of dollars out of the growth market to generate income for their retirement.
Do you realize what this growth stock "pullout" means?
The inevitable chain reaction will reverse the fortunes for growth stocks for years to come...
Is this the reason why Bush is trying to divert social security money to stock market?
<b>World Bank urges India to open up retail </b>
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Pointing to the risks posed by the high US fiscal deficit, the official said, "If the international interest rates rise, these would have implications for public finances in India, as external and internal debt would go up."

India has one of the highest external debts in the world, next only to China.

On internal debt, the report states, "There is a risk that public debt burden could increase significantly given the sizeable fiscal imbalances in the (South Asia) region, India in particular."
<b>Confessions of an Economic Hit Man </b>

How the U.S. Uses Globalization to Cheat Poor Countries Out of Trillions

January 2005

If you happened to glance at the NYTimes Book Review today, you might have
noticed a book on the best-seller list for the first time, in ninth place. The
blurb tells us: “CONFESSIONS OF AN ECONOMIC HIT MAN, by John Perkins.
(Barrett-Koehler, $24.95.) A former employee of an international consulting firm
denounces the American global empire and its ‘corporatocracy.’”

What’s this all about? The book was published last fall, but only now shows up
as a best-seller? It only recently was brought to my attention by a website fan
who knows I’ve long argued that the International Monetary Fund and its sister
organization, the World Bank, constitute an “Evil Empire.” The two
“international financial institutions” (IFI’s) were founded in 1945 during the
genesis of the United Nations as “do-good” enterprises. The IMF would assist
countries trying to keep their currencies tied to the dollar under the terms of
the 1944 Bretton Woods Agreement. The World Bank would lend money at low
interest rates gathered from the rich countries to help poor countries get off
their backs.

Over the years, the process has been corrupted, with both the IMF and World Bank becoming controlled by the multinational corporations and their banks. When
President Nixon went off the gold standard in 1971, the IMF’s reason for
existence evaporated, because Bretton Woods and the fixed dollar went up in
smoke. Now the problem for the big banks like Chase Manhattan, Citicorp and the
Bank of America became two-fold:

1) As surplus dollars accumulated in their reserves and there were no
credit-worthy Americans wanting to borrow, the banks had to think of ways to
lend the money abroad or it would sit in their vaults earning zip, which means
it really is losing money as the paper dollar – freed from its gold anchor – was
inflating and losing purchasing power. Citigroup’s Walter Wriston (who died last
week), came up with the idea that the surplus should be loaned to poor
countries, even though they had no collateral, because governments had to pay
off their hard-currency loans or lose their international credit ratings.

2) If the countries that borrowed from Chase or Citicorp could not pay back
interest or principle and did not worry about stiffing the private bankers, they
would have to swallow the non-performing loans. The solution was to have the
IMF, looking for something to justify its existence, step in to collect the
debt. All it had to do was persuade the U.S. Congress to ante up billion or two
of taxpayer dollars to fill their coffers (and “replenish” them from time to
time). They could then go to the deadbeat country and say, “We will give you
this money so you can pay Chase and Citicorp what you owe them, but you will
have to raise taxes on your own people and devalue your currency as the
conditions for the loan!

What we have in this book from Mr. Perkins is an account of a foot soldier in
these operations of the Evil Empire. I’ll get his book and check it out, but
from what I can gather about it on the internet he is well within the ballpark
of what has been going on. Are bankers evil by nature? Of course not. But as
bankers they follow the money, not giving a second thought to the conditions in
which they leave their debtors. The first priority of any institution is
self-preservation, and for the big banks, that means getting paid back on their
loans. Is this any way to run the world? No. It is a dreadful way to operate,
and it would end if our government returned to a dollar/gold system and abided
by it. If not, I’m afraid nothing Mr. Perkins writes or that I write will change
a thing. The folks who control the money control our government and that’s that.
It is interesting that Perkins does identify the Bechtel Corporation and
Halliburton as agents in this quiet conspiracy to make sure the good old USA
flourishes, even though it means the relentless impoverishment of the poorest
countries of the world.

Here is an interview that Amy Goodman of “Democracy Now” had with Perkins on
November 9 2004. Remember his perspective is not from the highest level, but
note he mentions George Shultz as an agent of the Evil Empire, which Shultz has
been for decades. It was Shultz who, with Walter Wriston and Milton Friedman,
persuaded Nixon to float the dollar and blow up the Bretton Woods monetary
system. Shultz, now an octagenarian, is still a power in the Establishment, a
key player at the Bechtel Corporation and a member of the Pentagon's Defense
Policy Board, a member of the Perle Cabal. Of course, the three men -- thought
it was the right thing to do at the time, but in retrospect it wasn’t.

Jude Wanniski

* * * * *

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Tuesday, November 9th, 2004
Confessions of an Economic Hit Man:
How the U.S. Uses Globalization to Cheat Poor Countries Out of Trillions

We speak with John Perkins, a former respected member of the international
banking community. In his book Confessions of an Economic Hit Man he describes
how as a highly paid professional, he helped the U.S. cheat poor countries
around the globe out of trillions of dollars by lending them more money than
they could possibly repay and then take over their economies.

John Perkins describes himself as a former economic hit man - a highly paid
professional who cheated countries around the globe out of trillions of dollars.

20 years ago Perkins began writing a book with the working title, “Conscience of
an Economic Hit Men.”

