Month: October 2009

By NERVE MACASPAC, Bulatlat.com

The total number of fatalities from tropical storm “Ondoy” (international name: Ketsana) that submerged some areas in Central Luzon and Calabarzon in mud and water may already be close to 200. The National Disaster Coordinating Council (NDCC) has placed the death toll at 100 and the number of people affected at nearly half a million as of Monday noon pending reports from local government units.

Fifty-six were killed in Region IV-A or the Calabarzon area; 36 died in Region III or in Central Luzon; seven in National Capital Region and one in the Cordillera Administrative Region.
– GMA News Online

We lost everything in a day.

We have lost the warmth
Of our homes
Of our kid’s laughter
Of our parent’s embrace.

We lost the fiesta of the sunset
The anticipation of the rush hour
The joy of coming home
The aroma of home-cooked dinner.

In that fearful long day,
Our tired clenched soul
Waded through the river of sadness.
There were no rocks to hold onto
Only our loved ones’ names
That we kept reciting
Between our gasps and strokes.

The flood rose higher
With more and more people
Plunging to look for their shores
Reciting names, ages, schools, offices,
Illnesses, highways, rooftops, buses.

With each word as heavy as the gravity of the rain.
With each word as heavy as the gravity of our tears.

(Bulatlat.com)

B

By Lester R. Brown, Inter Press Service

WASHINGTON, Sep 29 (IPS) – In early 2008, Saudi Arabia announced that, after being self-sufficient in wheat for over 20 years, the non-replenishable aquifer it had been pumping for irrigation was largely depleted.

In response, officials said they would reduce their wheat harvest by one-eighth each year until production would cease entirely in 2016. The Saudis would then import virtually all the grain consumed by their Canada-sized population of nearly 30 million people.

The Saudis are unique in being so wholly dependent on irrigation. But other, far larger, grain producers such as India and China are facing irrigation water losses and could face grain production declines.

Emerging Trends Threaten Food Security
Fifteen percent of India’s grain harvest is produced by overpumping its groundwater. In human terms, 175 million Indians are being fed with grain produced from wells that will be going dry. The comparable number for China is 130 million. Among the many other countries facing harvest reductions from groundwater depletion are Pakistan, Iran, and Yemen.

The tripling of world wheat, rice, and corn prices between mid-2006 and mid-2008 signaled our growing vulnerability to food shortages. It took the worst economic meltdown since the Great Depression to lower grain prices.

Past decades have witnessed world grain price surges, but they were event-driven – a drought in the former Soviet Union, a monsoon failure in India, or a crop-withering heat wave in the U.S. Corn Belt. This most recent price surge was trend-driven, the result of our failure to reverse the environmental trends that are undermining world food production.

These trends include – in addition to falling water tables – eroding soils and rising temperatures from increasing greenhouse gas emissions. Rising temperatures bring crop-shrinking heat waves, melting ice sheets, rising sea level, and shrinking mountain glaciers.

With both the Greenland and West Antarctic ice sheets melting at an accelerating pace, sea level could rise by up to six feet during this century. Such a rise would inundate much of the Mekong Delta, which produces half of the rice in Viet Nam, the world’s second-ranking rice exporter. Even a three-foot rise in sea level would cover half the riceland in Bangladesh, a country of 160 million people. And these are only two of Asia’s many rice-growing river deltas.

The world’s mountain glaciers have shrunk for 18 consecutive years. Many smaller glaciers have disappeared. Nowhere is the melting more alarming than in the Himalayas and on the Tibetan plateau where the ice melt from glaciers sustains not only the dry-season flow of the Indus, Ganges, Yangtze, and Yellow rivers but also the irrigation systems that depend on them. Without these glaciers, many Asian rivers would cease to flow during the dry season.

The wheat and rice harvests of China and India would be directly affected. China is the world’s leading wheat producer. India is second. (The United States is third.) With rice, China and India totally dominate the world harvest. The projected melting of these glaciers poses the most massive threat to food security the world has ever faced.

The Harbinger of Civilisation’s Demise?
The number of hungry people, which was declining for several decades, bottomed out in the mid-1990s at 825 million. In 2009 it jumped to over one billion. With world food prices projected to continue rising, so too will the number of hungry people.

CC

A Palestinian girl airs blankets near a house, damaged during the three-week offensive Israel launched last December, in Khan Younis in the southern Gaza Strip.

