US debt spiral

By the year 2020, the United States is expected to have a total national debt load of approximately $20 trillion dollars. The cost to service the public portion of that debt is expected to be nearly $800 billion per year, and that's assuming that we don't encounter significantly higher interest rates.

  

• The combination of high debt, mounting spending pressures from population aging, and moderate growth pose the risk of fiscal/financial crisis – a low probability event but one with potentially enormous costs for the U.S. and global economies. 
• To reduce that risk, the US Administration and Congress should restore the health of the country's public finances through gradual but sustained further reductions in the deficit.
• Economic growth is vital for a nation's ability to sustain its public debt. Many debt crises in emerging economies have been caused by declines in growth. In advanced economies, the largest increases in debt ratios occurred when policymakers mistook a prolonged decline in growth for a temporary recession, and failed to cut spending or increase taxes. 
• Economic growth is key because when growth declines, revenues decline commensurately, and governments are reluctant to cut spending in response, so that more debt accumulates.
• Living with high debt is living dangerously. As larger deficits are financed, the debt also swells.
• An interest-debt spiral is inconceivable for the United States, long considered a safe haven and benefiting from the "exorbitant privilege" stemming from the dollar's role as a reserve currency. A country's status as a safe haven is ultimately based on investors' perceptions, which can change abruptly. With privilege comes responsibility, and preserving the credibility of the U.S. public finances is vital not only for its citizens but also for the stability of the international financial system.
• If it were possible to sustain high inflation and low interest rates, investors would take their funds abroad. That rules out the "financial repression" strategy. Alternative approaches such as outright default would be even more disruptive. To avoid spooking investors, candidates should not suggest inflation or default as potential means of slashing the debt. That leaves old-fashioned fiscal adjustment through spending cuts – which are increasingly difficult as population aging adds pressures on entitlement programs – and revenue increases. The pace of adjustment should be gradual, in order not to disrupt the global recovery. The U.S. debt ratio may thus be expected, at best, to decline slowly. 
• Imposing statutory caps on domestic and military spending will definitely temper the deficit but will get swamped by healthcare and social security spending that will rise with aging population. Also Trump wants to spend $1 trillion on infrastructure in 10 years, surge in military spending and large tax cuts for individuals and corporations which will only increase overall debt.
• Deficits are helpful when economies are in recession. But when they are in near full employment , as US economy is now, deficits should be kept below 3% to avoid drag on investment or worse a financial crisis.
• The share of public debt is expected to reach 89% of GDP by 2027, increasing the risk of financial crisis and raise possibility that investors will become skittish about financing government's borrowing, although many countries have far higher debt levels.
• Besides deficit, tepid economic growth is also a concern. Over next 10 years real economic growth may not exceed 1.9% per annum. The steadily growing economy appears to be giving policy makers more time.
• Prepare to live dangerously for several more years.

Any person or corporation or state or nation, which can't repay smaller debt today will certainly can't repay bigger debt in future. So it is in the interest of lenders to stop restructuring of loans, that has very poor track record (1 in 100 success rate or even less), and stop dealing with such over spending entities after few warnings. Eventually, such debts will get written off in some form or other. But lenders are also helpless about parking their earnings or trade surpluses safely. Balance is the key! Every one must learn to balance income & expenditure, imports & exports so on on real time basis. Not doing so is recklessness or irresponsibility or both. Stay away from such people.

Pablo Escobar - Wealthiest criminal

No one disputes that Pablo Escobar was a murderer, a torturer, and a kidnapper. But he was loved by many in Medellín, Colombia. and he is an object of fascination abroad. At his zenith, he was the most notorious outlaw on the planet, with control of some 80% of the cocaine entering the U.S. and of a fortune estimated at $30 billion. In many respects, he remains Colombia’s most famous citizen, a charismatic entrepreneur of boundless ambition who delighted in his Robin Hood image, even as he killed thousands of people to subvert the government. 

