Global recession looms

WITH stunning speed, speculation in the developed world has turned to how deep a recession its economies face. Only days ago, analysis centred on the possibility of containing the financial crisis. The darkening mood has to do with the fact that the full extent of the shadow banking system has begun to sink in, terrorising markets with the staggering sums of money at risk. At centre stage in this drama are exotic financial instruments known as derivatives. Conceived as a way of managing financial risk, derivatives are so named because they ‘derive’ their value from underlying assets like stocks, bonds and commodities. The problem is that the market for derivatives is unregulated, allowing firms to take on catastrophic amounts of risk. Some perspective: global GDP is approximately $60tr; the derivatives market has grown from $106tr in 2002 to $531tr today. From the implosion of the US housing sector, two derivatives-related risks have emanated. The first, mortgage-backed securities, has already caused a $1.4tr loss. The second, credit default swaps, which are a form of insurance policy whose values depend on the assets they are written to cover, has a nominal market value of $60tr. Together, these derivatives control the fate of the Anglo-Saxon model of financial capitalism; the bigger the losses, the worse the recession.

For Pakistan, a global recession would be the final nail in the financial coffin. Already the country has suffered a slowdown in growth, a build-up in inflation, wide fiscal and current account deficits, a plummeting currency and the halving of foreign reserves. The declining price of oil, food and other commodities will help, but may be cancelled out by weaker exports. Moreover, Pakistan’s position is dire in the short run. Given the near junk-bond status of our sovereign debt, raising money in the global financial market is a non-starter. The standard alternative is to turn to the IFIs and bilateral governmental aid, a problematic route thus far as most western alternatives are busy putting out fires in their own backyards. However, there remain potentially more accommodating options: China and the oil-producing countries in the Middle East. China’s economy is expected to weather the global downturn and has enormous foreign reserves of $1.8tr. Saudi Arabia and the UAE, two of Pakistan’s closest Arab allies, will suffer as oil prices fall, but the historic highs of the oil market have given them an economic cushion. None of these countries should be expected to give Pakistan handouts. However, smart diplomacy can help tap these Asian countries to rescue us. The question is, does our government have what it takes?

Not a deterrent

REITERATING its call to abolish the death penalty, the Human Rights Commission of Pakistan has pointed out that capital punishment has not proved to be a deterrent against crime. The growing lawlessness in the country bears out this observation as much as it testifies to the brutalisation of a society that is experiencing more than its daily dose of crime and punishment. That, of course, is not the only reason why the HRCP is right in calling for an immediate moratorium on the death penalty and its eventual elimination from the statute books. Our police are renowned for extracting confessions under duress, investigations are often faulty and believed to be politically motivated, and poor forensic analysis makes it difficult to nab the real culprit. Consequently, there is much to justify concerns that a man accused of murder may not have committed the deed. And if justice has been flawed and it is proved at a later stage that an executed murderer was not, in fact, guilty of the crime for which he was sentenced to death, nothing can be done to mitigate the effects of this ultimate of penalties. Finally, the death penalty is held to be a degrading form of punishment — and quite rightly so — by a large number of countries that hold a more universal view of human rights and no longer go by culture-based value systems.

To its credit, the current government has more than once resolved to do away with capital punishment, a move that would save the lives of more than 7,000 convicts currently on death row. Unfortunately, it is not taking the measures required to remove Pakistan from the list of countries that most frequently implement the penalty. Perhaps, this laxity is partially due to the fact that many among the public actually advocate it on the basis of either personal experience or religious conviction. However, awareness is growing on a host of social issues seldom discussed previously, and it is now time to add to the list the subject of the death penalty and its efficacy. In Pakistan’s context, the example of other Muslim countries that have either abolished the death penalty or declared a moratorium on it is also there. Lastly, crime has to be combated on many fronts, of which better policing is just one aspect. A major overhaul of the system is required to lessen the frustrations that lead to violent crime.

Morbid lack of hope

HOPE begets confidence and despair bears only demoralised children. This was never truer than it is today in Pakistan. With almost universal despondency and pessimism, our self-confidence has hit rock bottom. We see nothing going for us and we find ourselves good for putting nothing right. From politics to the economy, law and order to militancy, provincial disharmony to external threats, and the judiciary’s independence to the rule of law, the list of problems that Pakistan faces can go on forever. But more tragically, few among us believe that we can fix any of these. In our collective dejection we see ourselves as an island of instability, insecurity and uncertainty surrounded by a sea of peace, prosperity and bliss. We never realise that this is far from the truth. The mess we are in is actually so widespread that from the Mediterranean to the Straits of Malacca, not a single country has escaped it.

