Thursday, June 7, 2018

BHAGAT SINGH and BUTTKEASHWAR DUTT

                    
Full Text of Statement of S. Bhagat Singh and B.K. Dutt in the Assembly Bomb Case.
(Read in the Court on 6th June, 1929, by Mr. Asaf Ali on behalf of Bhagat Singh and B.K. Dutt)

We stand charged with certain serious offenses, and at this stage it is but right that we must explain our conduct.
In this connection, the following questions arise.
1. Were the bombs thrown into Chamber, and, if so, why?
2. Is the charge, as framed by the Lower Court, correct or otherwise?

To the first half of first question, our reply is in the affirmative, but since some of the so-called 'eye witnesses' have perjured themselves and since we are not denying our liability to that extent, let our statement about them be judged for what it is worth. By way of an illustration, we many point out that the evidence of Sergeant Terry regarding the seizure of the pistol from one of us is a deliberate falsehood, for neither of us had the pistol at the time we gave ourselves up. Other witnesses, too, who have deposed to having seen bombs being thrown by us have not scrupled to tell lies. This fact had its own moral for those who aim at judicial purity and fairplay.
At the same time, we acknowledge the fairness of the Public Prosecutor and the judicial attitude of the Court so far.
Viceroy's Views Endorsed
In our reply to the next half of the first question, we are constrained to go into some detail to offer a full and frank explanation of our motive and the circumstances leading up to what has now become a historic event.
When we were told by some of the police officers, who visited us in jail that Lord Irwin in his address to the joint session of the two houses described the event as an attack directed against no individual but against an institution itself, we readily recognized that the true significance of the incident had been correctly appreciated.
We are next to none in our love for humanity. Far from having any malice against any individual, we hold human life sacred beyond words.
We are neither perpetrators of dastardly outrages, and, therefore, a disgrace to the country, as the pseudo-socialist Dewan. Chaman Lal is reported to have described us, nor are we 'Lunatics' as The Tribune of Lahore and some others would have it believed.
Practical Protest
We humbly claim to be no more than serious students of the history and conditions of our country and her aspirations. We despise hypocrisy, Our practical protest was against the institution, which since its birth, has eminently helped to display not only its worthlessness but its far-reaching power for mischief. The more we have been convinced that it exists only to demonstrate to world Indian's humiliation and helplessness, and it symbolizes the overriding domination of an irresponsible and autocratic rule. Time and again the national demand has been pressed by the people's representatives only to find the waste paper basket as its final destination.
Attack on Institution
Solemn resolutions passed by the House have been contemptuously trampled under foot on the floor of the so called Indian Parliament. Resolution regarding the repeal of the repressive and arbitrary measures have been treated with sublime contempt, and the government measures and proposals, rejected as unacceptable buy the elected members of the legislatures, have been restored by mere stroke of the pen. In short, we have utterly failed to find any justification for the existence of an institution which, despite all its pomp and splendour, organized with the hard earned money of the sweating millions of India, is only a hollow show and a mischievous make-believe. Alike, have we failed to comprehend the mentality of the public leaders who help the Government to squander public time and money on such a manifestly stage-managed exhibition of Indian's helpless subjection.
No Hope For Labour
We have been ruminating upon all these matters, as also upon the wholesale arrests of the leaders of the labour movement. When the introduction of the Trade Disputes Bill brought us into the Assembly to watch its progress, the course of the debate only served to confirm our conviction that the labouring millions of India had nothing to expect from an institution that stood as a menacing monument to the strangling of the exploiters and the serfdom of the helpless labourers.
Finally, the insult of what we consider, an inhuman and barbarous measure was hurled on the devoted head of the representatives of the entire country, and the starving and struggling millions were deprived of their primary right and the sole means of improving their economic welfare. None who has felt like us for the dumb driven drudges of labourers could possibly witness this spectacle with equanimity. None whose heart bleeds for them, who have given their life-blood in silence to the building up of the economic structure could repress the cry which this ruthless blow had wrung out of our hearts.
Bomb Needed
Consequently, bearing in mind the words of the late Mr. S.R. Das, once Law Member of the Governor - General's Executive Council, which appeared in the famous letter he had addressed to his son, to the effect that the 'Bomb was necessary to awaken England from her dreams', we dropped the bomb on the floor of the Assembly Chamber to register our protest on behalf of those who had no other means left to give expression to their heart-rending agony. Our sole purpose was "to make the deaf hear" and to give the heedless a timely warning. Others have as keenly felt as we have done, and from under the seeming stillness of the sea of Indian humanity, a veritable storm is about to break out. We have only hoisted the "danger-signal" to warn those who are speeding along without heeding the grave dangers ahead. We have only marked the end of an era of Utopian non-violence, of whose futility the rising generation has been convinced beyond the shadow of doubt.
Ideal Explained
We have used the expression Utopian non-violence, in the foregoing paragraph which requires some explanation. Force when aggressively applied is "violence" and is, therefore, morally unjustifiable, but when it is used in the furtherance of a legitimate cause, it has its moral justification. The elimination of force at all costs in Utopian, and the mew movement which has arisen in the country, and of that dawn we have given a warning, is inspired by the ideal which guided Guru Gobind Singh and Shivaji, Kamal Pasha and Riza Khan, Washington and Garibaldi, Lafayette and Lenin.
