Volkswagen as a huge corporation deliberately deceived regulators and consumers. This disaster will kill Volkswagen.

The Environmental Protection Agency says US Volkswagen vehicles emitted between 10,392 and 41,571 of NOx each year if they were all being judged against the 2016 model emissions standards. It means far more harmful NOx emissions, including nitrogen dioxide, have been pumped into the air than was first thought – on one analysis, between 250,000 to 1m extra tonnes every year.

The hidden damage from these VW vehicles could equate to all of the UK’s NOx emissions from all power stations, vehicles, industry and agriculture.

US emissions standards were introduced in 2007. It was these tests that forced VW to stop selling its diesel models, introducing new bestselling “clean diesel” models instead, that we now know were not especially clean at all. The treachery was hidden deep in the computer chips that operate modern vehicles, yet the cars had the EPA’s stamp of approval. All by fraud and deception.

How did they do it?

They introduced an intelligent software that was ‘evil ingenuity incarnate.’ It adjusted the engine’s output in order to reduce emissions when a car was hooked up to any testing equipment, then increased the emissions above legal levels when the car was on the road, giving the engine more power to go along with the extra smog.

EPA says the fine for this alleged deception could rise as high as $18-billion.

How were VW found out?

EPA was actually sleeping like any government agency. It was International Council on Clean Transportation (ICCT) that caught them. An NGO, the International Council on Clean Transportation (ICCT), performed independent – and crucially on-road – emissions tests, on the VW Passat, the VW Jetta, and a BMW X5. These tests followed five routes on similar lines to the EPA simulations: highway, urban, suburban and rural up/downhill driving. The emissions performance of the Volkswagen cars, but not the BMW, was so much worse than expectations that the ICCT ran further tests on a dynamometer. In these circumstances, the cars passed with flying colours. It was at this point that the ICCT contacted the EPA.

The post Fraud, Deception and Ineptitude: The Story of Volkswagen and the EPA appeared first on BRIC Plus News.

This is childish and amateurish. A dislike button is unnecessary. If you don’t like a post, you can simply not read it, and scroll down. If you don’t like a person, why not unfriend them, or block them? What this vengeful dislike crowd wants, and what Facebook wants to achieve are two very different things.  For Mark Zuckerberg, it seems to all be about empathy. Some statuses, due to their emotive and distressing content, seem entirely inappropriate for a ‘like’. With a dislike button, empathy can be expressed, when clicking ‘like’ on a sad post may feel insensitive. For the vengeful crowd, the real aim is to bring others down.

Truly, the real reason people are so excited by the prospect of a dislike button is because it is far easier to write why something is terrible than why it is good. The human mind finds it far easier to dislike something, as it is hard to describe why we like something. You can be irrational and negative about the things you hate, but positive emotions require reason. The feeling of dislike comes straight from our basest animal instincts.

Some of those who want to make Facebook a place where they can ‘down vote’ other people’s posts should cool their jets. Mark Zuckerberg’s statement gave hope to those of us who don’t want Facebook to descend into a hole of negativity. Zuckerberg said that he did not want it to be a mechanism for down voting others. I hope this is the case. It would be a very sad reflection of the worst traits of humanity, if all of a sudden people began to wantonly dislike pictures of their friends’ babies, pets, and cooking experiments.

We are lucky that we are all connected through the power of social media. There is no need for insults and mudslinging matches. But, regrettably, these things occur anyway. The addition of a dislike option of Facebook will only make such exchanges increasingly likely. There is enough human hate around, we do not need to start flirting with open dislikes. Perhaps, if we were not so busy highlighting people’s shortcomings, we may find their most secret redeeming qualities.

The post This Is Why A Facebook Dislike Button Is A Bad Idea appeared first on BRIC Plus News.

Globally, 34 billion barrels of oil are consumed each year. When the barrel price of oil falls by a mere $10, this can result in a price shift of $340bn from producers to consumers. Following this, last August’s $60 price decline redistributed a staggering $2trn in savings back to oil consumers. Clearly, falling oil prices benefit net importers of oil. Any country that consumes more than it produces will gain from these changes.

The major global recessions of the past 50 years have been preceded by a sharp increase in oil prices. In 2007, in the year before the Global Financial Crisis, the price of oil almost tripled, from $50 to $140. When prices collapse, however, the story is different. Even the prices of other commodities and industrial metals increase after an oil price collapse. In 1986, after oil prices fell by 50%, the prices of metals doubled.