Perkins writes, “The book was to be dedicated to the presidents of two
countries, men who had been his clients whom I respected and thought of as
kindred spirits - Jaime Rolds, president of Ecuador, and Omar Torrijos,
president of Panama. Both had just died in fiery crashes. Their deaths were not
accidental. They were assassinated because they opposed that fraternity of
corporate, government, and banking heads whose goal is global empire. We
Economic Hit Men failed to bring Rolds and Torrijos around, and the other type
of hit men, the CIA-sanctioned jackals who were always right behind us, stepped

John Perkins goes on to write: “I was persuaded to stop writing that book. I
started it four more times during the next twenty years. On each occasion, my
decision to begin again was influenced by current world events: the U.S.
invasion of Panama in 1980, the first Gulf War, Somalia, and the rise of Osama
bin Laden. However, threats or bribes always convinced me to stop.”

But now Perkins has finally published his story. The book is titled Confessions
of an Economic Hit Man.

AMY GOODMAN: John Perkins joins us now in our firehouse studio. Welcome to
Democracy Now!
JOHN PERKINS: Thank you, Amy. Its great to be here.

AMY GOODMAN: Its good to have you with us. Okay, explain this term, economic hit man, e.h.m., as you call it.

JOHN PERKINS: Basically what we were trained to do and what our job is to do is
to build up the American empire. To bring -- to create situations where as many
resources as possible flow into this country, to our corporations, and our
government, and in fact we’ve been very successful. We’ve built the largest
empire in the history of the world. It's been done over the last 50 years since
World War II with very little military might, actually. It's only in rare
instances like Iraq where the military comes in as a last resort. This empire,
unlike any other in the history of the world, has been built primarily through
economic manipulation, through cheating, through fraud, through seducing people
into our way of life, through the economic hit men. I was very much a part of

AMY GOODMAN: How did you become one? Who did you work for?

JOHN PERKINS: Well, I was initially recruited while I was in business school
back in the late sixties by the National Security Agency, the nation's largest
and least understood spy organization; but ultimately I worked for private
corporations. The first real economic hit man was back in the early 1950's,
Kermit Roosevelt, the grandson of Teddy, who overthrew of government of Iran, a
democratically elected government, Mossadegh’s government who was Time's
magazine person of the year; and he was so successful at doing this without any
bloodshed -- well, there was a little bloodshed, but no military intervention,
just spending millions of dollars and replaced Mossadegh with the Shah of Iran.
At that point, we understood that this idea of economic hit man was an extremely
good one. We didn't have to worry about the threat of war with Russia when we
did it this way. The problem with that was that Roosevelt was a C.I.A. agent. He
was a government employee. Had he been caught, we would have been in a lot of
trouble. It would have been very embarrassing. So, at that point, the decision
was made to use organizations like the C.I.A. and the N.S.A. to recruit
potential economic hit men like me and then send us to work for private
consulting companies, engineering firms, construction companies, so that if we
were caught, there would be no connection with the government.

AMY GOODMAN: Okay. Explain the company you worked for.

JOHN PERKINS: Well, the company I worked for was a company named Chas. T. Main in Boston, Massachusetts. We were about 2,000 employees, and I became its chief economist. I ended up having fifty people working for me. But my real job was deal-making. It was giving loans to other countries, huge loans, much bigger
than they could possibly repay. One of the conditions of the loan -- let's say a
$1 billion to a country like Indonesia or Ecuador -- and this country would then
have to give ninety percent of that loan back to a U.S. company, or U.S.
companies, to build the infrastructure -- a Halliburton or a Bechtel. These were
big ones. Those companies would then go in and build an electrical system or
ports or highways, and these would basically serve just a few of the very
wealthiest families in those countries. The poor people in those countries would
be stuck ultimately with this amazing debt that they couldn’t possibly repay. A
country today like Ecuador owes over fifty percent of its national budget just
to pay down its debt. And it really can’t do it. So, we literally have them over
a barrel. So, when we want more oil, we go to Ecuador and say, Look, you're not
able to repay your debts, therefore give our oil companies your Amazon rain
forest, which are filled with oil. And today we're going in and destroying
Amazonian rain forests, forcing Ecuador to give them to us because they’ve
accumulated all this debt. So we make this big loan, most of it comes back to
the United States, the country is left with the debt plus lots of interest, and
they basically become our servants, our slaves. It's an empire. There's no two
ways about it. It’s a huge empire. It's been extremely successful.

AMY GOODMAN: We're talking to John Perkins, author of Confessions of an Economic Hit Man. You say because of bribes and other reason you didn't write this book for a long time. What do you mean? Who tried to bribe you, or who -- what are the bribes you accepted?

JOHN PERKINS: Well, I accepted a half a million dollar bribe in the nineties not
to write the book.


JOHN PERKINS: From a major construction engineering company.

AMY GOODMAN: Which one?

JOHN PERKINS: Legally speaking, it wasn't -- Stoner-Webster. Legally speaking it
wasn't a bribe, it was -- I was being paid as a consultant. This is all very
legal. But I essentially did nothing. It was a very understood, as I explained
in Confessions of an Economic Hit Man, that it was -- I was -- it was understood
when I accepted this money as a consultant to them I wouldn't have to do much
work, but I mustn't write any books about the subject, which they were aware
that I was in the process of writing this book, which at the time I called
“Conscience of an Economic Hit Man.” And I have to tell you, Amy, that, you
know, its an extraordinary story from the standpoint of -- It's almost James
Bondish, truly, and I mean--

AMY GOODMAN: Well that's certainly how the book reads.