As both the alien Government and the Indian public leaders appeared to have shut their eyes to the existence of this movement, we felt it as our duty to sound a warning where it could not go unheard.
We have so far dealt with the motive behind the incident in question, and now we must define the extent of our intention.
No Personal Grudge
We bore no personal grudge or malice against anyone of those who received slight injuries or against any other person in the Assembly. On the contrary, we repeat that we hold human life sacred beyond words, and would sooner lay down our own lives in the service of humanity than injure anyone else. Unlike the mercenary soldiers of the imperialist armies who are disciplined to kill without compunction, we respect, and, in so far as it lies in our power, we attempt to save human life. And still we admit having deliberately thrown the bombs into the Assembly Chamber. Facts however, speak for themselves and our intention would be judged from the result of the action without bringing in Utopian hypothetical circumstances and presumptions.
No Miracle
Despite the evidence of the Government Expert, the bombs that were thrown in the Assembly Chamber resulted in slight damage to an empty bench and some slight abrasions in less than half a dozen cases, while Government scientists and experts have ascribed this result to a miracle, we see nothing but a precisely scientific process in all this incident. Firstly, the two bombs exploded in vacant spaces within the wooden barriers of the desks and benches, secondly, even those who were within 2 feet of the explosion, for instance, Mr. P. Rau, Mr. Shanker Rao and Sir George Schuster were either not hurt or only slightly scratched. Bombs of the capacity deposed to by the Government Expert (though his estimate, being imaginary is exaggerated), loaded with an effective charge of potassium chlorate and sensitive (explosive) picrate would have smashed the barriers and laid many low within some yards of the explosion.
Again, had they been loaded with some other high explosive, with a charge of destructive pellets or darts, they would have sufficed to wipe out a majority of the Members of the Legislative Assembly. Still again we could have flung them into the official box which was occupied by some notable persons. And finally we could have ambushed Sir John Simon whose luckless Commission was loathed by all responsible people and who was sitting in the President's gallery at the time. All these things, however, were beyond our intention and bombs did no more than they were designed to do, and the miracle consisted in no more than the deliberate aim which landed them in safe places.
We then deliberately offered ourselves to bear the penalty for what we had done and to let the imperialist exploiters know that by crushing individuals, they cannot kill ideas. By crushing two insignificant units, a nation cannot be crushed. We wanted to emphasize the historical lesson that lettres de cachets and Bastilles could not crush the revolutionary movement in France. Gallows and the Siberian mines could not extinguish the Russian Revolution. Bloody Sunday, and Black and Tans failed to strangle the movement of Irish freedom.
Can ordinances and Safety Bills snuff out the flames of freedom in India? Conspiracy cases, trumped up or discovered and the incarcertion of all young men, who cherish the vision of a great ideal, cannot check the march of revolution. But a timely warning, if not unheeded, can help to prevent loss of life and general sufferings.
We took it upon ourselves to provide this warning and our duty is done.
(Bhagat Singh was asked in the lower court what he meant by word "Revolution". In answer to that question, he said) "Revolution" does not necessarily involve sanguinary strife nor is there any place in it for individual vendentta. It is not the cult of the bomb and the pistol. By "Revolution" we mean that the present order of things, which is based on manifest injustice, must change. Producers or labourers in spite of being the most necessary element of society, are robbed by their exploiters of the fruits of their labour and deprived of their elementary rights. The peasant who grows corn for all, starves with his family, the weaver who supplies the world market with textile fabrics, has not enough to cover his own and his children's bodies, masons, smiths and carpenters who raise magnificent palaces, live like pariahs in the slums. The capitalists and exploiters, the parasites of society, squander millions on their whims. These terrible inequalities and forced disparity of chances are bound to lead to chaos. This state of affairs cannot last long, and it is obvious, that the present order of society in merry-making is on the brink of a volcano.
The whole edifice of this civilization, if not saved in time, shall crumble. A radical change, therefore, is necessary and it is the duty of those who realize it to reorganize society on the socialistic basis. Unless this thing is done and the exploitation of man by man and of nations by nations is brought to an end, sufferings and carnage with which humanity is threatened today cannot be prevented. All talk of ending war and ushering in an era of universal peace is undisguised hypocrisy.
By "Revolution", we mean the ultimate establishment of an order of society which may not be threatened by such breakdown, and in which the sovereignty of the proletariat should be recognized and a world federation should redeem humanity from the bondage of capitalism and misery of imperial wars.
This is our ideal, and with this ideology as our inspiration, we have given a fair and loud enough warning.
If, however, it goes unheeded and the present system of Government continues to be an impediment in the way of the natural forces that are swelling up, a grim struggle will ensure involving the overthrow of all obstacles, and the establishment of the dictatorship  of the proletariat to pave the way for the consummation of the ideal of revolution. Revolution is an inalienable right of mankind. Freedom is an imperishable birth right of all. Labour is the real sustainer of society. The sovereignty of the ultimate destiny of the workers.
For these ideals, and for this faith, we shall welcome any suffering to which we may be condemned. At the altar of this revolution we have brought our youth as an incense, for no sacrifice is too great for so magnificent a cause. We are content, we await the advent of Revolution "Long Live Revolution."