The income disparity between importers and exporters goes some way towards explaining these trends. Oil consuming countries spend extra income quickly, whereas oil exporters maintain public spending, and add significant funds to their sovereign reserves. One such example is Saudi Arabia. The effect of lower oil prices is positive for global growth. The IMF has projected that the recent fall in oil prices should boost 2016’s global GDP by 0.5-1%.

Many recent developments have helped to accelerate the decline in oil prices. The shale boom in the United States and its innovative extraction methods have made oil easier to obtain. Known as ‘octopus wells’, as many as 18 horizontal shafts can tap multiple separate pools from a single vertical hole. It is undeniable that the shale revolution has changed the oil industry irrevocably. As advances continue, more oil wells will become accessible, and production is set to increase further.

The post The Impact of Falling Oil Prices On The Global Economy appeared first on BRIC Plus News.

Iqbal Latif, Managing Director, Gulf Real Asset Management

“The Yuan weakening was actually long overdue and the lower interest rates will help the anaemic liquidity”

China is not going to go bust any time soon. We need to look at the fear factor at play here. This week the Shanghai Composite (SSEC) dropped 8.5%, trading down -300 points and was pressing 3200. Back in July Howard Gold’s (Marketwatch) opinion was “China’s stock-market crash is just beginning” writing that “Morgan Stanley which made a good “sell” call on China weeks ago, now expects Shanghai to fall as low as 3,250 by mid-2016.” Now here we are.
The sell off is compounded by the fears that the Chinese economy may be slowing down far more drastically. China’s astonishing move to devalue its Yuan two weeks ago to make its exports competitive, and now its interest rate cuts amid intense measures to boost lending, are adding to the worries.

It is expected that there will be further easing moves and that the central bank is preparing to flood the system with liquidity to increase lending. However China’s economy is still growing at a fast clip compared with Western nations, and China has a vast $3.7 trillion in foreign-exchange reserves to help it weather shocks.

China needs a dose of quantitative easing to cope up with non-performing loans of the banks. The bursting of the property bubble and leveraged punters to the hilt have taken a heavy toll; but luckily the world demand is not slackening. China will continue to be a big exporter. The Yuan weakening was actually long overdue and the lower interest rates will help the anaemic liquidity, although it wouldn’t hurt to consult Bernanke. I see similarities to 2007/8, but the caveat is China is not hugely indebted like the Western countries were when they faced the meltdown.

David Powell, Chief Euro-area Economist, Bloomberg Intelligence    

“Growth in the Asian nation would have to slow much more precipitously before it would pose a big threat to the euro-area recovery.”

The biggest hit to the euro-area recovery from the slowdown in the global economy may have come already — from the downturn in Russia. The deceleration in China, by contrast, looks to be a much smaller problem for the monetary union. Growth in the Asian nation would have to slow much more precipitously before it would pose a big threat to the euro-area recovery. Russia has contributed most to the slowdown in foreign GDP growth (weighted by exports from the monetary union), which is the most important determinant of export growth, over the last year knocking 0.23 percentage point off the headline figure. China has chipped away only 0.03 percentage point.

Vasily Koledov, Director at Bluestone Capital Partners and BRIC+ Editor

“Whether there is going to be a major spillover into the world markets depends a lot on market perception.”

Two weeks ago China unexpectedly devalued its currency. This highlighted fears about the state of the Chinese economy and its real estate market, which many believe to be propped up by the government in order to give an appearance of stability. As a result, last week saw an 11.5% fall in the Shanghai Composite Index.

Market participants expected the government might announce a fresh loosening of monetary policy, including reductions in the proportion of deposits that banks need to hold in reserve.

However Beijing did not respond accordingly, as over the last seven weeks they have spent $200bn buying up equities to support prices and nearly $200bn of China’s FX reserves to keep the yuan from falling further since devaluation – likely deeming the operation too expensive.

What followed was yesterday’s crash which saw Shanghai Composite falling 8.5 %, its worst day since February 2007. The losses are continuing today as the market continues to lose faith in Beijing’s ability to prop up the economy.

In order to answer the question fully we must understand the roots of the crisis. Now, whether there is going to be a major spillover into the world markets depends a lot on market perception.

As it stands the majority of economic growth was really the result of governments injecting a lot of cash into the markets. This has led to government debt piling up all across the Western world so cash today has to be paid by debt tomorrow. Now, when you’re full of debt it’s harder to borrow more (or rather print more money thereby devaluing your currency as everyone has been doing) so policy responses to market shocks are now very weak.

So is this the end of the debt supercycle? Potentially. Spillover can be very bad for the wider economy however it is important to understand that the problems here are China specific and panic selling can easily be reversed if sentiment is re-established.