The number of Gazans living in “abject” poverty has tripled this year to 300,000, or one in five residents, the Gaza head of the UN agency helping Palestinian refugees said.

Gaza’s economy has foundered under an Israeli-Egyptian border blockade imposed after the Islamic militant group Hamas seized control of the territory in 2007 from forces loyal to Palestinian President Mahmoud Abbas.

John Ging, the UN Relief and Works Agency’s top official in Gaza, called the rise in poverty a “predictable consequence” of the border blockade.

“The suffering, the impoverishment, the misery of the people here in Gaza continues to rise because of a man-made crisis, a political failure,” Ging told reporters.

The blockade’s toll on Gaza residents was compounded by Israel’s winter offensive in the strip that aimed to stop Palestinian rocket fire at southern Israel. Thousands of homes, government buildings and businesses were destroyed during the Israeli campaign.

UN staff said the rise also reflects improved monitoring of refugees’ economic conditions.

The UN agency provides services, including emergency food rations, to 750,000 of Gaza’s 1.4 million residents. Those who are unable to feed their families are considered “abject poor” and receive extra aid, the agency said.

Ging said lifting the blockade is the only way to stop Gaza’s rising poverty, and appealed for more funding to help his agency meet the growing need.

Israeli officials have said they fear that easing the blockade will benefit Hamas, and say they won’t reopen the border crossings until the militant group releases an Israeli soldier captured more than three years ago.

A first sign of progress toward a prisoner exchange emerged Wednesday when Israel agreed to release 20 Palestinian women from its prisons in exchange for a recent video of the soldier.

BAH

Recommended: The Age of Empathy
Scientific American also suggests The Sibley Guide to Trees
By Kate Wong

EXCERPT
The Age of Empathy: Nature’s Lessons for a Kinder Society
by Frans de Waal. Harmony Books, 2009

Grieving elephants, sympathetic bonobos, grateful whales—nature is not always red in tooth and claw. In his latest book primatologist Frans de Waal draws on numerous examples from our fellow fauna, such as the chimpanzee in the anecdote below, to make his case that humans are hard-wired to be humane.

“… don’t believe anyone who says that since nature is based on a struggle for life, we need to live like this as well. Many animals survive not by eliminating each other or by keeping everything for themselves, but by cooperating and sharing. This applies most definitely to pack hunters, such as wolves or killer whales, but also our closest relatives, the primates. In a study in Taï National Park, in Ivory Coast, chimpanzees took care of group mates wounded by leopards, licking their blood, carefully removing dirt, and waving away flies that came near the wounds. They protected injured companions, and slowed down during travel in order to accommodate them. All of this makes perfect sense given that chimpanzees live in groups for a reason, the same way wolves and humans are group animals for a reason. If man is wolf to man, he is so in every sense, not just the negative one. We would not be where we are today had our ancestors been socially aloof.

“What we need is a complete overhaul of assumptions about human nature. Too many economists and politicians model human society on the perpetual struggle they believe exists in nature, but which is a mere projection. Like magicians, they first throw their ideological prejudices into the hat of nature, then pull them out by their very ears to show how much nature agrees with them. It’s a trick for which we have fallen for too long. Obviously, competition is part of the picture, but humans can’t live by competition alone.”

SA

By Tridip Suhrud

Oct.02 : On November 5, 1931, Mahatma Gandhi along with other delegates to the Second Round Table conference was invited to a garden party at the Buckingham Palace. The invitation specified that guests should wear “morning dress”. Gandhi and Mahadev Desai went to the gathering in their “usual dress”. As Gandhi came out, he was asked about his lack of proper attire by reporters. Mahatma Gandhi is supposed to have said, “His Majesty was wearing enough for the two of us”.

Its textual veracity notwithstanding, if anyone could have said this it could only have been Gandhi. This was not just a quick and sharp repartee but a political retort at a time when the English textile industry was reeling under the impact of Gandhi’s call of swadeshi.

So was Gandhi a humorous man? He was capable of great deal of laughter and self-deprecating wit. His humour, like his life, was sparse, economical and in some ways very English. He was taken to inspect the Balilla, where young Italian boys were being trained in Nazi military parade, and he reportedly quipped, “You look quite well-fed”; something only a man who knew the virtues of fasting could have said.

Gandhi cut an interesting figure for the cartoonists of the world, with his lanky frame, bald head, toothless smile and idiosyncratic preferences like goat’s milk. And yet, all his caricatures look alike — simple lines, a face in profile, with his round, rimmed glasses. The cartoons capture the essentials, but are rarely funny, except when he is shown in the clothes of a late Victorian gentleman that he tried to play for a while.

