December 28, 2009

life in financial markets: review of 'the dismal science' book

A couple of weeks back I reviewed, for the magazine I presently write for, a book on economics. I present it below. Economics is understood differently by different people. Economists, like every other professional in his or her respective field, try to lobby and influence governments, companies and finance professionals with their theories.

The ideal situation is one where such heavy lobbying, as economists and others do presently, fails and instead quiet and straight-forward research and theories are picked up directly by governments, companies and finance professionals. The latter should do their own hard work to surf the world of economists and their economic theories and pick the right ones for implementation in their policies and businesses.

Anyway, here is the review of that book:

Title: THE DISMAL SCIENCE - How Thinking Like An Economist Undermines Community

Author: Stephen Marglin

Publisher: Oxford University Press

First published in India 2009

ISBN-13: 978-0-19-806335

ISBN-10: 0-19-806335-0

Number of pages: 307

Price in India: Around Rs 800

Good criticism, poor alternatives

A critic from inside provides his expose to problems in economic theory and practice but only in order to bat, without success, for community-based thinking

Stephen Marglin, the author of this book, is a trained economist from a few decades back. Presently, he is a member of the Department of Economics at Harvard University. It has taken courage on the part of Marglin to defy conventional economics wisdom among his colleagues and students to write this book.

This is because his book 'Dismal Science' works on a comprehensive and intense critique of the mainstream consensus, among economists, that a system of unfettered markets is good for the people. This, Marglin does, in order to put forth his theory that community-based economics would serve humanity better.

His training as an economist gives Marglin some credibility when he elaborates on why he rejects many of foundational assumptions of economics calling them "cultural myths" as against what conventional economists would term as "universal truths".

One of them is the idea of individualism that, Marglin writes, is be understood as "a collection of autonomous individuals, that groups—with the exception of the nation—have no normative significance as groups, that all behavior, policy, and even ethical judgment should be reduced to their effects on individuals."

Marglin continues articulating, "A second founding myth is the modern ideology of knowledge, an ideology that privileges the algorithmic over the experiential, an ideology that elevates the knowledge that can be logically deduced from what are regarded as self-evident first principles over what is learned from intuition and authority, from touch and feel."

The third assumption, and myth, according to Marglin, is that "the nation... is the only legitimate social grouping," where "it is legitimate to ask whether the nation will be better off by free trade, but it is parochial to ask whether workers, old folks, or farmers will fare better or worse."

The fourth myth is of unlimited human wants that can never be fulfilled and so economics tries to allocate scarce resources towards it. Marglin states that the western economy allows free play to unlimited desires and allows "rivalry—keeping up with the Joneses and the like—to be expressed in the acquisition of display and wealth."

These four foundational assumptions of economics, and other theories associated with any of these, are very craftily argued against in 'The Dismal Science'. One thoroughly enjoys reading the well-articulated and sharp points and elaborations made by Marglin, particularly in the middle half of the book in chapters titled 'From Vice to Virtue in a Century', 'How Do We Know When We Do Not Know?', 'Taking Experience Seriously', 'Why is Enough Never Enough?' and 'The Economics of Tragic Choices'.

The book provides very well-presented thoughts of the author although at times the frequent references to people, events and places from the history of economics get boring and pointless. There have been other critiques of economic theory in the past but Marglin's book is nevertheless a fresh and interesting addition to the list of critiques.

Marglin, however, fails to give justice to the second part of the book title 'How Thinking Like An Economist Undermines Community'. Even though he has one full chapter on 'What is Community? And Is It Worth the Cost?' it does not present a convincing case as to why community-based economics is necessarily free of the myriad problems that bog down market-oriented economics.

It is, however, to Marglin's credit that he stays fair to the mainstream economists in the sense that when he is stating their positions on economic theories and free markets there is no distortion of any kind. This, then, gives him enough credibility to launch his criticisms.

The second big failing in the book is that Marglin could have hit harder on the problems with foundational assumptions of economics. He could have, if he had put in just a bit more effort, to expose, through real-life examples, of the continuous failure of the fulfilment of the assumptions of economics. The fact that, more often that not, cronyism, unfair tax favours and corruption of government, and not free and fair markets, is how capitalists operate is ignored by Marglin.

The fact that some markets work, and work wonderfully, is despite the capitalists' cronyism and partly because of human nature to adapt as best they can to circumstances forced upon by the policy-makers and industrialists who resort to conventional economics' flawed theories.

Are there alternatives to conventional economic wisdom then? Marglin thinks going back to communities would help. But, in my view, any system that is run by humans will not be free of the negatives of human nature such as manipulativeness, greed, deception and violent, or subtle, exploitation of other living beings and the ecology.

At any rate, 'Dismal Science' is a book worth reading, and I can safely recommend you to go buy a copy.

December 13, 2009

life in financial markets & general: food gets expensive in india

My country was abundant in natural resources until the industrialists, consumers and likes of Chidambaram and Manmohan Singh decided to fiddle too much with the nature's bounty in the name of 'development'.

Vagaries of climate, particularly rainfall, induced by global warming and other harmful consequences of mankind-generated toxic gases' emissions in the atmosphere and destruction of ecology, are creating with agriculture in India. And the Indian government is outright refusing to play its part in bringing down such emissions.

Anyway, agriculture-rich India is since the last couple of years facing a problem in keeping up the produce of essential food items such as grains, pulses and vegetables. The soil of India has also been badly affected by excessive use of chemical fertilisers and insecticides (that government calls as "green revolution").

Prices of food items have shot up by 50% and more in the last one year. See the graph below that shows India's Wholesale Price Index and the food index (click on the image to see it enlarged & clear).

December 10, 2009

life in financial markets: home bias in markets such as india & china!

Unfailingly, over the last 10-12 years, we have clearly seen a strong and sustained home bias in the writings and views of almost very economist and market/investment analyst/guru in fast-growing economies such as India and China.

I think, half of this is based on genuine factors but the other half is on account of complete blindness to the internal developments, their causes and long-term implications.

The same is, however, not the case with North American and West European economists and market analysts as there are always a decent number of them who do not hold themselves back from highlighting the negatives in their own countries' economic developments.

Nowadays, Indians and Chinese economists/analysts are also beginning to get extremely confident that their countries' economies will soon become larger than the western economies. No problem with this confidence but then these same very jingoist Indian and Chinese economists/analysts lose their courage when it comes to aggressive lobbying by western companies to set up large industrial projects in all violation of environmental, forest and tribal laws and at tax rates much lower than those applicable to domestic companies.