Ian Ivory, Partner at Goltsblat BLP:

“It is difficult to see which countries might gain from this situation – at the moment it is looking like a “lose, lose” outcome”

The slow-down in China will bear difficult consequences for everyone. It will heavily impact the global economy and we can expect to see a sharp fall of demand of goods and services and a significant reduction in global economic growth. The hardest hit will be its direct trading partners and in particular, the emerging economies who are providing raw materials for the One Belt One Road initiative. Russia is another classic example who will feel the pain and China will be a further negative drag on the Russian economy. It also puts into question the economic viability of the proposed energy pipelines between Russia and China. With the reduction in demand and the drop of oil prices, the upfront cost of building these pipelines is a significant burden and must surely put the projects under threat.

However, the reactions from both the mainland and internationally, point to the wider, fundamental concerns around our globalised world and how we function. What is happening in the China cannot be called a blip and is part of a wider, global problem.

Combined with the situation in Greece, the weakness of the Euro, military tensions in the Ukraine and the Middle East, the collapse of oil prices and the asset bubbles forming in a zero interest rate environment, there are some fundamental structural issues that world leaders need to urgently address. It is difficult to see which countries might gain from this situation – at the moment it is looking like a “lose, lose” outcome and the only questions are how long it will last and how deep the effects will be.

Recent events have been a major bump in the road for the global economy and represents a continuation of the volatility we have experienced since 2009. Whether it will lead to a full-blown crisis remains to be seen and it is too early to call at this stage.

The post Ask the Experts: Is This The Next Global Financial Crisis? appeared first on BRIC Plus News.

“Tharoor’s speech reflected the feelings of patriotic Indians on the issue, and showed what an impression one can leave with effective arguments, by saying the right things, at the right place” – Narendra Modi, Indian prime minister

India’s colonial era began in 1502, when in Kollam, the Portugeuse Empire established the first European trading centre. Through the marriage of Charles II of England to Princess Catherine of Portugal, the English crown gained possession of some Indian territories. This was the beginning of the English presence in India.

The spice trade would become the frontline of the colonial advance. In 1617, the Mughal emporer Jahangir gave the British East India Company permission to trade in India. As they increased their influence, the British East India Company was granted duty-free trade status in Bengal in 1717. The opposition of the local leader, Siraj ud Daulah, led to military confrontation with the British, in which the East India Company’s forces, named the Bengal Army defeated Nawab’s forces, which had been backed by the French. The key argument in Dr Tharoor’s speech concerned the economic toll that British rule took on India.

Quite simply, Dr Tharoor is wrong. I present a full rebuttal of his arguments – and explain how British rule actually had a positive effect on India.

We let ourselves be conquered

Dr Tharoor stated that the so-called ‘Clive of India’ treated the country as though Robert Clive himself was from the country, “when all he really did was to ensure that much of the country belonged to him”. Tharoor’s mistake is tantamount to severe historical whitewashing, forgetting about the deceit and treason of the native. How else could a nation of 100 million be conquered by so few? ‘Clive of India’ only succeeded because of the betrayal of our people, who are imbued with an intrinsic sense of treason. We were rotten, we who sold the allegiance of our Motherland for a trifle.

Before the British, India was a disunited mess

Tharoor claimed that by the fall of the 1800’s, “India was already Britain’s biggest cash cow”. Until 1947, the subcontinent was deeply separated. The British gave the subcontinent contiguity, and extending it beyond the Indus to the Durand Line, they left it an almost communicable subcontinent. Without the Raj, no-one would be able to unite the subcontinent; it was never ‘one’ the way it was once it became a federation after 1947. It was made up of about 680 ‘native states’, under hereditary rulers, the population kept subjugated into draconian systems and caste divisions. The empire lasted 200 years, and the Government of India acquired de facto and de jure control over the entirety of India. Thank the Raj. We were never ‘one’ before that.

The British liberated us from Nawabs

In 1857, there was no northern region, simply Indus and all of the lands owned by the hereditary Nawabs, in whose hands lay nearly all the wealth of the state. Without a central army that the Raj bequeathed to us, these Nawabs would have wreaked hell on the ordinary people of a balkanised subcontinent. The best thing to happen to the subcontinent was the disappearance of these 600-plus blood-sucking Nawabs.

