The petrol subsidy must go.

Who is it helping the most? Large consumers of petrol. i.e. Ford Endeavour owners blasting the AC with a special power point for the computer. Or, people like my boss who drive a converted Merc van with a DVD player and a drinks cooler. These are not the people who need subsidies. These are the people that must be discouraged. A quick back of the envelope calculation reveals that petrol retails in India for $(3.78541178 * 54 /43) = $4.75 and change. This is second cheapest only after the great United States (outside of the major oil producing nations). It is a ridiculous number in a country where 99.3% of people DO NOT own cars. You might say that even motorcycles run on petrol to which I will say that the difference between 4-6 kpl in city traffic for a car and 60-70 kpl for a bike constitute two very different things in a family's budget. Or, one might sell three litres at the current price and everything above at exorbitant rates. A minor inconvenience for a biker - a major drag for car owners.

Indian oil companies are "weeks away from bankruptcy" (http://sify.com/finance/fullstory.php?id=14678154). Their failure will send cascading failures through the oil delivery system meaning that cooking gas, kerosene, diesel - the stuff that actually runs the country - might just become unavailable. This is hardly a price worth paying for the wellbeing of the chosen few.

More expensive petrol might actually allow the feedback mechanisms from peak oil to filter through to people's behaviour. Maybe if they drive less and we have less congestion on the roads, then we can possible even have decent standards of living in our cities. Perhaps revert some of that tarmac into basketball courts.

You can bet your ass that it is the country's car manufacturers who are "lobbying" for the maintenance of the status quo as regards petrol. They might as well not bother. As the rupee devalues against the dollar (a shocking occurence in its own right - possibly engineered by the textile and ITES companies), the price of petrol will put paid to their fancy advertising schemes and so on. Tata Nano might just become the "not-so-poor-man's-car" in the near future.

Look for more excitement on the energy front as the twin horsemen of inflation and supply constriction come riding out of the West.

Peak Oil Hits the Mainstream

$135 a barrel. Headline news worldwide. World poised for the outbreak of fuel riots. All of America on the abyss. Is it really happening? It would be to boring to get into an introductory discussion about peak oil but the uninitiated can follow the discussion at http://theoildrum.com

Peak oil is an inevitability. Whether we are living through it at this very moment or not might even today be open to debate (or is it? http://europe.theoildrum.com/node/4018) but that the rate of flow of oil will drop below the constantly expanding demand for it seems to be a mathematical certainty. We have all heard the story of the ant and the grasshopper but can you believe that it seems to have had zero impact on all these responsible adults that are running the world? Here in India the increase in oil consumption is palpable. Landing in Mumbai the other day I saw for the first time a sky full of planes, circling. Airport buses with LCD televisions. Cavernous terminals with the air conditioning blasting, the doors open to 33 degree heat. All this wasn't here even just a few years ago and this is one of the poorest countries on the planet. How many more dinosaur bones can we burn before they finally give out? Are we building 13 tonne stone heads with the last of the wood?

To be quite honest, I find the cornucopian argument quite unfathomable. "Something will save us", they say, "It always has." Which would have been equivalent to driving while looking in the rear-view mirror except for the minor examples of the Easter Island and Aztec civilisations (and this from people who have even read Jared Diamond's Collapse). The history of the world is rife with examples of civilisations where "something" did not indeed arrive at the last minute and save everyone. To all the people still thinking about building spaceships to Mars I say this - pull your head out of your fucking arse and take a look around you.

Even if the high price of oil is indeed caused not by peak oil but by world's the collapsing financial systems, I posit that one of the reasons for this is purposeful demand destruction be people well aware of peak oil who want to preserve the precious stuff for the warplanes and the tanks. Hello prisonplanet.org !!

As the Coen brothers said - you can't stop what's coming. The mathematics of inflation and peak oil are very clear. The descent is inexorable. Then it accelerates. What can one do? Gather together. Play some music. Smoke a joint. Forgive your enemies. And your friends. And yourself. Re-evaluate. Re-connect.

We have enough aeroplanes. What we need is a new myth. A new heroism. A new culture.

Food riots and Energy as Money

It was jusgt a few days ago that I told someone - sometime before 2009 is over we will see extreme poverty being brought about by nothing more than a collapse of the world's monetary systems. Seems like it is coming to pass already.

