Monday, December 29, 2014

Generational Debt: That Debt From 1720? Britain’s Payment Is Coming

Article on how bailout debts taken out by Governments can last many centuries. To me another take home message was that these debts become small change with time because of inflation.

LONDON — Share prices went through the roof, speculation ran wild and money poured into ill-fated ventures before the boom turned, inevitably and catastrophically, to bust.

After that financial crash in 1720, called the South Sea Bubble, the British government was forced to undertake a bailout that eventually left several million pounds of debt on its books. Almost three centuries later, Britons are still paying interest on a small part of that obligation.

Now, prompted by record low interest rates, the British government is planning to pay off some of the debts it racked up over hundreds of years, dating as far back as the South Sea Bubble.
George Osborne, the chancellor of the Exchequer, said this month that in 2015 Britain would repay part of the country’s debt from World War I, and that he wanted to pay off other bonds for debt incurred in the 18th and 19th centuries.

That includes borrowing that may have been used to compensate slave owners when slavery was abolished, to relieve the famine in 19th-century Ireland and to bail out the infamous South Sea Company, which caused the bubble in 1720.

Economically, the move is no different from a homeowner’s decision to refinance a mortgage at a lower rate. In an era when the government can borrow at 1.5 percent or less, paying out to holders of historic debt anything from 2.5 to 4 percent per year, as it is now, makes little sense.
But the maneuver is also a reminder of how debts incurred by governments are passed down through generations.

In many cases, the underlying debt has already been refinanced, sometimes multiple times, since being incurred. The bonds paying interest on the debt have been bought and sold and passed down through generations, still paying interest indefinitely, until the government decides to pay them off. So old are some of the bonds that closing the books on them may require an act of Parliament in some cases.
Gary Shea, head of the school of economics and finance at the University of St. Andrews, said historic debt is “real,” even if the vast majority of public borrowing is fairly recent. “The taxpayer is still financing the interest payments on it,” he said.

One of the bonds Mr. Osborne plans to pay back next year is a 3.5 percent war loan issued in 1932 in exchange for earlier bonds. It still has more than 120,000 holders, including 38,000 who own bonds with a face value of less than £100, or about $155. In March, those who still own the bonds will get the original stake back at a cost to the government of £1.9 billion.

Also set for repayment are “4 percent consols,” or securities, issued in 1927 by Winston Churchill, then chancellor of the Exchequer, partly to refinance National War Bonds originating from World War I. Now worth £218 million, they will be repaid in February.

Reissuing bonds was a big administrative endeavor in earlier eras. In 1932, the conversion of an earlier war loan to one paying lower interest required so many temporary clerks that 700 lambs were prepared to feed them one evening, according to a history of Britain’s debt by Jeremy Wormell. Now, in the computer age, the task is relatively straightforward, officials say.

Within a total debt of around £1.4 trillion, the historic liability accounts for a small portion — about £2.5 billion, or less than two-tenths of 1 percent of the total outstanding.
But over the centuries, Britain’s borrowing has at times been huge and has come in different forms, sometimes including loans from other governments.
It was not until 2006, for example, that Britain fully repaid its lend-lease debts to the United States from World War II.

Some international loans from the aftermath of World War I were never fully paid and were effectively put aside in 1934, though Britain also failed to recoup debts it was owed by other nations.
The recent eurozone debt crisis is creating a similar legacy in countries that took bailout loans. Ireland is not scheduled to make its final repayment to international creditors until 2042. Greece is scheduled to do the same in 2054.

Britain’s current stock of open-ended historical debts does not include international loans but is made up of a variety of bonds known as gilts, a name that comes from the original British government certificates that had gilded edges.

Of course, much of the original debt has been eroded by inflation. According to research for the British Parliament, prices rose by around 118 times from 1750 to 1998.

The debt originating in part from the South Sea Bubble, the oldest still on the books, was consolidated into bonds issued in 1853, and those who now own them receive an annual payout of 2.5 percent.
According to the Bank of England, that original debt of around £4 million was probably incurred around 1722, though other sources suggested it might date from a few years later.

Experts say that some of the government bonds issued in the years after 1720 were created to replace earlier ones that had paid higher interest — a principle that Mr. Osborne is following three centuries later.

“We are now in a period,” said Mr. Shea of the University of St. Andrews, “in which interest rates are even lower than they were in the 18th century.”


Sunday, December 28, 2014

Prostitution and Illegal Drugs give UK GDP a boost.

