Basket Case/Reality Bites

[muse]

Rebuffed by China, Pakistan may seek IMF aid
By Jane Perlez

Saturday, October 18, 2008
ISLAMABAD, Pakistan: President Asif Ali Zardari returned from China late Friday without a commitment for cash needed to shore up Pakistan's crumbling economy, leaving him with the politically unpopular prospect of having to ask the International Monetary Fund for help.

Pakistan was seeking the aid from China, an important ally, as it faces the possibility of defaulting on its current account payments.

With the United States and other nations preoccupied by a financial crisis, and Saudi Arabia, another traditional ally, refusing to offer concessions on oil, China was seen as the last port of call before the IMF

Accepting a rescue package from the fund would be seen as humiliating for Zardari's government, which took office this year.

An IMF-backed plan would require Pakistan's government to cut spending and raise taxes, among other measures, which could hurt the poor, officials said.

The Bush administration is concerned that Pakistan's economic meltdown will provide an opportunity for Islamic militants to capitalize on rising poverty and frustration.

The Pakistanis have not been shy about exploiting the terrorist threat to try to win financial support, a senior official at the IMF said.

But because of the dire global financial situation, and the reluctance of donor nations to provide money without strict economic reforms by Pakistan, the terrorist argument has not been fully persuasive, he said.

"A selling point to us even has been, if the economy really collapses this is going to mean civil strife, and strikes, and put the war on terror in jeopardy," said the official, who declined to be identified because he was not authorized to speak to the news media.

"They are saying, 'We are a strategic country, the world needs to come to our aid,' " he said.

Pakistani officials said they had received promises from the Chinese to help build two nuclear power plants, and pledges for business investment in the coming year.

But Pakistan had also hoped China would deposit $1.5 billion to $3 billion in its central bank, according to senior officials at the IMF and Western donor countries.

The infusion of cash would have helped with payments for oil and food as currency reserves dwindle, officials said.

Shaukat Tareen, the new Pakistani financial adviser who accompanied Zardari to China, began to prepare the public for an IMF program on Saturday, saying for the first time at a news conference that if Pakistan could not stabilize its economy within 30 days, it "can go to the IMF as a backup."

"We may have to go to Plan B," he said.

Economic hardship has been mounting across Pakistan for several months. Electricity shortages have become so dire that even middle-class families in big cities have to ration supply, with power cuts for 12 of every 24 hours, with one hour on, and one hour off.

Food prices have soared, making some basics, even flour, too expensive for the poorest to afford. No large-scale riots have occurred, but concern is mounting that such protests are not far off.

The new government has reduced subsidies on fuel and food, and the central bank moved on Friday to ease an intrabank liquidity crisis.

In addition, new rules were imposed several weeks ago on the Karachi stock exchange to stop sell-offs.

But none of those steps have stanched the crisis in confidence.

The central bank's currency reserves have dipped to $4 billion, enough to cover payments for oil and other imports for about two months. As it became clear over the past two days that the Chinese were not going to provide a cushion for Pakistan, the rupee slumped to a record low.

The thin results from the China trip were of little surprise to Western donors.

Asked about the likelihood of Pakistan winning the direct cash infusion it was seeking, a senior Chinese diplomat was reported by Western officials to have said, "We have done our due diligence, and it isn't happening."

"What we needed is $3-to-$4 billion," said Sakib Sherani, a member of the government's economic advisory panel and chief economist at ABN Amro Bank in Pakistan. That amount was necessary "to build confidence," he said.

The central bank governor, Shamshad Akhtar, said in a telephone interview on Saturday, "We are very open to all kinds of financial support." She added, "We've taken a lot of corrective actions, and we plan to take more."

But Zubair Khan, a former commerce minister and a critic of the government's economic management, said confidence would improve once Pakistan arranged an IMF rescue package. Khan said that the alternative would be the imposition of controls on imports and capital flows that could do long-term harm to the economy.