JOHN PERKINS: Yeah, and it was, you know? And when the National Security Agency recruited me, they put me through a day of lie detector tests. They found out all my weaknesses and immediately seduced me. They used the strongest drugs in our culture, sex, power and money, to win me over. I come from a very old New England family, Calvinist, steeped in amazingly strong moral values. I think I, you know, I’m a good person overall, and I think my story really shows how this system and these powerful drugs of sex, money and power can seduce people, because I certainly was seduced. And if I hadn't lived this life as an economic hit man, I think Id have a hard time believing that anybody does these things.

And that's why I wrote the book, because our country really needs to understand,
if people in this nation understood what our foreign policy is really about,
what foreign aid is about, how our corporations work, where our tax money goes,
I know we will demand change.

AMY GOODMAN: We're talking to John Perkins. In your book, you talk about how you helped to implement a secret scheme that funneled billions of dollars of Saudi
Arabian petrol dollars back into the U.S. economy, and that further cemented the
intimate relationship between the House of Saud and successive U.S.
administrations. Explain.

JOHN PERKINS: Yes, it was a fascinating time. I remember well, you're probably
too young to remember, but I remember well in the early seventies how OPEC
exercised this power it had, and cut back on oil supplies. We had cars lined up
at gas stations. The country was afraid that it was facing another 1929-type of
crash depression; and this was unacceptable. So, they -- the Treasury Department hired me and a few other economic hit men. We went to Saudi Arabia. We --

AMY GOODMAN: You're actually called economic hit men --e.h.m.s?

JOHN PERKINS: Yeah, it was a tongue-in-cheek term that we called ourselves.
Officially, I was a chief economist. We called ourselves e.h.m.'s. It was
tongue-in-cheek. It was like, nobody will believe us if we say this, you know?
And, so, we went to Saudi Arabia in the early seventies. We knew Saudi Arabia
was the key to dropping our dependency, or to controlling the situation. And we
worked out this deal whereby the Royal House of Saud agreed to send most of
their petro-dollars back to the United States and invest them in U.S. government
securities. The Treasury Department would use the interest from these securities
to hire U.S. companies to build Saudi Arabia new cities, new infrastructure
which we’ve done. And the House of Saud would agree to maintain the price of oil
within acceptable limits to us, which they’ve done all of these years, and we
would agree to keep the House of Saud in power as long as they did this, which
we’ve done, which is one of the reasons we went to war with Iraq in the first
place. And in Iraq we tried to implement the same policy that was so successful
in Saudi Arabia, but Saddam Hussein didn't buy. When the economic hit men fail
in this scenario, the next step is what we call the jackals. Jackals are
C.I.A.-sanctioned people that come in and try to foment a coup or revolution. If
that doesn't work, they perform assassinations. Or try to. In the case of Iraq,
they weren't able to get through to Saddam Hussein. He had -- His bodyguards
were too good. He had doubles. They couldn’t get through to him. So the third
line of defense, if the economic hit men and the jackals fail, the next line of
defense is our young men and women, who are sent in to die and kill, which is
what we’ve obviously done in Iraq.

AMY GOODMAN: Can you explain how Torrijos died?

JOHN PERKINS: Omar Torrijos, the President of Panama. Omar Torrijos had signed the Canal Treaty with Carter much -- and, you know, it passed our congress by only one vote. It was a highly contended issue. And Torrijos then also went ahead and negotiated with the Japanese to build a sea-level canal. The Japanese wanted to finance and construct a sea-level canal in Panama. Torrijos talked to them about this which very much upset Bechtel Corporation, whose president was George Schultz and senior council was Casper Weinberger. When Carter was thrown out (and that’s an interesting story how that actually happened), when he lost the election, and Reagan came in and Schultz came in as Secretary of State from Bechtel, and Weinberger came from Bechtel to be Secretary of Defense, they were extremely angry at Torrijos -- tried to get him to renegotiate the Canal Treaty and not to talk to the Japanese. He adamantly refused. He was a very principled man. He had his problem, but he was a very principled man. He was an amazing man, Torrijos. And so, he died in a fiery airplane crash, which was connected to a tape recorder with explosives in it, which -- I was there. I had been working with him. I knew that we economic hit men had failed. I knew the jackals were closing in on him, and the next thing, his plane exploded with a tape recorder with a bomb in it. There's no question in my mind that it was C.I.A. sanctioned, and most -- many Latin American investigators have come to the same conclusion.

Of course, we never heard about that in our country.

AMY GOODMAN: So, where -- when did your change your heart happen?

JOHN PERKINS: I felt guilty throughout the whole time, but I was seduced. The
power of these drugs, sex, power, and money, was extremely strong for me. And,
of course, I was doing things I was being patted on the back for. I was chief
economist. I was doing things that Robert McNamara liked and so on.

AMY GOODMAN: How closely did you work with the World Bank?