In the ongoing tussle at Copenhagen climate change summit between India/China/etc on one hand and US/UK/Australia/etc on other hand, I fail to understand why the former does not say 'yes' to firm commitments on carbon emissions and then charge a hefty 'carbon tax' on all their exports to the latter. This is a direct way of making western consumers pay for their high carbon footprint. Also, a high carbon tax should be imposed on the consumption of the very affluent within India/China/etc as their carbon footprint is at par with the affluent of the West.

December 06, 2009

life in financial markets: of spikes and regulatory opaqueness

That the Securities and Exchange Board of India (Sebi) is presently investigating a spike in prices and trading volume in the shares of Reliance Petroleum in November 2007 would not have as a surprise to the market participants. The spike was indeed rapid fast (see chart below, click on the image to see it enlarged & clear).

Sebi, while probing the largest traders in RPL shares in early November 2007, found out that about a dozen firms that were among the largest traders were linked to Reliance Industries. Spokespersons of RIL have, however, rubbished any allusions that the company violated any Sebi regulations.

RIL did, however, disclose on 23 November 2007 that it had sold 1804 lakh shares it held in RPL then (RPL was merged with RIL this year) at an average price of about Rs 223. RPL's share price had shot up by about 35% in a span of a week in early November 2007 although the broad market index, Nifty, had corresponding moved up by just about 4%.

It is now likely that RIL will file for a consent order with Sebi and this will push dirt, if any, under the carpet. Because, as I have written about problems with opaqueness in Sebi's consent order, the details of the violations are not given in the consent orders passed by Sebi. One never know what exactly happened and so one can never tell whether the monetary amounts collected under the consent orders are fair or not.

November 29, 2009

life in general & financial markets: can we please have a nuclear-free India?

On Friday (27 November '09) this week, one of the few nuclear plants here, in India, (see the map of plants locations in India above; it was taken from and the original image is at experienced a disaster. The newsreport below provides the detail.

Advanced science can offer potential benefits but these should far outweigh the potential dangers to Earth ands all its inhabitants. Nuclear science, unfortunately, does not fit this bill.

The harmful radiation leak in the Kaiga nuclear plant (see its pic to the left; taken from an the original pic is at .com/Img/2009/6/11/kaiga1.jpg)

I wish for a nuclear-free India, and a nuclear-free Earth.
has currently harmed humans (employees of the factory) but there is also the future potential risk of the ecology around the plants being completely devastated by a careless operation of the nuclear plants.
N-plant radiation leak in Karnataka leaves 45 staffers sick
Prashanth G N , TNN 29 November 2009, 01:30am IST
BANGALORE/KARWAR: In a nuclear accident that is bound to raise key safety concerns ahead of India’s ambitious atomic expansion programme, about 45 employees of the Kaiga atomic power plant suffered radiation poisoning when radioactive heavy water from the plant contaminated the drinking water. Kaiga is one of India’s newer nuclear reactors.
There was no official word from the usually secretive nuclear establishment. Sources said the employees were in hospital because they experienced a mildly higher level of radiation than permissible on Friday after drinking from a water cooler near an open area in one of the reactors.
Though a tiny amount of radiation is normal, scientists said the contamination was unusual because the affected employees do not go into the actual reactor area but work around it. ‘‘With no exposure to the reactor directly, it was surprising to see them with mildly higher level of radiation,’’ was the only comment Kaiga station director A M Gupta had to offer.
Heavy water molecules have two atoms of deutrium instead of the hydrogen in drinkable water H2O. It can cause fatally high levels of toxicity in humans.
The Nuclear Power Corporation, which runs Kaiga, did not respond to media queries over the nuclear accident. According to the deputy commissioner of Uttara Kannada N S Channappa Gowda, there were no casualties or injuries reported.
‘‘Investigation is on and we’ll probe how the (heavy) water got into the drinking water. For now, we have isolated the cooler and drinking water. Simultaneously, water testing is on,’’ said an NPC official, speaking on condition of anonymity.
The contamination was detected when some of the affected employees felt a change in the pattern of urination.
They were rushed to the doctor and all of them were tested and found normal. The employees even got back to work.
However, tests confirmed radioactivity in the urine samples. Sources said some amount of used heavy water, used as a moderator in reactors that use natural uranium as fuel, had got into the cooler containing drinking water and contaminated it. This heavy water caused the higher radiation. NPC has not released the names of those hospitalised at NPC’s medical establishment at Malapur.

November 28, 2009

life in general: (PICS IN THIS POST MAY SHOCK YOU) butchering animals


Violence is cruel and extremely degrading to those who suffer from it. Today is Bakri Id festival of Muslims where they kill a large number of goats as a sacrifice.

We mercilessly butcher animals not just for our food but also due to religious fervour. There are contradictions even when one religion tries to show compassion for animals. For instance, Hindu right-wing group, RSS, says animal sacrifice is inhuman but then also encourages full commercial use of bull power (that I can add is extremely painful to the bulls)

Below are five sets of photos -- first one pertains to Bakri Id, second one pertains to Hinduism's rituals, third one pertains to Christianity's turkey massacre during Thanksgiving, fourth one pertains to consumption of eggs and chickens by humans and fifth one pertains to consumption of pork by us.

I wish for a world where humans stop inflicting such extreme cruelty towards animals.



a) This pic has been taken from and the original pic is at

b) This pic is taken from and the original pic is at


a) This pic is taken from,in-pictures,nature,daily-animal-picture-hindu-goat-sacrifice-in-bangladesh

This pic is taken from and the original pic is at


a) This pic is taken from
and the original pic is at

b & c) These two pics are from
& the original pics are at &


a & b) These two pics are from a CD I had received from the Bombay office of People for the Ethical Treatment of Animals about 3 years back.


a, b & c) These are grabs from the video at

November 25, 2009

life in general: india's regressive stance on climate change mitigation measures

India, China and some other economically-growing countries are refusing to commit to any global measures to reduce emissions of Earth-harmful carbon dioxide and other Earth-harmful gases. The logic is that the already-large economies have, in the last couple of decades, grown on the back of severe emissions and so these large economies should first cut down drastically on their emission levels.

So far, this line of argument is fair. The large economies should actually, and concretely, reduce their emissions.

But after this, the egg-headedness of India, China etc comes into play. Saying that they will not commit to emission-reductions is a regressive decision. The next 2-3 decades will see the highest harmful-gases emissions, on our Mother Earth, from China and India if it goes on at the current rate.

According to the ruling political forces from India & China the large economies became large only because of their past, un-hindered, emissions and so their growth can not be stunted. But in this argument it is forgotten that more than half of what is produced in countries such as India and China is consumed in the already-large economies. So, instead of cribbing, India and China should impose an extremely-large carbon tax on all its exports to the already-large economies. In the policy matters on environment and emissions, the guts to take on the western large economies should be in this fashion rather than simply say we will not commit to emissions and go on polluting and producing cheap goods and services that is lapped up by consumers in the western countries.