Saturday, June 17, 2017

JUST FOR THE HACK OF IT






                 Do you know--------------

*Glabella* - The space between your eyebrows is called a glabella.
*Petrichor* - The smell of the earth after the rain is called petrichor.
*Aglet* - The plastic or metallic coating at the end of your shoelaces is called an aglet.
*Wamble* - The rumbling of stomach is actually called a wamble.
*Tines* - The prongs on a fork are called tines.
*Phosphenes* - The sheen or light that you see when you close your eyes and press your hands on them are called phosphenes.
*Box Tent* - The tiny plastic table placed in the middle of a pizza box is called a box tent.
*Overmorrow* - The day after tomorrow is called overmorrow.
*Minimus* - Your tiny toe or finger is called minimus.
*Agraffe* - The wired cage that holds the cork in a bottle of champagne is called an agraffe.
*Vocables* - The 'na na na' and 'la la la', which don't really have any meaning in the lyrics of any song, are called vocables.
*Interrobang* - When you combine an exclamation mark with a question mark (like this ?!), it is referred to as an interrobang.
*Columella Nasi* - The space between your nostrils is called columella nasi.
*Armscye* - The armhole in clothes, where the sleeves are sewn, is called armscye.
*Dysania* - The condition of finding it difficult to get out of the bed in the morning is called dysania.
*Griffonage* - Unreadable hand-writing is called griffonage (Are you reading this dear doctors?)
*Tittle* - The dot over an “i” or a “j” is called tittle.
*Crapulence* - That utterly sick feeling you get after eating or drinking too much is called crapulence.
*Brannock Device* - The metallic device used to measure your feet at the shoe store is called Brannock device.

Thursday, June 15, 2017

THE GOLDEN WISDOM





                

•I can only please one person per day. Today is not your day, tomorrow is not looking good either.

•I love deadlines. I especially like the whooshing sound they make as go flying by.

•Tell me what you need, and I'll tell you to get along without it.

•Accept that some days you are the pigeon some days the statue.

•Needing someone is like needing a parachute. If he isn't there the first time, chances are you won't need him again.

•I don't have an attitude problem, you have a perception problem.