Meanwhile, the American financial crisis is also expected to hurt ordinary Pakistanis.

Remittances from Pakistanis living abroad to their relatives in Pakistan were expected to be about $7 billion this year, about $3 billion of that from Pakistanis living in the United States. But those remittances are likely to dwindle, affecting real estate values in Pakistani cities and families who live in poorer rural areas.

Zardari had approached the China trip with considerable fanfare, saying he was looking forward to visiting a country that had enjoyed a warm relationship with Pakistan, particularly during the rule of his father-in-law, Zulfikar Ali Bhutto.

His visit to Beijing followed a trip there by the chief of the army, General Parvez Kayani, and came at a time when the relationship between Washington and Pakistan was strained over how to deal with the escalating threat from the Taliban and Al Qaeda.

Javed Burki, a former Pakistani finance minister, said China had provided $500 million in balance-of-payments support in 1996, when Pakistan was on the brink of default. He had flown to Beijing to ask for the money and his request was fulfilled.

But those days are over, he said, because China is no longer inclined to grant cash outright without structural reforms from the receiving government, he said.

 

[muse]

Tareen keeps IMF option open

Sunday, October 19, 2008
Rules out default; hopeful of arranging $3.5 billion in 30 days

By Khalid Mustafa

ISLAMABAD: Pakistan will move the International Monetary Fund (IMF) after 30 days in case Islamabad fails to get the required dollar inflows either from the international financial institutions or from the Friends of Pakistan group, Adviser to the Prime Minister on Finance Shaukat Tareen said on Saturday.

“Time is fleeting and the Pakistani currency is fast dwindling because of massive decrease in the foreign reserves and we cannot wait for more than 30 days,” he told a news conference. Foreign Minister Shah Mehmood Qureshi accompanied him.

Tareen expressed optimism that Pakistan would be able to arrange its financing gap of $3 to $3.5 billion in a short span of 30 days under the A and B plans.

“Fund managers are of the view that Pakistan needs $4.5 billion,” he said, adding in case the two plans failed, Pakistan would, under the Plan C, move the IMF to bail out itself from the ongoing economic morass.

Tareen said under the Plan A, the country was seeking $ 1.4 billion from the World Bank, $1.5 from the Asian Development Bank, $ 1 billion from the Islamic Development Bank and 600 million Pounds Sterling (over $1 billion) from the DFID on upfront basis.

For this, in the next 10 days, Pakistan would seek endorsement of economic stabilisation programme from the IMF that would ensure financial supply from the international financial institutions, he added.

“Under the Plan B, Pakistan would try to generate the required amount from the Friends of Pakistan group,” he said, adding: “Keeping in view our interactions with the IFIs and the Friends of Pakistan, we are hopeful that we would be able to avoid moving the IMF.”

Answering a question, he said that the rupee had devalued for two reasons, which included massive decrease in foreign reserves and its overvaluation in the Shaukat Aziz government.

He said Shaukat Aziz kept the rupee-dollar parity at 1:60, which was against the ground realities of that time. He said that the rupee was overvalued at that time by 25 to 30 per cent. He added his government wanted a flexible and realistic exchange rate.

The adviser said the government had decided to go with production-led growth instead of consumer-led, as the shift in policy would help Pakistan stand on its own feet. “And to this effect, China would play a major role in the manufacturing sector in Pakistan and in developing an industrial base in the country,” he said.

Tareen further said Pakistan needed to reduce fiscal deficit and cut the government expenditures and increase tax to the GDP ratio to 15 per cent in the next five to seven years as the existing tax to the GDP ratio stands at 10.5 per cent, the lowest in the world.

 

[Vanguard_786]

Wait for China to fall at the same time. The country subsidises its petrol and currency (not floated) by foreign exchange. Hit by the double whammy of economic slow down, China is slowly sinking into the abyss.