It was very difficult to deprecate Gandhi, except when he chose to do it himself. This failure to mock at Gandhi came from the fact that he was given to transparency and honesty. Caricature requires hypocrisy from the subject of caricature. It requires certain superciliousness. Gandhi was neither. And to make the job of the cartoonist more difficult, he had a lightness about his own experiments and idiosyncrasies.

Gandhi did not have the inclination or the time for humour in the usual sense of the term.

When Charlie Chaplin sought an interview with him, he politely asked “who this distinguished gentleman was”. Needless to say that during the meeting he spoke to the maker of Modern Times about spinning and the charkha.

Gandhi was truly free only inside the prison. That was leisure time when he read, wrote, spun and had long, sometimes idle conversations with his fellow prisoners, like Sardar Vallabhbhai Patel, Mahadev Desai and Sarojini Naidu.

Those long months and years were filled with laughter and the kind of bad, almost unpalatable, cooking that only Gandhi was capable of — the only time Sarojini Naidu allowed him near her makeshift kitchen was in the prison.

Humour was not the leitmotif of his life. It was search for equanimity. As India erupted in a frenzy of self-destructive and macabre violence, Gandhi became a lonely, brooding, sad man. He searched within himself, hoping to find the inner-voice that would show some light and dispel the darkness that enveloped him and the country. As he increasingly gave himself up to Ramanama, the self-deprecating humour also disappeared.

AA

(Agencies)
PARIS: Unemployment is rising around the world as the recession leaves few corners untouched – but sharp differences remain between companies directly hit by financial or housing-market collapses and those that have deliberately protected jobs with expensive measures – including subsidizing shorter working weeks.

Unemployment rates in the 30 wealthy countries that belong to the Organization for Economic Cooperation and Development range from a low of 3.2 percent in the Netherlands to 17.6 percent in Spain, according to July figures.

In the developing world, the downturn has also taken its toll. Unemployment in Brazil appears now to be easing a bit, but Mexico in August posted its highest jobless rate in 13 years. In Africa, the continent’s largest economy, South Africa, is in the grips of its first recession in 17 years and about a quarter of the population is officially without work.

The US unemployment rate was 9.4 percent in July, above the European Union rate of 8.8 percent. By August, the US unemployment rate had ticked up to 9.7 percent, a 26-year high. On Friday, the US Labor Department is due to release data for September and economists are forecasting the rate edged up to 9.8 percent. Most economists see US unemployment topping 10 percent by early next year.

The speed of the increase in unemployment rates also varies, with countries like France starting with relatively high unemployment and shifting only slightly upward, and Britain and Ireland starting low but rising fast.

“There are quite significant differences across countries and regions,” said John Martin, head of the OECD’s employment, labor and social affairs division. “Quite a number of the countries which so far have not seen major increases in unemployment were countries that either have expanded short-time working schemes or introduced them in the first places.”

But he noted such programs – where workers agree to fewer hours and the government helps make up the difference in their pay – may not be affordable for much longer.

The OECD expects the jobless rate in its 30 members to approach 10 percent in the second half of next year, meaning 57 million people out of work. If forecasts arfar by government financial support for workers put on shorter hours in order to avoid mass layoffs.

France – The increase in French jobless lines has been somewhat tempered by short-work arrangements and government incentives such as exempting payroll taxes for some workers. The unemployment rate rose to 9.2 percent in July from 7.8 in 2008, according to the OECD. It is expected to hit 10 percent by the end of the year.

Britain – Unemployment hit a nearly 13-year high of 7.9 percent in July. The number of people out of work looks on course to pass the three million mark next year as the impact of the recession translates to rising dole queues. However, the number losing their jobs has fallen from spring highs.

Spain – Spain has gone from being a European model for growth, creating more than a third of all new euro-zone jobs over the past decade, to having the region’s highest unemployment rate. This stems mainly from thay economy,” in which people are paid under the table.

Japan – Japan’s unemployment rate actually dipped to 5.5 percent in August after reaching 5.7 percent in July, the highest level in Japan’s post-World War II era, amid mounting job and wage cuts. Still, the total number of jobless in August rose 32.7 percent from a year earlier to 3.61 million. The number of temporary workers has surged in recent years, reaching around a third of the work force in the world’s No. 2 economy. The plight of these workers, who with little job security have born the brunt of the recession, has stirred emotions in Japan.