Pablo Emilio Escobar Gaviria (1949-1993)

• Pablo Escobar was a Colombian drug lord and narcoterrorist. His cartel supplied an estimated 80% of the cocaine smuggled into the United States at the height of his career, turning over US $21.9 billion a year in personal income. 
• He was called "The King of Cocaine" and was the wealthiest criminal in history, with an estimated known net worth of US $30 billion by the early 1990s (equivalent to about $56 billion as of 2017), making him one of the richest men in the world in his prime.
• It was estimated that 70 to 80 tons of cocaine were being shipped from Colombia to the U.S. monthly. His drug network competed with rival cartels domestically and abroad, resulting in murders of police officers, judges, locals, and prominent politicians.
• On December 2, 1993, police traced a phone call between Escobar and his son. Colombian special forces swooped in. Escobar was killed at the house, felled by three bullets as he stood on its roof. 
• His two brothers believe that he shot himself through the ear. The duo stated that Pablo "had committed suicide, he did not get killed. During all the years he would say that if he was really cornered without a way out, he would 'shoot himself through the ear'.
• Escobar made it to Congress in 1982, and began working to build a political constituency in and around Medellín. His electoral ambitions did not go very far. He was denounced as a gangster by Colombia’s justice minister. Escobar fought back, falsely accusing the minister of being in the pocket of narcos. But a newspaper editor dug up an old news story showing that Escobar had been arrested, seven years before, for the possession of thirty-nine pounds of cocaine. Escobar was ejected from Congress, and the FBI began investigating him. He went underground, and a long hunt began. Escobar spent seven years as a fugitive.
• He had killed innocent people, and cut victims into pieces, but had done so because his enemies had done that to his people, too. In those days he had been fighting what he thought was a war against a corrupt state and its extradition treaty with the United States.
• Escobar was held directly responsible by various media publications for the 1985 storming of the Colombian Supreme Court by left-wing guerrillas, known as M-19. The siege, which was in retaliation for the Supreme Court studying the constitutionality of Colombia's extradition treaty with the U.S., resulted in the murders of half the judges on the court M-19 and burn all papers and files on of cocaine smugglers who were under threat of being extradited to the U.S. by the Colombian government. Escobar was listed as a part of Los Extraditables. 
• Escobar was a hero to many in Medellín (especially the poor people). He was a natural at public relations, and he worked to create goodwill among the poor of Colombia. Escobar was also responsible for the construction of houses and football fields in western Colombia, which gained him popularity among the poor. He worked hard to cultivate his Robin Hood image, and frequently distributed money through housing projects and other civic activities, which gained him notable popularity among the locals of the towns that he frequented. Some people from Medellín often helped Escobar avoid police capture by serving as lookouts, hiding information from authorities, or doing whatever else they could to protect him. 
• At the height of his power, drug traffickers from Medellín and other areas were handing over between 20% and 35% of their Colombian cocaine-related profits to Escobar, as he was the one who shipped cocaine successfully to the United States.
• 13 Unbelievable Facts About Pablo Escobar.
• Pablo Escobar - Biography - Drug Dealer (1949–1993)
• At the height of Escobar’s power, he built himself a paradise: La Hacienda Nápoles, a 7,000 acre estate three hours from Medellín. Escobar spent years converting the property from an isolated wilderness to a refuge, with paved roads, artificial lakes, and a private zoo stocked with zebras, hippopotamuses, and giraffes, as well as a series of life-size dinosaur sculptures. Guests had the use of swimming pools, a party house, stables, a bullring, a vintage-car collection, and a fleet of speedboats. After Escobar’s death, the compound was abandoned, its structures ransacked by memento seekers and by treasure hunters. After being repossessed by the state, Hacienda Nápoles was reopened in 2007, as a theme park with a zoo, a water park, and several family-friendly hotels.
• A journalist Alonso Salazar suggested that he had merely been a conduit for the country’s bigotry and violent impulses. He said that Pablo Escobar’s legacy had profoundly altered political and social life. Narcotrafficking came along and just overwhelmed everything. Escobar débuted the instruments of terror, and afterward everyone used them.
• Psychopaths are loving with their kids and murderers. A woman insisted that she had not wanted to make Escobar a hero since he had kidnapped her mother and killed her uncle. But a  person that was able to do what Escobar did, has also a normal face. And people have to learn that that’s the way people are, they have two sides.
• Narconovelas set up an alternative moral political structure in which the state, government, politicians, law enforcement, bureaucrats, and soldiers are seldom portrayed as the good guys. The heroes are always either lone rangers or misunderstood drug dealers.
• Álvaro Uribe, former President of Colombia. bemoaned the appeal of antiheroes: “People love bandits, no matter what we do.” In a profoundly unequal country, Escobar represented a form of economic mobility. “When there are no regular paths to get out of where you are, the bandit is the one who makes it -- the one who can jump ahead.”  
• Escobar also appealed to a perverse sense of patriotism. The oath of Los Extraditables “Better a tomb in Colombia than a cell in the United States” resonated with Latin Americans sensitive about Yankee intervention.
• In 2009, Escobar’s son, Juan Pablo, appeared in a documentary called “Sins of My Father,” in which he contacted victims of his father and apologized on behalf of his family. 
• Juan Escobar, his mother, and his sister Manuella, at first fled to Mozambique. Juan Pablo chose the name "Sebastián Marroquín" from the telephone book and adopted it as his new name since he needed a new identity as he believed his original name was cursed. Manuella now lives in Central North Carolina under an alias. 
• “I know about everything my father did, and I will go to each and every one of the families of his victims to ask forgiveness. But I’m not legally culpable. My personal slogan is ‘I inherited a mountain of shit. So what am I supposed to do with it?’ ”
• A professor wrote, “We live the culture of drug trafficking, inaesthetic, values, and references. We are a nation that took on the narco idea that anything goes if it will get you out of poverty: some tits, a weapon, corruption, trafficking coca, being a guerrilla or a paramilitary fighter, or being in government.” He was careful to note that the narco aesthetic was not merely bad taste. It was a way of life among the dispossessed communities that look to modernity and have found in money the only way to exist in the world.
• Escobar left behind a model of success: build support among the disenfranchised by providing them with money and power they would not otherwise have; in return, they will be your loyalists, your spies, and your gunmen. For the middle class, use your wealth to corrupt policemen, generals, judges, and politicians.