GWB's recent comments regarding the alarming rise in food prices has sparked off quite a controversy in the papers here in India, as well as I suppose in China. Of course, Jairam Ramesh was right in retorting that this is just another example of his ignorance, which indeed it is. Had there been massive crop failures or some other event, it would even have made sense but in the absence of all these issues, simple rising of demand for meat, etc from India cannot explain a 200% increase in wheat prices and 100% increase in rice prices in such a short time. The massive diversion of cropland away from food to biofuels does play some part in the tragedy that is unfolding. Those of you who have faith in the free market and its ability to fix our looming energy crisis might pay attention to this, a good example of the so called free market completely fucking things up for everybody. Wheat prices Rice prices

What can, and does explain the alarming rise in prices is US Dollar inflation and rigidities in the real world that cannot keep pace with the changing value of money. Oil prices US Dollar

Now, some trader on Wall Street bidding on rice contracts, priced in USD, has changed the world for all the rice buyers whose national governments and central banks have a particular policy towards the US dollar. Regime's change painfully. Those who have built their lives on a particular regime will fight tooth and nail to preserve it, but like every other fiat currency, the fiat currencies of today and especially the most powerful US Dollar (or should we call it by its real name - the Federal Reserve Dollar) are beginning their inexorable decline to zero value and are causing untold misery along the way. It seems there is a limited amount of money you can push into the economy through subprime loans and HELOC extractions before people start wondering what it is that those dollars actually do.

So now we have a situation where the collapse of the worlds monetary systems is once again causing poverty where none existed. Even hallowed institutions like the World Bank are saying that all of Capitalism painstaking efforts at pulling millions out of poverty have suffered a huge setback with millions being pushed back into poverty because they were just too far away from the action - the action being the rapid and continuous devaluation of the world's reserve currency. Fools.

Sooner or later one must ask the question - what is money? I think we can answer this by describing the functions that money performs i.e a medium of exchange and a store of value. However, let us take a closer look at these functions and see whether our hallowed dollars and rupees do actually perform this function. Is the dollar a medium of exchange? Undoubtedly. You can buy bread, eggs, apartments for dollars. You accept dollars as payment because you are sure that somewhere down the road, someone else will accept dollars to provide you the things you need. A dollar, and all money, represents a claim on assets, on real things. From whence does this claim arise? Simply put - from propoganda and from the corecive power of the State. Can you think of another reason why you continue to accept dollars and rupees in exchange from your labour when the value of your assets changes so rapidly from day to day?

Is money a store of value? Let me ask you - is a lakh of rupees a lot of money? Can you remember a time when it was? How long ago was it? Your savings - what will they be worth when you retire? Is this fair? Here's another question to test your familiarity with that thing we call reality - is gold a currency because it is valuable, or is gold valuable because it is a currency? Leave your answers in the comments.

Most of you who read this will scoff. Don't worry - that is normal. For someone to suggest that Weimar hyperinflation could arise again is for someone to suggest that our leaders have learnt nothing from history. That would be true only if you give them the benefit of the doubt, which I refuse to. Our leaders have no interest in our wellbeing. War is for external enemies. Economics if for the internal ones. Much more bang for one's buck, especially considering that the bucks are all fake anyways.

There is one thing though, that can serve as the ultimate currency, which has all the benefits of a currency but none of the drawbacks. For example, this unit of currency would be unforgeable, uninflatable, totally fungible, would preserve it's value (it might even get more valuable with time), would be environmentally friendly, would take power away from the great banking cartels, would be freely exchangeable and tradeable and would be great for backing not only local but also national and international transactions. Ladies and gentle, may I present - the humble KiloWatt.

If there is a dynamic entrepreneur out there with the ability to reliable deliver kilowatts, I suggest you float a currency.

I am sure there are any number of objections to this proposal, and like I like to say - if there is a truth, let it out in the comments. While I do believe that my many hours and weeks and years involved with banking have meant that I have spent a lot of time thinking about these things, I still maintain that truth is truth and that it will emerge only from discussion and not from me saying any xyz thing on my blog. Have at it in the comments and let us see whether we can find a better alternative to our volatile and unfair systems of trade today.

Cryptonomicon by Neal Stephenson - Book Review

There is a particular kind of nerd that is so smug about the number of things he knows that he forgets that facts are for analysing, not for remembering. Like Borges's Funes the Memorius, this nerd keeps collecting information without ever being able to hew a coherent whole out of the assortment of facts. Add to this some facility with the keyboard and a staggering command of the english language and you get Neal Stephenson - wholesale killer of forests and waster of time par exellence.

Cryptonomicon could have been a wonderful book about absurdity, cryptography, government control, war, the nature of money and politics. Instead it is a terrible book about absurdity, cryptography, government control, war, the nature of money and politics. Neal Stephenson has little political sophistication. His writing is not just racy, it is downright racist - painting the Nips a ghatly shade of yellow, all ruthless rapists labouring under an anachronistic culture while the americans are white as the driven snow, brave, honourable, etc.