While the Chinese will not release figures, its estimated that they have lost over 1 trillion yuan since the Olympics. Petrol in China is 55c per litre, fully subsidised by the govt, who is losing 1 billion daily on petrol subsidies.

India will come out of this crisis with a body blow but remaining standing. Pakistan and Bangladesh will sink into depression.

 

[Vinod2070]

The best thing about this episode (China not coming to the aid of Pakistan in its difficult period and letting it go to the hated capitalist western controlled IMF) is that its the Pakistanis who will vie with each other to justify why they did not come to their aid.

Watch them degrade their own government and justify why the Chinese (and Saudis) were right in not coming to their aid!

 

[muse]

Vinod brings up a very important point, Why have the Saudi and China and the so called "friends of Pakistan" not bothered to assist Pakistan??

What are these "structural reforms" the Saudi, the Chinese and IMF all seem to want?? What are the implications of this :"Pakistan's.. existing tax to the GDP ratio stands at 10.5 per cent, the lowest in the world."??

By the way, lost in all this, some important questions:

What happened to the reserves?? Were we not paying our bills during the Musharraf regime???

Why ? How did it happen? Are PPP and PML not going to take responsibity for the effect of the lawyers movement??

If the vaue of the Pak Rupee has depreciated suggesting a lack of confidence - who has lost confidence?? What did this government's policies have to do with the loss of confidence??

Of what "strategic value" is a basket case? fact of the matter is that it's "nuissance value" that has people concerned, nobody wants lawless 170 million perpetually retarded as a "value" and therefore, better to let it limp along and deprive it of those things that they may use to hurt others and themselves.

Pakistanis, while you babble along about which piece of hardware you will beg for next, take a care and attend to the business that needs attending - all these so called "democractic" governments are by political necessity, "populist" - in other words, they will always avoid making tough decisions, that must be made, in the public interest, to save Pakistan.

What then must be done? Whether it's PPP or PML or JI or JUI, there is no stomach or even understanding of the dangerous situation Pakistan have been placed in -- So, what needs to be done??

Our friends say that we negotiate with them with a gun held to our own heads - it's one threat after another, It's "democrats" saying the miitary used the islamist terrorists as a threat to Pakistan, now it's the "democracts" who tell the world that they need saving, because if they fail, Islamist terrorists will take over.

Every ten years the country is broke, what is even more incredible is that the same bunch of thieves were returned into office in a open election -- maybe those who do not have the courage to save themselves, do not deserve the assistance of others to save them.

 

[third eye]

Muse,

The Q's raised are interesting to say the least. I'd be keen to read answers to them & replies to the other issues raised by you.

The bottom line is transparency & accountability. Blind faith in anyone , even a patriotic dictator is the reason why Pak comes to grief with monotonous regularity.

The ppl finally bear the brunt of it, none of our leaders ever have to worry abt re - paying a mortgage, marrying daughters, settling sons, retirement or old age.

What does an ordinary citizen plan on when suddenly his investments are worth nothing just coz someone somewhere goofed it ?

 

[Vinod2070]

Every ten years the country is broke, what is even more incredible is that the same bunch of thieves were returned into office in a open election -- maybe those who do not have the courage to save themselves, do not deserve the assistance of others to save them.

At the cost of sounding vindictive, I think its a case of Pakistan's ideology (in practical terms) which led her to take on a much bigger adversary and actually believing that they can win a war against them that has repeatedly led to this sad situation.

I won't say that India may not have contributed to this stance. That is not the point here.

Once Pakistan becomes a state whose ideology is the betterment of its people rather than trying to inherit the mantle of the Mughals or Gazhanis, these issues should become a thing of the past. There is no doubt about the potential of the country and the people.

 

[Neo]

I beg to differ, our finincial crisis isn't linked to "bigger adversary" India but it started with the asassination of Benazir Bhutto, expensive election compaign, continued terrorist attacks which scared off investors, fuel and power crisis and the free fall of rupee.
To complete the mess we re elected a currupt bunch of socalled politicians when the country desperately needs true leadership a la Musharraf.

