ECONOMICS FOR DUMMIES

"VALUE HAS A VALUE ONLY IF ITS VALUE IS VALUED BY YOU"

SAVING IS SIN, SPENDING IS VIRTUE" - Written by an Indian Economist

Japanese save a lot. They do not spend much. Also Japan exports far more
than it imports. Has an annual trade surplus of over $100 billions. Yet
Japanese economy is considered weak, even collapsing.

Americans spend, save little. Also US imports more than it exports. Has an
annual trade deficit of over $400 billion. Yet, the American economy is
considered strong and trusted to get stronger.

But where from do Americans get money to spend?
They borrow from Japan, China and even India. Virtually others save for the
US to spend. Global savings are mostly invested in US, in dollars. India
itself keeps its foreign currency assets of over $50 billions in US
securities. China has sunk over $160 billion in US securities. Japan's
stakes in US securities is in trillions.

Result:
The US has taken over $5 trillion from the world. So, as the world saves for
the US, Americans spend freely. Today, to keep the US consumption going,
that is for the US economy to work, other countries have to remit $180
billion every quarter, which is $2 billion a day, to the US! Otherwise the
US economy would go for a six. So will the global economy. The result will
be no different if US consumers begin consuming less.

A Chinese economist asked a neat question. Who has invested more, US in
China, or China in US? The US has invested in China less than half of what
China has invested in US. The same is the case with India. We have invested
in US over $50 billion. But the US has invested less than $20
billion in India.

Why the world is after US?
The secret lies in the American spending, that they hardly save. In fact
they use their credit cards to spend their future income. That the US spends
is what makes it attractive to export to the US. So US imports more than
what it exports year after year.

The result:
The world is dependent on US consumption for its growth. By its deepening
culture of consumption, the US has habituated the world to feed on US
consumption. But as the US needs money to finance its consumption, the world
provides the money. It's like a shopkeeper providing the money to a customer
so that the customer keeps buying from the shop. If the customer will not
buy, the shop won't have business, unless the shopkeeper funds him. The US
is like the lucky customer. And the world is like the helpless shopkeeper
financier.

Who is America's biggest shopkeeper financier?
Japan of course. Yet it's Japan which is regarded as weak. Modern economists
complain that Japanese do not spend, so they do not grow. To force the
Japanese to spend, the Japanese government exerted it self, reduced the
savings rates, even charged the savers. Even then the Japanese did not spend
(habits don't change, even with taxes, do they?). Their traditional postal
savings alone is over$1.2 trillions, about three times the Indian GDP. Thus,
savings, far from being the strength of Japan, has become itspain.

Hence, what is the lesson?
That is, a nation cannot grow unless the people spend, not save. Not just
spend, but borrow and spend. Dr. Jagdish Bhagwati, the famous Indian-born
economist in the US, told Manmohan Singh that Indians wastefully save. Ask
them to spend, on imported cars and, seriously, even on cosmetics! This will
put India on a growth curve. "Saving is sin, and spending is virtue." Before
you follow this neo economics, get some fools to save so that you can borrow
from them and spend, ofcourse this will apply to the individual also.

This is what US has successfully done in last few decades.

What is ur Take on this ??????????
--------------------------------------------------------
ET has opened a debate on "Is Premji right to go against job quotas in Wipro?"
As expected most of the posts agree with him...
here is someone who put his pt in a v diff way.. :))
--------------------------------------------------------
I think we should have job reservations in all the fields. I completely support the PM and all the politicians for promoting this.

Let's start the reservation with our cricket team. We should have 10 percent reservation for muslims. 30 percent for OBC, SC/ST like that.
Cricket rules should be modified accordingly. The boundary circle should be reduced for an SC/ST player.
The four hit by an OBC player should be considered as a six and a six hit by a OBC player should be counted as 8 runs.
An OBC player scoring 60 runs should be declared as a century.

We should influence ICC and make rules so that the pace bowlers like Shoaib Akhtar should not bowl fast balls to our OBC player. Bowlers should bowl maximum speed of 80 kilometer per hour to an OBC player. Any delivery above this speed should be made illegal.

Also we should have reservation in Olympics. In the 100 meters race, an OBC player should be given a gold medal if he runs 80 meters.

There can be reservation in Government jobs also. Let's recruit SC/ST and OBC pilots for aircrafts which are carrying the ministers and
politicians (that can really help the country.. )

Ensure that only SC/ST and OBC doctors do the operations for the ministers and other politicians. (Another way of saving the country..)

Let's be creative and think of ways and means to guide INDIA forward...

Let's show the world that INDIA is a GREAT country. Let's be proud of being an INDIAN..
May the good breed of politicans like ARJUN SINGH long live...

So, what do you think, huh???

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The wife is extremely embarrassed, and the husband looks at
the drunk and says" Excuse me, you just farted before my
wife."

The drunks replies," I'm sorry I didn't know it was her turn."

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Fresh Fish

The Japanese have always loved fresh fish. But the waters close to
Japan have not held many fish for decades. So to feed the Japanese
population, fishing boats got bigger and went farther than ever. The farther
the fishermen went, the longer it took to bring in the fish. If the
return trip took more than a few days, the fish were not fresh. The Japanese
did not like the taste.

To solve this problem, fishing companies installed freezers on their
boats. They would catch the fish and freeze them at sea. Freezers
allowed the boats to go farther and stay longer. However, the Japanese could taste the
difference between fresh and frozen and they did not like frozen fish.