 Stephenson had a wonderful opportunity to talk about absurdity. He'd set it up very nicely - sending Bobby Shaftoe on all kinds of missions that make no sense, but nerds are usually not existentialists (they believe in the god of technology) and Neal let's the opportunity slip through his fingers. Stephenson also had many wonderful opportunities to talk about money and its nature, but he fails again. It is only Goto Dengo who says that money is nothing. The men who go to work everyday, the children improving themselves at school - that is wealth. Gold is just dead stuff. This wonderful insight was covered in half a page with no further elaboration on a theme which could have redeemed this book.

The characters are mostly predictable and the modern ones are mostly forgettable and nondescript. The story while very racy is essentially meaningless and the book finally is nothing more than 1100 pages of pulp. To compare this work with either Neuromancer or Shogun would be a mistake of epic proportions.

Economics is a Religion

I'll say it again - economics is a religion. It is not a science, it is not art, it is not a social science. It is, essentially, a body of knowledge designed to provide ideological backing for the rule of a certain class of people thereby allowing them to control the actions of vast multitudes of people. It is a religion.

Both religion and economics started as ways of explaining the world. While religion seeks to "explain" the mysteries and wonders of life, economics sets the more modest goal of explaining commodity exchanges and monetary systems. While religion's failures are spectacular and their mythology and dogma are on a grand scale, economics is more like a religion for accountants with the centre of its universe being not God but homo economicus - rational, utility-maximising man. Economics is nothing more than dressed up common sense like some of the more mundane religious rituals. Take for example the great curves of economics -the demand and supply curves. As price decreases demand increases and vice versa. Oh sweet revealation! Or the backward bending supply curve of labout - as wages increase, beyond a point, people prefer leisure to work - the shiftless bastards!

However, while economics is admittedly a very banal form of religion, it is actually the most dangerous religion alive. For one, no one considers it to be one. The mathematical symbols and complex equations that abound in its liturgies give it a thin veneer of respactability, something scientific and appropriate for the 21st century. Entire governments and whole populations buy the economists mumbo-jumbo wholesale. Economics is the cocaine of the masses.

Virulent schools of economic thought like the Chicago school have very consequences in real life. Latin america is only just recovering from being their laboratory for thirty years. Economics, like religion, does not follow any of the basics of a science - falsifiability, repeatability, etc. While it is dubbed a "social science", disciplines like econometrics are gaining credibility as real sciences, which makes them all the more dangerous.

The stupid reductionist view of man can never bring us a true picture of reality, but it can bring plenty of power to the owners of yet another convenient fiction - capital. These are the people that benefit from economics. It provides the ideological justification for their excesses. Just like the priests and clergy of the great religions had a direct route to God, bankers and industrialists have direct access to the God of the material world - Capital. It should come as no surprise to regular readers of the blog that we here consider Capital to be as fictitious an entity as God and this asymmetric access is basically nothing but a power imbalance perpetuated by the elite classes.

Just like religion provided the ideological justification for the persecution of heretics and non-believers, economics provides one for the exploiters of human beings. Efficiency is paramount they say, so sorry for beating you with a stick but the economists say its for your own good. I don't like it any more than you do. What? All the money I'm making? But if I don't get that then what would be my incentive for beating you? You get the picture.

You might argue that things like God and the Afterlife have no physical manifestation whereas a market for example, exists in reality. This does not invalidate the argument. Mysticism has nothing to do with phenomena, rather it is the manner in which phenomena are explained. The market is not mystical, just like comets and volcanoes are not mystical. Raising the market to the highest arbiter of ethics is mystical, just as as comets were associated with misfortune.

One of the definitions of economics is the study of methods to distribute the produce of society amongst itself. However, there are certain problems with thast definition. Just as there can be no religion without God, there can be no economics without Money and private property. These are the unspoken assumptions of economics. This is why economics is not really a study of how best to distribute the produce of society because one can imagine that production can be distributed without money or private property. Therefore, economics is necessarily a capitalist discipline. Since economics serves to further the interest only of a particular class, it is a religion.

The ultimate aim of economics is power. To reduce the human beings in factories to mere statistics, to measure wars in terms of GDP growth and to essentially further tilt the balance of power towards the elite. When an American engineer loses his job to outsourcing, economists shout about the free market making things better for everyone. When food is burnt in gas tanks as ethanol economists trumpet the "solutions" discovered by the marketplace. When acres of farmland are turned into concrete and acres of woodland turned into houses that will rot to the ground in a few years, economists praise the "rise in asset prices." Just like religion, economics takes no heed of the real world, shows little compassion and requires making assumptions that a child would laugh at.

Economics is a religion.