JOHN PERKINS: Very, very closely with the World Bank. The World Bank provides
most of the money that’s used by economic hit men, it and the I.M.F. But when
9/11 struck, I had a change of heart. I knew the story had to be told because
what happened at 9/11 is a direct result of what the economic hit men are doing.
And the only way that we're going to feel secure in this country again and that
we're going to feel good about ourselves is if we use these systems we’ve put
into place to create positive change around the world. I really believe we can
do that. I believe the World Bank and other institutions can be turned around
and do what they were originally intended to do, which is help reconstruct
devastated parts of the world. Help -- genuinely help poor people. There are
twenty-four thousand people starving to death every day. We can change that.

AMY GOODMAN: John Perkins, I want to thank you very much for being with us. John Perkins' book is called, Confessions of an Economic Hit Man.
'The World Is Flat'
Published: May 1, 2005
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->No one ever gave me directions like this on a golf course before: "Aim at either Microsoft or IBM." I was standing on the first tee at the KGA Golf Club in downtown Bangalore, in southern India, when my playing partner pointed at two shiny glass-and-steel buildings off in the distance, just behind the first green. The Goldman Sachs building wasn't done yet; otherwise he could have pointed that out as well and made it a threesome. HP and Texas Instruments had their offices on the back nine, along the tenth hole. That wasn't all. The tee markers were from Epson, the printer company, and one of our caddies was wearing a hat from 3M. Outside, some of the traffic signs were also sponsored by Texas Instruments, and the Pizza Hut billboard on the way over showed a steaming pizza, under the headline "Gigabites of Taste!"

No, this definitely wasn't Kansas. It didn't even seem like India. Was this the New World, the Old World, or the Next World?

I had come to Bangalore, India's Silicon Valley, on my own Columbus-like journey of exploration. Columbus sailed with the Niña, the Pinta, and the Santa María in an effort to discover a shorter, more direct route to India by heading west, across the Atlantic, on what he presumed to be an open sea route to the East Indies-rather than going south and east around Africa, as Portuguese explorers of his day were trying to do. India and the magical Spice Islands of the East were famed at the time for their gold, pearls, gems, and silk-a source of untold riches. Finding this shortcut by sea to India, at a time when the Muslim powers of the day had blocked the overland routes from Europe, was a way for both Columbus and the Spanish monarchy to become wealthy and powerful. When Columbus set sail, he apparently assumed the Earth was round, which was why he was convinced that he could get to India by going west. He miscalculated the distance, though. He thought the Earth was a smaller sphere than it is. He also did not anticipate running into a landmass before he reached the East Indies. Nevertheless, he called the aboriginal peoples he encountered in the new world "Indians." Returning home, though, Columbus was able to tell his patrons, King Ferdinand and Queen Isabella, that although he never did find India, he could confirm that the world was indeed round.

I set out for India by going due east, via Frankfurt. I had Lufthansa business class. I knew exactly which direction I was going thanks to the GPS map displayed on the screen that popped out of the armrest of my airline seat. I landed safely and on schedule. I too encountered people called Indians. I too was searching for the source of India's riches. Columbus was searching for hardware-precious metals, silk, and spices-the source of wealth in his day. I was searching for software, brainpower, complex algorithms, knowledge workers, call centers, transmission protocols, breakthroughs in optical engineering-the sources of wealth in our day. Columbus was happy to make the Indians her met his slaves, a pool of free manual labor.

I just wanted to understand why the Indians I met were taking our work, why they had become such an important pool for the outsourcing of service and information technology work from America and other industrialized countries. Columbus had more than one hundred men on his three ships; I had a small crew from the Discovery Times channel that fit comfortably into two banged-up vans, with Indian drivers who drove barefoot. When I set sail, so to speak, I too assumed that the world was round, but what I encountered in the real India profoundly shook my faith in that notion. Columbus accidentally ran into America but thought he had discovered part of India. I actually found India and thought many of the people I met there were Americans. Some had actually taken American names, and others were doing great imitations of American accents at call centers and American business techniques at software labs.

Columbus reported to his king and queen that the world was round, and he went down in history as the man who first made this discovery. I returned home and shared my discovery only with my wife, and only in a whisper.

"Honey," I confided, "I think the world is flat." . . .

<b>Blackstone Group to invest $1 billion in India</b>
<b>Internet crashes in Pakistan</b>

ISLAMABAD, Pakistan (Reuters) -- An undersea cable carrying data between Pakistan and the outside world has developed a serious fault, virtually crippling data feeds, including the Internet, telecommunications officials said.

The system crashed late on Monday and was still down on Tuesday evening. Many offices across the country ground to a halt as people realized it was not one of Pakistan's regular, but usually brief, technical hitches.

"It's a worst-case scenario. We are literally blank," said a senior foreign banker who declined to be identified.

An official at the Karachi stock exchange said Pakistan's main bourse was unaffected as it had its own internal trading system.

Officials at Pakistan Telecommunication Ltd, which operates the link, said the fault was in an undersea cable and had been caused by a power supply problem.

<b>Fixing it would entail an interruption for other countries using the link, including India, Dubai and Oman, one company official said.</b>

"To reconfigure the power supply system and set the fault right there needs to be an interruption of up to two hours," said PTCL official Mashkoor Hussain.

But the impact on neighboring countries would be limited and the repairs would begin at 4 a.m. on Wednesday (2300 GMT on Tuesday) to minimize any disruption, he said.

"They have more than one cable. Their systems will continue working."

Telecommunications officials in those countries had been consulted and had given the go-ahead for the repairs, he said. "Hopefully it will be repaired by tomorrow morning."

Airlines and credit card companies were among the businesses hit by the crash.