He showed us the path we must never take as a society because it's the path to self-destruction, the loss of values and a place where life ceases to have importance ...  Pablo Escobar's son Sebastián Marroquín

A novelist described Escobar as a monstrous Pied Piper: “At the height of his splendor, people put up altars with his picture and lit candles to him in the slums of Medellín. It was believed he could perform miracles. No Colombian in history ever possessed or exercised a talent like his for shaping public opinion. And none had a greater power to corrupt. The most unsettling and dangerous aspect of his personality was his total inability to distinguish between good and evil.”

After Escobar, the idea of rebellion based on ideology was largely supplanted by the remorseless pursuit of profit and power. In places along his supply chain, including Mexico and in Central America, the remnants of his operation have grown into insurgent gangs, and states have succumbed to corruption and internal conflict. Today’s youth still see narcotrafficking as a way to make quick money. Society doesn’t change, really. And those with the greatest responsibility for this are those in the media, with their television series and their books.

Jaitley's Rs.50K stimulus package. Will it work?

• Arun Jaitley more or less announced Rs.50,000 economic stimulus package by loosening fiscal deficit from 3.2 to 3.7% to halt economic slow down which slipped from 7.1% to 5.7%. It was actually projected to grow from 7.1% to 8.1% this year but for demonetization, unprepared and hurried roll out of 'mangled' GST etc.
• History and experience had shown that any where in the world 'stimulus packages' never yielded targeted results except giving some initial confidence boost.
• Chinese government went on spending trillions of dollars since 2008 to boost its sagging GDP growth rate but ended up in piling up huge national debt and white elephant trophy projects which are even more difficult to maintain & service. GDP remained stagnant below 7%. 
• This Rs.50,000 comes from printing currency notes which will result in higher 'inflation' which in turn hurts poor & poorest most. It tantamount to taxing the lower classes for the benefit of upper classes who gets the benefits. In other words we are following the economic model aptly described as "Socialize the risks and privatize profits". Ridiculous!
• The 2009 US $787bn Obama's stimulus package had actully contracted economy by 2.8% and jobs saved were no where nearer to targeted saving of upto 2.3 million. Tax concessions which were expected to increase consumer spending have resulted in individuals saving those tax concessions in view of uncertain future. The Stimulus for small business helped create jobs. The aid helped, but many states were so underwater that their losses outweighed the federal assistance.
• More than stimulus package which is a 'monetary policy', a 'fiscal policy' would give much better results rather little bit slowly. 

If you haven't done anything for yourselves, your life is not wasted.

In democracy, governments can't be overthrown; they collapse under their own weight.

If stimulus package solves problems, they why limit it to Rs.50,000 crores, make it Rs.5,00,000 crores. The caution indicates their doubts about results. A popular saying says 'if you are not sure of results, then don't do it'. Modi's senseless decisions of demonetization and subsequent unprepared, hurried and mangled GST roll out have hit the economy by several lakhs of crores of rupees etc are such undemocratic decisions that is short off war with common man. Consequences are surfacing incessantly there after. There is no escape from consequences of wrong doings. Stimulus package with a meager amount is another attempt to divert public attention and to claim government is responsive. What is needed is sound thinking, careful planning and meticulous implementation. None of the Modi's team members are good for anything. It doesn't require more than common sense to say that this stimulus package will not succeed and nation will be burdened and people impoverished. At best this will add some more fire to Modi's advertisement and publicity! Within three days of demonetization, it was amply clear that it was heading for colossal failure and arrogant Modi refused to take any corrective steps like restoring status quo ante or allowing old notes also to continue for at least three months. Instead he made impassioned appeal to people to bear the pain for 50 days and thereafter targeted results would be imminent. But what happened is 'all pain and no gain'. Even Supreme Court, the constitution protector, failed in its job by remaining a mute spectator by passing just a remark 'discontinuing of higher denomination notes appears to be carpet bombing and not surgical strike'. Modi is worse than VP Singh of 1990. One more foolish decision by Modi will be enough to see Rahul Gandhi as PM in 2019. 