•Last night I lay in bed looking up at the stars in the sky, and I thought to myself, "where the heck is the ceiling?"

•On the keyboard of life, always keep one finger on the escape key.

•I don't suffer from stress. I am a carrier.

•Do not meddle in the affairs of dragons, you are crunchy and good with ketchup.

•Never argue with idiots. They drag you down their level, then beat you with experience.

•A pat on the back is only a few inches from a kick in the ***.

•Don't be irreplaceable. If you can't be replaced, you can't be promoted.

•After any salary raise, you will have less money at the end of the month than you did before.

•The more crap you put up with, the more crap you are going to get.

•You can go anywhere you want if you look serious and carry a clipboard.

•If it wasn't for the last minute, nothing would get done.

•When you don't know what to do, walk fast and look worried.

•Only the mediocre are at their best all the time.

•Life is a waste of time; time is a waste of life, so get wasted all of the time and have the time of your life.

Tuesday, June 13, 2017

HAPPINESS IS WITHIN


      

                    "You can have flaws, be anxious, and ever angry, but do not forget that your life is the greatest enterprise in the world. Only you can stop it from going bust. Many appreciate you, admire you .. Remember that to be happy is not to have a sky without a storm, a road without accidents, work without fatigue, relationships without disappointments.To be happy is to find strength in forgiveness, hope in battles, security in the stage of fear, love in discord. It is not only to enjoy the smile, but also to reflect on the sadness.It is not only to celebrate the successes, but to learn lessons from the failures.It is not only to feel happy with the applause, but to be happy in anonymity. Being happy is not a fatality of destiny, but an achievement for those who can travel within themselves. To be happy is to stop feeling like a victim and become your destiny's author. It is to cross deserts, yet to be able to find an oasis in the depths of our soul. Being happy is not being afraid of your own feelings. It's to be able to talk about you. It is having the courage to hear a "no". It is confidence in the face of criticism, even when unjustified. It is to kiss your children, pamper your parents, to live poetic moments with friends, even when they hurt us. To be happy is to let live the creature that lives in each of us, free, joyful and simple. It is to have maturity to be able to say: "I made mistakes". It is to have the courage to say "I am sorry".. May your life become a garden of opportunities for happiness ... That in spring may it be a lover of joy. In winter a lover of wisdom. And when you make a mistake, start all over again. For only then will you be in love with life. You will find that to be happy is not to have a perfect life. But use the tears to irrigate tolerance. Use your losses to train patience. Use your mistakes to sculptor serenity. Use pain to plaster pleasure. Use obstacles to open windows of intelligence. Never give up .... Never give up on happiness, for life is an incredible show. "

