Friday, 26 August 2011

Can Libya Reap the Fruits of the Arab Spring?

Just as Saddam Hussain portrayed himself as the new Salahuddin Ayyubi of the Arab world, Muammar Gaddafi projected himself as the new Omar Mukhtar of Libya. Salahuddin Ayyubi fought the marauding crusaders, and Omar Mukhtar fought the Italian invaders, whilst the Arab dictators spent their life oppressing their citizens and empowering their family and tribes. Is there any comparison between the brave and heroic struggle undertaken by Omar Mukhtar, and Gaddafi’s cowardly acts of oppressing and killing Libyan citizens over the last forty years? The world only caught a glimpse of Gaddafi’s reign of horror through the shocking events in Benghazi that ignited the people of Libya to overthrow the regime.

Colonel Gaddafi has always been the Arab Idi Amin, an eccentric clown to the outside world, and a cruel monster when dealing with his opponents. As the rebels close in on Gaddafi, Moussa Ibrahim, the spokesman for Gaddafi, is beginning to sound like Ali al-Sahhaf, better known as comical Ali, for his lurid and absurd claims. Gaddafi’s superficial rhetoric belongs to the 70s, when the government-controlled media was the primary source of information, but the world has moved on, you cannot fool this Facebook generation; they are technologically savvy with instant access to information from numerous sources.

Thursday, 18 August 2011

Is it the End of the American Century?

China is sitting on a mountain of money, whilst the US is sitting on a mountain of debt exceeding $14 trillion and 100% of its GDP. The Chinese are the largest foreign holder of the US federal debt with $1.2 trillion in treasuries, and in addition approximately two-thirds of $3.2 trillion in foreign exchange reserves is estimated to be in dollars. It’s rational to expect the poor to get into debt, but not the rich, and certainly not the largest economy in the world. After the historic down grading of the US government's credit rating by Standard & Poor, China as the leading creditor raised concern, demanded that the US should "cure its addiction to debts" and "learn to live within its means".

This is a strange paradox; China as a socialist nation has become wealthy using the Capitalist free market model, whereas the leading capitalist nation has gone into severe debt, as if they were managed by some inefficient communist regime. It is even more ironic that the capitalist US is in debt to socialist China.

Tuesday, 9 August 2011

The Riots: is it Poverty or Greed?

There is chaos in the stock market, and on the streets of London. Is there a connection between the rioters and the investors? The common thread is economics, as some argue that a lack of economic opportunities is causing, or at least contributing, to these riots; the youths dissatisfied are expressing their anger. Well so far, most of those wearing hoods and with faces covered have prepared for a different agenda, and that is looting. To date, no one has come forward elaborating the case for their violent dissent, and under those circumstances, one can only infer their motive from their actions. Indeed, lack of economic opportunities seems to be the primary cause, because the rioters are breaking into the shops creating economic ‘opportunities’ for themselves!

If anyone seriously wants to examine the issue of economic opportunities, then they should look at places like Somalia, Ethiopia and other parts of the world where children are begging or working like slaves, to support families. They do not have the ‘luxury’ to riot for a Plasma TV or Nike trainers and they would be more than content with what we throw away on a daily basis here in the West. If those kids rioted for basic necessities, that would be a genuine ‘riot’!

Thursday, 4 August 2011

Ramadan – Wealth and Poverty

Don’t worry; this is not a religious sermon. I am neither an Imam, nor a priest of any kind. Although fasting in the month of Ramadan is a spiritual act for Muslims, it may offer valuable lessons that are beneficial to all humanity, and provide some insight into human nature.  

To abstain from consuming food and drink, and sexual intercourse, is to break from the usual routine. By observing this annual fasting it gives the hard working organs in the body a bit of a rest, allowing them to recuperate, like the annual service done on a car. For a more in-depth analysis of the physical benefits of fasting one can consult a medic, and there is plenty of literature out there. I am more interested in the collective social benefits that can be derived from the notion of fasting.  

Monday, 1 August 2011

Debt Reduction and Economic Growth through Distribution of Wealth

Facing competition, businesses in the private sector must be efficient and profitable to survive in the market place. A similar principle is applicable to the business of government in the public sector; although, it does not operate to make profit and faces zero competition, it has to generate enough revenue to meet its expenditure. Otherwise, the need to borrow money to manage the deficit arises, leading to the problem of debt. On both sides of the Atlantic, nations are suffering from debt; this is particularly acute for some of the nations in the Euro zone.

The government answer to the national debt problem has been to impose higher levels of taxation, and introduce new taxes where possible, coupled with a reduction in government expenditure. However, the problem is, taxes reduce disposable income, thus a decrease in consumer spending, and reducing government spending has the same effect; the end result is a contraction of the economy as the demand for goods and services falls. Since, the bulk of the tax revenue comes from the private sector, a contraction in the economy will result in tax revenue falling, offsetting the initial rise in tax revenue acquired through higher tax.