Tharoor’s GDP argument is flawed

Dr. Tharoor made much of the fact that India’s share of the world economy seemed to fall under British rule. He claims that it was 23% at the start, and by the time the British left, it had been driven down below 4%. Tharoor claims that this is due to India being governed for the sole benefit of Britain. He completely missed the fact that India was (and remains) among the world’s most populated nations. Naturally, the GDP would consequently be high – but as the economy and productivity were very inefficient, the wealth was mostly concentrated in a few ruling hands. Furthermore, the share of world output was 23% when the world was an utterly agriculturally-based economy. India’s population was 120 million, and together with China, constituted 45% of the population of the known world, and 50.5% of its GDP. Without the Raj, we would be struggling with internecine wars, no language skills, and hugely divided land under the control of the Nawabs, with no railways making the continent one.

Without the Raj, India would have been pre-industrial

The subcontinent was lucky that as a result of the Raj we had an early rendezvous with the Industrial Revolution, fuelled by steam power. Otherwise, sans steam power, there would be no agricultural revolution, or scientific revolution. In the long run, the manual skill of the Indian artisan could be no substitute for technical progress.

India would be nowhere without the English language

If the Mughals had continued their unremitting rule of India without a proper education system introduced by the British, the overreliance on madrasas would ensure that downtown Bangalore would be a picture of day-after-day beheading, rather than India’s most important tech hub. The English language was brought by the Raj, and taught in schools and institutions as an official language in the country. They gave us the language that connected us to the world, and the long term benefits can still be seen today.

The Raj boosted India’s healthcare

An important point ignored by Dr Tharoor in the heat of the moment is overlooking the Raj’s contribution to healthcare. The control of campant diseases helped to reduce mortality rates. According to Angus Maddison, the British ensured that the death rate fell, allowing India’s population by 1947 to be more than two-and-a-half times that in 1757.

India’s agriculture was revolutionised

Tharoor made another huge omission in his speech by making no reference to the irrigation systems made by the Raj and the British that made the Punjab the granary of the subcontinent. This was the biggest gift of the Raj, with the others being the early introduction of the age of steam and industrialisation, and language. It’s no coincidence that Iran, Afghanistan and others have not seen their sons running Microsoft and top Fortune 500 countries. The Indus irrigation system is the world’s largest, and it consists of three major reservoirs, 18 barrages, 12 link canals, 25 irrigation canals, and over 107,000 water courses, with millions of farm channels and field ditches. The total length of the watercourses and field channels exceeds 1 million miles.

The railways, the postal service, every possible system that we enjoy today are the remnants of the Raj. The difference between India and North Waziristan in Pakistan for example, is the language and the versatility of connection. The largest man-made irrigation system is a gift of Raj engineering. Yes, excesses were committed, but the alternatives were not democratically elected leaders of India. A leap forward in science requires foresight, reason, and rationalism – these were the gifts that the Raj gave India.

Closing

We overlook the fact that we kept fighting over religion for hundreds of years, and kept our populace in chains and shackles as a result of an evil caste system. We ignore this, and find xenophobic slogans to detract from life in the slums, where men are denied the dignity of the living. What economy can prosper ‘when waging holy wars is the name of the game’? Some of the old fiefdoms and princely states used to spend up to 50% of their region’s GDP. Can you imagine how many times Delhi was looted and raped before the Raj? How could a nation come out of it? Had it not been for the systems that the Raj established, there would be no nation to speak of.

The post India Does Not Deserve Reparations For Colonial Rule – And Here’s Why appeared first on BRIC Plus News.

It has a possible resolution: a settlement. The ‘greatest democracy’ in the world cringes when it comes to promises of a plebiscite – that seemingly is out of the question – yet all hell has broken loose in the name of holy Jihad to free the valley; it has taken a huge toll on the new state and has taken all its development hostage to this single point. They call it their jugular. As wasteful as it is economically for Pakistan, it leads to nowhere, only vain glory. The present face-saver is to make the Line of Control (LOC) permanent and work around it. This is possible to achieve.

But first, a bit of history: Mohammed Ali Jinnah did not make Pakistan. BJP leader Jaswant Singh said on record that ‘he did not win Pakistan but Congress leaders Jawaharlal Nehru and Sardar Vallabhbhai Patel “conceded” Pakistan to the Quaid-e-Azam with the British acting as an ever helpful midwife.’ Partition, luckily for India, bequeathed the most troublesome ‘northern region’ (which remained the cause of several invasions even by the British) in the hands of the new nascent nation: no greater tragedy could have been asked. It was a design of the ‘two most intelligent and shrewd politicians [to]cut the umbilical chord and bequeath the most troublesome blue baby, the ‘northern region’, to Mr Jinnah.’

What we call ‘Pakistan’ is the land that contained the invasion routes to the subcontinent. The Khyber Pass and Bolan Pass are not the creation of the ISI or Pakistani state, neither was Bin Qasim nor Mongol Tamerlane or Nadir Shah, Ghauri or Ghaznavi. North of the subcontinent was the lawless land for millennia, where most of these invasions fermented and the hate remains.

