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Idiot’s guide to global and domestic debt

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Immortal invisible god only wise

by Kumar David

“In light inaccessible hid from our eyes”, is a line from an 1867 hymn set to the tune of a Welsh ballad: it is not a quip about the mystery of global debt but it could well be. Economists don’t enlighten you on the nature and ubiquity of debt because they are muddled themselves. The eclectic hither and thither is recounted in The Economist’s ‘A new era of economics’ – 25 July 2020. There is no shared paradigm, laymen have to cogitate and pick up as best they can. Scientists, finicky about cause and effect cannot suppress the need to frame things in intelligible terms; see if you can pick up anything useful from this idiot’s guide to the ubiquity and explosion of global and domestic public and private indebtedness. Public or national refers to central and local governments. Private is corporate, non-central-bank, bank and household borrowing; the last includes mortgages, personal overdrafts and credit-card indebtedness.

There have been four stages in economic theology since the 1930s. The Keynesian gambit, the neoliberal (Friedman-monetarist) nightmare and the two post-2009 phases. Yes, two phases, the first till about 2018 and the second thereafter which accelerated with Covid-19. I say little on Keynesian macroeconomics or neo-liberalism; the former reigned from the Great Depression till the 1970s when it was invalidated by stagflation, and the latter, that is the neo-liberalism of Pinochet-Regan-Thatcher-IMF, gripped the world by the throat till the 1990s. The last nail in the coffin of dying neo-liberalism was the Great Recession (GR) of 2009-10; the last captain of that sinking ship, Tony Blair, earning himself the epithet Blatcherist. GR proved that unchecked free-market capitalism contained the germs of its destruction in its own DNA, collapsing under its own rationale.

The ratios vary from country to country. In the US Public Debt is about 100% of GDP but semi-Public Debt is small while Corporate and Private Debt are roughly 50% and 70% of GDP. In China Public Debt is not large (48% oh GDP) but Provincial Governments have run wild with infrastructure and waste, which summing up with household debt to over 200% of GDP. In Japan government, debt is 230% of GDP but corporate debt is below 10% and household debt is minimal. For Sri Lanka the big item is Public Debt; nearly 90% of GDP. It doesn’t sound bad, comparatively, but we don’t have the resources to service it.

A feature of the global economy since the 1990s is mounting debt, now astronomical public plus corporate debt, and in the run up to GR acute household mortgages. Strangely, no one asks: “If-all the world is in debt, who is the creditor? Who owns the loot? What the source?” Leaving aside the printing press, a substantive topic of this essay, there are two tangible sources; the enormous wealth accumulated in the hands of the ultra-rich (the “One-Percent”) and public savings in provident funds, social-security coffers and in Japan Post Office Savings accounts. The former is the surplus created by social labour appropriated by capital or siphoned into institutions called private equity, mutual and hedge funds and into mighty investment banks. Maybe half Lanka’s foreign debt is owned to these money-market funds, the other portion to multi-lateral agencies IMF, ADB and World Bank and foreign governments, mainly China and its state banking arms. The point I am driving is that the people of the poor half of the world are deeply in hock to the moguls of international finance capital, including the mighty One-Percent.

The first period of the post-GR phase which lasted for a little less than a decade was characterised in metropolitan centres by measures intended to revive economic growth. Credit was created by central banks (US Fed, EU’s ECB, Japan’s BoJ and limping along, the Bank of England) by the shipload and pumped out to Treasuries, or by purchases of corporate bonds, or shoved into bank vaults. The hope was that there would be investment, growth and employment. It fell flat on its face. Though employment did pick up a bit for reasons too long to detail here, production-capital did not take the ball and run. Instead finance took the money and put it into shares (equities), commercial property and Treasury Bonds, creating an asset bubble.

Central bank money did not go into economic activity; it was siphoned through the ultra-rich into the asset bubble, that is the rich got richer. For this reason, demand for goods and services did not grow (how many bottles of Premier Cru can a millionaire imbibe?). Sans demand, economic growth did not take off in the US, Europe or Japan, hence inflation was stuck below 2% and the economy did not fire up (if inflation escalates, the economy exudes full employment and output is near capacity-output they call it “heating up”). Economic misery in the lower orders created anger and populism (Occupy Movements and radical fundamentalisms). Outrage at the rich getting richer and everyone else getting poorer also triggered the Trump Base, the grip of Marine Le Penn, the popularity of Nigel French, Brexit, near fascists Hungary’s Victor Oban and Poland’s Andrzej Duda, and Hindutva’s Muslim-hating Amit Shah and Narendra Modi. In sum the first phase of post-GR intervention was neither an economic success nor was it politically soothing, it was a failure.

Enter the second post-GR stage starting in 2018 but fouled up and drowned by covid-19. The world’s ruling powers had to take note that growth was not picking up, political resentment was swelling, inflation doggedly low and interest rates peering into the moat of negativity. Then corona hit! It summoned gigantic “stimulus” packages; in the domain of economic theory four schools of were jostling for space.