Brazil – Unemployment in Brazil reached 8.1 percent in August, remaining stable over the last two months. The figure shows a drop in the jobless rate from its peak of 9 percent in March. Brazil emerged from recession in the second quarter of this year and analysts are now predicting the economy will expand slightly in 2009.

South Africa – The unemployment rate in South Africa hovered at 23.6 percent in this year’s second quarter, according to the country’s statistics office. That was up slightly from 23.1 percent in the April-June quarter of 2008, as South Africa is mired in its first recession since 1992.

The African continent as a whole was initially unscathed by the financial turmoil that roiled Europe and the United States. But the collapse of Western consumer demand has meant Africans are selling less of the commodities on which many of their economies depend.

CD

by Michael Moore

Capitalism’ Opens Today at a Theater Near You!

…an invitation from Michael Moore

Friends,

For two months, we’ve sat and watched the rabid right achieve the unimaginable: Derail universal health care and send the Democrats in Congress running for cover. Many have asked, “How did this happen? How could a small minority of angry people control the public agenda? Where is the majority’s response? Why the silence?”

I don’t have the answers to all these questions. But I do know this: I’ve had enough. As far as I’m concerned, Tea Bag Nation ends today — at noon to be precise. For that’s when I set loose, on a thousand screens across this great land, a movie I’ve made that’s so relentless, so dangerous, so damning in its humor, that it will — I can only hope — do what no movie has done before: Take them down, take them all down, once and for all.

The days of the majority of Americans being ignored and played for chumps are over as of right now. This weekend, consider your local cinema the REAL town hall meetings! Come and spend two hours with hundreds of other people who are fed up and in need of a bit of inspiration — and a good hearty laugh at the expense of all the S.O.B.s who’ve wrecked our economy and laid ruin to our democracy.

I’m personally inviting you to come see what many critics are saying is my best film yet: “Capitalism: A Love Story.” You will not be disappointed. I will show you things and tell you things about how the captains of corporate America have stolen our country from us. No one on the nightly news is bringing these truths to you. Beginning at noon today, I pull back the curtain and reveal who’s responsible for the calamity we’re in. That’s right — I name names and I explain why this economic system we have is nothing more than legalized greed, and Wall Street is nothing more than a crime syndicate in suits. You will be blown away by what you see, but you will not leave the theater in a pit of despair. I’m counting on your response to be one of exhilaration and determination. I’ve watched this movie in sneak previews with audiences from Pittsburgh to L.A. and I’ve never seen more hooting and hollering during a documentary in my life. There are actually standing O’s during the movie! Weird. Cool. Down in front!

Please see “Capitalism: A Love Story” this weekend. Take a bunch of friends and make it an event. Last weekend in New York and L.A. many shows sold out (making “Capitalism” the biggest per screen average at the box office for 2009), so get your tickets early. And if you get a chance, send me a photo of what opening night looks like in your city and I’ll post it on my website.

C’mon, friends — RISE UP! This is our moment. And it comes with popcorn! Not bad!

Thank you so very much for all your support and encouragement over the years.

Yours,
Michael Moore
MMFlint@aol.com
MichaelMoore.com

CD
(Submitted by reader)

By Gopal Balakrishnan

A crisis occurs sometimes lasting for decades. This exceptional duration means that incurable structural contradictions have revealed themselves and that despite this the political forces which are struggling to conserve and defend the existing structure itself are making every effort to cure them within certain limits and to overcome them. These incessant and persistent efforts (since no social formation will concede that it has been superseded) form the terrain of the conjunctural, and it is upon this terrain that the opposition organizes.
Antonio Gramsci, Prison Notebooks

What is the historical significance of the implosion of neo-liberalism, coming less than twenty years after the collapse of the Soviet Union? A disconcerting thought experiment suggests itself. The ussr, it might be recalled, had reached the summit of its power in the 70s, shortly before stumbling downward into a spiral of retrenchment, drift and collapse. Could a comparable reversal of fortune now be in store for the superpower of the West, one of those old-fashioned ‘ironies of history’? After all, a certain unity of opposites can be traced between an unbridled late capitalism and the centrally planned rust belts of the former Comecon—and precisely in the economic sphere, where they were diametrically counterposed. During the heyday of Reaganism, official Western opinion had rallied to the view that the bureaucratic administration of things was doomed to stagnation and decline because it lacked the ratio of market forces, coordinating transactions through the discipline of competition. Yet it was not too long after the final years of what was once called socialism that an increasingly debt- and speculation-driven capitalism began to go down the path of accounting and allocating wealth in reckless disregard of any notionally objective measure of value. The balance sheets of the world’s greatest banks are an imposing testimony to the breakdown of standards by which the wealth of nations was once judged.