 

[Vinod2070]

I beg to differ, our finincial crisis isn't linked to "bigger adversary" India but it started with the asassination of Benazir Bhutto, expensive election compaign, continued terrorist attacks which scared off investors, fuel and power crisis and the free fall of rupee.
To complete the mess we re elected a currupt bunch of socalled politicians when the country desperately needs true leadership a la Musharraf.

I was not talking of only this instance. Its the every 10 years itch that I talked about. If you go deeper into this particular instance too, you will come to the same conclusions.

But its something for Pakistan to decide. We can be only on our guard and hope for better sense to prevail.

 

[muse]

Champaigne and cavier taste on budget that makes "meal deal" a distant fantasy -- Give us electric power, but no kalabagh dam, magically make the price of commodities match my wallet, beg for more fuel after all we are very proud people and can't take hardship that our decisions bought - but Musharraf is bad - and while we're at it, remember the purpose of the vote was what you will give us for free - thats right free, Ok, for cheap then, remember we are righteous poor and exceedingly proud - can't you tell??


Vinod - spot on about the 10 yr itch. Now check out why this 10 itch simply will not go away -- Pakistan are wedded to populist socialism with out any care for how economics and markets actually work, as opposed to the ideology of how they should work -- notice, nowhere in the piece is there actually any IDEA of how to improve things



Government for the people
Sunday, 19 Oct, 2008 | 06:17 AM PST |
By Dr Mahnaz Fatima

DEMOCRACY is supposed to be a government of the people, for the people, and by the people. The induction of a democratic government was long awaited by the people so that their economic woes could be addressed.

Sadly, the people were left dumbfounded when they saw their real incomes declining even more than they did under the previous government. And these woes are independent of the recent global economic turmoil and need not be confused with it.

The previous government had pushed hard towards liberalisation, privatisation, deregulation and supply-side policies, all of which contributed to high unemployment and a burdensome price spiral that eroded real incomes. To get a break from this trend, the electorate voted people-friendly parties into office, especially the one that chanted roti, kapra aur makaan.

Unfortunately, even roti is now getting beyond the reach of the underprivileged. Rising food inflation reinforces the overall upward price spiral. The elected government is looking the other way from this disturbing trend that is likely to intensify instead of abate under an administration that is supposedly representative.

The emphasis is clearly on promoting the profitability of the agricultural producer at the expense of consumers. The price of wheat has gone up more than once since the induction of the current government. The first such raise was announced in the PM’s maiden speech from the floor of the assembly, before his administration’s economic policy outlook had even been articulated.

While traditionally independent economists are now operating right of centre, one does need a worksheet demonstrating the rationale for this exorbitant increase. A wheat crisis triggered by an ill-informed export decision made by the previous government, compounded by hoarders and smugglers, has now assumed crisis proportions. There is no crisis management either.

Also, wheat output trends need to be looked at to justify such a high increase. The retail price of rice has also increased considerably even though rice output went up. This defiance of the laws of demand and supply needs to be arrested or explained to the electorate. Our vote is now not needed for another four years. Will we not be heard until then? Will we have to pay Rs10-plus for a tandoori naan and will prices of other food and produced items continue to get out of control until the next elections when it will be too late to reverse the trend?

It is hard to accept that an increase in the price of wheat will lead to such a bumper crop that prices will fall significantly. If the price of rice has not fallen despite an increase in rice output, why would wheat’s? Trust in market forces ought to erode in the wake of the US home loan crisis. An unbridled market mechanism there gave way to greed and huge losses that are becoming unmanageable. We are not immune from greed either. Smuggling and hoarding must be checked. If the government makes its presence felt in this realm, there might be a favourable movement in some price levels.