MORAL COURAGE

Field Marshal Sam Manekshaw, as quoted from his own speech to the Officers of DSSC, Wellington, on 11th November 1998, regarding the real meaning of 'Moral Courage':-
" Ladies and Gentlemen, I do not know which of these is more important. When I am talking to young officers and young soldiers, I should place emphasis on physical courage. But since I am talking to this gathering, I will lay emphasis on Moral Courage.
What is moral courage? Moral courage is the ability to distinguish right from wrong and having done so, say so when asked, irrespective of what your superiors might think or what your colleagues or your subordinates might want. A ‘yes man’ is a dangerous man. He may rise very high, he might even become the Managing Director of a company. He may do anything but he can never make a leader because he will be used by his superiors, disliked by his colleagues and despised by his subordinates. So shallow– the ‘yes man’.
I am going to illustrate from my own life an example of moral courage.
In 1971, when Pakistan clamped down on its province, East Pakistan, hundreds and thousands of refugees started pouring into India. The Prime Minister, Mrs. Gandhi had a cabinet meeting at ten o’clock in the morning. The following attended: the Foreign Minister, Sardar Swaran Singh, the Defence Minister, Mr. Jagjivan Ram, the Agriculture Minister, Mr. Fakhruddin Ali Ahmed, the Finance Minister, Mr. Yashwant Rao, and I was also ordered to be present.
Ladies and Gentlemen, there is a very thin line between becoming a Field Marshal and being dismissed. A very angry Prime Minister read out messages from Chief Ministers of West Bengal, Assam and Tripura. All of them saying that hundreds of thousands of refugees had poured into their states and they did not know what to do. So the Prime Minister turned round to me and said: “I want you to do something”.
I said, “What do you want me to do?”
She said, “I want you to enter East Pakistan”.
I said, “Do you know that that means War?”
She said, “I do not mind if it is war”.
I, in my usual stupid way said, “Prime Minister, have you read the Bible?”And the Foreign Minister, Sardar Swaran Singh (a Punjabi Sikh), in his Punjabi accent said, “What has Bible got to do with this?”, and I said, “the first book, the first chapter, the first paragraph, the first sentence, God said, ‘let there be light’’ and there was light.
You turn this round and say ‘let there be war’ and there will be war. What do you think? Are you ready for a war? Let me tell you –“it’s 28th April, the Himalayan passes are opening now, and if the Chinese gave us an ultimatum, I will have to fight on two fronts”.
Again Sardar Swaran Singh turned round and in his Punjabi English said, “Will China give ultimatum?”
I said, “You are the Foreign Minister. You tell me”.
Then I turned to the Prime Minister and said, “Prime Minister, last year you wanted elections in West Bengal and you did not want the communists to win, so you asked me to deploy my soldiers in penny pockets in every village, in every little township in West Bengal. I have two divisions thus deployed in sections and platoons without their heavy weapons. It will take me at least a month to get them back to their units and to their formations. Further, I have a division in the Assam area, another division in Andhra Pradesh and the Armoured Division in the Jhansi-Babina area. It will take me at least a month to get them back and put them in their correct positions. I will require every road, every railway train, every truck, every wagon to move them. We are harvesting in the Punjab, and we are harvesting in Haryana; we are also harvesting in Uttar Pradesh. And you will not be able to move your harvest.
I turned to the Agriculture Minister, Mr. Fakhruddin Ali Ahmed, “If there is a famine in the country afterwards, it will be you to blame, not me.” Then I said, “My Armoured Division has only got thirteen tanks which are functioning.”
The Finance Minister, Mr. Chawan, a friend of mine, said, “Sam, why only thirteen?”
“Because you are the Finance Minister. I have been asking for money for the last year and a half, and you keep saying there is no money. That is why.” Then I turned to the Prime Minister and said, “Prime Minister, it is the end of April. By the time I am ready to operate, the monsoon will have broken in that East Pakistan area. When it rains, it does not just rain, it pours. Rivers become like oceans. If you stand on one bank, you cannot see the other and the whole countryside is flooded. My movement will be confined to roads, the Air Force will not be able to support me, and, if you wish me to enter East Pakistan, I guarantee you a hundred percent defeat.”
“You are the Government”, I said turning to the Prime Minister, “Now will you give me your orders?”
Ladies and Gentlemen, I have seldom seen a woman so angry, and I am including my wife in that. She was red in the face and I said, “Let us see what happens”. She turned round and said, “The cabinet will meet four o’clock in the evening”.
Everyone walked out. I being the junior most man was the last to leave. As I was leaving, she said, “Chief, please will you stay behind?” I looked at her. I said, “Prime Minister, before you open your mouth, would you like me to send in my resignation on grounds of health, mental or physical?”
“No, sit down, Sam. Was everything you told me the truth?”
“Yes, it is my job to tell you the truth. It is my job to fight and win, not to lose.”
She smiled at me and said, “All right, Sam. You know what I want. When will you be ready?”
“I cannot tell you now, Prime Minister”, I said, but let me guarantee you this that if you leave me alone, allow me to plan, make my arrangements, and fix a date, I guarantee you a hundred percent victory”.
That made history.

*We also need to learn some things from this story... A "yes man" is dangerous and shallow.... Don't become a "Yes man".... Have the moral courage to speak out the harsh truths...

Sunday, June 11, 2017

UNDERSTANDING COMMERCE AND ECONOMICS

Commerce is the exchange of goods or services between two economic agents. It is an activity. Economics is the science that studies the behavior of economic agents. It is a study discipline !!!!

Derivative?????????

A derivative is a contract through which the contracting parties trade in risk. The idea of a contract through which risk is traded is not a new one; indeed it is familiar to us all. The obvious example of such a contract is the one we enter into with insurance companies, for getting health insurance cover or motor vehicle insurance cover or crop insurance cover. Derivatives are very similar things, though insurance contracts are normally not included among derivatives.