Democracy and its Perils

• Democracy is a political system which combines the elements of fairness, legitimacy and effectiveness. It is the least worst system. 
• Democracy is imperfect and, when misapplied or incorrectly interpreted, can be saddled with flaws and weaknesses. 
• Democracy is the most expensive & inefficient form of governance.
• A democracy is not a democracy unless it has independent and strong institutions that help facilitate good governance and right thinking citizens demanding accountability and transparency.
• Proper democracy is far more than a perpetual ballot process. It must include deliberation, mature independent institutions and checks and balances. It may include educated citizens, strong civil society and strong laws.
• Freedom is an essential part of democracy. Freedom is essential for both the ruled and the ruler.
• Unfettered freedom brings with it its own hazards that would undermine the institutions that help sustain democracy.
• The victim of democracy is the politics itself. Politics in a democratic set up tends to be looked upon with contempt by the people. It is much maligned and abused field in all the democracies.
• Politicians once elected to power become the custodians and abusers of power.
• Bad politics leads to corruption. As the people responsible for corruption are ‘enabled’ to loot the exchequer either by the loopholes in the laws or indifferent ‘people’ who form the very basis of democracy.
• Corruption has reached gargantuan proportions, because of the indifferent attitude of the people and enabling environment provided by democracy for the corrupt to practice their art. 
• Democracy aides both the individual and the ‘corrupt’ authority. Democracy with weak institutions gives them free hand to run the government, they tend to err, and err with impunity.
• Criminalization of politics is the biggest peril of democracy. With it comes misuse of position and authority. It inevitably leads to corruption.
• Corruption directly brings underdevelopment and spawns poverty. In India poverty is the major benefactor for the politicians. As long as poverty is sustained, they can amass wealth – always unaccounted.
• Democracy promotes capitalism which in turn results in uneven wealth distribution. Rich becomes much richer while poor remain poorer.
• Risk of capitalism is usually socialized while profits gets privatized.
• Democracy in itself is not a threat, but any weak link within it is bound to weaken the whole structure.
• Democracy has become synonymous with elections and is reduced to the process of elections.
• In democracy poor people vote, and the elected become rich at the cost of the poor. It’s a government of the rich, for the poor to sustain the poverty. This sounds cynical, but hard facts vindicate the statement. If 70% of India’s population still earns less than Rs 50 per day, even after 70 years of independence, should we compliment ourselves or introspect?
• Development has suffered more in democracy than in other forms of governments. Though it is fashionable to say that democracy is better than despotism despite lack of development, does it do justice to the vast millions who go to sleep hungry?
• Within democracy, we need a change of mindset both of the people and politicians in their attitude towards development. We are witnessing the loot of our resources by the powerful few who are covertly supported by the government machinery. Every penny that’s put to improve the lot of this country is unaccounted for. The crux is lack of accountability.
• Education of the masses and strong institutions is a solution to most problems in India.
• Institutions which are not pestered and interfered by the ruling classes perform better. The fear that these institutions if given complete autonomy would grow as a threat is unfounded. The Supreme Court of India and Election commission of India are governed by bureaucrats, not by the elected politicians. These institutions function well within the scope of our constitution.
• Our military has gained reputation for being fair to its people and the constitution. Where there is no interference by the politics, the institutions serve well. For a democracy to thrive and bring development to the masses, we need independent institutions to act as check and balances on the government.
• We need universities which are not at the mercy of government; we need public service commissions not interfered in their functioning by the government; we need a strong Lokpal to punish the corrupt; strong local governments to bring development at the bottom; independent CBI and a police force which is pro-people; the list goes on.