Also, India's and China's un-checked and rampant emissions by its industries are going to do more harm, than good, to their own populations. They will do well to remember this.

November 24, 2009

life in general & financial markets: india's connection to blood diamonds

Many many women, young or old, in India or elsewhere, tend to be obsessed with wearing jewellery and diamonds are the most sought after jewellery item. But behind jewellery, and most particularly behind diamonds, lie a sordid tale of terror, exploitation and horror.

Indian businesses are also participants in such a sordid tale. A news story in the latest issue of Tehelka brings out what some of us have always been aware of and conscious about. Here it is:
The blood diamond files

Following the trail from Johannesburg to Mumbai, SHANTANU GUHA RAY finds that India is an important destination for Zimba stones

Priceless stone Sefadu, from Sierra Leone, is the largest uncut diamond

IT’S A crowded street market in Johannesburg. Boisterous youth and elderly women have set up stalls to sell polished ostrich eggshells, wrought iron flamingos and colourful bead strings. But in this Jo’burg bustle, there is often another hustle: the simple street markets also play host to the kind of sellers who come in big flashy cars and sell an item that’s quite, quite small in size — though not quite small when it comes to price.

The scenes are reminiscent of the 2006 Leonardo DiCaprio Hollywood movie Blood Diamond, and these people are dealers, many of them former mineworkers who have been driven out by the military from the Marange mines.

Diamond merchants such as these operate freely on the streets of Jo’burg. Those who cannot strike a deal here can head to Mozambique’s Vila de Mancia, a town close to the Machipanda frontier often referred to as diamond country.
These areas have dealers from everywhere, Somalia, Mozambique, Congo and Sierra Leone. They usually offer diamonds in tea-bag size sachets, a little like packets of washing powder or shampoo. “It is easy operating in South Africa and Mozambique if your passport is in order,” says a dealer.
The brisk trading happens openly in the Jo’burg street markets, under umbrellas shading the open-air coffee tables, where waiters serve Huntley Palmer biscuits as free accompaniment to guests who complete their transactions within seconds. They then discuss, among other things, the 2010 football World Cup, national politics and cricket.
But this open trade is, as Surat diamond trader Vipul Jain explains, just the first step towards credibility for diamonds mined from South Africa’s wartorn and troubled neighbours — Angola, Sierra Leone and Zimbabwe. “Direct import is impossible. The traders use this route to get the Zimba stones a taint-free stature,” Shah told TEHELKA.
Once sold, the diamonds first go to Dubai and then to Asia, usually India. But now, they have an air of certification about them — call it the Johannesburg effect. This means that importers can be sure the diamonds and gems have a stamp of legitimacy, regardless of which country they come from.


Hard life A worker at a diamond mine in eastern Zimbabwe

Although many operators in Johannesburg say it is getting harder to smuggle Zimbabwe’s diamonds, the sale continues unabated. The Zimbabwean authorities have awarded contracts for the Marange mines to two companies: Mbada Mining, a little-known local firm, and Canadile Miners, a company that has South African investors. Desperate for cash, Zimbabwean Mines Minister Obert Mpofu has gone ahead with mining what he believes can bring the cash-strapped nation a whopping £360,000 a day.
Since the Zimbabwean government took over the mines in October 2008 (after the Mugabe regime reached a power-sharing formula with challenger Morgan Tsvangirai), there have been reports of rampant abuse by the military forces: forced labour, child labour, beatings and killings.
For the importers, there are several advantages. For one, this trade ensures a steady supply. For another, they are substantially cheaper. For firms in places such as Surat, home of the Indian diamond cutting and polishing industry, already reeling from a global recession in cutting and polishing in 2008, these stones from conflict zones in Africa — estimated at nearly 20 percent of India’s annual diamond imports — are often 40 percent cheaper than the rest.
Most of the time, that is. Sometimes they are not. Last week, a Mumbai firm that had imported uncut diamonds worth several crore rupees from an African nation delayed taking delivery of the packet from the customs. The packet, which had come from Congo, was filled with plastic granules and brass powder. Ekta Enterprises, which has offices in Mumbai and Vadodara, had imported diamonds worth Rs 17 crore. “We were amazed to find plastic granules and brass powder,” says Naresh Mehta, a Mumbaibased diamond merchant and a valuer.
Customs authorities say under or overvaluing diamond shipments is routine, but plastic granules in a packet was indeed surprising. “We are tracking the case,” Deputy Commissioner (Customs) Dr Somesh Chandra, told TEHELKA. Still, the completely fake consignment was probably an aberration. When diamonds are imported from conflict areas, consignments normally have a Kimberley Process (KP) certificate that 74 nations dealing in diamonds recognise.
In this case, even the certificate was faked. Gujarat Jewellery Export Promotion Council (JEPC) Chairman Vasantbhai Mehta is certain it’s a case of cheating. “Either the parcel has been swapped or it is a hawala transaction,” says Mehta. “For more than four to five years, many such diamonds have hit the Indian shores and we have realised these are Zimba stones (blood diamonds) much after they were cut, polished and exported,” he adds.


Brisk trade Employees at a Surat diamond cutting and polishing factory


Sparklers Diamond jewellery displayed at a store in London


Tainted shine A man checks raw diamonds in war-torn Sierra Leone
Photo: AFP

Trade in conflict diamonds has certainly been going on for some years, augmented by – experts claim – the efforts of some of the world’s top diamond miners to slowly increase output.
Meanwhile, demographic changes have tended to sap demand in traditional markets in the West and threatened a long-term crisis for the industry. With demand ebbing from the US and Europe, Surat traders are now seeking newer markets: 70 per cent of polished diamonds are now exported to Hong Kong, China, UAE, Israel and Australia.
FIGURES AVAILABLE from the Gems and Jewellery Exports Promotion Council show that export of polished diamonds from India to the US — the world’s biggest market (at 60 percent in better days) — fell by 30 percent in the first six months of the current fiscal year ($1,791 million, compared to $2,527 million in the corresponding period in 2008). But then, exports to Hong Kong and China grew nearly nine percent. For the record, polished diamond exports to Hong Kong in the first half of 2009 were $3,126 million, compared to $2,853 million in the same period last year. Prices for rough, uncut rocks have risen more than 40 percent since February, impacting retail sales that nosedived to $65 billion this year from $74 billion in 2008.
And it is here that the low-priced Zimba and other ‘blood’ stones make a huge impact. They come cheaper, are routinely smuggled across the South African border and then end up in countries like India and Israel. “And these stones are not just coming from South Africa, they are coming from a number of African nations that receive such gemstones,” says Pravin Nanavati, a Surat diamond trader who has tracked such supplies.
Global experts told TEHELKA that an international effort to curb such illegal shipments could catch countries like Botswana and Namibia in the crossfire. The Kimberley Process could suspend Zimbabwe from the world diamond market because of human rights violations and other irregularities at the notorious Chiadzwa diamond fields.
In fact, the KP report on the state of diamond trade calls for a temporary ban of six months or more to allow Zimbabwe time to comply with Kimberley Process standards. “If such smuggling continues, southern Africa’s main diamond producers, Botswana, Namibia and South Africa, may find their excellent reputation undermined if they continue to be a destination for diamonds from conflict zones,” adds Nanavati. The report by the KP review mission has already suggested that other KP participants in the region, particularly Botswana, South Africa and Namibia, should act against smuggling.
But will that happen? Diamond merchants in Surat and Mumbai say smuggling has been fuelled – at least in the last six to eight months – by an increased demand that has had the tiny Gujarat town gasping because of a drop in the supply of rough diamonds caused by reduced production at downturn-affected companies. “Everyone wants to pick up whatever supplies and it is here that the smugglers are slowly pushing in such diamonds,” says Auguar Sanghvi, another Surat diamond trader.