The risk that is traded through these contracts is usually associated with the value of an asset. Since the trade in this case is not in the asset itself but in the risk associated with its value, ie, is derived from its value, the contract is called a “derivative”. A very simple example of a derivative is when a farmer enters into a contract with a trader that he would give the latter a specified amount of a crop at a specified price at a specified future date. The actual price prevailing at that specified date may be more or less than the specified price. If more, then the farmer has made a loss compared to what he could have got; if less, then the farmer has made a gain. But by entering into a contract at the time he does, the farmer opts for certainty rather than the risk of more or less. And exactly the same is true of the trader. The farmer and the trader have traded risk through this “derivative” contract.

Why, it may be asked, should trade of this sort be at all possible? There are several reasons why it is. First, the expectations about the future price of the asset may differ among the contracting parties, in which case both may think that they would gain from the contract and hence enter into the contract. The farmer in the above example may believe that the specified price in the forward contract he has got into, is above what he expects to prevail on that particular future date, and hence consider himself a gainer from the contract. The trader on the other hand may think the price to be lower than he expects to prevail and hence he too considers himself a gainer. Both therefore enter into the contract thinking they are going to gain.
Secondly, even if all contracting parties have the same expectations about the future price of the asset, they may have different attitudes towards risk, some being more risk-averse than others. Some for instance may be more cautious by nature, while others may be less cautious, or may even love gambling, in which case there is scope for them to enter into such a contract.

Thirdly, even if all parties to the contract have the same expectations about the future price of the asset and also the same attitude towards risk, they may have very different capacities for bearing risk. (This is true in the insurance case, since the insurance company, through the sheer scale of its operations, can bear risk to a far greater extent that the individual, which is why both can enter into a contract with which each is satisfied).
Fourthly, even if the contracting parties have the same expectations, the same attitude towards risk, and even the same capacity for bearing risk, they may nonetheless have different attitudes towards the future, some being more concerned with the immediate future while others are more long-sighted, in which case again there is scope for them to enter into a contract.

The fifth case is when there is an element of swindle or coercion associated with the contract, in which case of course one of the parties enters into the contract either unwillingly or unknowingly. (This was the case with the Bengal peasants under colonial rule who took loans from traders to pay their land tax, by entering into dadan contracts that made them agree to sell a certain amount of a specified crop at a certain time at a specified price to the traders).

While the existence of derivatives has been traced back to the times of ancient Greece, and can be seen in pre-independence India as well, the real explosion in these instruments occurred only recently, with the growth of the financial sector. Derivatives in commodity markets, credit markets, foreign exchange markets, and financial markets are now a common phenomenon. Some of the common forms of derivative contracts are: forward contracts (of which the case of the contract between the farmer and the trader discussed above is an example), and futures contracts, which are very much like forward contracts except that they are standardised contracts drawn up by clearing houses rather than by the parties themselves, and can be traded by these clearing houses.

In addition there are options, where the contracting parties have the right but not an obligation to buy (or sell) an asset at a pre-specified price at a pre-specified date; and swaps which are contracts for exchanging assets that result in the substitution of one stream of cash-flows for another stream of cash flows over a certain time-span. A common form of swap agreement that has been much in vogue in recent years is the Credit Default Swap, which can be understood as follows.

Suppose I hold a claim (a loan) on somebody. I can sell this loan to a third party which makes me a series of payments, but in return I pay the buyer the full value of the loan in case there is a default on the loan, and take possession of the loan myself. The buyer in this case in other words is willing to make a series of payments to insure himself or herself against any risk of default on the loan that he or she holds.

Likewise there can be interest rate swaps, where, say, one stream of cash flows on an asset on which there is a variable interest rate is exchanged against another stream of cash flows on an asset on which the interest rate is fixed. Similarly there can be currency swaps where assets may be exchanged in order to hedge against risks of exchange rate fluctuations.

It is clear that an infinite array of possibilities exists with regard to derivative contracts, and these in turn can be marketed. In the process even newer forms of contracts may emerge, and so on. The question that arises is: what is the effect of these derivatives, and trade in derivatives, upon the real economy?