The cradle of all invasions to the Indian subcontinent was left to a nation newly formed. That is the true background of the lawlessness and warlordism in the region called Pakistan; it is part of the curse of its history. By sheer coincidence the entire region was cut off from the subcontinent and a buffer placed in between.  People have forgotten the thousands of years of history and squarely place the blame on the region, not on its history.

A war leading to military defeat will lead to a power vacuum. A strategic power vacuum in the region where Pakistan is situated will lead to similar consequences like Peninsular Arabia post de-ba’athification of Iraq and Syria. (Pakistan red line – the breach of which will signal ‘the existential threat.’) In the absence of a strong credible arbiter in the region, too many vested extremists like ISIS shall crop up, and that will be extremely difficult to handle. ‘What next?’ is the question for the morning after. Military tacticians worry more about consequences and outcomes than the war itself. What will happen next after a military victory, occupation? And what next? Perpetual Jihad, once the ‘thorn of Pakistan’ is removed the entire subcontinent’s Muslims will once again unite against a common ‘Hindu enemy.’ Today a secular India is the best bet against any such happening.

Can’t you see that coming? You need a strong nation in the North, the last thing you need is de-ba’athification of Pakistan where there is no one to talk to but Baghdadi-like men dangling nukes. When Pakistan fights a full scale war in North Waziristan, it is a war for the stability of the subcontinent. Why Indian strategists cannot even think of that as a plus, is baffling.

The curse of history has weakened Pakistan from its inception. We need to understand that Pakistan is at a crossroads of history. It is a product of sensitive geography and a tragic history of confrontation and violence. Some lands are more quarrelsome than others; whereas some are cursed with the violence of history. The tribal North, the hotbed of global fundamentalism, is one such troubled zone, cut off from the world for centuries – even the British never bothered to rule it and granted it a status of autonomous tribal area where writ of Pakistani government rarely functions; people grow hashish and run guns and now with the ‘distance collapsing,’ such areas are breeding grounds for jihadis.

The heavy weight of the violent North West Frontier Province of India by the 1947 partition was bequeathed to a state which was young and created on the concept of homeland of Islam. It was, and is, tainted with blood. What changed in 1977, under Carter, was that these landlocked warriors whose forays never extended beyond the north of India were put in bed with the most radical elements of Wahhabism.

India should help make Pakistan stable; a peaceful, economically stable Pakistan is the best course for India.

Let’s go back to history – to the north of Pakistan is a disintegrated land under pressure from neighbouring nations and a historical battlefield where rival nations could wage their proxy wars. Indeed it is doubtful whether even many Western nations would have been able to cope with the strain faced by Pakistan. An Indian army of nearly a million face off Pakistan at the border, and in the highlands of the Khyber Pass, Pakistan is pitted against the fanatical Islamic terrorist. Instead of helping them, to kick them is foolhardy. Who else is going to do the job if Pakistan as a federation is condemned?

Had there been no partition in a united India, India would have had to contend with a 550 million strong Muslim minority with a keen awareness of their ‘ruled’ past, united from North to South against dominant Hindu rule. Partition diluted the political folklore of a heavenly Muslim nation, and rather the failure of Pakistan to present itself as a functional democratic state has helped cool down the Islamic fervor amongst Indian Muslims.

Today, 200 million Indian Muslims scattered in India are happy with 20+ seats in the Lok Sabah. A concentrated 550 million united Indian Muslim population would have had 150+ seats in the Lok Sabah. No Union government could have worked without Muslim concessions and no secularism would be possible. Who knows how Deoband would have weighed in such circumstances? After all Mr. Gandhi and Congress were very close to Khilafat and Reshmi Rumal heroes.

The rise of secularism within Indian society is across the sectarian divide, though in radically charged Kashmir today it requires 700,000 troops to subdue and pacify the regional population, which has not reconciled itself with an imposed Indian identity. Can one truly imagine the consequences of a 550-million strong disaffected minority? Partition separated the most vocal and radicalised segment of the subcontinent’s populace in one area and created a huge buffer between secular India and the Islamic Republic. It also created a bigger distance from the warlords from the North once and for all. It is a blessing in disguise for India that they could phenomenally progress in peace without any intervention from religious warlords from the North or the disgruntled radicalised majority of the Islamic provinces.