The blood diamonds first go to Dubai and then to India, where they turn ‘clean’

With steady supplies available now, and demand having picked up, very few importers bother to check the origins of their diamonds. On paper, the consignments come from a legitimate nation, right? And for a cutting and polishing industry that is showing signs of revival after almost a year of depression, would anyone genuinely care to bother too much about the antecedents of the product? The answer is a simple no. “The problem is that no one actually knows the origin. Or, very few would actually know and care about not getting these stones because the KP certificates are there. But we must be cautious,” says Rohit Mehta of the Surat Diamond Association.
BHP Billiton, among the largest mining companies in the world, has already hiked rough diamond prices by five to 10 percent. Diamond Trading Corporation, a leading distributor and part of the De Beers group, is about to follow suit. The increase in prices has been triggered by huge demand. Owners of large units are flush with orders for supplying polished diamonds before Christmas. “It’s a demand and supply principle and everyone is awaiting supplies,” adds Mehta.

Dealers sell diamonds in tea-bag size sachets, a little like packets of washing powder

Still, the fact that blood diamonds are among those being imported continues to cause concern. Tim Dabson, executive director of De Beers, recently told an international conference in Antwerp, Belgium, that ethical consumerism is of utmost importance if someone has to checkmate the outflow of conflict gemstones. “The risks include the tendency of consumers in India and China to favour less expensive gems than what sell elsewhere,” Dabson told The Wall Street Journal.

Last June, the Human Rights Watch exposed the horrors of Marange and shot a film to highlight the situation there. A task team from the KP Certification Scheme confirmed HRW’s findings and recommended that Zimbabwe be suspended from trading in diamonds. But the horrors have continued. “Gems from Marange travelling to India, China and Israel are blood diamonds, extracted through the persecution and oppression of those living in the area,” Georgette Gagnon, HRW’s Africa director told TEHELKA, adding that importers need to make sure of the stones’ origin.


Digging dirt Miners often violate rules in Congo and Zimbabwe

But it’s not easy. In fact, diamond merchants in Surat and Mumbai say it’s almost impossible. “When we are following the KP certificates, we are playing it safe. The onus to check and cross check whether such diamonds are coming from Congo, Zimbabwe and Sierra Leone lies on those who keep getting supplies from such troubled zones,” says Nanavati.

He says there’s enough of a divide within the Kimberley Process itself on whether there should be a suspension of such supplies or whether there should be some strict monitoring of such mining. Many have argued against the scheme because Zimbabwe has been defended most strongly by South Africa, Namibia, Congo and Russia.

Importers don’t check the origin of such diamonds, when sent by a legitimate exporter

Ian Smillie, one of the KP architects who resigned earlier this year in protest against its working, told Bloomberg that he found the functioning of KP farcical, irresponsible and a disgrace. “Here we have a government that has lied repeatedly to the KP and has a tenuous grip on its diamond industry — that courtesy of gross human rights violations. The regulatory body that is supposed to assure consumers that the diamonds it certifies are clean ignores its responsibility and sets up an open-ended tea party. It will turn the KP into a laughing stock and give Zimbabwe more or less carte blanche for business.
HE SHOULD know. Global Witness, a London-based campaign gro - up, said the recent KP decision to allow Zimbabwe to sort out its troubled mining business would ruin the credibility of the watchdog body.

There are other problems as well. Diamond mining in eastern Zimbabwe is being carried out by companies in which South Africa’s Old Mutual has a share. The companies are now setting up a diamond- cutting operation at Harare airport: that will allow them to export diamonds without the KP certification.
Once, conflict stones made up about 15 percent of the world market. Though they are believed to account for less than 1 percent of stones bought and sold today, it’s also a fact that millions of carats produced annually remain untraceable. “They must track all supplies from Africa,” Smillie told Reuters.
His report highlighted the case of Congo — a big source of diamonds for India and the world’s second largest producer of diamonds by volume. Congo is a KP member but, despite recommendations to improve traceability, lack of internal controls has created the world's most perfect system for laundering dirty diamonds to Asia, the report said. In 2008, Congo produced more than 33 million carats, accounting for around 20 percent of the world diamond market. However, the study found that nearly half of the country’s exported stones were untraceable.

Congo produced over 33 million carats for exports but half of it was untraceable

But there are those trying to stop illegal diamond trafficking. Israel has agreed to lead a group working to stop rebels from using the $6 billion trade in conflict diamonds to fund fighting.
The Israel Diamond Institute said Boaz Hirsch, the country’s minister of industry, was elected as KP chairman after a UN panel of experts said Israel, whose diamond trade is worth more than $10 billion, might be involved in the illegal export and sale of blood diamonds from the Ivory Coast. At least, the process of trying to plug the loopholes in the illegal diamond trade has begun. Where it will end might just depend on how discerning buyers across Asian markets become about the origin of their


From Tehelka Magazine, Vol 6, Issue 47, Dated November 28, 2009

November 23, 2009

life in financial markets: (part 2 of 2) why be afraid of volatility?

Last Monday, I blogged about volatility in equity markets. This post is a continuation of that.

Volatility, inevitable though it is in the context of equity markets, need not be dreaded. The best way to to deal with it is to follow set principles of investing that do not change no matter how much the stock prices change.Wise financial planners would not even want to track the index movements on a day to day basis.

Its a test match and not 20-20! Stockbrokers will mock you saying "in the long run we are all dead" but equities fetch certain returns, higher than fixed income assets, over a long time span of 10 years and more. But you need to stay committed to your equity investments continuously over this long time and not get carried away with bouts of panic selling during crises and excessive buying during irrational exuberance in the markets.