"It's a total disaster," said Nasir Ali, commercial director of the private Air Blue airline. "We have a Web-based booking system which has totally collapsed."

PTCL provided satellite back-up for the link, which meant some people were able to get access to a very slow Internet connection, Hussain said, but users complained it was too slow to be of any use.

Did US submarin try to temper with undersea cable to eavesdrop?
<b>Newest Navy sub said to have undersea cable-tapping ability</b>


Intel's $700-mn India project faces trouble

Gaurie Mishra & Sidhartha in New Delhi | July 19, 2005 10:10 IST

There seem to be hiccups on the way towards setting up Intel's proposed $700-million wafer testing facility in India as the government appears reluctant to meet some of the demands raised by the world's largest chipmaker.

Apart from flexibilities on external commercial borrowings and tax benefits, Intel had asked the government to make an upfront payment of $100 million, officials told Business Standard on Monday.

But the government is not ready to make this kind of a contribution. A team from Intel negotiated the terms of a deal with officials last week but a breakthrough could not be achieved, officials said.

In response to an e-mailed questionnaire, Intel Spokesperson Chuck Mulloy said, "We have teams exploring sites worldwide on an ongoing basis. We do not comment on their activities unless we have reached an agreement and announced an agreement." He also declined to comment if Intel had asked the Indian government for an upfront payment.

"I can't answer this because we won't confirm or deny that we have met with the government," Mulloy said. But he said Intel sought incentives from regions where it made "significant capital investments".

Intel's investment proposal was being pursued by the Prime Minister's Office, which had asked for the finance ministry's comments on the sops sought by the chipmaker. The negotiations were also being handled by the Prime Minister's Office.

After his visit to the US last month, Communications and Information Technology Minister Dayanidhi Maran had said that he had convinced Intel to set up a $400 million facility in India. But Intel denied this saying no decision had been taken.

Officials said tax benefits sought by the California-headquartered company and unlimited access to external commercial borrowings facility were available in special economic zones.

Intel has identified special economic zones near Chennai and Greater Noida as possible investment sites.
There are those who argue that history is cyclical, while others prefer to conceptualize it as an ebb and flow. As the economies of China and India continue their dizzying growth, it seems that history is preparing to repeat itself. Economist Clyde Prestowitz, in the first of a three-part series, coins the term "The Great Reverse" in reference to the projected Asian-leaning shift in the global balance of power. In his exposition of three discreet waves of globalization, Prestowitz details the developments that facilitated the rise, fall, and rise, once again, of the East's global influence. And if history is any indicator, India and China may, in the coming century, compete for the title, "World Economic Superpower." – YaleGlobal

The Great Reverse - Part I

After two centuries of Western domination, China and India are poised to claim their places

Clyde Prestowitz
YaleGlobal, 2 September 2004

China - due in part to the silk trade - boasted the world's most powerful economy in the 18th century Enlarged image

WASHINGTON: "The balance of influence in this region is shifting rapidly to China - not yet the balance of power, but the balance of influence."

That statement, made recently to me by a senior leader in Singapore, is an early indication of how a new, third wave of globalization is ending the era of the West's global dominance and restoring Asia to its traditionally powerful and influential role.

The history of the past 500 years has largely been the story of the dynamism and expansion of first European and then American power. The initial wave of globalization was launched in the late fifteenth century by the early Portuguese and Spanish explorers. The high technology of that day was embodied in the Spanish galleon and the navigating skills that guided it. Using this technology, intrepid Iberian captains could go anywhere the wind blew, enabling the kings of tiny Portugal and Spain to lay claim to nearly half the world.

Soon thereafter, the Dutch and English developed the joint stock company and built the "capitalist road" by enabling the amassing of large amounts of capital on a relatively low-risk basis with the potential for very large gains. And the gains were sought largely in the East, where the legendary wealth of the Indies beckoned, for at this time, the standards of living in the West were well below those of the East. By the end of the 18th century, the countries of the European periphery had combined their technological leadership with low-cost labor - sailors from the lower rungs of society were routinely pressed into service - to acquire huge empires in Asia and elsewhere.

The second wave of globalization began at about the time of the founding of the United States, with the onset of the Industrial Revolution. The steam engine and new manufacturing technology multiplied productivity and wealth a thousand-fold. Over the next 200 years, this further accelerated the rise of Western wealth and dominance. In 1776, the year of the American Declaration of Independence, China still had by far the world's biggest and most powerful economy, with the area we now call India and Pakistan following close behind. Indeed, at this time, Asia accounted for well over half of global gross domestic product. Industrialized mass production dramatically reversed the balance; by the end of the 20th century, the US and Europe accounted for two-thirds of global GDP, while Asia was responsible for only 20 percent.

In the 1990s, four developments laid the foundation for the third wave of globalization, which is now leading to the Great Reverse. In the wake of the Tiananmen Square incident, the leaders of China concluded that the only way to hold onto power was to bring China fully onto the "capitalist road." India, seeing the rapid success of China, also decided to abandon its socialist protectionism in favor of getting on the capitalist freeway. At about the same time, the conclusion of the Uruguay Round of trade talks, along with China's inclusion in the World Trade Organization and the opening of most countries to foreign investment, removed most of the classic barriers to the global flow of goods and capital. Finally, the development and deployment of the internet after 1995 largely negated time and distance as significant cost factors for a vast number of products and services.