From Turkey to the Philippines, no nation can pat itself on the back and claim that it is not facing some bloody revolt from within: Kurds in Turkey, the Baloch and Arabs in Iran, Kashmiris and the inhabitants of the north-east in India, Tamils in Sri Lanka, Karens in Myanmar, Muslims in southern Thailand, the Acehnese in Indonesia, Moros in Philippines. At least three countries in the region are in a state of war: Iraq, Afghanistan and Israel/ Palestine. Many big cities across this crescent of instability have of late seen strikes, violent protests, bomb blasts and even riots. Only a decade ago, Turkey suffered from triple-digit stagflation, with its currency losing value by the day. Almost all the South-east Asian economic tigers like Thailand, Malaysia and Indonesia suffered massive financial and economic setbacks as early as 1995-96. Some thousand miles to the West, Argentina actually defaulted on its sovereign debt in the late 1980s. In the last one month alone, Thailand has seen the back of two prime ministers. By this count, if the end is nigh for us, it should be nigh for many other countries around us. Still the obituary writers are out and active only in Pakistan. Even when we are not alone in our misery, we are certainly finding ourselves alone in our hopelessness.

It is therefore imperative that opinion-makers in the media and intelligentsia work towards reviving hope and policy-makers and politicians contribute towards keeping it alive. We may survive a dysfunctional polity but not a morbid lack of hope.

OTHER VOICES - North American Press

Drugs and disclosure

The New York Times

WE’VE long feared that the integrity of medical research is being eroded by conflicts of interest and manipulation of scientific data. Still, it was disheartening to learn that one of the nation’s most prominent psychiatrists has taken large, undisclosed payments from a drug company whose products he evaluated and that another company manipulated studies to make a drug look far more beneficial than it actually is.

As Gardiner Harris reported in the Times, Congressional investigators found that Dr Charles Nemeroff of Emory University — the principal investigator on a government-financed study of antidepressant drugs made by GlaxoSmithKline — repeatedly promised to keep his consulting fees from Glaxo below $10,000 a year in compliance with federal and university conflict-of-interest rules. He took far more than that, mostly for giving talks promoting the company’s drugs to other doctors.

All told, according to Sen Charles Grassley, who has spearheaded the inquiry, Dr Nemeroff failed to report some half-a-million dollars in fees and expenses from Glaxo while he led the study.

Dr Nemeroff has declined to comment beyond assuring Emory that he followed university disclosure regulations “to the best of my knowledge.” The university is investigating. But the Congressional investigation was based on reports from drug companies on their payments to Dr Nemeroff.

This episode underscores the need for Congress to pass a bipartisan bill, sponsored by Mr Grassley and Sen Herb Kohl, that would require drug companies and other medical manufacturers to publicly disclose payments to physicians that exceed $500 a year.Meanwhile, there is strong evidence that Pfizer and its Warner-Lambert unit have been manipulating the publication of studies to bolster the use of their epilepsy drug Neurontin to treat other disorders for which it has not been approved. As reported recently by the Times’s Stephanie Saul, experts who reviewed thousands of internal documents that surfaced in a lawsuit against the company concluded that Pfizer had used several tactics to mislead physicians about Neurontin.

The tactics included delaying publication of studies that found no evidence that the drug worked for some disorders, spinning negative data to make it look more positive and bundling negative data with positive findings to neutralise the results. Pfizer denies any such manipulation. It will be up to the courts to pass final judgment on what looks like tawdry behaviour. — (Oct 11)

A new world order

IT is clear that we face unprecedented times. Unprecedented because there is no direct precedent, no past for what we see. The world is totally oriented towards the future. And whoever still dwells in the past doesn’t understand the future because the past is of full of prejudices, of commitments. It arrests us.

Today, the extent and pace of fundamental change is extraordinary. We wake up every morning to a new world. I like to think that the conflicts and crises we see raging are a sign that the world, as we know it, is pregnant and going through a painful labour. What we see and hear are the labour pains. Who knows how long this tortuous labour will last, but we can be sure that what emerges from this delivery will be a tomorrow that is profoundly different from today.

And it is for this tomorrow that we must endeavour, and devote our intellectual energies to dealing with the prospect of a very different future.

Modern society hinges not on the experience of the past but on risk-taking for the future. But all the expertise of the world hinges on what has happened, not what may happen. So perhaps it is more important to imagine than to remember. What are memories anyway? We barely remember that which was not right or not easy, but remember clearly all that was agreeable. Remembering is, in a way, conveniently forgetting.

Peace is indeed in our destiny. The question is how long it will take and how many victims it will claim. The history of land is besmirched with red; people have been fighting for centuries to either defend their lands or to extend them. But the minute the world’s focus shifted from land to science, what was there to fight about any more?

Armies cannot conquer wisdom. Customs cannot inspect a scientist’s thoughts. All that is vital for tomorrow is uncontrolled and free, making land and borders increasingly irrelevant. In countries today, it is of greater consequence to have more engineers per square kilometre than to have an extra square kilometre.

And our problems today, are they between nations — Arabs and Jews, India and Pakistan? Or instead a battle of generations, between an old age and a new age? The terrorists protest the influence of the new age, which they believe endangers their tradition. They consider modernity their enemy but, sooner or later, they will have to bend.

