Thursday, November 6, 2008

BANKING NEWS - AIBEA - 04.11.2008

Why the world dislikes America
Igor Bogdanov The Hindu 3-11-2008

The United States ought to become less anxious to change the world.
This is not the first time America has been accused of spreading an economic crisis worldwide
Globalisation spreads American mass culture with its inferior movies, conduct, manners and fast food
The world looks forward to Barak Obama’s presidency and will be bitter should John McCain win. The world is pinning its hopes on Mr. Obama. It expects him to change America. Meanwhile, America evokes a wide range of negative emotions in every continent — bitterness, irritation, scorn, hatred or, at least, sarcasm. Even those who think well of Americans speak of them with a smirk.
Will the world ever like them again? What should the United States do in order to be liked? How should its leadership and the nation change? Will the current crisis lead it toward the right conclusions? For an answer, you need to look at the roots of global anti-Americanism.
Crisis export
This is not the first time America has been accused of spreading an economic crisis worldwide. Look back to the summer of 1929. The world found the Americans too prosperous for their own good. Their money was a thorn in the world’s side. Many of the products they were exporting appeared to be innovations the world could do without. Autumn and winter 1929 came with a Wall Street crash. “Serves ’em right!” the world gloated. “They are exporting crisis!” it cried thereafter.
The world grew sympathetic with the bleak America of 1930-31 — with its Hunger Marches, soup- kitchens and street-fires to warm the homeless. Now America has another chance to win sympathy, though it is no longer the isolationist state with the smallest possible army it was at the start of the Dirty Thirties.
The best have it hottest
There was a superpower in the 19th century and up to the end of the Second World War. It was not America but Britain. The British Empire sprawled across five continents, taking up more than a third of the globe. It appeared implausible until the early 1940s that the empire could be hit even the slightest, let alone collapse.
Britons were admired, envied and disliked overtly or covertly. They were hated all the more for their extremely competent colonial management — and their racism. The empire made colour an all but insurmountable barrier between social estates, with every race living according to its own written and unwritten rules, though all were equal before the law. Britain was hated by the countries it colonised and by other colonisers — France, Holland and America.
The British Empire fell, and the prejudice gradually shifted to America.
Shining city
The Americans were never racists, though Afro-Americans in the U.S. faced insurmountable odds. But a superiority complex lies at the root of the American mentality and culture. America was from the beginning a New World for everyone to start from scratch when he fled the Old World with its preconceptions, social barriers and other age-old problems. America, “the shining city upon a hill,” thought it was called upon to set an example.
The majority of Americans still believes in the American Dream, which gives an impetus to the naïve conviction that American is best. When they failed to impose this conviction on others, it was met with a condescending smile. That was so before the U.S. turned into a superpower.
Anti-Americanism appeared with the first foreboding that Americanism would be imposed on other nations. Much of the world became anti-American by the end of the Second World War. Latin America was so by the end of the 19th century. The same can be said of old Cuba, the Philippines and other countries that were U.S. colonies for half a century. There, admiration for Uncle Sam went hand in hand with hatred.
A firm belief in American moral superiority justifies the neo-conservatives, who have had the say during the current presidency. Now they are suffering a moral setback while the financial crisis undermines American and global faith in the allegedly invincible economic concept of unlimited freedom of enterprise.
The concept of “the shining city,” however, still cements the multi-ethnic American community. It will hardly ever recede. Possibly, it will benefit America if it is no more a global superpower.