 

MMT (Modern Monetary Theory)

MMT is really odd in the eyes of regular economists; I too find it difficult to digest. Were I to exaggerate but only a bit, the theory says print money, print as much as you like, it won’t and it can’t do harm. Governments should not break their heads about deficits, central banks should not let inflation fears hold them back, they should create stimulus money by the bathtub and pour it into investment markets; household should party late into the night. The argument is that by turbo charging the economy with cash, productive activity will take off and rising output will defeat the demon of galloping inflation. The more serious-minded supporters of this school want to keep it going only till inflation and growth pick up and unemployment falls sufficiently, then slacken. But I am not persuaded. When inflation hits it hits fast and hard. Governments and the unwary, soaked in debt, will be overwhelmed by rapidly rising interest rates which will drive them to bankruptcy. Going in search of a free lunch is never unproblematic.

 

Fiscal splurge driven  strategies (FS)

The more conventional last-ditch efforts are Fiscal Splurge (FS) and Monetary Control (MC). The former is the de facto method employed, whether consciously named FS or not, in broke, crisis driven, debt wracked or plain basket economies. While these pejoratives do not all apply to Lanka, some do. The bottom line is that in poor countries with high populist expectations, or enjoying electoral democracy that can oust politicians, governments if they wish to survive, have no option but to resort to fiscal deficits. That is spend more than their revenues to keep the masses stoned, an alternative opiate to religion. In a debt-intoxicated country this means monetary policy and fiscal policy have to merge, the former becomes a service provider to the latter; Prof Laxman transmutes into front office receptionist for President and PM.

In the long-term fiscal profligacy has disastrous consequences that are so well-known that I don’t need to dwell on the it here.

 

Monetary control and manipulation (MC)

This is typical of the EU; the US is a mix of FS and MC. With MC power rests in the hands of the central bank not government, finance ministry or treasury – FS is the other way round. The prime example of MC is the European Central Bank, I dare say with the Bundesbank breathing down its neck, which drives a chariot whose lowly drays are individual EU governments. BoJ too is not a sub-contractor of the Japanese government. The Reserve Bank of India tried to talk big in the era of Raghuram Rajan but Governors and the Bank have since been cut down to size. Central banks in dominance use interest rates and money supply to manage inflation with an eye on the side turned towards employment and growth.

 

Restructuring (social concern or state-led)

This is an outlier in a discussion of how capitalist economies (including Scandinavian version) are struggling to cope with explosive debt, income and wealth gaps, and retain social instability. The two key concepts in understanding this fourth option are restructuring and involvement of the state. State-led, but market sensitive and capitalism-accommodative, one party China seems an obvious prototype but it is not an exemplar because this essay is focussed on capitalist (the majority) nations of the world. An imagined President Bernie Sanders Administration in the US is a hypothetical example of this option. I don’t need to explain how this will be different from the US we know, but the point of this essay is that US national debt is large and will be larger in the hypothetical case. At the moment in the debate about coping with a belly-up economy, staggering stimulus packages are on Congress’ table – the Republicans want to cap it at $2 trillion, Democrats to push it up to $3 trillion. Hypothetical Bernie and his Squad will make it larger.

Whatever the version, stimulus money will be part channelled to government (Treasury Bond purchase) and a comparable sum will be siphoned into corporate bonds and private assets. Soaring debt will undermine faith in America’s ability to measure up to its commitments and will damage faith in the dollar as the world’s reserve currency. Debt has come to stay in every corner, an unwelcome guest determined to hang on till there is a global transformation. Sri Lanka is a footnote to the story.

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Features

Hair Growth and Thickness

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LOOK GOOD – with Disna

 

* Oil:

Oiling is an old home remedy for hair growth and thickness. Oiling is also used for the strength, shine, and length of hair, from ancient times. The use of coconut oil, especially, is very effective when it comes to the amplification of hair health. Additionally, there are many essential oils for faster hair growth which you can use, too.

* How to Use: Generally, hair oiling works best when applied overnight. You could use this therapy every night, or after each night, then wash your hair, in the morning, before heading for studies, or work.

 

* Aloe Vera:

Aloe vera has long been used as a home remedy for hair growth, thickness, and treating hair loss problems It contains vitamins A, C, and E. All three of these vitamins are known to contribute to cell turnover, supporting healthy cell growth and shiny hair. Plus, vitamin B-12 and folic acid are also included in aloe vera gel. Both of these elements can keep your hair from falling out. Aloe vera plants can be easily grown indoors. A leaf can be plucked, occasionally, and cut open to reveal its gel. This gel needs to be applied on the scalp, basically, to provide nourishment to the roots.

*  How to Use:

Rub this gel on your head properly, leaving no area dry; wash after half an hour or so. Keeping this massage as a part of your weekly routine will eventually make your hair thick and long.

 

*  Green Tea:

Green tea is often consumed as a home remedy for weight loss. Surprisingly, it has many other benefits, including hair-related benefits.

* How to Use:

Consuming green tea once every day can add to the strength and length of your hair. If your body is extremely comfortable with green tea, then you may even consume it twice every day.

