fatman17
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And we shall eat grass
By Fakir S. Ayazuddin
The decision by the Governor of the State Bank to raise the interest rates is mind boggling. The whole world is lowering rates trying to coax their economies into revival, and here we have a stock market on its knees, with two brokers whose cards have been cancelled, and many more awaiting the axe.
Manufacturing is down, property is down, and just two weeks ago massive funds were pumped into the banking system to restore liquidity, otherwise there would have been a collapse of the banking industry. We cheered the Lady Governor's performance on TV live, and her very adept handling of the press.
This was in tune with the world crisis and was handled in the same manner as the other finance ministries of the world. Suddenly Madam does an about face, and raises the interest rates. Is she trying to drive the businessmen into defaulting with the banks? By squeezing their credit lines and their liquidity further. The GOP must not overprotect the banks at the cost of industry trade and agriculture, for it is these three that provide the bulk of employment and revenue in the country.
In the US giants such as GM and Ford are being saved from bankruptcy, and here our traders and businessmen are being hit with a higher interest rate, making their life more difficult. Being competitive in today's world is difficult, as the Chinese have seen to that already. With most businesses having foregone exports to concentrate on the domestic markets, we have a huge balance of payments deficit and will surely be forced by IMF to devalue, making our Balance of Payments even worse and so on and on.
The interest rates must be dropped and the money lent to the Export and manufacturing industries, and of course to the Agriculture sector. The stock market must not be shored up, for other than keeping the prices of share high they did not add to the growth of new industries, in fact, people closed down industries to ride the stock market boom. These profits were plowed into plots in Dubai and Malaysia with the added attraction of residence visas. When the market crashed the people lost money, but much worse, Pakistan lost the opportunity for manufacturing to expand. The Chinese and the Bangladeshis have outstripped us and it is doubtful if we will ever catch up.
The joke is that the massive shift was into the banking sector. This sector was fuelled by the stock market which in itself was all smoke and mirrors. But they managed to entice Barclays into the game. We need to discourage the gambling on the market, as it detracts from the serious business of manufacturing, for that is where our employment comes from. Our desperate need is jobs, and production.
Fifty percent of our population is already below the poverty line, and it will not be long before the unemployed masses start casting their hungry eyes at the bulletproof Mercs whooshing past. When Mr Bhutto swore that we would eat grass but have the bomb, he was right, we are eating grass but certainly not for the bomb. Our economic managers over the last eight years have seen to that.
The raid on the money changers is yet another charade. The money changers were at best money cyclers, to give them their proper designation. I can say with some authority that after 9/11 no Hawala transactions could be done between, the US and Pakistan.
They were shut down immediately after 9/11 to stop the funding of militant groups by ensuring that all money was transferred through official banking channels. In essence the inward remittances come from all over the world - hard-earned money sent home by our workers. When did our workers send money out of Pakistan?
The funds that were cycled were for the benefit of those businesses that needed to import raw materials, or any other purpose, and were well within the knowledge of the State Bank, certainly not the poor labourer, for it was his hard-earned money once in the coffers of the State Bank that paid for the luxury goods or the Chinese air-conditioners, and even shoes that have flooded our markets.
Recently the managing director of the second largest shoe manufacturer told me that he was now importing his shoes from China, complete with his label. This makes two strikes against Pakistan, for we pay in foreign exchange, and we lose foreign exchange in loss of exports. Surely, this should have been addressed by our prime and finance ministers?
The basic fundamentals in any economy is import substitution. Here the principle was reversed. We had a thriving export of textiles and leather goods. Now we are huge importers of the same items but inferior to our own.
The grass that we are eating is not because of the bomb, but of our incompetent managers. Hopefully, Shaukat will move in the right direction and lower the interest rates for a start.
The writer is a political analyst
is history going to repeat itself
By Fakir S. Ayazuddin
The decision by the Governor of the State Bank to raise the interest rates is mind boggling. The whole world is lowering rates trying to coax their economies into revival, and here we have a stock market on its knees, with two brokers whose cards have been cancelled, and many more awaiting the axe.
Manufacturing is down, property is down, and just two weeks ago massive funds were pumped into the banking system to restore liquidity, otherwise there would have been a collapse of the banking industry. We cheered the Lady Governor's performance on TV live, and her very adept handling of the press.
This was in tune with the world crisis and was handled in the same manner as the other finance ministries of the world. Suddenly Madam does an about face, and raises the interest rates. Is she trying to drive the businessmen into defaulting with the banks? By squeezing their credit lines and their liquidity further. The GOP must not overprotect the banks at the cost of industry trade and agriculture, for it is these three that provide the bulk of employment and revenue in the country.
In the US giants such as GM and Ford are being saved from bankruptcy, and here our traders and businessmen are being hit with a higher interest rate, making their life more difficult. Being competitive in today's world is difficult, as the Chinese have seen to that already. With most businesses having foregone exports to concentrate on the domestic markets, we have a huge balance of payments deficit and will surely be forced by IMF to devalue, making our Balance of Payments even worse and so on and on.
The interest rates must be dropped and the money lent to the Export and manufacturing industries, and of course to the Agriculture sector. The stock market must not be shored up, for other than keeping the prices of share high they did not add to the growth of new industries, in fact, people closed down industries to ride the stock market boom. These profits were plowed into plots in Dubai and Malaysia with the added attraction of residence visas. When the market crashed the people lost money, but much worse, Pakistan lost the opportunity for manufacturing to expand. The Chinese and the Bangladeshis have outstripped us and it is doubtful if we will ever catch up.
The joke is that the massive shift was into the banking sector. This sector was fuelled by the stock market which in itself was all smoke and mirrors. But they managed to entice Barclays into the game. We need to discourage the gambling on the market, as it detracts from the serious business of manufacturing, for that is where our employment comes from. Our desperate need is jobs, and production.
Fifty percent of our population is already below the poverty line, and it will not be long before the unemployed masses start casting their hungry eyes at the bulletproof Mercs whooshing past. When Mr Bhutto swore that we would eat grass but have the bomb, he was right, we are eating grass but certainly not for the bomb. Our economic managers over the last eight years have seen to that.
The raid on the money changers is yet another charade. The money changers were at best money cyclers, to give them their proper designation. I can say with some authority that after 9/11 no Hawala transactions could be done between, the US and Pakistan.
They were shut down immediately after 9/11 to stop the funding of militant groups by ensuring that all money was transferred through official banking channels. In essence the inward remittances come from all over the world - hard-earned money sent home by our workers. When did our workers send money out of Pakistan?
The funds that were cycled were for the benefit of those businesses that needed to import raw materials, or any other purpose, and were well within the knowledge of the State Bank, certainly not the poor labourer, for it was his hard-earned money once in the coffers of the State Bank that paid for the luxury goods or the Chinese air-conditioners, and even shoes that have flooded our markets.
Recently the managing director of the second largest shoe manufacturer told me that he was now importing his shoes from China, complete with his label. This makes two strikes against Pakistan, for we pay in foreign exchange, and we lose foreign exchange in loss of exports. Surely, this should have been addressed by our prime and finance ministers?
The basic fundamentals in any economy is import substitution. Here the principle was reversed. We had a thriving export of textiles and leather goods. Now we are huge importers of the same items but inferior to our own.
The grass that we are eating is not because of the bomb, but of our incompetent managers. Hopefully, Shaukat will move in the right direction and lower the interest rates for a start.
The writer is a political analyst
is history going to repeat itself
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