The U.S. has been from the start a land of immigrants, be they first-generation or tenth-generation. A population gathered from every part of the world gives it economic dynamism but is also a problem that whips up global anti-Americanism.
The problem takes root in the psychology of any immigrant community. People emigrate because they are unhappy in their own country. Many disagree not only with its government but also with a majority of the public.
Prejudice wears off with generations. Contemporary Americans of Italian ancestry hardly dislike the Berlusconi Cabinet or have anything against Italians in Italy. However, there are immigrant communities that make a dissident mosaic set against the rest of the world. These communities have an impact on the Administration and partly form public opinion. They influence U.S. foreign policy and so whip up anti-Americanism. Crisis or no crisis, this effect will remain part and parcel of American life for long.
Planting leaders
It has been America’s political custom to plant convenient national leaders all over the world. America does it on a greater scale than any other country, unblushingly. Not surprisingly, America has approached the status of the world’s only superpower with the strongest financial muscle. The 1990s saw this trend at its strongest.
King-making is an established American practice. There have been American puppets in many countries. The 1990s revealed a pattern in which the U.S. preferred national leaders who are weak and incompetent, and therefore obedient and dependent. This practice is a mighty instigator of global anti-Americanism. It will end if America can no longer afford such a policy, and the questionable leaders quit.
Big stick democracy
The Administration bases its foreign policy on the promotion of democracy and human rights. This boils down to political suicide. The idea is intrinsic to ideologised Americans, who believe in the “shining city.” But it inevitably leads to the U.S. bribing dissidents opposed to their own nation’s elites or authorities.
Dissidents usually snatch the opportunity to promote American values — and never mind that their propaganda exposes those values to hatred in their country. The logic is simple: a country that dares to set values and force them on others is fated to be disliked and hated, however excellent the values might be. So its local friends have support only from outside and entirely depend on the U.S. Anti-Americanism will dwindle if America gives up its Big Stick Democracy.
Other democracy
American public democracy differs from any other. The American ideology produces a sublimated version, so to say, of human equality. It stresses that lineage, education, ethnicity and so on do not matter in making one a full-fledged member of the community or a citizen of the world. As the American Dream has it, anyone can get rich, become President…
Such democracy brings unexpected fruits — it makes ordinary Americans conceited, and totally unlike, say, Western Europeans in terms of culture and education. Americans care little about the world around them and are not eager to know it; they are too sure America is better and stronger. This situation impacts elections and the choice of foreign policy, and compounds America’s problems. We can expect that the current crisis will make Americans see the world the way it really is, and gradually convince them to support a more rational foreign policy. That would enfeeble anti-Americanism.
Globalisation spreads American mass culture with its inferior movies, conduct, manners, fast food… Mass culture has become the most lucrative American export. The less educated succumb to it the quickest.
We should not underestimate the resentment this promotion evokes in people from all walks and all sections of life. It can be assumed that the pressure of mass culture that is eroding the traditional culture was the root cause of the tragedy of 9/11.
What can change the American public? It has a chance to learn from the global crisis. It might change composition, with Anglo-Saxons losing priority to other people with other values. As a result, it might become less anxious to change the world. The world will change of itself — as we see now, globalisation may not only be European but also Asian, so American mass culture might lose its monopoly. When America becomes one of many key countries, it will no longer be pestered by unkind feelings of the world around.
— RIA Novosti

