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Thursday, October 4, 2012

Budget fallacies Budget of 2010

The joint front dharna was a grand success. After all the other unions namely AIIEA,CLASS I FEDERATION leaders spoke. On behalf of IWO SZO[BMS] Balayogi spoke. As all the others spoke about various aspects of wage revision and the dubious parameters that LIC management follows to dodge a meaningful negotiation Balayogi spoke about he root cause as to why the government is least interested in settling a meaningful wage revision for banks and lic. Transcription  of Balayogi’s speech on 6th March 2010.

“I spoke finally and I wanted to get into the root cause of  why the government is least interested in settling a meaningful wage revision for banks and LIC? It is because we are Indians and we work for Indian corporation. The MPs ruling the nation are a bunch of looter who are focused only on looting and putting all the burden on the common man and the working class. I am not saying this out of any animosity towards any MP nor am I scripting any dialogue for a Vijayakanth movie. This is a statement of fact and through 10 points I shall lead you to understand the veracity of this statement.

1] This budgnet is pegged at a whopping $239 billion. The FM finishes presenting te budget by 1.30 and by there is euphoria in Bombay Stock Exchange. stock markets   rally round.Sensex had  a record surge of more than 300 points –how is it possible for sensex to make a knee jerk reaction and surge 300 points within an hour? and why? it is because of the biggest frauds unknown in financial history of the world introduced by PC [ the Pinnacle of Corruption] the mother of all frauds greater than Harshad Methas, Bofors or Thelgi or even Spectrum. what it is  ? I  will come to that later on.

2] The FM pledges to cut fiscal deficit of 5.5 %, without corresponding cut in the profits of capitalists luxuries, without taking any step to stop the steep inflation, without curtailing government borrowings, without doing anything about curtailing the ever expanding net of indirect taxes, and simultaneously hiking fuel prices and so on and so forth. It is  a pledge to put all burden on the back of the working people, there was jubilation in business world. This made the big business especially cheerful in advance, anticipating a budget without any hassles from allies or ineffective opposition.Attitude of the business world, to the Union budget, is best expressed in the words of H.M. Nerukar, MD, Tata Steel, who lauded it saying that, “It has surprised mostly on the positive side. It is a good budget which lays out the target and road map of the Government to maintain growth momentum, while ensuring greater fiscal prudence in the near term”.Why the govt is so unconcerned about workers and common man because is there is no elections in the near future except  for one state assembly of Bihar.

3] This budget has raised the state borrowings to unprecedented height, with an abrupt 1.3% hike. With this estimate government borrowings would touch Rs.15,000 crore per week.Why this huge borrowing? is it to increase the salaries of public sector employees or to increase the salaries of workers in unorganised sectors or to fund social sector lik health and education or is it for infrastructure or is it for any other welfare measure ? In fact for education the FM  mentioned  allocation on primary education raised from rs.26,800 crore to rs.31,300 crore. How cleverly they use logical fallacies even when reading out  figures while mentioning government borrowings he says only 1.3 % whereas on education he mentions exact rupees because if he mentions the percentage, then the blatant fact would be out. Allocation for social sector both health and education together has been increased from .036% to.037%  i.e an increase of just .01% whereas before the election when Rahul was roaming the streets of Indian from Kashmir to Kanyakumari to woo the youth they  promised 3% increase in allocation for education alone? So the government borrowings are for none of these. It is to compensate for  the measures taken by the government to set-off the losses of big business during the recent financial crisis. the direct aid, concessions and subsidies given to the business enterprise, resulted in huge fiscal deficit of $75.8 billion, part of which government plans to make up through state borrowings.Repayments for these borrowings would give further push to future budget deficits and resultant inflation..

4] This high level of  state borrowings and fiscal deficit as admitted by the finance ministry at 5.5% are the two greatest dangers which can plunge the economy into greater difficulty causing greater inflation. why and how? I am not making any expert prediction or floating my opinion. This has been said by  world bank president Robert Zoellick “ we're definitely not out of the woods by any means,…. the pace of recovery is going to be quite uncertain,……. as economies recover there were also hidden dangers and re-pricing of sovereign credit risk would be a challenge in 2010”.

5] Since the govt has to borrow as per  this budget where from they can borrow internally, definitely not from the big business houses which they have bailed out it would be like asking a person who has just survived from coma to donate blood, they cannot borrow from the TATAS, BIRLAS AND AMBANIS. They can borrow only  from the government owned financial institutions so  in banking sector the government has proposed a capital infusion of Rs.165 billion as against the infusion of Rs.19 billion in 2009-10.

6] They will infuse Rs.165 billion and take out Rs.200 billion and let the nationalized banks bleed to death. That is their hidden agenda but to just divert the public attention they have come out with announcements like there would be nationalized bank for every area with a population of 2000 plus and to promote savings they are going to implement calculation of interest on a daily basis on all savings account from 10th to 30th  of every month. Besides diverting the attention there is a loot here known as 4M technique which is beyond the purview of this meeting, so let me not get into it.