The frozen fish brought a lower price. So fishing companies installed
fish tanks. They would catch the fish and stuff them in the tanks, fin
to fin. After a little thrashing around, the fish stopped moving. They
were tired and dull, but alive. Unfortunately, the Japanese could still
taste the difference. Because the fish did not move for days, they lost
their fresh-fish taste. The Japanese preferred the lively taste of
fresh fish, not sluggish fish.

So how did Japanese fishing companies solve this problem? How do they
get fresh-tasting fish to Japan? If you were consulting the fish
industry, what would you recommend?


How Japanese Fish Stay Fresh:

To keep the fish tasting fresh, the Japanese fishing companies still
put the fish in the tanks. But now they add a small shark to each tank.
The shark eats a few fish, but most of the fish arrive in a very lively
state. The fish are challenged.

Have you realized that some of us are also living in a pond but most
of the time tired & dull, so we need a Shark in our life to keep us
awake and moving? Basically in our lives Sharks are new challenges to keep
us active and taste better.....

The more intelligent, persistent and competent you are, the more you
enjoy a challenge. If your challenges are the correct size, and if you
are steadily conquering those challenges, you are Conqueror. You think
of your challenges and get energized. You are excited to try new
solutions. You have fun. You are alive!

What does it cost to have a celebration?

A winter evening.
Four friends.
One barsaat.
Four glasses of chai.

Hundred bucks of gas.
A rusty old bike.
And an open road.

Maggi noodles.
A hostel room.
4.25 a.m.

3 old friends.
3 separate cities.
3 coffee mugs.
1 internet messenger.

Rain on a hot tin roof.
Pakoras deep-frying.
Neighbours dropping in.
A party.

You and mom.
A summer night.
A bottle of coconut oil.
A head massage.
Gossiping about absent family members.

You can spend hundreds on birthdays, thousands on festivals, lakhs on weddings, but to celebrate all you have to spend is your Time.

Chetan Bhagat is an ex-IITian, graduating from IIT Delhi in 1995. At IIT he had his stint as the editor of the hostel magazine. Post IIT, he did an MBA from IIM, Ahmedabad graduating in 1997. He received a medal for the 'best outgoing student award'. After IIM, he has been working in Hong Kong with a prominent US investment bank for the past six years.

Chetan is 29 years old and grew up in Delhi most of his life and attended The Army Public School. His love for writing has meant he has frequently contributed articles and stories to local publications and newspapers. Through Five-point someone, he attempts to provide an insider's view about the most famous colleges of India.

My Stupid Suicide Plan - CHETAN BHAGAT Last week, an IITian committed suicide. People who commit suicide do it when they feel there's no future. But wait, isn't IIT the one place where a bright and shining future is a foregone conclusion? It just doesn't add up, does it? Why would a young, hardworking, bright student who has the world ahead of him do something like this? But the answer is this-in our constant reverence for the great institution (and I do believe IITs are great), we forget the dark side. And the dark side is that the IITs are afflicted by the quintessential Indian phenomenon of academic pressure, probably the highest in the world. I can rant about the educational system and how it requires serious fixing, or I can address the immediate-try my best to prevent such suicides. For this column I have chosen the latter, and I do so with a personal story. News of a suicide always brings back one particular childhood memory. I was 14 years old when I first seriously contemplated suicide. I had done badly in chemistry in the Class X half yearly exam. I was an IIT aspirant, and 68% was nowhere near what an IIT candidate should be getting. I don't know what had made me screw up the exam, but I did know this, I was going to kill myself. The only debate was about method. Ironically, chemistry offered a way. I had read about copper sulphate, and that it was both cheap and poisonous. Copper sulphate was available at the kirana store. I had it all worked out. My rationale for killing myself was simple-nobody loved me, my chemistry score was awful, I had no future and what difference would it make to the world if I was not there. I bought the copper sulphate for two rupees-probably the cheapest exit strategy in the world. I didn't do it for two reasons. One, I had a casual chat with the aunty next door about copper sulphate, and my knowledgeable aunty knew about a woman who had died that way. She said it was the most painful death possible, all your veins burst and you suffer for hours. This tale made my insides shudder. Second, on the day I was to do it, I noticed a street dog outside my house being teased by the neighborhood kids as he hunted for scraps of food. Nobody loved him. It would make no difference to the world if the dog wasn't there. And I was pretty sure that its chemistry score would be awful. Yet, the dog wasn't trotting off to the kirana store. He was only interested in figuring out a strategy for his next meal. And when he was full, he merely curled up in a corner with one eye open, clearly content and not giving a damn about the world. If he wasn't planning to die anytime soon what the hell was I ranting about? I threw the copper sulphate in the bin. It was the best two bucks I ever wasted. So why did I tell you this story? Because sometimes the pressure gets too much; like it did for the IITian who couldn't take it no more. On the day he took that dreadful decision, his family and friends were shattered, and India lost a wonderful, bright child. And as the silly but true copper sulphate story tells you-it could happen to any of us or those around us. So please be on the lookout, if you see a distressed young soul, lend a supportive, non-judgmental ear. When I look back, I thank that aunt and that dog for unwittingly saving my life. If God wanted us to take our own life, he would have provided a power off button. He didn't, so have faith and let his plan for you unfold. Because no matter how tough life gets and how much it hurts, if street dogs don't give up, there is no reason why we, the smart species, should. Makes sense right?