IBA facilitates bank credit flow to mutual funds

Be considerate on interest rates to be charged, banks urged.
Our Bureau Mumbai, Nov. 2 BUSINESS LINE
Banks have worked out a system to provide “hassle-free” credit to mutual funds facing redemption pressure.
Indian Banks Association (IBA), the apex body of banks in India, has opened a facilitation counter to enable mutual funds to borrow from banks under the Reserve Bank of India’s liquidity support scheme for MFs.
The IBA will help mutual funds to locate banks which have “headroom” under the RBI scheme, as each bank has a lending limit (depending on the size of its deposits), said Dr K. Ramakrishnan, Chief Executive of IBA.
Daily watch
The IBA will collect data on the position of its members on a daily basis so that it will know which bank has funds to lend under the scheme, he said. Banks will also be “considerate” on interest rates to be charged, he said at a hurriedly called press conference on Sunday.
Though it is for the individual banks to decide on the interest rates, Mr M.D. Mallya, Chairman, Bank of Baroda, who is also an IBA managing committee member, said banks should be able to lend at 11-12 per cent interest.
The announcement of the IBA initiative, ahead of the scheduled meeting of bankers with the Finance Minister on Tuesday, is seen as a “proactive’ move by banks to support MFs.
The RBI had also enhanced the liquidity support on Saturday as part of a host of measures to inject more funds into the system. Mr M.V. Nair, Chairman, Union Bank of India, said with the RBI enhancing the limit, IBA is trying to facilitate MFs to take advantage of it.
Meeting with AMFI
The IBA move follows representations made by the Association of Mutual Funds in India (AMFI) alleging that its members were finding it difficult to access funds. Mr Ramakrishnan said IBA had a meeting with the representatives of Association of Mutual Funds in India on Friday.
Mr A. P. Kurian, Chairman of AMFI, welcoming the IBA move, said “The new facility to help MFs is a joint effort by both the IBA and AMFI.”
On October 14, the RBI had announced a Rs 20,000 crore short-term fund facility at 9 per cent interest for banks (since increased to Rs 60,000 crore on Saturday) exclusively for on-lending to MFs.
So far, banks have borrowed Rs 8,500 crore as the response from mutual funds was said to be “lukewarm ”.
However, mutual funds have been facing difficulties in obtaining funds as some banks reportedly were charging rates as high as 14 per cent. There were also instances of banks denying funds to MFs.
Credit to NBFCs
On the fund facility provided to non-banking finance companies , bankers said they would be happy to extend credit to finance companies, but the ‘rigour of credit discipline” would be adhered to
Inappropriate timing’ of Centre’s moves
Bill introduced to raise FDI limit in insurance

The untimely step on the insurance front is bound to set off a huge opposition.
The Cabinet approval for the introduction of a comprehensive bill in Parliament to raise foreign direct investment (FDI) limit in insurance was long coming ever since the Left parties walked out of the UPA (United Progressive Alliance) over Indo-U.S. nuclear deal. But when it came on Friday last, it came at a very inappropriate time.
Predictably, it has drawn angry reactions from the Left parties and others. The Cabinet also gave its nod to introduce another bill to raise the paid-up capital of Life Insurance Corporation of India (LIC) from Rs. 5 crore to Rs. 100 crore to bring it on a par with private insurers with a view to ensuring a level-playing field.
There was also this totally unconnected exercise by an industry body, which drew rebuff from the Government for the ‘inappropriate timing’. The Associated Chambers of Commerce and Industry of India (Assocham) was forced to withdraw its analysis in double quick time in the wake of criticism from powers-that-be for its “irresponsible behaviour”. Assocham had suggested, in a recent report, that 25-30 per cent of jobs in seven industry segments could be axed over 10 days following Diwali in the wake of the global meltdown. The industry body took back the report clarifying that “it was not representative of the industrial segments in its totality.” A minister at the Centre came down strongly on “totally irresponsible” Assocham for coming out with such a report, predicting scary forecasts.
If the chamber could be criticised for putting out such a ‘scary report,’ the Central Government too should take the blame for pushing for a hike in FDI limit in the insurance sector at an inopportune time. The speed with which the U.S. Government acted to pick up equity by pumping huge money into AIG, one of the biggest insurance groups in the world, still remains fresh in the minds of the public at large. In fact, the uncertainty that followed the bail-out of AIG has created anxiety in the minds of people who have bought life insurance products from Tata-AIG, a private life insurer in India. Coming as it does at a time when the world’s biggest capitalist nation is turning part-socialist in a no-holds-barred bid to rescue an economy which appears to have got into a quicksand kind of a situation, the move by the Centre on the insurance front is bound to set off a huge opposition.
Given the timing of the move, the opponents of the move are bound to get support and sympathy from known as well as unexpected quarters. That companies with name, reputation and history could go down the drain is scary enough for even the so-called new Indian with a global outlook to quietly join the opposition ranks. If it took several years for effecting a change in the mindset of an inwardly looking Indian, the collapse of global giants could take him back in time and make him a cautious Indian of yester-year.
Given the current situation, the anti-reformists are bound to exploit the grounds well of negative perceptions. They have all proofs in front of them to press forward their opposition to the move. If the timing of the release of the Assocham report was inopportune, the move to hike FDI limit in insurance is inappropriate for its timing, to say the least.


15TH – 18TH NOVEMBER, 2008



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