China is now, without question, the location of choice for most manufacturing. Its huge population provides a continuing supply of low-cost labor. By widely opening the doors to foreign investment, emphasizing education of technologists, and providing major incentives for technology transfer, it has combined inexpensive labor with technology to create a huge competitive advantage similar to that enjoyed by the Portuguese and Spanish half a millennium ago.

This is not just a matter of low-tech, labor intensive manufacturing. On my recent trips to China, I have visited state-of-the-art plants for manufacturing semiconductors and other high tech products equal in quality to those produced in the West - and at less than half the cost. Moreover, in recent interviews, top Silicon Valley venture capital executives emphasized to me their plans to shift start-up companies' Research and Development activities to China or India as fast as possible. Indeed, some said they would not fund any start-up that lacked a China or India R&D strategy. The logic is simple: There are a lot of good technologists in those countries who can do much of the high-tech work at 10 to 15 percent of the cost in the West.

India has not yet become the same magnet for manufacturing as China, but it is clearly the location of choice for software development and many other services. Again, one should be careful of the conventional wisdom that thinks only in terms of call centers and grunt programming. For example, the British National Health Service recently announced that it is shipping all blood samples to India, where they will be analyzed and the results faxed or e-mailed to the appropriate medical facilities in the United Kingdom.

As a result of these kinds of development, both China and India have enjoyed annual GDP growth of about ten percent over the past several years. In fact, China has been racking up such growth for the past twenty years. Projected into the future, these growth rates show why the senior Singapore leader made his comments about the shift of the balance of influence. By the year 2025, China's current GDP of about $2 trillion (adjusted for the undervalued renminbi) would be $16 trillion, and India's current GDP of $700 billion would be about $5 trillion. Over the same time, the current U.S. GDP of $11 trillion would reach $21 trillion if it grows at the average rate of U.S. growth of the past forty years. Even if these estimates are well off the mark, they show a dramatic narrowing of the gap between Asia and the West. China is already the biggest trading partner for Japan, Korea, and the other key economies of Asia. Its influence will only grow from here, as will that of India.

To this must be added the demographic story. Europe is literally dying. Its people are aging rapidly, and birth rates are far below those necessary to maintain current population levels. By 2050, the population of Germany, for example, will shrink from the present 83 million to about 75 million. This will put a severe limit on European growth prospects. The United States, by dint of immigration and high Hispanic birth rates, will maintain small population growth, but it will age substantially over the next 45 years. Because of its one child policy, China will also begin to age rapidly in about 20 years. <b>But half of India's nearly one billion people are presently under the age of 25, and there is no one child policy here. Thus, in the long run, the 21st century could well turn out to be the Indian century. </b>In any case, it will surely be the century in which Asia resumes its historical position of economic power and influence.

Clyde Prestowitz is the author of Rogue Nation: American Unilateralism and the Failure of Good Intentions. He is also President of the Economic Strategy Institute and a former trade negotiator in the Reagan Administration.
<!--emo&:angry:--><img src='style_emoticons/<#EMO_DIR#>/mad.gif' border='0' style='vertical-align:middle' alt='mad.gif' /><!--endemo--> [FONT=Arial][SIZE=1][COLOR=red]
Chindia Penny wise Thinking Foolish : Naipaul
There are no thinkers in India: Naipaul
Source: IANS. Image Source: IS

New York, Aug 9: Nobel Prize winning author V.S. Naipaul says that India and China "will completely alter the world" although he bemoans there "are no thinkers in India".

"It's a rather calamity of India today that there are no thinkers. A big country, a powerful country of a billion people. There are no thinkers in India. What is important today is the economic development of India and China that will completely alter the world," Naipaul told The New York Times in an interview.

In contrast "nothing that is happening in the Arab world has that capacity", Naipaul said, adding, "It has capacity for mischief. They are spreading their little wars to Indonesia, the Philippines and all these other places. But that's just mischief. What's happening in India and China will bend the world and will change it forever."

Naipaul, whose writings about the world of Islam and its troubles have been considered prophetic, had a sobering view of the Sep 11 terror attack on America. "What happened on Sep 11 was too astonishing. It is one of a kind, can't happen again. But in the end it has had no effect on the world. It has just been a spectacle like a bank raid in a western film. They will be caught by the sheriff eventually but they'd raid a few banks," he said.

On the Arab world he said "intellectually it is a great tyranny. Because it is a tyranny people's can't grow intellectually and be on the level of the world they envy. But it has always been like that. Religion has always been a tyranny and it becomes an expression of state power.
He spoke of his controversial views on Islam with undiminished vehemence. "I became very interested in the Islamic question, and thought I would try to understand it from the roots, ask very simple questions and somehow make a narrative of that discovery," he said.

He wondered to what extent "people who lock themselves away in belief...shut themselves away from the active busy world?" He said he was also interested in "to what extent without knowing it" they were "parasitic on that world"? He said there were "no thinkers to point out to them where their thoughts and their passion had led them"?

He reiterated his famous observation that as a form of writing the novel is dead. "What I felt was, if you spend your life just writing fiction, you are going to falsify your material," he said. "And the fictional form was going to force you to do things with the material, to dramatise it in a certain way. I thought nonfiction gave one a chance to explore the world, the other world, the world that one didn't know fully."