7] Other area where they can take money out freely is the other profitable public sector units, so FM has declared in the budget that his government would raise Rs.25000 Cr through disinvestment

8] Having done all these, the budget also announced two big jokes
A] Government to set up apex level financial stability and development council. Where is the finance to stabilize and develop?
 B] RBI to release additional licenses to PVT sector banks and non-banking financial institutions
 Why they are big jokes?  Because one in this budget.
9] Government intends to make FDI policy user- friendly by compiling all guidelines into one document, user friendly means to exempt it from most of the statutory regulations.
10] Coming to the first point there are 3 types of crisis. Crisis that happens beyond our control, number two the crisis that is created by someone else and we are required to face and rectify the situation and third  the crisis that we create. In recent financial history of India in 1991 there was a crisis which was inherited when Manmohan Singh was FM and he was forced to pledge gold with international groups to avoid becoming a defaulter. At that time he was financial wizard but now he has become a spineless lizard crawling before Sonia. There is another crisis that we create to confuse and divert the attention of all the others and so that we can joyfully loot. For example here hundreds of ladies are sitting if I let loose some 10 snakes you all would run leaving your purses then I can loot them. This as been done by P.Chidambaram through the most perfidious financial derivative called participatory notes [PNs] something unheard of and  unprecedented in world financial history. What is this PN? It is a piece of paper issued by designated financial institutions abroad such as Fidelity Investments and Morgan Stanley, which paper does not carry any detail except the money worth, and can be purchased by anyone with cash even without disclosing to any regulatory authority his or her name and the source of the funds! that piece of paper was acceptable for transactions in the indian stock market for buying and selling shares as also short a special order, the finance ministry under chidambaram exempted the PNs from the purview of SEBI, RBI, Enforcement Directorate and CBI ! the SEBI headed then by Damodaran protested and repeatedly wrote to the ministry. The RBI Governor Reddy kept warning of dangers from PNs. All were ignored. Damodaran and Reddy were denied usual   extensions of tenure.
Thus, billions of dollars of  hot money entered into the Mumbai stock exchange, that was used for buying and selling shares with pns almost like cash, in fact better because cash transactions of over rs.10,000 have to be reported with details to the income tax department. Moreover if it came via Mauritius, it did not have to pay capital gains tax,because govt of india facilitated this through a special Mauritius Tax Treaty . So, by september 2008 PNs accounted for 60 percent of the FII funds in the stock market.
This is nothing but Indian government sponsored,sanctioned and sanctified Hawalla. Why the US which is so very worried about money laundering which may get into the hands of terrorists and has been scrupulously following all movements of money across the globe has not bothered to question this? Why the world bank has not questioned this? Why the ineffective opposition has not questioned this? Why the allies have  not questioned this? Why the big business houses which both benefited as well as suffered due to this did not question this?
US has  not questioned this because when the financial crisis was officially acknowledged in the US following the collapse of Fannie Mae and Freddie Mac, two government owned loan providers, followed by Lehman Brothers in september 2008, a liquidity crunch developed in US and later in Europe. Interest rates rose, liquidity froze and funds were in demand. The PNs, which were  hot money  or portfolio funds, just shipped out of India without any hindrance to the tune $60 billion in october 2008-january 2009 causing a stock market crash symbolized by the steep fall in the sensex index  and  it is this that caused the financial crisis in India and not the US sub-prime loan as it was projected . We must all know that first the sensex did not shoot up because of US sub prime loans.
Why the ineffective opposition has not questioned this? Why the allies have  not questioned this? Why the big business houses which both benefited as well as suffered due to this did not question this?
Because PNs were basically emanated from the loot parked in Swiss Banks by corrupt politicians and business persons. Till PNs came into existence this loot was just stashed away in secret accounts and they were paying service charges to the banks for keeping it secretly ! now these bandits and pirates could earn easily on their ill-gotten money by playing anonymously on the stock market, and through consequent capital gains without having to pay taxes that honest citizens have to, thanks to the dubious Mauritius Tac Treaty. In fact so large PNs have become in value, that the movement of the stock market, bulls and bears, can be manipulated by the free entry and exit of this derivative. today thus, our stock market has become rigged. it can be made to rise and fall at will of PN holders  cartel   of corrupt politicians and business persons. The sufferers are middle class who hang on to shares to improve on the yield of their pensions and provident funds but then who cares for them in India? Even the media has been muffled or compromised to remain silent on PNs by this cartel.The national security adviser M.K. Narayanan aired his observation  that terrorists too could be or were earning on the Indian Stock Market [obviously via the anonymous PNs] to finance killing of indians, but he was silenced. Now he is away as governor of west bengal.
So even if a bank employees go on one month strike PC can get the necessary funds for the ccountry to operate after all he has helped US to bail out of a major crisis thatswhy US has awarded him as the best Finance Minister.
In fact I recently read a joke .  After the budget Sonia called Manmohan, Pranab and PC. She asked them to get into the next room there were three men  a PSYCHLOGIST, a PSYCHATRIST and a NEURO SURGEON. They had a small spoon, coffee cup and a bucket respectively. There was huge black bath tub full of water and the room opened into the beautiful garden of Sonia’s house. They were asked to empty the tub without spilling water in the room. The person who performs best will be let out and he other two must occupy two VIP beds in a mental hospital.
Immediately pranab became jubilant and said ‘ I know if I take the spoon you will put me in bed. So I will take the coffee cup and take water and fill the bucket then water the garden.’
Then MANMOHAN Singh said ‘ Forget about all my heart problem for Soniaji I can lift the bucket itself carefully and  carry it and water the garden.
Then our Tamilian PC turned around laughed at both of them, and requested the psychologist to give beds near the window to both of them, then,  put his hand in the tub pulled the plug the whole water in the tub emptied without a drop of spill. He is a master in emptying and his attention is focused in emptying  whereas, the other two were distracted by the garden and misplaced loyalty  to the owner of the garden.
Arise , awake and stop not till you nail this crime on the nation and its citizens.”

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