Time, forbearance, academia and informed decisions based on our ‘dark history’ can help our future generations, otherwise, we face a bleak future of war. We need to grow up and face our demons and let’s talk aloud. We are nuclear tipped nations; we should talk sense and balance, not foolish jingoism putting total blame on each other. People who ignore history are the worst offenders and fools.

If you like this article you may be interested in “Can China, India and Pakistan Work Together for Afghanistan?”.

The post India Needs A Stable and Strong Nation in the North appeared first on BRIC Plus News.

Aung San Suu Kyi’s is making her first trip to Beijing. As part of her preparations, she has avoided anti-Chinese rhetoric in a clear break from other fellow Nobel Prize laureates. Notably, she has sidestepped criticising Chinese human rights abuses. Meanwhile, the Chinese have major investments in Myanmar with an eye to have control of the Indian Ocean. Has Ms Suu Kyi recognised the potential for Myanmar to be that bridge?

Aung San Suu Kyi was first recognised for her non-violent campaign for democracy and human rights development with the Nobel Peace Prize in 1991. Suu Kyi had won 59% of the national vote in the 1990 General Election whilst living under house arrest.

Perhaps the most sensitive aspect of Ms Suu Kyi’s visit is that her fellow Nobel peace laureate, Liu Xiaobo, the only Chinese winner of the honour is languishing in jail, on an 11-year sentence for “inciting subversion”.

Does this put into question her status in the West as a pro-democracy peace loving Nobel laureate? Ms Suu Kyi’s is also poignantly reluctant to speak for Myanmar’s persecuted Rohingya people. Those who recognise Suu Kyi feels no responsibility to the Rohingya may infer she has no obligation towards anyone’s human rights and, that like everyone else, doesn’t actually mind the Chinese expansion and encirclement of their strategic interests in the Indian Ocean.

Bangladesh too has been courted by the Chinese to create a trade corridor, as well as by India’s Prime Minister Narendra Modi. India strategically want Myanmar and Bangladesh to be in their sphere of influence as Indian interests face isolation in the South East of it’s flanks –but for Ms. Hasina and Ms. Suu Kyi, money could speak much louder than all other voices. Suu Kyi may have learned at the heart of politics is not human rights but raw interest, with friendship and humanism a sacrificial lamb.

If you like this article you may be interested in “Social Media Watch: Internet Reacts To Castro’s Million Dollar Demands”.

The post Is Aung San Suu Kyi the Pro-Democracy Laureate We Think She Is? appeared first on BRIC Plus News.

The ‘career or kids’ dilemma facing women today is a key factor in Germany’s baby drought, as not having children becomes the norm in Germany. Germany has the world’s lowest birth rate, according to a new study produced by German auditing firm BDO in partnership with the Hamburg Institute of International Economics (HWWI). Regrettably like most of the advanced and Western world, Germans are dying faster than they’re breeding.

The country’s fertility rates are among the lowest in the world even below Japan. The future of Germany as an economic powerhouse is threatened. The German population will have a drop of around 20 million by 2060, according to estimates from the German government statistics agency, Destatis.

Chancellor Merkel said at Davos” we will lose a net six million workers over the next 15 years.” This is before the freefall. Will the European balance of power change? Most likely.. Britain and France will overtake Germany’s GDP as they replenish their population and workforce much more efficiently. Britain and France have a birthrate 50 percent higher than Germany’s despite having many socioeconomic similarities to the country, such as education levels. Britain’s birthrate was 152nd out of 208 countries, at 12.68 babies per 1,000 people. The British population is expected to overtake Germany’s within 45 years.

The recent study shows that, on average, 8.2 children were born per 1,000 inhabitants over the past five years. Britain and France are in far better shape, with an average of 12.5 births per 1000 from 2008-2013. Portugal and Italy has an average of 9.0 and 9.3 children, respectively.

On the other extreme end of the spectrum is Niger which has 50 children born per 1,000 inhabitants. If the entire global population achieved an 8/1000 rate of procreation, the Earth would decrease in population by a billion in less than 150 years.

In part, this 8/1000 rate is because Germany has an ageing population and many are now too old to have children, but compounding the misery of this low birth rate lies the “total fertility rate.” This rate can be explained as women face a stark choice: career, or kids. For years, relatively few women in Germany worked, especially if they also had children.

Let’s have a look at the average number of children a woman might have in her lifetime. In Germany it has stood at around 1.4 since 1970. The rate of 1.4 is unsustainable, the breakeven rate is say around 2.1, and 1.4 is just two-thirds of that. This means that each generation is one-third smaller than the one before. In contrast France’s total fertility rate is 2.0, similar to levels in Scandinavia, the UK and the US.