Have a big heart! Build a diversified portfolio of equities comprising of several stocks and a couple of exchange traded funds (ETFs). If you prefer mutual funds then ignore direct stocks and have a portfolio of several equity schemes of mutual funds, but do also hold some ETFs. Think of earning decent returns on a portfolio and not on select stocks. If the Sensex is crashing it does not necessarily mean that the value of your portfolio is crashing as well.

The stocks or ETFs you hold, when taken as an aggregate, may or may not co-relate very closely with that of the Sensex or Nifty. If it does then it is pointless to have this portfolio and you should instead just put all your money in a Nifty ETF and sit quite. Inversely, when Sensex is at its peak do not get tempted to book profits because your portfolio returns may not have risen as much as the Sensex.

Slow and steady wins the race! Buy little but buy at least once every month. Scatter your purchases across a minimum of 12 periods in a year with more or less equal amounts of investment each time. This will average out your cost of purchases over a longer time frame and any bouts of high volatility like the one seen from mid-October to mid-November will not affect your investments adversely.

If you are buying into stocks through your broker then do so at different time slots during a trading day. Avoid the first and the last one hour of the day as markets generally are trying to find their rhythm in the beginning and traders are generally trying to rush to close their open positions during the end of the day.

Re-jig to cut the flab! Equities should ideally be one of a few asset classes in your overall investments. If you have set a 60:30:10 ratio for investing in equities, debt and gold for a specific period then ensure that during that period this ratio does not get skewed towards any particular asset class. "Re-balance your portfolio not because markets have risen or fallen but because the value of your investments in a particular asset class has gone above or below the initial limit you decided upon," says Mashruwala. He suggests this be done once every quarter.

Re-balancing should be done through selling that much part of the asset class that has gone above the limit and using the proceeds from this to buy into the asset class that had gone below the limit. As your age progresses you may want to re-set the asset allocation ratio itself. Say, you change it to 40:50:10 for equities, debt and gold. This too involves re-balancing.

Long, but not teary, farewells! When to sell and how much t sell are the two most difficult questions in investing. It is time to sell when you are re-balancing or when your pre-determined investment tenure is over. When you sell to re-balance you should sell a little part of many component of your equity portfolio. You should not sell all your holdings in one, or few, stocks or an ETF in one go.

Even on completion of your investment tenure you should not sell whole of your equity portfolio in one go. Just as you bought little every month during the investment tenure you should sell a little every month after the tenure is over. This averages your cost of selling.

The above strategies are good enough.If you want some adventure then you can also directly exploit, an expectation of high volatility, in the equity derivatives segment. One of the most common ways to potentially profit from expected volatility is through a 'straddle' that involves buy a call option and a put option of the same strike price. On 10 November, spot Nifty closed at 4880. The premium on a November-end put option on Nifty of strike price 4900 traded at Rs 125 during the close, and that of call option on Nifty of same strike price traded at Rs 100. If you bought both these options and paid an aggregate premium of Rs 225 then you will profit from a rise or fall of Nifty of 225 points from its level on that day till the end of November. If it doesn't then your loss will range between Rs 100 and Rs 225.

Volatility can not be wished away. Dealing with it patiently helps.

November 21, 2009

life in financial markets: better late than never

Here is something I wrote (in the magazine I presently work for) on Sebi's recent allowance to mutual funds and stock exchanges to settle purchases and redemptions in mutual fund units through the brokers' trading terminals:

Getting wings
It could have been a reality a few years back itself but the stock exchanges have just been allowed to settle purchase and redemption transactions between investors and asset management companies' (AMCs') various mutual fund offerings. The Securities and Exchange Board of India has modified its mutual regulations such that transactions, 'know your customer' compliance and the holding of securities can happen in the same manner as in equity shares.
So, as an investor, you can buy and redeem units of an open-ended or close-ended mutual fund scheme on a NSE or BSE trading terminal through the same equity broker through whom you presently buy and sell stocks. You also hold the units in the same demat account of yourNSDL—or CDSL—DP as you hold your stocks in. The price at which units are bought or redeemed, however, will be fixed, based on same-day or next-day NAV depending on the time of the day you trade. You would also have to pay between 0.2% and 1% as brokerage charge.
The conventional way of buying or redeeming funds will continue. The stock exchange route will be an additional route. The development, however, increases the short-term pain for mutual fund agents who have, in recent months, been facing the wrath of Sebi, mainly in the form of the ban on entry loads that led to a stoppage of receipt of commissions from AMCs.
"But independent fund selling agents will not suffer for too long," says Mukesh Dedhia, director at Ghalla Bhansali Securities, a NSE-broker firm as well as registered agent with several AMCs. "The market for mutual funds will itself expand with trading terminals spread all over the country becoming available and the independent agents can become fund-selling sub-brokers with the main NSE or BSE brokers." We second that.

November 20, 2009

life in journalism: another cowardly attack on nikhil wagle & his team by shiv sena goons

Whenever any one asks me who is my most favorite editor in the media I take no more than a micro-second to answer "Nikhil Wagle". Yes, Nikhil Wagle, who is presently the editor of a Marathi TV channel, IBN-Lokmat, but whom I know since 1992-93 as the editor of daily Marathi newspaper, Apla Mahanagar. I do not watch TV so I don't know what Wagle and his team is upto on IBN-Lokmat channel but I still buy and read, as often as I can, the Marathi newspaper 'Apla Mahanagar'.

Today, two groups of Shiv Sena party workers, under instructions from their goon leaders, severely attacked the offices of IBN-Lokmat in Bombay and Pune. In the Bombay office they targetted Wagle as well as physically assaulted journalists and other employees including women. These goons were armed with iron rods and cricket wickets (these wickets have pointed metal jutting out at one end, see the image to the right) and they used these to break computers as well as assault people in the two offices. Read more about the attacks here and here among several other places.

What a shame! I am born and brought up in Bombay and studied Marathi as one of the three language subjects in school. But my real grasp on Marathi is thanks completely to the Marathi newspaper 'Apla Mahanagar' because it was the only newspaper in Bombay during December 1992 and January 1993 that dared to take on the terrorism of Shiv Sena, Bajrang Dal, Vishwa Hindu Parishad and Bharatiya Janata Party. Wagle and his small team of brave Marathi journalists then formed a civil group called 'Nirbhay Bano Andolan' ('Be Firm' Movement) that organised public meetings to protest against the terror of Shiv Sena and the other three rogues.

I participated in these public meetings and a few of them were also attacked by Shiv Sena's goons. But the group sustained itself and the Shiv Sena and BJP terrorists learnt that civil society will not get intimidated by their terror tactics. Today, Pakistani civil society is also undergoing attacks by Talibani terrorists. Its a sad state of affairs in this sub-continent of our planet.