Yet opposing modernity and change is still protest, not terror. The problem begins when one tries to kill the future. As the opponents of modernity will soon discover, nobody can stop the future. One cannot continue to live by archaic traditions. Take attitudes toward women: if women lack equal rights, a nation will only be half a nation. Not only do you lose the women, you lose the children too because an uneducated woman cannot educate her children. This is a clash between generations, not nations. And I’m hopeful for the future, because today’s young are largely free from the shackles of the prejudice that encumbers the old.

Terror does not have a future, because terror has neither message nor vision. What hope or promise can it provide to the people? Terrorists fear the further development of the new age, but how long can they cling to the past and their outdated traditions? Progress will not cease and people will soon tire of them, that much is inevitable.

Grievances and protests have to be managed through dialogue. Traditional battles over land are inertia from the past and prolonging them is senseless. But war unifies nations, while peace divides them and gives rise to arguments about the price.

Yes, negotiations are difficult and peace is expensive but nothing is wiser than making a moral choice. The future is always in a minority, so to be accepted and popular go praise the past. If you want to serve the future, however, don’t be afraid of belonging to a minority.

Governments and administrations are becoming old, staid bureaucracies. They represent, all over, a fading age. The world of tomorrow will centre on global corporations that are devoid of armies. They will be based on creativity and goodwill and around countries that will form into geographic clusters.

Perhaps we can envision South Asia as one economic bloc. A common people sharing a common market, currency and heritage, with divisions having broken down in the face of economic cooperation.

I see tomorrow’s people living on two foundations: the heritage of our culture and values, and our skill with modernity. It’s an educational challenge, but the balance between authority and freedom is overwhelmingly in favour of freedom.

Today everything is global: the war on terror, global warming, the environment, financial markets, media. Governments and borders too will go global. This is the delivery we shall witness in our lifetimes. This is the future.

Rakesh Mani is a New York-based writer.

rakesh.mani@gmail.com

Nobel problems with US literature

CULTURAL commentators searching online bookstores last week for English-language translations of books by Jean-Marie Gustave Le Clezio, literature’s latest Nobel laureate, were surprised to find that the most heavily flagged item offered was a DVD of Young Einstein.

The tantalising possibility that a 68-year-old French writer praised in the official citation for “new departures, poetic adventures” might, during populist interludes, have worked on Peewee Wilson movies was soon removed. Computers had been confused by an actress called Odile Le Clezio and the fact that her novelistic namesake’s impact, on UK publishing at any rate, seems to have peaked with a couple of long-deleted Hamish Hamilton hardbacks from the 1960s. Inevitably, the choice of this Google-thin writer after three years of laureates who had a strong presence in English literature and cultural life — Doris Lessing, Orhan Pamuk and Harold Pinter — will revive accusations of obscurantism and pretension. And such reflexes in the Anglophone book world will be increased this year by the suspicion that the prize committee is deliberately resisting the claim of American literature, generally accepted by critics on both sides of the Atlantic as the current prose superpower. Just as Barrack Obama would be guaranteed the presidency if the decision rested with the electorates of Europe, so any Nobel literature poll taken would have given the cheque to Philip Roth at least a decade ago and probably John Updike as well. Fuelling our incredulity, one of the usually secretive judges unwisely sounded off in an interview last week that American writing is too parochial and inward-looking.

Certainly, it seems an eccentric reading of contemporary literature that only Saul Bellow and Toni Morrison from the American canon have been honoured in the past 32 years, and that all have been overlooked since 1993. And it’s impossible to deny that the decisions often have political undertones.

While the poems of Seamus Heaney and the plays of Harold Pinter are unarguably deserving of preferment, the former’s Irish passport and the latter’s anti-American writings usefully insulated them from the strength of anti-US feeling in European cultural circles. Le Clezio, being French, is similarly protected. Conversely, Updike’s defences of the Vietnam war and Roth’s refusal to politicise his novels may have harmed their chances.

But the fact that Le Clezio and Elfriede Jelinek of Austria have the prize is not entirely down to geopolitical score-settling. The key lines in the citation were that reference to “departures” and “adventures” in the French writer’s work. Winners have, especially in recent years, been those who represent some kind of formal innovation: either of subject-matter — Morrison’s rendition of African-American history; or structure — the mixing of the naturalistic with the abstract in Pinter’s fractured dialogue or Lessing’s games with memoir and science-fiction. All, at some level, are experimental writer — as, from what an English reader can discern, is Le Clezio.

In contrast, the greatest contemporary Americans operate, though at remarkable levels of poeticism and psychology, in traditional forms. By the definitions of the Nobel committee, which likes its novels to be really novel, the prize that Roth or Updike might win has already been claimed, in 1976, by Saul Bellow.

With the possible exception of Mailer, who pioneeringly blurred the lines between fiction and journalism, recent American giants — including Arthur Miller and Edward Albee — have tended to bring an innovative style to familiar structures of fiction and drama. The Nobel judges are certainly not indifferent to flags but what really gets them going is formats. No matter how remarkable the flavour of the tea, they like a new design of pot.

— The Guardian, London