The usual argument that used to be advanced is that derivatives, by introducing a whole range of new instruments, serve to improve financial markets; they serve to transfer risks from those who are unwilling to bear risks to those who are willing, and as a result the overall burden of risk in the economy comes down. Put differently, since economic agents want to be compensated for bearing risk by an amount which is called the risk premium, the reduction of risk in the economy as a whole entails a reduction, other things being equal, in the risk premium demanded in the economy. This is exactly analogous in its economic effect to a reduction in the interest rate, and therefore increases investment and thereby the capital stock, output and growth-rate in the economy. The proliferation of derivatives in short, by improving the quality of financial markets, has, according to this view, the effect of improving the performance of the real economy.

This view however is wrong. It is based on a conception of capitalism where the system reaches full employment in every period and has a long-run rate of growth equal to the sum of the rate of growth of labour force and the rate of growth of labour productivity. In other words, it sees capitalism as a system that is always in equilibrium, with no demand constraints, no slumps, no crises or fluctuations. In such a world some fine tuning in the financial markets can only make for a better equilibrium, and nothing else. This means that derivatives can only improve the performance of the real economy, which is pretty good to start with anyway.

But once we look at the actual capitalist system we get a very different picture. This is a system where under neo-liberal policies, growth occurs only through the formation of bubbles, and the collapse of bubbles brings crises. Now, the introduction of derivatives on a large scale implies, in this scenario, a camouflaging of risk. Nobody quite knows how much risk any enterprise or financial unit is exposed to by virtue of holding the portfolio that it does.


During the boom therefore when the bubble is expanding, there is a tendency on the part of the banks and other financial institutions to underestimate the risk for this additional reason, namely that the actual risk situation of any production or financial unit is shrouded in mystery, and therefore keep expanding credit. This keeps the bubble going, as happened during the housing bubble in the USA when a good deal of what came to be called “sub-prime lending” occurred. By the same token however when the bubble bursts, as it inevitably does like all bubbles, the crash is all the more severe, posing in particular an acute threat to the viability of the entire financial system.

It follows therefore that the introduction of financial instruments like derivatives, which are claimed to improve the performance of the real economy, actually exaggerates the slump and makes the financial system extremely vulnerable. Many factors no doubt went into the 2007-8 crisis which still continues, and in the wake of which the Obama administration had to pledge $13 trillion of State funds to shore up the financial system; but one factor that no doubt contributed to this dire situation was the camouflaging of risk which the introduction of derivatives has made possible !!!!!!!!

Saturday, April 29, 2017

Quoting Shakespeare


If you cannot understand my argument, and declare "It's Greek to me'', you are quoting Shakespeare; if you claim to be more sinned against than sinning, you are quoting Shakespeare; if you recall your salad days, you are quoting Shakespeare; if you act more in sorrow than in anger; if your wish is farther to the thought; if your lost property has vanished into thin air, you are quoting Shakespeare; if you have ever refused to budge an inch or suffered from green-eyed jealousy, if you have played fast and loose, if you have been tongue-tied, a tower of strength, hoodwinked or in a pickle, if you have knitted your brows, made a virtue of necessity, insisted on fair play, slept not one wink, stood on ceremony, danced attendance (on your lord and master), laughed yourself into stitches, had short shrift, cold comfort or too much of a good thing, if you have seen better days or lived in a fool's paradise -why, be that as it may, the more fool you , for it is a foregone conclusion that you are (as good luck would have it) quoting Shakespeare; if you think it is early days and clear out bag and baggage, if you think it is high time and that that is the long and short of it, if you believe that the game is up and that truth will out even if it involves your own flesh and blood, if you lie low till the crack of doom because you suspect foul play, if you have your teeth set on edge (at one fell swoop) without rhyme or reason, then - to give the devil his due - if the truth were known (for surely you have a tongue in your head) you are quoting Shakespeare; even if you bid me good riddance and send me packing, if you wish I was dead as a door-nail, if you think I am an eyesore, a laughing stock, the devil incarnate, a stony-hearted villain, bloody-minded or a blinking idiot, then - by Jove! O Lord! Tut tut! For goodness' sake! What the dickens! But me no buts! - it is all one to me, for you are quoting Shakespeare.