In their own ways, both bureaucratic socialism and its vastly more affluent neo-liberal conqueror concealed their failures with increasingly arbitrary tableaux économiques. By the 80s the gdr’s reported national income was revealed to be a statistical artifact that grossly inflated its cramped standards of living. But in the same decade, an emerging circuit of global imbalances was beginning to generate considerable problems for the measurement of capitalist wealth. The coming depression may reveal that the national economic statistics of the period of bubble economics were fictions, not wholly unlike those operative in the old Soviet system.

Of course, the recurring crises of capitalism are supposed to be different from the terminal stages of non-capitalist civilizations and modes of production. Such social orders seem to have lacked capitalism’s distinctive capacity for creative destruction, for periodic renewal through downturns that liquidate inefficient conditions of production and life forms, opening up frontiers for the next round of expansion. In accordance with this pattern, nearly all commentators on today’s economic meltdown have assumed that this Schumpeterian tale of crisis and renovation will repeat itself in one form or another. But is it, in fact, inevitable that new phases of accumulation will emerge from the aftermath of what now promises to be an enormous and protracted shake-out? I would like to propose that this scenario of capitalist renewal is distinctly less likely than a long-term drift towards what the classical political economists used to call ‘the stationary state’ of civilization.

Growthlessness
From Adam Smith to John Stuart Mill, early theorists of the wealth of nations were pessimistic about their societies’ long-term prospects for growth, and assumed that the productivity gains from specialization and the division of labour would be thwarted after a certain point by the exhaustion of the soil and population increase. The historian E. A. Wrigley writes:

For reasons cogently argued by Smith and his successors, the momentum of growth was expected to peter out after a time, arrested by changes endogenous to the growth process itself, and giving rise in due course to the supervention of the stationary state. Moreover, the classical economists were unambiguous in doubting whether even the then prevailing level of real wages could be sustained indefinitely. Future falls were more probable than future rises. A steady and substantial improvement in real wages for the mass of the population was a utopian pipe-dream, not a possibility that a rational and well-informed man could plausibly entertain, however much he might wish to see it occur. [1]

The passage suggests why Adam Smith and his contemporaries might have thought that a stagnant 18th-century China was in some sense ahead of contemporary Western Europe. Having exhausted the sources of further productivity growth, China had entered, inevitably, onto the path of secular involution: de te fabula narratur. Of course, this pessimistic verdict on civilization’s longue durée was overturned by subsequent great waves of capitalist expansion. Marx’s later critique of political economy was, in part, an attempt to reconceptualize this tradition’s classical, pre-industrial pessimism regarding the external, natural limits to economic growth, transforming it into an account of an ever more difficult to surmount socio-economic impasse of accumulation. [2]

NLR

By P.K. Nigam

A small number of Englishmen (about two lacs) ruled India, a vast country with a population of 400 million. How could they do it? Their strategy was military control and creation of vested interests bound up with British rule. The princes and zamindars were given privileges and they wanted the British to rule India. After a few decades of the Great Revolt of 1857, the British became pro-Muslim to convert them to support British rule. Wavell considered Muslims loyalist like princes.

According to Lord Roberts, the Commander-in-Chief in the beginning of the 20th century, “Respect based on fear was key to rule in India. Remove the fear and respect will soon disappear.” British Prime Minister Lord Salisbury added that British rule depended on resort to force enormously enhanced by the reputation of invincibility. The British kept aloof from Indians. But the racial superiority shown by the English Sahibs created revulsion among Indians gradually. Gandhiji’s non-cooperation movements restored self-respect to Indians. They did not feel inferior to Englishmen as they did earlier. The easy Japanese victories in South-East Asia and Burma during December 1941 to May 1942 destroyed the myth of European invincibility. The record of the British in Malaya and Burma was extremely poor, though the British propaganda kept the truth hidden from most of the world.