Oil prices have been sliding of late and are now under $80 a barrel. But the prices of petroleum products have not fallen from the level set when international oil prices were approaching $150 a barrel. The price of petrol recently saw a slight downward revision but diesel, which fuels transportation costs and inter alia the cost of doing business, was jacked up. The ‘logic’ behind decisions pertaining to the pricing of petroleum products remains unclear, unless the intention is to help elitist households. Is there a particular elitist ring to the economic decisions being taken now?

Permission to raise electricity tariffs in Karachi by a whopping 70 per cent has been granted to a utility whose inefficiency and incompetence is not even investigated. Inflated electricity bills are burdensome as it is. To add another 70 per cent to electricity charges will not only hit industry and business hard, households too will suffer. Looking out for households is not a populist concern. They represent the micro economy that must synchronise with the macro economy.

It is the micro economy that throws up demand for the real macro economy. Erosion of micro-level purchasing power will reduce demand and thereby growth of the real economy. The previous government spurred growth mainly through credit-financed consumption of durables, a policy that did not prove to be tenable as was predicted back then. Is this government banking primarily on wheat and other agricultural outputs at the expense of industry, business and real household incomes?The key economic issues need to be brought to the surface and thrashed out in the interest of the people and democracy itself. Growing discontent paves the way for the return of non-democratic forces, a change that is welcomed by the disenchanted until people are disappointed again. Elections are then sought.

A government is stable only if it works for the people at large and not for just a handful who may provide a power base in the interim but not over the long haul. A comprehensive set of economic policies is required to provide teeth to the economy that will grow substantively only if growth is broad-based sector-wise and is visibly shared by the people at large

Dr. Fatima deserves kick up lard ***, her heart bleeds, she really seems to care, about what we cannot fathom - but she feels, a lot!

 

[AgNoStiC MuSliM]

At the cost of sounding vindictive, I think its a case of Pakistan's ideology (in practical terms) which led her to take on a much bigger adversary and actually believing that they can win a war against them that has repeatedly led to this sad situation.

I won't say that India may not have contributed to this stance. That is not the point here.

Once Pakistan becomes a state whose ideology is the betterment of its people rather than trying to inherit the mantle of the Mughals or Gazhanis, these issues should become a thing of the past. There is no doubt about the potential of the country and the people.

Like Neo, I have to disagree. This is another example of the thought process of some Indians that it is somehow solely the hostility with India that has led to Pakistan's economic mess. Perhaps some sadistic egoism in thinking that India bankrupted Pakistan and therefore indirectly defeated Pakistan - though you try and cleverly hide it by insisting that you won't claim that India is not to blame.

Notice that on this count, (unlike the terrorism in Baluchistan) of lack of development and poor economic growth, Pakistanis hardly ever blame India. The criticism from Pakistanis has almost always focussed on Pakistani rulers for following short sighted and poor policies. Indians on the other hand are, ironically, foaming at the mouth to take credit for Pakistan's economic devastation. Its a very interesting phenomenon really.

The ideological argument, as you paint it, is naught but bad speculation, of a subtle 'anti-Muslim' kind. We all know how much you loath the Islamic conquerors of South Asia, and you somehow try and weave into Pakistan's so called 'ideology' this thread of following the path of those ancient Islamic conquerors who sought to control/subjugate all of India or some such nonsense.

In fact, Pakistan and its ideology has always been about betterment, even when Islamic fervor was at its height. Behind that fervor was the cause of creating a 'Utopian Islamic state' which directly implies 'betterment of the people'. The entire reson de etre of Pakistan was to establish a nation for a community and people who wished to exist and prosper outside of the other proposal of a super state - a super state in which they did not feel they would be guaranteed equality and a chance at 'betterment'.

So I would argue that contrary to your claim, betterment of the people has always in some fashion or form been Pakistan's 'ideology' and the driving force behind its creation. Where we have failed is with those who would implement the proper policies to make tangible this idea and ideology of a state founded for the 'betterment' of its citizens.