There is no difference between Shiv Sena goon-leaders and the goons of their subsidiary political group 'Maharashtra Navnirman Sena'. After Bal Thackeray, the mastermind of terror in Bombay since the last 40 years, these two groups will merge themselves and continue spreading their terrorism in Bombay and elsewhere.

But the real onus lies on the Congress party and the Nationalist Congress Party which is the joint ruling alliance in Maharashtra. They failed miserably in 1992-93 and several other times to book these goons to justice. The NCP itself is known to be violent in Pune and some other parts of Maharashtra. I do not think they will fare any less miserably this time around. Bombay's police force is completely communalised and beholden to elements from Shiv Sena and MNS. Nothing can be expected from them.

But I once again salute Nikhil Wagle and his team of brave Marathi journalists and staff members because of whose force of moral and ethical strenght which I respect Maharashtra's culture and its language. Shame on the false representatives of Maharashtra belonging to Shiv Sena and MNS!

November 18, 2009

life in financial markets: rare action against listed companies

Securities market regulators, including stock exchanges that regulate their intermediaries and issuers, tend to show weakness when it comes to non-compliance of disclosure or any other rules of a stock exchange.

In India, although cases (occasional or frequent or a bit of both, I don't know) of delayed, improper, misleading disclosures by listed companies happen, the National Stock Exchange and the Bombay Stock Exchange have never imposed a hefty monetary penalty on any of their listed companies that will send out a clear message to future potential miscreant companies.

No wonder then I was pleasantly surprised yesterday in learning that London Stock Exchange
(LSE) imposed an unprecedented amount of monetary penalty on one of the companies listed {Regal Petroleum, see its price graph below (click on image to see it enlarged & clear)} on

its Alternative Investment Market (AIM). Read LSE's official press release below.

The real challenge before LSE, however, is to keep an intense eye on what their Main Market listed companies. The AIM is for small and medium companies and the Main Market has all the biggies. It is easier to go after the small fish. Therefore, a standing ovation beckons a stock exchange that dares to go after the big fish.

Of course, if there are no violations by any of the big companies then what can you do? But that is an illusion created by the strong lobby groups these big companies manage to create and successfully use in excessively influencing government ministers and regulators' chiefs. You just have to look at India's one-year old Satyam Computers case to see how not a single rupee or dollar fine has been imposed yet by Sebi on the company for rigging its accounts and inflating its profit figures for 3-5 years.

Here then is LSE's press release of yesterday:

17 November 2009


("Regal" or "the Company"). These sanctions were imposed by the AIM Disciplinary Committee for numerous, serious breaches of the AIM Rules in connection with its oil exploration wells in the The London Stock Exchange today issued a public censure and fine of £600,000 against Regal Petroleum plcKallirachi Prospect, an area in the North Aegean Sea.

On 11 separate occasions, Regal failed to take reasonable care to ensure that its announcements were not misleading, false or deceptive, and did not omit material information. On two occasions, Regal also failed to release price sensitive information without delay.

In particular, Regal contravened AIM Rule 9 (equivalent to the current AIM Rule 10) by:

using language in its announcements that created a misleading impression as to the potential commercial viability of the Kallirachi Prospect;
being over-optimistic in the information it notified, focussing on the higher end of expectations without adequate explanation of this fact, and omitting an adequate description of the risks associated with the Prospect; and
not accurately reflecting in its announcements the test results from the Kallirachi wells or the conclusions of independent experts on which the announcements were based

In contravention of AIM Rule 10 (equivalent to the current AIM Rule 11), Regal failed to announce without delay poor test results and the plug and abandonment of the two wells drilled within the Kallirachi Prospect.

Nick Bayley, Head of UK Regulation at London Stock Exchange Group, said:

"Today's public censure and fine closes an exceptional case in AIM's history. It is unprecedented in terms of the seriousness of the rule breaches involved and the resultant market impact. These factors contributed to the AIM Disciplinary Committee's decision to impose the highest fine in AIM's history.

"Following an investigation by the Exchange and the FSA, the Exchange's action was contested by Regal, resulting in lengthy disciplinary proceedings. Today's action demonstrates that the Exchange takes the accurate and timely disclosure of price sensitive information by quoted companies very seriously. Whatever the size, profile or complexity of the breach, the Exchange is prepared to take firm action against companies that fall short of the required standards."

Full details of the breaches can be found in the censure.
- ends -
For further information please contact:
Patrick Humphris / Alastair Fairbrother
Press Office +44 (0)20 7797 1222

Background to Regal Petroleum:
Regal Petroleum, a company focussing on exploration, development and production of oil and gas assets in various countries including Greece, Ukraine and Romania, was admitted to AIM in September 2002.
Relevant Regulatory Provisions:
All references to the AIM Rules in today's censure are to those in effect at May 2003. While the AIM Rules were amended during the Relevant Period, the rules that are the subject of this censure remain unchanged, other than in respect of their numbering. The equivalent rules currently in force are Rules 10 and 11 of the AIM Rules for Companies, June 2009:
AIM Rule 10
The information which is required by these rules must be notified by the AIM company no later than it is published elsewhere. An AIM company must retain a Regulatory Information Service provider to ensure that information can be notified as and when required.
An AIM company must take reasonable care to ensure that any information it notifies is not misleading, false or deceptive and does not omit anything likely to affect the import of such information.
It will be presumed that information notified to a Regulatory Information Service is required by these rules or other legal or regulatory requirement, unless otherwise designated.
AIM Rule 11
An AIM company must issue notification without delay of any new developments which are not public knowledge concerning a change in:
♦ its financial condition;
♦ its sphere of activity;
♦ the performance of its business; or
♦ its expectation of its performance,
which, if made public, would be likely to lead to a substantial movement in the price of its AIM securities.

November 16, 2009

life in financial markets: (part 1 of 2) why be afraid of volatility?

(this is part 1 of the subject matter of this post... part 2 will follow after a few days...)

I can not but feel amused when people, who are supposed to know better, get excited about volatility in the stock markets and then go on to call them all sorts of names like "mad" and "manic".

Volatility is an intrinsic part of the markets that predominantly affects, both positively and otherwise, day traders and short-term speculators. But it does not, I repeat, does not matter to long-term investors how markets are moving from one day to another. When you are investing a little, once or twice a month, on randomly-selected days, you can never be hurt badly by volatility.

So, what exactly is volatility? One out of a couple of dictionary meanings of 'volatile' is something that is difficult to capture or hold permanently.

The commonly accepted technical measure of volatility for a stock—and an index (which is a combination of stocks)—is the standard deviation (SD) of day-to-day price changes for a period. SD is the square root of the variance and variance, in case of stocks or indices, is the average of the squared deviations of the daily changes during a period from their average. An accepted-and-followed mathematical theorem then says that at least 75 per cent of the values will fall within plus and minus two standard deviations from the mean of a distribution.