"I thought if I didn't have this resource of nonfiction I would have dried up perhaps. I'd have come to the end of my material, and would have done what a writer like Graham Greene did. You know, he took the Graham Greene figure to the Congo, took him to Argentina, took him to Haiti, for no rhyme or reason."
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Majority of sacked employees were Indians<b>........UK going nuts</b>
Press Trust of India

London, August 13, 2005
Asians, mostly <b>Indians, were among the majority of 800 workers </b>sacked by a catering firm at Heathrow airport, which triggered a wildcat strike by British Airways ground staff, disrupting flights and leaving thousands of people stranded.

Hundreds of ground staff walked out on Thursday in support of workers fired by US company Gate Gourmet, BA's in-flight meal supplier. Tara Shah, 39, and her husband Kiran worked at the catering firm. She was one of those sacked over megaphone. Kiran was off for the day so he was sacked through a letter.

"Many couples have been sacked," she told reporters. "We don't know what we are going to do. We have four children and a mortgage to pay. The way we have been treated is shocking."

Tara Shah said the company appeared to have miscalculated the scale of the opposition. "We are very strong and we are angry. This gives me hope."

Another sacked employee Sabajit Sidhu, a mother of two from Slough, said managers underestimated the resilience of their workers and the ties that unite airport workers of all races, ages, religions and both sexes.

"I work for Gate Gourmet but some of my relatives are baggage handlers," she said. "I am very proud of the fight we are showing. They treated us terribly.

"We were held in the canteen for hours and then they just pushed us out of the building. I worked there for six years. I think they have made a big mistake," said Sidhu.

Harinder Atwal, 45, joined the company a decade ago. The mother of three was a senior shop steward and said relations between staff and senior managers seemed to deteriorate 18 months ago.<!--QuoteEnd--><!--QuoteEEnd-->
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>The second age of globalisation </b>
Larry Elliott
Welcome to the second age of globalisation, and the labour practices of Victorian mill owners.

CRINOLINE AND croquet are out. As yet, no political activists have thrown themselves in front of the royal horse on Derby Day. Even so, some historians can spot the parallels. It is a time of rapid technological change. It is a period when the dominance of the world's superpower is coming under threat. It is an epoch when prosperity masks underlying economic strain. And, crucially, it is a time when policy-makers are confident that all is for the best in the best of all possible worlds. Welcome to the Edwardian summer of the second age of globalisation.

Spare a moment to take stock of what's been happening in the past few months. Let's start with the oil price, which has rocketed to more than $65 a barrel, more than double its level 18 months ago. The accepted wisdom is that we shouldn't worry our little heads about that, because the incentives are there for business to build new production and refining capacity, which will effortlessly bring demand and supply back into balance and bring crude prices back to $25 a barrel. As Tommy Cooper used to say, just like that.

Then there's the result of the French referendum on the European Constitution, seen as thick-headed luddites railing vainly against the modern world. What the French needed to realise, the argument went, was that there was no alternative to the reforms that would make the country more flexible, more competitive, more dynamic. Just the sort of reforms that allowed Gate Gourmet to sack hundreds of its staff at Heathrow after the sort of ultimatum that used to be handed out by Victorian mill owners. An alternative way of looking at the French "non" is that our neighbours translate "flexibility" as "you're fired."

Finally, take a squint at <b>the United States. Just like Britain a century ago, a period of unquestioned superiority is drawing to a close</b>. China is still a long way from matching America's wealth, but it is growing at a stupendous rate and economic strength brings geo-political clout. Already, there is evidence of a new scramble for Africa as Washington and Beijing compete for oil stocks. Moreover, beneath the surface of the U.S. economy, all is not well. Growth looks healthy enough, but the competition from China and elsewhere has meant the world's biggest economy now imports far more than it exports. The U.S. is living beyond its means, but in this time of studied complacency a current account deficit worth 6 per cent of gross domestic product is seen as a sign of strength, not weakness.

And so it goes on. Iraq is not another Vietnam, the bombs in London on 7/7 had nothing to do with Tony Blair's support for George W. Bush, rocketing oil prices do not mean a return to the recessions of the mid-1970s and early 1980s. Relax. Don't worry. These guys know what they're doing. In the U.K., the Government boasts proudly about its stewardship of the economy, when all the evidence is that activity collapses like a punctured souffle as soon as action is taken to restrain property speculation. Britain's manufacturing sector is a hollowed-out shell, claimant-count unemployment has risen for six months in a row, the Bank of England is at war with itself over whether interest rates should be cut, and the only person who believes there is not a gaping black hole in the public finances is the Chancellor of the Exchequer, of whom very little has been seen or heard since the election.

In this new Edwardian summer, comfort is taken from the fact that dearer oil has not had the savage inflationary consequences of 1973-74, when a fourfold increase in the cost of crude brought an abrupt end to a post-war boom that had gone on uninterrupted for a quarter of a century. True, the cost of living has been affected by higher transport costs, but we are talking of inflation at 2.3 per cent and not 27 per cent. Yet the idea that higher oil prices are of little consequence is fanciful. If people are paying more to fill up their cars it leaves them with less to spend on everything else, but there is a reluctance to consume less. In the 1970s, unions were strong and able to negotiate large, compensatory pay deals that served to intensify inflationary pressure. In 2005, that avenue is pretty much closed off, but the abolition of all the controls on credit that existed in the 1970s means that households are invited to borrow more rather than consume less. The knock-on effects of higher oil prices are thus felt in different ways — through high levels of indebtedness, in inflated asset prices, and in balance of payments deficits.