The future problems with these figures is easy to comprehend. Germany needed higher birth-rates to ease the reliance on immigration. Germany is increasingly closing in on a dependency ratio of 1:2; this means two people in Germany are dependent upon one citizen’s income. Now the frightening prospect for Germany is with such a low birth-rate this figure becomes even more unsustainable. Germany could end up with a dependency ratio of 1:3 if it does not address these problems. The impact such a scenario would have on Germany’s welfare budget and taxation is unimaginable.

Is Immigration the Answer?

This sharp lack of procreation has resulted in a restricted welcome for immigrants in Germany. A new study shows that Germans are becoming more mature in their treatment of immigrants.

A researcher Stephan Sievert has also recently dwelled on this disturbing trend summarising thus:

Germany has had the lowest birth rate in Europe in recent years, it has now surpassed countries outside the continent.

This is a matter of great concern as the economic repercussions of having the lowest birth rate in the world could be very damaging; Germany’s working-age population will shrink from its current 61 percent to 54 percent by 2030. Arno Probst, an executive board member of the BDO, said that as a direct consequence, Germany will face higher wage costs due to a shortage in skilled labor. “Without strong labor markets, Germany cannot maintain its economic edge in the long run,” Probst said.

Stephan Sievert warns ‘that without immigration, our population would continue to shrink, markedly.’ Last year, this demographic dip was cancelled out by record immigration – Germany’s net migration was an increase of roughly 400,000 people (1.2 million in, 800,000 out).

Germany is now worried about the sustainability of immigration rates that has helped the demographics so far. The threats like recession in the eurozone and conflicts in the Arab World combined to bring high immigration, once economies and conflicts die about these immigration rates are not likely to stay this high in the long term.

The warning this ticking demographic time bomb is giving is grave. Whatever radical views one may have about immigration with such a pathetic decline in the fertility rate, the dependency of Germany on further immigration will rise. Perhaps it is time for newer generations to think less about their personal income.
Already 400,000 thousands new migrants are expected this year with 10m foreign born nationals in the country. It is extremely difficult for a nation caught in the rut of this demographic tanker to get out. These are deeply entrenched structural issues and rooted in a desire for higher prosperity, and a lack of interest in taking responsibility to raise future generations.
These cultural and social patterns eat up society from the core. What is the point of affluence if within 100 years there will only be a quarter of the present population to enjoy barren autobahns and deserted cities? Without a burst in fertility rates we see a bleak future. This birth dearth is a nightmare for policymakers who are now throwing money at families in a bid to stem the birth dearth and encourage citizens to have more babies.

The German baby-drought is an eye opener for everyone in Europe; a plummeting population leaving dry sewers, vacant homes, ghost towns and fears of an imploding economy is a huge challenge and it is not something that a nation can ignore. Our existence is precarious: if everyone stopped procreating we’d be wiped off the planet in less than eight decades. A healthy birth rate at 2 is minimum guarantee of our survival as human race.

Today immigration and integration is at the heart of the demographic debate at the highest levels of policy. The very same European nations who are ‘whipping immigration’ will be begging for educated trained migrants in less than a decade as innovation and creativity starts depleting with a lack of new young minds. Immigrants are not that bad if they can populate the countries, which desperately need populating.

Image by © Bernd Vogel/Corbis

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Analysing the results of the FIFA Presidential Election

Nearly the entire of Europe and Latin America (the real force in terms of players and money behind the World Cup) have voted against Blatter. The two biggest largest football continents want a reformed FIFA. FIFA most likely will face a massive dissent and a revolt as a result of recent indictments. The indictment in the US against FIFA officials alleges that corruption is rampant, systemic, and deep-rooted; it spans at least two generations of soccer officials who, as alleged, have abused their positions of trust to acquire millions of dollars in bribes and kickbacks.

The Potential Future of FIFA

This control of FIFA by weaker football playing nations and corrupt officials that was displayed so arrogantly will backfire, a possibility of a new FIFA is now being discussed along the lines of ICC and probably will be now shattered by a parallel organisation that will host the Latin America and European teams in a new World Cup.

Everyone will join the new FIFA. Nike, Coca Cola, McDonald’s will not continue funding FIFA. Nike’s 40m 2014 payment is already part of the US Justice Department indictment.

The alleged rigging of FIFA’s 2011 presidential elections by Jack Warner, a former Trinidadian politician and FIFA vice-president is one classic example of rampant corruption. Mr Warner arranged for envelopes containing $40,000 in cash to be given as a “gift” to officials in return for their votes. He is alleged to have told colleagues: “There are some people here who think they are more pious than thou. If you’re pious, open a church, friends. Our business is our business.” In a statement he said he was “innocent of any charges”. He was Mr. Blatter’s front man in 2011.