• These changes are not difficult to bring on. It is the will which is missing, lest it affects the power of few to amass the wealth. Perils of democracy are the result of loopholes within it. To plug them, we need to fight. Of course, non-violently.
• A blanket endorsement of it as a convenient panacea will do more harm than good.
• There are very few nations on this Earth, which openly reject the notion of democracy. Most countries espouse it, or at least offer it lip service.
• Myth #1: The people can do no wrong.  The legitimacy of majority rule with no reservations or caveats raises the issue of sub-units within the voters viz territorial, cultural, ethnic or religious. What happens if the people change their minds? Democracy cannot be just if it is not just over time. Does a coalition automatically legitimize the action of individuals or groups or nations without regard to higher principles of morality or ethics? The doctrine of popular infallibility can be kept as a useful reference point but must not be abused or overextended.
• Myth # 2: Direct  democracy is always better than representative democracy. Given the volatility of public opinion, the complexity of social psychology and the possibility of inter generational conflicts, the representative democracy is often superior to direct democracy, with the representatives acting as buffer. Mistakes can then be attributed to representatives and not to the people. The conventional assumption is that the will of the people should always trump that of the elites. The principal arguments against leaving too many decisions to the direct appreciation of the masses can be summarized as follows: (1) Uninformed or insufficiently informed electorate (2) Influence of money and media (3) People changing their mind (4) Contradictory Referenda (5) Deleterious effect on public policy.
• Myth #3: Democracy trumps all other social goals. The backlash against Dumb Democracy is the realization that democratization, although a valid goal, is not the only desirable one that a Society can legitimately aspire to. The following compete for priority with democracy. (1) Peace (2) Justice (3) Liberty & Freedom (4) Security (5) Good governance (6) Escape from extreme poverty (7) Public Vs Private goods (8) Good health (9) Traditional values (10) Climate change and sustainable development. 
• Myth #4: Democratic countries will never go to war against each other. There is a frequent assumption that once a country becomes democratic it will renounce violence, avoid going to war especially against other democracies, and try to resolve outstanding problems by peaceful means. Experience shows that the relationship between democracy and war is actually very complex and far from straightforward. 
• Myth #5: National democracy automatically leads to global democracy. Will a world composed of democratic nation-states automatically mean that it will also be democratic? This question is as complex and there are no simple answers. The UN Security Council, with coercive powers, is composed of five permanent members with veto powers who appointed themselves to that position. The other non-permanent members are elected by the UN General Assembly, but do not have veto power. The elected President of United States has real authority over the whole world by virtue of the overwhelming military power, which it has used in Iraq and threatens to do so elsewhere. There is a serious democratic deficit where 2% of the world’s voting population manages to have a determining influence on the entire world.
• There is no formula of global democracy and every formula suffer from inefficiencies and conflict of goals. The attempted simple transition from national to global democracy without a lot of preparation and adaptation is therefore destined to fail unless treated with a more sophisticated analysis.
• Other than democracy, there are no other known political alternatives which will work in the long run.  There is no permanent security in tyrants and the checks and balances of democracy make it the only sustainable political system, which can claim both long-term efficiency and legitimacy. Democracy must prevail because of mounting global interdependence requiring team responses and collective decision-making. A leader has to motivate his troops and keep their confidence. No single individual holds absolute power anymore, and everyone has to report to some group or a parliament, all leaders are accountable to some committee of peers, which makes democracy sustainable, indispensable and inevitable. 
• The modalities of this accountability have to be modulated and perfected.
• The construction of a democratic state must be gradual and well planned. It can rarely be imposed by non-democratic means. Democracy by force of arms is self-defeating. 