 

[was]

At the cost of sounding vindictive, I think its a case of Pakistan's ideology (in practical terms) which led her to take on a much bigger adversary and actually believing that they can win a war against them that has repeatedly led to this sad situation.

I won't say that India may not have contributed to this stance. That is not the point here.

Once Pakistan becomes a state whose ideology is the betterment of its people rather than trying to inherit the mantle of the Mughals or Gazhanis, these issues should become a thing of the past. There is no doubt about the potential of the country and the people.

i don,t think that people in india are living better than pakistan.yes india economy is growing but this does not mean that you are living better than any other country in south asia.

 

[Vinod2070]

AM, I have no love lost for the invaders of my land as I assume should be true for all patriots anywhere but you have extended the argument a bit too far.

Can you deny that Pakistan tries to represent the Islamic conquerors of India? Doesn't that reflect in even the names of your missiles? Thoush many of them caused as much or more damage in Pakistani areas!

Again we have a fundamental difference in the way we treat the theory and practice of an ideology. For me practice means more than a theory in the air. The practice actually defines the nitty gritty of the theories.

If it could not be implemented correctly, it was a flawed theory to begin with. It goes for the socialism model that we had in India for decades losing us precious time and it may be relevant for you in some measure.

 

[AgNoStiC MuSliM]

AM, I have no love lost for the invaders of my land as I assume should be true for all patriots anywhere but you have extended the argument a bit too far.

Can you deny that Pakistan tries to represent the Islamic conquerors of India? Doesn't that reflect in even the names of your missiles? Thoush many of them caused as much or more damage in Pakistani areas!

Again we have a fundamental difference in the way we treat the theory and practice of an ideology. For me practice means more than a theory in the air. The practice actually defines the nitty gritty of the theories.

If it could not be implemented correctly, it was a flawed theory to begin with. It goes for the socialism model that we had in India for decades losing us precious time and it may be relevant for you in some measure.

That you selectively pick a moment in history to determine 'invaders' and 'invasions' only indicates that you have chosen to discriminate and show prejudice to an 'other' with whom your own ideology does not match. I have argued before, arbitrary choices of times during history are a flawed exercise. We do not know how many tribes and peoples invaded and displaced the peoples of South Asia before the Muslims arrived, Just because the history of that time does not exist does no mean that it is alright to arbitrarily pick this particular group of 'invaders' to direct your ire at. What occurred was a part of human evolution.

The nations that existed then do not exist now - that hatred towards 'invaders' was for the citizens of those nations to bear, not yours that never existed then.

Pakistan represents the Muslims that inhabit its lands, it therefore identifies with those that brought the faith of a majority of its citizens to these shores. That is part of our history, we cannot deny it, especially since it is a part of our current identity. It does not automatically mean that all Pakistanis also wish to reconstruct the mountains of skulls erected by those long gone barbarian Kings.

 

[muse]

Lets focus please, no more about Muslims invaders,"my land" etc; please - or my size 12 boot will find it's way to the posterior -- we had hoped to discuss how it is that the problems, especially the question of reserves and confidence, took the hit they did and why it is that we cannot seem to have a informed national and international discussion -- again, please focus, your contribution is important, you are important, please do behave with that in mind. In the leader post several questions were posed so that we may have some elementary understanding of the issues, the questions were pretty basic - they remain unanswered, unexamined -- Now, is this item below useful in this dicussion :




Free Vs responsible
Safiya Aftab


Things can be both good and bad. The media in Pakistan is an example. Consider.

The proliferation of television news channels in Pakistan over the last six years has been held up as one of the few positive trends in the country, and a veritable feather in the cap of former President Musharraf. It’s hard to fault this view.

In a country which has suffered successive dictatorships characterised by ridiculous controls on expression, no one can really contend against the argument for a free media. Neither can anyone condone excessive regulation or control of media. But this is precisely where we skate on thin ice. Free media is not synonymous with responsible media.