During the pre-war period, the British had a strategy to suppress the mutiny of Indian soldiers should it occur. The proportion of British soldiers to Indian soldiers was one to two. The British troops were kept inside the country to serve as internal security troops. The greater part of Indian troops was part of field army for service abroad and on the frontier. The more effective weapons were with the British and not given to Indians. Commissioned Officers, the brain of the army, were mostly British. All this changed due to the exigencies of war and the British desire to save their own blood. To fight against the Japanese, the British created an Indian Army of two-and-a-half million men. The Indians had to be given modern arms: the number of Indian officers greatly increased, the proportion of Muslims to Hindus changed. Before the war, more than 50 per cent of Indian troops were Muslims. The figure fell to 25 per cent at the war end. The British had become too confident due to their experience in WW I. In the prewar period the British had kept a fair number of Sikhs in the group of non-Muslim soldiers, as Hindus mainly were asking for freedom. Thus the British could not militarily control India, even if the Muslims joined them. The number of British soldiers in India was still 70,000. When General Wavell travelled with Churchill in 1943 on the way to the US, he rebuked Wavell for creating a Frankenstien by putting modern weapons in the hands of Sepoys. Wavell still believed in the loyalty of Indian Sepoys and disagreed. He thought that Churchill had a 19th century mind. Churchill, the politician, was correct.
¨
Many events happened during WW II and immediately after the war end. The ‘Quit India’ movement was very widespread and stronger than the 1857 Revolt. This fact was suppressed during the war period by the British. Subhash Chandra Bose raised the Indian National Army in 1943. Though the INA could not free India by invasion, the British began to have doubts about the loyalty of the Indian Army. To teach a lesson to the Indians, the British put on trial three Indian National Army officers. This boomeranged and affected the Indian soldiers. Britain, France and Holland had to give up their rule in South-East Asia during the war. To justify their own desire for rule, the British wanted their rule restored in South-East Asia. They had become too weak to fulfill their wish to rule again Indo China and Indonesia. They could not take surrender from the Japanese at the war end. Britain sent Indian troops there to take surrender from Japanese. After taking surrender from the Japanese, the British commander used them to suppress the freedom movements there. The Congress said that Indian troops were not mercenaries and should not be used to restore colonial rule there. Commander-in-chief Auchinleck feared that Indian troops might not obey orders to fire on the natives. It is important to note that it was Atlee and his Labour Government, which sent Indian troops to Indo-China and Indonesia to suppress the independence in these countries. This proves that Atlee and Labour Party were imperialist and not in favour of giving independence to India. The contrary is wrongly believed by millions in India even now. Realising that Indian troops were no more loyal to Britain, Wavell wrote in December 1945 to the Home Government in a top-secret letter a blueprint of partition and Pakistan, which was needed in the interest of the worldwide British Empire. The aim was to protect West Asia from Soviet expansion to the Indian Ocean and the oilwells there.

MSW

By C.P. CHANDRASEKHAR

When a global expansion in liquidity leads to a surge of capital inflow into the country, it does more harm than good.

INDIA’S stock market recovery over the past six months is a bit too remarkable for comfort. From its March 9, 2009, level of 8,160, the Sensex at closing soared and nearly doubled to touch 16,184 on September 9, 2009. This is still (thankfully) well below the 20,870 peak that the index closed at on September 1, 2008, but is high enough to cheer the traders and rapid enough to encourage a speculative rush.

There are two noteworthy features of the close to 100 per cent increase the index has registered in recent months. First, it occurs when the aftermath of the global crisis is still with us and the search for “green shoots and leaves” of recovery in the real economy is still on. Real fundamentals do not seem to warrant this remarkable recovery. Second, the speed with which this 100 per cent rise has been delivered is dramatic even when compared with the boom years that preceded the 2008-09 crisis. The last time the Sensex moved between exactly similar positions it took a year and 10 months to rise from the 8,000-plus level in early 2005 to the 16,000-plus level in late 2007. This time around it has traversed the same distance in just six months.

With firms just looking to exit from a recessionary phase, this rapid rise in stock prices cannot be justified by movements in sales and profits. In fact, as Business Line noted in its editorial on September 9, 2009, the price to earnings ratio of Sensex companies now stands at 21, which is much higher than an average of 17, which itself many would claim is on the high side.

Those comfortable with the market’s rise would of course argue that investors, expecting a robust recovery, are implicitly factoring in future earnings trends, rather than relying on earnings figures that are the legacy of a recession. That would be stretching the case. Once the next round of arrears has been paid, the once-for-all component in the stimulus that the Sixth Pay Commission’s recommendations provided would wane. With the deficit on the government’s budget expected to reach extremely high levels this fiscal, a cutback of government expenditure is likely.

FL