Friday, February 13, 2009

Economic transformaton : Towards True Knowledge Economy

True Knowledge Economy is in the process of manifestation . That is why old forms are crashing and collapsing.

Old Economy

Own the asset
Fear of losing
Money makes Money
Take from the environment
Intellectual property
Share holder

True Knowledge Economy

Know and grow
Know the asset
Joy of Sharing
Knowledge creates Knowledge
Give to the Environment Intellectual pooling
Sharing ,not holding
Intuitive Intelligence

Indian School of Economic thought

India has much to offer on Economic field then destitute economics .
You don’t need to be economist ,to understand Indian School of Economic thought which has existed for Centuries. A Indian Housewife is the best economist as she is considered “Laxsmi- the Goddess of Wealth” in India.

Based on Atharva Veda , Indian Economic thoughts makes an Essential connection between the spirit of money and material compartment of money.

India’s Economic thought is not based on Paper currency of ‘money’, but on ‘Artha’ – which is a holistic money where every aspect of money, is related to good governance and real economy.

India practices more ‘giving’ then consuming as a whole society . The Economic principles of the villages are based on Ecological Economy and close to nature rather then mainstream economy .That’s why India’s economic principle is based on the spiritual principle.

For last 10,000 years , Numerous ,Indians have left everything of there life for seeking divine consciousness and transforming every aspect of life from matter to mind , by this consciousness. There is so much work done in these level , that India could be called as the ‘Guru of the World’

Ancient Indian Economic thought has also tried to change the consciousness of political economy and business also.

Transformative Solution 2 : Why do we Need a New Economy ?

If we consume Natural resources like World Grain, Fossil Fuel and others the way we are doing now, on US Economic model ( Either of Chicago school or Keynesian) we will require 5 earths . Even if we follow , the EU countries consumption model , then also we will require 3.4 earths.

We are consuming 20% more then the availability global resources.
So everyday we are spending more of planet resources then we are producing.
That’s Nature is reverting back by destroying ‘Human Financial System’, and it just could not be stopped, with taking the same measure, which created the problem in first place.

Assumption of the greatest Modern Economist where prove wrong by the present crisis.

Adam Smith’s assumption, of Collective happiness only possible when individual ego works, was proved to be asuric, as this is the assumption which instutionalised Greed.

Keynes assumption of ’State intervention’ is only creating more bail out packages, which is getting us Nowhere.

Milton Friedman assumption of ‘Free markets and less regulation ‘ has already get us into the problems of Global Financial Crisis.

The present system which is based on Modern Economic thought helps money to give a fake sense of immortality .

Everything in Nature destroys, Money doesn’t. A crop kept for an year will, get destroyed and not give an yield in next year, whereas money kept in Bank will grow .
This is the natural reason , why it is important in the present system, to store and stop the circulation of money where some will ‘have’ and some will ‘have not’ and everybody ‘will not have’ in socialism .

Thus, Human Mainstream economy where ‘scarcity’ is law, creates conflict with Nature’s Economy where ‘abundance’ is the law .

Transformative solution for Global financial Crisis

An Economy based on consciousness , True need, and joy of Giving , is the economy of the future , and can be the economy today also for the word to sort global crisis.

The future of earth depends on change of Business and economic consciousness.

In that Business could be used as an instrument of divine.

1. Connect with the light above

2Bring it down in all layers of business

3.Business not just a tool to convert natural resources in Goods and services.

4.Business is an instrument for transformation

Innovative Solution for Solving Global Financial Crisis

A. Disintermediation of Banks :

Given that the age of the’' Information Society (with the Internet being our central resource that networks citizens and enterprises) is the Age of Disintermediation, a lot could be said for eliminating banks as they are intermediaries whose conversion process has broken down.

A key reason for the downward spiral we observe at present is that liquidity is absorbed at the intermediary level. Given the capacity of our Governments to electronically obtain our tax declarations and collect and disburse funds to those declaring, one would imagine that the same Governments could also provide capital directly where needed on a formula basis.

B.Disintermediation of inefficient Intermediaries

The demonic nature of the financial system and its links to interest rates as the means of capital allocation across capital classes is evident if you look at the "near zero" interest rate at the source, and the "near infinite" cost of capital for business, reflected in the "near zero" supply of funds for risk capital at all stages.

It means we have "near infinite" inefficiencies in the intermediaries of the financial system. As the basic supply of money becomes "near infinite", and the corresponding price "near zero", risk premiums apparently become "near infinite" , reducing supply of risk capital to "near zero".
This is a paradox that would not exist if we had changed the capital provisioning system and in particular removed the dysfunctional parts that are built around Credit.

The Call of Time 2: Global Financial Crisis -Problems on Conventional solutions

Secondly, even if both strategies -- bailing out the banks and re-regulation of the financial sector -- are implemented reasonably well, neither resolves the "Second Wave" problem:

The banking system will get caught in a vicious circle of credit contraction that invariably accompanies the massive de-leveraging that will be needed. Depending on how the re-regulation is implemented, it may actually inhibit banks from providing the finances needed for a reasonably fast recovery of the real economy.
In any case, given the size of the losses to be recovered, it will take many years, in the order of a decade, certainly more than enough time to bring the real economy into real trouble.

In practice, this means we are only at the beginning of a long, drawn-out economic unraveling. The social and political implications for such a scenario are hard to fathom.

The last time we faced a problem of this size and scope was in the 1930's, and that event resulted in social and economic problems that ended up manifesting violently in a wave of fascism and ultimately World War II

The first objection to nationalizing banks or their toxic assets is the well known "moral hazard" problem.

If banks know that they will be saved when in trouble, they may be tempted to take higher risks than otherwise would be prudent. When these risks pay off, the profits are held privately and translated into generous dividends for the banks' shareholders and extraordinary bonuses to management.

But when they fail, the losses end up being absorbed by the taxpayers. The current salvage programs confirm that this problem hasn't gone away and is unavoidably further strengthened by new bailouts.

Christine Lagarde, Minister of the Economy, Industry and Employment in the current Sarkozy government in France, stated "Moral hazard has to be dealt with later... Maintaining the functioning of our markets is the top priority." This is exactly the argument that pops up at every systemic crisis...

The Call of Time 1: Conventional Solution to Global Financial Crisis

1.Nationalizing Toxic Asset

This solution is invariably preferred by the banks themselves.It consists of either the government (in the initial Paulson bailout plan, for example, it is the U.S. Treasury Department) or a specially created institution funded by the government buying assets from the banks that they now want to jettison.Of course, determining the price at which these assets are purchased is a very tricky issue, particularly when a liquid market for such assets has dried up completely, as is the case now. If the government buys the assets at too high a price, it will be seen as a straightforward subsidy for previous bad behavior, and accentuate the "moral hazard" problem (defined below), something that is politically unpalatable.

2.Nationalizing the Banks

The second way to buttress the banks is by governments providing capital directly to banks themselves, either by buying stocks, or by acquiring a newly issued preferred stock. For example, this is what Warren Buffet did for Goldman Sachs in September 2008 in the US: He injected $5 billion in the form of preferred stock that would give him not only 7% of the capital, but also a guaranteed 10% dividend forever.
In Europe, governments have typically taken the bank-nationalization road, although with less demanding terms than what Warren Buffet obtained. Nationalizing the banks was the option taken for instance in Sweden in 1992, and in 2008, first for Northern Rock in the UK, and then for a wide range of banks in all countries by mid-October 2008.