The power will be held like in the case of ICC by the nations who pull the strings of the purse. Without the purse FIFA is of course paralysed. This will be the sad legacy of Blatter’s  intransigence if he does not incorporate reforms now. Who will watch a World Cup being played between Blatter’s ‘African and Asian teams? His days are numbered in my opinion, he will not complete his term.

If you like this article you may be interested in “Brazil, Russia, India, China, S. Africa: BRICS Economic Prediction”.

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Without doubt, China has risen to become a huge player on the world stage, but it will take a lot to topple the crown of America. The U.S. has only 300 million people (5 percent of the global population) yet its influence, when compared to the 500 million population of the EU, or rising demographically big nations like China, India and Russia, is huge. But it is not just about population size, or the impact on global economy.

What makes USA distinguished is her extraordinary combination of geo-strategic, consumptive and intellectual capital might. This power has a total stranglehold over world peace and productivity hence, it is able to maintain US currency as the global hedge and currency of the last resort.

The reason why when USA sneezes the world catches a cold are as follows:

1. USA is important since the major portion of the global savings of say China/OPEC surpluses are all parked in US treasury bills. There is no other triple-A available credit market where such huge global liquidity of surpluses can be invested. Don’t forget, all these US outstanding loans are actually someone’s hard savings.

2. Mammoth US consumption is behind a major chunk of Chinese exports. A slowdown in US impacts everyone globally.

3. The major trading currency of the world is the US Dollar. All major commodities are priced in US Dollars. Oil, Gold, Silver and even the new top big four: Google, Facebook, Amazon and Apple of the Information technology are US Dollar based companies. Out of the top 10 global brands that have a global lock and biggest leverage are US-based.

4. USA controls, through its strategic 7 ‘mythical fleets,’ effectively all the choke points of the world maritime trade. About half of the world’s total oil production of nearly 90 million barrels per day is transported over water. At some point, almost all of this seaborne oil passes through one of seven chokepoints, or a narrow body of water – Suez, Panama, Hormuz, Bab ul Mandab, to Dardanelles, Malacca, and Danish straits.

5. The US Defence budget of $700 billion makes USA the effective policeman of the world. It is the USA that settles North Korean tensions or brokers Middle East talks, or maintains NATO.

6. It is not the population, wealth or size of the country that has ever determined the large empires and world anchor monetary units, it is the sum total of all of the above. Let anyone of these ‘great powers’ radiate even 50 percent of the power that USA exudes and I will talk of the fall of the US Empire. Until such time, just watch carefully that these Democrats and Republicans may soon find a compromise.

As a postscript to the essence of this dialogue I think it would be apt to mention why the US Dollar reigns supreme, and why there are very little chances that it can be dislodged from the pedestal as the global currency of the last resort. Some think that $16.9 trillion obligations are of the USA’s alone, but the obligations of the USA are funded by the savings of the world, and for these savings there is no alternate parking area. Where else will people find safety of their earnings other than the US treasury bills? No one would want to invest with a bankrupt nation. If Russians want to issue IOU’s it will be priced at 12 percent and they will have to borrow to meet their deficit. On the other hand, USA issues paper and gets what they want; their paper buys commodities which are priced in that paper-denominated currency.

I have also been a firm opponent of the Peak Oil Theory and Gore-like nonsensical movies. One of the biggest turnarounds has been the US’s growing self-sufficiency in oil since 911, possibly as a subconscious response to logistics and security concerns. The ability of the USA to impose its will on global trade is what makes the US Dollar a great currency. EU, China, Russia, India and the world at large most unfortunately to their chagrin, are not fully aware that a global currency will only have relevance when the using authority has the ability of controlling the world trade and sea lanes. Hence, a nation so obligated and the trajectory of debt moving into $16 trillion is still able to issue debt to pay for its deficits, only because they are the economic super power (and OPEC is extremely concerned as peak oil theory is shoved in the dust bin of history).

USA with all its huge obligations will one day have to inflate this debt away, and as debt will fall so will global savings; and the Icelandic solution will one day be a reality, but that is a different subject.

Last but not least is the encouragement, plus utilisation, of the global brain drain; no one does it better than the U.S. People might hate on America but it is their inclusivity that makes them the nation to get the best results out of people. When Google brings in the best Head of Products, he happens to be an Indian and they take pride in that; when Bill Gates wants a replacement he looks at an Indian and when Warren Buffet wants to retire he’ll too look at an Indian. This is the utilisation of the power of mind.

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