Take, for example, 10 day-to-day changes in Nifty during 11 trading days. Find its simple average. Say, it is -0.3%. Calculate, for each day-to-day change, its deviation from the mean. Square each of these 10 deviations. Then, total these 10 squared figures and divide by 10 to get their average. This is the variance. Its square root is the SD.

Say, the SD is 1.6%. Now, applying the theorem it follows that would be at least 7-8 days (75%) on which the daily Nifty change would be between -3.5% [-0.3 - (2*1.6)] and 2.9% [-0.3 + (2*1.6)]. If the SD (volatility) for the next set of 10 days is higher than 1.6% then it follows that this range has widened.

Another measure of volatility in the financial markets is the movement of a Volatility Index (VIX) that takes the implied volatility from actively traded index options trades. The most tracked VIX is that of the Chicago Board of Options Exchange. In India, the National Stock Exchange too has its own VIX based on Nifty options trades.

It is generally believed that when VIX goes above 30 the stock market is likely to experience a correction. See below (click on the image to see it enlarged & clear) to the see the co-relation between S&P 500 (US) and CBOE's VIX, as well as between S&P CNX Nifty (India) and NSE's VIX.

Global equity markets tend to co-relate in the short term but it is interesting to note how their narrow differences widen over time. Below is a graph I made of global indices movements from end of 2005 onwards (click on the image to see it enlarged & clear).

November 15, 2009

life in financial markets: unviable Sebi's new small companies' listing rules

It looks like it is doomed to fail.

The latest Securities and Exchange Board of India (Sebi) move to allow listing of small IPOs of paid-up equity capital of Rs 10 crore and less on existing stock exchanges had been in the offing for about two years.

Such small IPOs were already possible under BSE's listing norms but had to comply with difficult requirements such as minimum revenue of Rs 3 crore in each of preceding three years and a 1,000 minimum public shareholder requirement.

These restrictions won’t apply under the new relaxations for the BSE. Even the NSE, that presently has a minimum paid-up capital requirement of Rs 10 crore for IPOs, will be able to list small companies.

But two new conditions that Sebi has introduced are expected to discourage small-size IPOs. These are the minimum IPO application size amount of Rs 1 lakh and a post-listing minimum trading lot size of Rs 1 lakh. These are expected to take away liquidity in trading and scare away even the big investors and institutional investors.

November 06, 2009

life in general: afghanistan: drugs, oil, violence

Like many people of many countries in some form of extreme distress or the other are the Afghanis. Sandwiched between the terrorist group of Taliban and the US-installed-terrorist group of warlords, the citizens of Afghanistan are a traumatised lot.

I share below a recent insightful analytical report, that I came across, on some aspects of Afghanistan:

Opium, Rape and the American Way
By Chris Hedges
November 03, 2009 "Truthdig" -- The warlords we champion in Afghanistan are as venal, as opposed to the rights of women and basic democratic freedoms, and as heavily involved in opium trafficking as the Taliban. The moral lines we draw between us and our adversaries are fictional. The uplifting narratives used to justify the war in Afghanistan are pathetic attempts to redeem acts of senseless brutality. War cannot be waged to instill any virtue, including democracy or the liberation of women. War always empowers those who have a penchant for violence and access to weapons. War turns the moral order upside down and abolishes all discussions of human rights. War banishes the just and the decent to the margins of society. And the weapons of war do not separate the innocent and the damned. An aerial drone is our version of an improvised explosive device. An iron fragmentation bomb is our answer to a suicide bomb. A burst from a belt-fed machine gun causes the same terror and bloodshed among civilians no matter who pulls the trigger.
“We need to tear the mask off of the fundamentalist warlords who after the tragedy of 9/11 replaced the Taliban,” Malalai Joya, who was expelled from the Afghan parliament two years ago for denouncing government corruption and the Western occupation, told me during her visit to New York last week. “They used the mask of democracy to take power. They continue this deception. These warlords are mentally the same as the Taliban. The only change is physical. These warlords during the civil war in Afghanistan from 1992 to 1996 killed 65,000 innocent people. They have committed human rights violations, like the Taliban, against women and many others.”
“In eight years less than 2,000 Talib have been killed and more than 8,000 innocent civilians has been killed,” she went on. “We believe that this is not war on terror. This is war on innocent civilians. Look at the massacres carried out by NATO forces in Afghanistan. Look what they did in May in the Farah province, where more than 150 civilians were killed, most of them women and children. They used white phosphorus and cluster bombs. There were 200 civilians on 9th of September killed in the Kunduz province, again most of them women and children. You can see the Web site of professor Marc Herold, this democratic man, to know better the war crimes in Afghanistan imposed on our people. The United States and NATO eight years ago occupied my country under the banner of woman’s rights and democracy. But they have only pushed us from the frying pan into the fire. They put into power men who are photocopies of the Taliban.”
Afghanistan’s boom in the trade in opium, used to produce heroin, over the past eight years of occupation has funneled hundreds of millions of dollars to the Taliban, al-Qaida, local warlords, criminal gangs, kidnappers, private armies, drug traffickers and many of the senior figures in the government of Hamid Karzai. The New York Times reported that the brother of President Karzai, Ahmed Wali Karzai, has been collecting money from the CIA although he is a major player in the illegal opium business. Afghanistan produces 92 percent of the world’s opium in a trade that is worth some $65 billion, the United Nations estimates. This opium feeds some 15 million addicts worldwide and kills around 100,000 people annually. These fatalities should be added to the rolls of war dead.
Antonio Maria Costa, executive director of the United Nations Office on Drugs and Crime (UNODC), said that the drug trade has permitted the Taliban to thrive and expand despite the presence of 100,000 NATO troops.
“The Taliban’s direct involvement in the opium trade allows them to fund a war machine that is becoming technologically more complex and increasingly widespread,” said Costa.
The UNODC estimates the Taliban earned $90 million to $160 million a year from taxing the production and smuggling of opium and heroin between 2005 and 2009, as much as double the amount it earned annually while it was in power nearly a decade ago. And Costa described the Afghan-Pakistani border as “the world’s largest free trade zone in anything and everything that is illicit,” an area blighted by drugs, weapons and illegal immigration. The “perfect storm of drugs and terrorism” may be on the move along drug trafficking routes through Central Asia, he warned. Profits made from opium are being pumped into militant groups in Central Asia and “a big part of the region could be engulfed in large-scale terrorism, endangering its massive energy resources,” Costa said.
“Afghanistan, after eight years of occupation, has become a world center for drugs,” Joya told me. “The drug lords are the only ones with power. How can you expect these people to stop the planting of opium and halt the drug trade? How is it that the Taliban when they were in power destroyed the opium production and a superpower not only cannot destroy the opium production but allows it to increase? And while all this goes on, those who support the war talk to you about women’s rights. We do not have human rights now in most provinces. It is as easy to kill a woman in my country as it is to kill a bird. In some big cities like Kabul, some women have access to jobs and education, but in most of the country the situation for women is hell. Rape, kidnapping and domestic violence are increasing. These fundamentalists during the so-called free elections made a misogynist law against Shia women in Afghanistan. This law has even been signed by Hamid Karzai. All these crimes are happening under the name of democracy.”
Thousands of Afghan civilians have died from insurgent and foreign military violence. And American and NATO forces are responsible for almost half the civilian deaths in Afghanistan. Tens of thousands of Afghan civilians have also died from displacement, starvation, disease, exposure, lack of medical treatment, crime and lawlessness resulting from the war.
Joya argues that Karzai and his rival Abdullah Abdullah, who has withdrawn from the Nov. 7 runoff election, will do nothing to halt the transformation of Afghanistan into a narco-state. She said that NATO, by choosing sides in a battle between two corrupt and brutal opponents, has lost all its legitimacy in the country.
The recent resignation of a high-level U.S. diplomat in Afghanistan, Matthew Hoh, was in part tied to the drug problem. Hoh wrote in his resignation letter that Karzi’s government is filled with “glaring corruption and unabashed graft.” Karzi, he wrote, is a president “whose confidants and chief advisers comprise drug lords and war crimes villains who mock our own rule of law and counter-narcotics effort.”
Joya said, “Where do you think the $36 billion of money poured into country by the international community have gone? This money went into the pockets of the drug lords and the warlords. There are 18 million people in Afghanistan who live on less than $2 a day while these warlords get rich. The Taliban and warlords together contribute to this fascism while the occupation forces are bombing and killing innocent civilians. When we do not have security how can we even talk about human rights or women’s rights?”
“This election under the shade of Afghan war-lordism, drug-lordism, corruption and occupation forces has no legitimacy at all,” she said. “The result will be like the same donkey but with new saddles. It is not important who is voting. It is important who is counting. And this is our problem. Many of those who go with the Taliban do not support the Taliban, but they are fed up with these warlords and this injustice, and they go with the Taliban to take revenge. I do not agree with them, but I understand them. Most of my people are against the Taliban and the warlords, which is why millions did not take part in this tragic drama of an election.”
“The U.S. wastes taxpayers’ money and the blood of their soldiers by supporting such a mafia corrupt system of Hamid Karzai,” said Joya, who changes houses in Kabul frequently because of the numerous death threats made against her. “Eight years is long enough to learn about Karzai and Abdullah. They chained my country to the center of drugs. If Obama was really honest he would support the democratic-minded people of my country. We have a lot [of those people]. But he does not support the democratic-minded people of my country. He is going to start war in Pakistan by attacking in the border area of Pakistan. More civilians have been killed in the Obama period than even during the criminal Bush.”
“My people are sandwiched between two powerful enemies,” she lamented. “The occupation forces from the sky bomb and kill innocent civilians. On the ground, Taliban and these warlords deliver fascism. As NATO kills more civilians, the resistance to the foreign troops increases. If the U.S. government and NATO do not leave voluntarily, my people will give to them the same lesson they gave to Russia and to the English who three times tried to occupy Afghanistan. It is easier for us to fight against one enemy rather than two.”
Chris Hedges, whose column is published on Truthdig every Monday, spent two decades as a foreign reporter covering wars in Latin America, Africa, Europe and the Middle East. He has written nine books, including “Empire of Illusion: The End of Literacy and the Triumph of Spectacle” (2009) and “War Is a Force That Gives Us Meaning” (2003).
Copyright © 2009 Truthdig, L.L.C. All rights reserved.