Back in 1914, there was a good case for saying that peace and prosperity would go on indefinitely. There had not been a major war involving all the great powers for 100 years, and the price level in Britain was lower in the year that the First World War started than it was in the year of Waterloo. New inventions and technology that would shape the 20th century — the motor car, the aircraft, the cinema — were being developed. Yet the following three decades did not see the final flowering of the first age of globalisation but its disintegration. Only after two world wars and a global slump was it accepted that warning signs had been there long before the assassination at Sarajevo but been tragically ignored.

History does not always repeat itself. It may be different this time, with the second age of globalisation avoiding the pitfalls of the first. There are those who point out, rightly, that modern industrial capitalism has proved mightily resilient these past 250 years, and that a sign of the enduring strength of the system has been the way it has apparently shrugged off everything — a stock market crash, 9/11, rising oil prices — that has been thrown at it in the half decade since the millennium. Even so, there are at least three reasons for concern. First, we have been here before. In terms of political economy, the first era of globalisation mirrored our own. There was a belief in unfettered capital flows, in free trade, and in the power of the market. It was a time of massive income inequality and unprecedented migration. Eventually, though, there was a backlash, manifested in a struggle between free traders and protectionists, and in rising labour militancy.

Secondly, the world is traditionally at its most fragile at times when the global balance of power is in flux. By the end of the 19th century, Britain's role as the hegemonic power was being challenged by the rise of the United States, Germany, and Japan while the Ottoman and Hapsburg empires were clearly in rapid decline. Looking ahead <b>from 2005, it is clear that over the next two or three decades, both China and India — which together account for almost half the world's population — will flex their muscles.</b>

Finally, there is the question of what rising oil prices tell us. The emergence of China and India means global demand for crude is likely to remain high at a time when many experts say production is about to top out. If supply constraints start to bite, any declines in the price are likely to be short-term cyclical affairs punctuating a long upward trend.

- Guardian Newspapers Limited 2005
(Larry Elliott is the Guardian's economics editor.)
<b>Free trade will help Americas compete with China, India: Bush</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->"A successful Doha Round will open up markets for farm products, and services, and industrial goods across this hemisphere and across the globe.

"Under Doha, every nation will gain -- and the developing world stands to gain the most. The World Bank estimates that if the Doha Round passes, 300 million people will be lifted from poverty", Bush said.

"My administration has offered a bold proposal for Doha that would substantially reduce agricultural tariffs and trade-distorting subsidies in a first stage -- and over a period of fifteen years, eliminate them altogether," he said.

Bush said the greatest obstacles to a successful Doha Round are the countries that stand firm in the way of dismantling the tariffs, and barriers, and trade-distorting subsidies that isolate the poor on this continent from the "great opportunities of the 21st century".

"Only an ambitious reform agenda in agriculture, and manufactured goods, and services can ensure that the benefits of free and fair trade are enjoyed by all people in all countries", he said.

Bush said he agreed with the criticism of the President of Brazil, Luiz Inacio Lula da Silva that trade distorting agricultural subsidies in the developed world were undercutting farmers in the developing world.

"Leaders who are concerned about the harmful effects of high tariffs and farm subsidies must move the Doha Round forward," Bush said
<!--emo&:ind--><img src='style_emoticons/<#EMO_DIR#>/india.gif' border='0' style='vertical-align:middle' alt='india.gif' /><!--endemo--> Soon, Indians may do the thinking for the West

AGENCIES[ FRIDAY, OCTOBER 27, 2006 02:03:31 AM]

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That shift has been driven by cost. The average ’05 Wall Street salary was almost $290,000. That’s about 6.6 times more than the nation’s average per-capita income of $43,740. Apply that multiple to India’s average income of $720, and you get to an annual salary of a bit more than $4,700.

Even at three or four times that level for qualified banking staff in India, the cost attractions are clear. Once you have a research team in India, it might make sense to open a trading floor. Deutsche Bank, Germany’s biggest bank, is hiring staff in Mumbai for its Global Markets Centre.

India has a couple of key advantages over China in the race to become the West’s offshore intellectual workforce. Language barriers are lower, and there’s a diaspora of Indian managers already running business units all around the world.

Most of the US and European literature on the growth of financial services in Asia focuses on whether the locals will lock up their domestic markets before Western firms can establish a beach-head to market insurance and banking and credit cards to the 2.4bn inhabitants of China and India.

“A threat may come from the use of local expertise to establish a separate rival indigenous financial services industry that shifts the balance of global services toward Asia,” said the City of London Corp in a report on how India and China might affect London’s financial district. Maybe that emphasis is wrong. Instead of focusing on what we might or might not be able to do to ‘them,’ we should be worrying about what ‘they’ might do to us.

While I’m not quite in the camp that says we should all be teaching our children Mandarin, the words of former Chinese Vice Premier Qian Qichen resonate with me. In the official China Daily newspaper’s November ’04 online edition, he said the US “is dreaming if it thought the 21st century was the American century.”

In Kessler’s ’04 article, he takes comfort from how US companies are “moving low margin, low paying jobs overseas, but, fortunately, are left with high margin, high paying intellectual property jobs.” Anyone who believes the US and Europe have some kind of monopoly on intellect is cruising for a bruising.

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