Just consider what passes for news analysis on most, if not all, local television channels. Much of it, at best, is superficial; at worst, positively misleading and dangerous. From hate-speech against other religions and minority sects to the exposition of long-disproved conspiracy theories, Pakistani news channels have it all.

While it would perhaps be asking too much of the media, the men and women who project views and help project them, to be devoid of the social prejudices and intolerance that permeates our society, we can at least expect and demand substantive analysis on technical issues, notably the economy. Here’s how it goes.

One can have a variety of opinions on how to solve economic problems, but at the very least the anchors interviewing economic analysts should have some basic understanding of the issue at hand. For their part, the analysts should be specific in their answers.

Not so. Here’s a frustrating example of obtuse analysis on a channel that claims to be the country’s most watched channel.

The Governor of the State Bank of Pakistan called an emergency press conference fairly late at night on October 17 to discuss the Bank’s strategy for dealing with the liquidity crunch in Pakistan’s banking sector. She announced a 200 basis point reduction in the cash reserve requirement, suspension of the statutory liquidity requirement on time deposits and advised the banks to bring advance-deposit ratios to about 70 percent. This was in addition to the announcement of measures that the SBP has taken to more effectively regulate commercial banks in the wake of rumours of certain private banks declaring bankruptcy.

The Governor’s statement also included a brief reference to the reasons why Pakistani banks are, in the SBP’s opinion, relatively better placed to withstand shocks compared to banks in the west for whom consumer and housing finance constitutes a significant share in the total lending portfolio.

You don’t need a PhD in economics to identify the basic issues here:



* Although the Governor stressed that the press conference was only concerned with the discussion of liquidity issues, the measures she announced were essentially indicative of a loosening of monetary policy (in developing countries, reserve requirements and not open market operations are the essential tools available to central banks to control the money supply). What does this mean for inflation?

* To what extent is the liquidity crunch the result of excessive government borrowing, and should the SBP have taken steps to curtail that rather than injecting liquidity in the market?



The press conference had barely finished when the cameras switched to the newsroom with two anchorpersons interviewing an expert.

One of them clarified that he wanted the expert to explain the implications of the Governor’s policy announcement. Fair enough. But then, just before handing over the floor to the expert, he proceeded to make an impassioned speech about how the developed economies had in effect nationalised their banks in the last week while we were “still depending on the market” to sort out banking-sector issues. Conclusion: did this not imply that we were enslaved by capitalism etcetera.

There goes the long explanation by the Governor in her press conference on the differences in the banking crises in the west and in Pakistan.

One would have liked to ask the impassioned anchor how many of his friends and relatives had taken out mortgages to buy houses with little or no collateral requirements and then seen property prices tumble — the phenomenon which is essentially at the root of the banking crisis in the US and UK and which has no parallel in Pakistan.

Having established his “credentials” as a radical and an iconoclast, the anchor then turned to the expert for an explanation of what had happened in the press conference. It was then that the fun began. The expert, who had obviously been lined up in a hurry and at an awkward time, proceeded to enlighten the audience with the following facts:

* Pakistan’s economy is in a bad shape;

* The value of the rupee is sliding every day;

* If there is a recession in the west, this will affect FDI flows as well as export growth in Pakistan;

* The SBP was attempting to make credit available to the private sector; and

* The developed world had effected an about-turn on capitalism by nationalising banks.

The only fact missing from this analysis was that the sun rises from the east. This last would have had as much to do with the implications of the policy measures announced as anything else.

If the channel was taken by surprise by the Governor’s late announcement, they should really have done better to simply broadcast the conference, and leave the comment to another day rather than subjecting viewers to such ill-informed commentary. And with all those advertising revenues at hand, is it too much to ask to hire informed journalists as anchors? Surely, the days of immaculately groomed presenters reading from the teleprompters, with no idea of what they are talking about, are over?

Some serious self-analysis is in order to make free expression compatible with responsible expression.

The writer is a Research Fellow at Strategic and Economic Policy Research (SEPR), Islamabad