 

* Onion Juice:

A bi-weekly application of onion juice can relieve you of your tension, regarding hair health. The smell can really torture you, but divert your attention in doing something else for a while, like making a puzzle or washing the dishes. From an early age, onion juice has been used as a home remedy to control hair fall. Research has shown that onion juice has been successful in treating patchy alopecia areata (non-scarring hair loss condition) by promoting hair growth .

* How to Use:

Take half onion and blend it. Apply the mixture on every nook and corner of your scalp and let it sit for some 60 minutes, or so. Shampoo it off when it’s time for the hair-wash.

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Features

Fun-loving, but… sensitive

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This week, my chat is with Nilu Vithanage. She is quite active, as a teledrama actress – having done four, already; her first was ‘Pavela Will Come In The Cloud, Mom’ (playing the role of a nurse). Then Came ‘Heavenly Palaces’ (student), ‘Black Town’ (a village character Kenkaiya), and ‘Wings Of Fire,’ currently being shown, with Nilu as a policewoman. You could checkout ‘Wings Of Fire,’ weekdays, on Swarnavahini, at 7.30 pm. Nilu is also active as a stage drama artiste, dancer…and has also been featured in musical videos.

And, this is how our chit-chat went…

1. How would you describe yourself?

Let’s say, I’m a bit on the playful side, and I like to have a lot of fun. But, I do find the time to relax, and, at home, it’s dancing to music! Yeah, I love dancing. Oh, I need to add that I’m a bit sensitive.

2. If you could change one thing about yourself, what would it be?

I get angry quickly. Fortunately, that anger doesn’t last long – just five to 10 minutes. But I wish I could get rid of anger, totally from my system!

3. If you could change one thing about your family, what would it be?

Nope, can’t think of anything, in particular. Everything is fine with us, and I’m proud of my only brother, and I feel safe when he is around. Or, come to think of it, if I did have another brother, I would feel doubly safe…when going out, in particular!

4. School?

I did my studies at two schools – C.W.W. Kannangara Central College, and Panadura Sumangala Girls’ School for my higher studies. Representing my school, I won first place in a speech competition and dance competition, as well.

5. Happiest moment?

When my husband comes home, or talks to me on the phone. He is stationed in Hatton and those calls and home visits are my happiest moments

6. What is your idea of perfect happiness?

I really find a lot of happiness feeding the fish, in ponds. I love to see them rush to pick up the tidbits I throw into the pond. That’s my kind of happiness – being close to nature.

7. Are you religious?

I would say ‘yes’ to that question. I like to go to the temple, listen to sermons, participate in meditation programmes, and I do not miss out on observing sil, whenever possible. I also find solace in visiting churches.

8. Are you superstitious?

A big ‘no.’ Not bothered about all those superstitious things that generally affect a lot of people.

9. Your ideal guy?

My husband, of course, and that’s the reason I’m married to him! He has been a great support to me, in my acting career, as well in all other activities. He understands me and he loves me. And, I love him, too.

10. Which living person do you most admire?

I would say my Dad. I truly appreciate the mentorship he gave me, from a young age, and the things we received from him

11. Which is your most treasured possession?

My family.

12. If you were marooned on a desert island, who would you like as your companion?

A camel would be ideal as that would make it easier for me to find a way out from a desert island!

13. Your most embarrassing moment?

One day, recently, with the greatest of difficulty, I managed to join a one meter distance queue, to withdraw money from an ATM. And, then I realised I didn’t bring the card along!

14. Done anything daring?

I would say…yes, when I ventured out to get involved in teledramas. It was a kind of a daring decision and I’m glad it’s now working out for me – beautifully.

15. Your ideal vacation?

I would say Thailand, after reading your articles, and talking to you about Amazing Thailand – the shopping, things to see and do, etc. When the scene improves, it will be…Thailand here I come!

16. What kind of music are you into?

The fast, rhythmic stuff because I have a kind of rhythm in my body, and I love to dance…to music.

17. Favourite radio station:

I don’t fancy any particular station. It all depends on the music they play. If it’s my kind of music, then I’m locked-on to that particular station.

18. Favourtie TV station:

Whenever I have some free time, I search the TV channels for a good programme. So it’s the programme that attracts me.

19. What would you like to be born as in your next life?

Maybe a bird so that I would be free to fly anywhere I want to.

20. Any major plans for the future?

I’m currently giving lessons to schoolchildren, in dancing, and I plan to have my own dancing institute in the future.

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Features

Snail-napping sets the stage for CGI road trip

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The SpongeBob Movie:Sponge on the Run

By Tharishi hewaviThanagamage

Based on the famous and one of the longest-running American animated series that made its debut on Nickelodeon in 1999, created by marine science educator and animator Stephen Hillenburg, ‘The SpongeBob Movie: Sponge on the Run’ is the latest addition to the SpongeBob movie franchise, coming in as the third installment after ‘The SpongeBob SquarePants Movie’ (2004) and ‘The SpongeBob Movie: Sponge Out of Water’ (2015).

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