 In framing a government which is to be administered by men over men, the great 
difficulty lies in this: you must first enable the government to control the governed; 
and in the next place oblige it to control itself ... James Madison

The Perils of Dumb Democracy


Ambedkar described constitution as a fundamental document stated that the purpose of a constitution is not merely to create the organs of the state but to limit their authority because if no limitation was imposed upon the authority of the organs, there will be complete tyranny and complete oppression. The legislature may be free to frame any law; the executive may be free to take any decision, and the Supreme Court may be free to give any interpretation of the law. It would result in utter chaos. Constitutional morality is not a natural sentiment. It has to be cultivated. We must realise that our people have yet to learn it. Democracy in India is only a top-dressing on an Indian soil which is essentially undemocratic. Demonetisation has negated the fundamental and constitutional rights of Indians. By forcing every Indian, and not just the black marketers and counterfeiters, to stand in queues to withdraw hard earned money, our elected government has insulted all. Citizens have been temporarily deprived of property by a single fiat, even though the constitution says this can only be done with the authority of law. Countless have died, been rendered jobless, hungry and homeless. Is this a democratic act? RBI has been reduced to cipher. Fiscal policy has become political and the finance ministry redundant. The parliament and the cabinet have been turned into a mere formality. Judiciary appears seriously weakened. It is not easy for the victims of police and investigative agencies to get any relief against wrongful detentions and prosecutions. But it is the concerted attack on institution after institution by the Modi government that raises serious concerns. Bhakti in religion may be a road to the salvation of the soul. But in politics, bhakti or hero-worship is a sure road to degradation and to eventual dictatorship. India has moved away from constitutional democracy to populist democracy. Ambedkar is losing. Modi is winning.