This article is good as far as it goes which is to the same depth that most reports reach. The article makes it seem that we "good guys" are over there consorting with the tribal leaders for the purpose of defeating the Taliban. WE ARE CONSORTING WITH THE TALIBAN WHO ARE THE TRIBAL LEADERS!
Karzi is a mere American fig leaf to cover the repulsive fact that we are there to protect and collect on the Afghan opium production. How does Hedges think the world obtains the Afghan heroin? Is he stupid enough not to know that the CIA is the main buyer and distributor for the 92% of the world's heroin supply? Perhaps Hedges should research the present world financial situation including the source of worldwide financial liquidity - especially that of the large American banks. Perhaps Hedges should do a little research on a certain former State Department chieftan by the name of Richard Armitage who was responsible for organizing the Afghan poppy farmers and helping them increase their production.
Hedges is smart enough not to try giving an American version of the truth that could easily have been written by any member of the national media.

The greatest profit margins come from drugs, oil and war. As far as I know nothing else even comes close. It makes me wonder if the input for the manufacture of vicodin, percocet, percodan, norco and other analgesics is opium? Could oil, opium and opression be why we are over there?

The analgesics (pain killers) fentanyl, morphine, oxycodone, oxycontin and hydrocodone are all derivatives of opium.
Afganistan farmers produced 185 metric tons of opium in 2001 and 8,200 metric tons of opium in 2007. Farmers made about $1 Billion dollars from opium production in 2007.
Pharmaceutical companies in the United States of America manufacture 100% of the hydrocodone used worldwide.
88 million prescriptions were written for hydrocodone products in the U.S. in 2000. 130 million prescriptions were written for hydrocodone products in the U.S. in 2006. A 48% increase. Vicodin and Norco are two examples of these products. hydrocodone_factsheet.doc
Make up your own mind why we are in Afghanistan.

Good article and Interview Chris! Crime and conspiracy confirmation is important for us to know and understand the reasoning behind the US and NATO's involvement in Afghanistan - that way we can be numbed into complacency about why we are fed the bullshit in order to keep us focused on what they want us to see as a war on Terroism.
Plain and simple - we're (US & NATO) all there for the money from Drugs, Oil Pipelines, and a wedge to guard against a unified regional resistance to our seizing it all by force. All in the name of Freedom and Democracy- of course!
The one thing I'm confused about though when we're told that "we are fighting the terrorists over there, so we don't have to fight them over here" is - aren't we already fighting the terror of Opium and Heroin addiction on our streets?
I guess that the class of person becoming addicted to these drugs on our streets aren't considered to be "casualties" of this escalating war on terror are they? I mean, afterall - they're just a bunch of worthless minority citizen's anyway right? It's easy to hide a lot of the opium when it gets to the hands of the big Pharma drug lords here and in Europe. That way it's easier to get it into the hands of the middle and upper classes. Heaven forbid that those wholesome "Whitey's" would have to make a deal in the Ghetto's for their daily fix!
It's like peeling an Onion I guess - the deeper you get the more layers you discover!