Britain becomes a bigger economy than France with the inclusion of Prostitution and Illegal drugs for GDP calculation. Official estimates show prostitution added about £5.7bn to the UK economy in 2013, while illegal drugs were worth about £6.62bn.
  • Britain spends more on illegal drugs than it does on Beer or Spirits (liquor)
  • Britain spends more on illegal drugs and Prostitution than on Vegetables, Milk, or footwear
Also read how increased health care costs allowed US GDP to become 5%

Wednesday, December 3, 2014

US Debt: $18 Trillion; U.S. Debt/GDP ratio over 300%

So much for fiscal prudence in the US. 

$4.9 Trillion added by George Bush Presidency.  $8 trillion by the Obama Presidency.

Total U.S. debt has increased by 70 percent under Obama, from $10.625 trillion on January 21, 2009 to over $18.005 trillion today (Dec 2 2014)

Each household in the U.S. now carries the burden of $124,000 in national debt alone - or $56,378 per individual. This does not include the massive private debt or household debt burden - people’s  mortgages, personal loans, credit card debt, student loans, car loans and other household debt.

$200 trillion of unfunded liabilities such as medicare, medicaid and social security not included in US National Debt.

$12 trillion Household debt--including mortgages, credit cards, auto loans and student loans not included in US National Debt.

Tuesday, December 2, 2014

How Russia outmanoeuvred the west in Ukrainian finance

I think this should be essential reading for the gurus who negotiate or issue bonds for the SL govt directly or indirectly.  e.g. The Petroleum Corp, oil price hedge fiasco.

How Russia outmanoeuvred the west in Ukrainian finance by John Dizard

“F*** the EU!”
Victoria Nuland, US assistant secretary of state, commenting on Ukrainian  policy on her mobile phone, as recorded and publicly distributed by the Russian special services in February 2014.

“Treason is a matter of dates.” Attributed to Prince Charles Maurice de Talleyrand-Perigord, drawing up European borders at the Congress of Vienna, 1815

The quality of US representation in eastern Europe seems to have declined, sadly, since the days of George Kennan and George Marshall in the 1940s and 1950s. European diplomacy, though, appears to have maintained the tradition of ethical flexibility that Prince Talleyrand embodied.
Whatever your opinion of the morality of Russia’s intervention in Ukraine, or whether the Putin government’s larger strategy will have more gains than losses for the Russian state, there is no doubt the Russians have tactically outmanoeuvred the US and Europe in the financial markets. I am told the Pentagon is already studying Russia’s financial market moves in Ukraine to see how similar tactics might be used in future military crises.

The new Ukrainian government ministers, being chosen and sworn in since the new parliament first met on Thursday, have to deal with a collapsing currency, a corrupt energy pricing scheme that has helped bankrupt the state, and large imminent hard-currency payments to enterprises owned by the very state violating its borders with tanks and “volunteer” troops.

This is all pretty visible. Yet interestingly, the prices in an actively traded market in Ukraine’s internationally held foreign currency bonds do not reflect these realities. An issue due in September 2015 was priced at around 85 cents last week, for a yield of 28 per cent; another bond due in July 2017 could be bought for 80 cents, for a yield to maturity of 19 per cent. 

All of these bonds are “foreign law” issues, which means the terms cannot be altered unilaterally by the Ukrainian government using its own parliament and legal system. Until the end of next year, their interest and principal payments are, effectively, shielded by English law, Scandinavian arbitration boards and the Russian and Russian-backed forces at, and over, Ukraine’s borders.

Russian institutions have been quick learners in understanding the uses of international law bonds. The terms under which it sold gas to previous Ukrainian governments reek of corruption, but also good technical lawyering, the effectiveness of which was only slowly understood by people who should have known better, such as the US administration.

Take, for example, what the Americans now call “the booby-trap bond”, a $3bn bond issued by Ukraine to Russian holders a year ago, which is due in December 2015. It is not only enforceable under English law, but was registered on an Irish exchange. It has cross default clauses that are triggered if Ukraine misses a payment to any other entity controlled or majority owned by Russia. That includes a $1.6bn payment to Gazprom due at the end of this month. Oh, and Russia can call a default (which triggers a further default on the rest of Ukraine’s roughly $16bn bonded foreign debt) if the country’s debt to GDP ratio rises above 60 per cent – due, perhaps, to extortive Russian gas prices and a Russian-backed invasion and insurgency.

Thanks to a deep devaluation of the Ukrainian hryvnia, as well as the greater impoverishment of the population, Ukraine’s current goods and services account is probably close to balancing. However, its debt service burden is beyond the capacity of its foreign exchange reserves and forex earning capacity over the visible future. 

So the western countries can either grit their teeth and put up much of the money needed to pay off Ukraine’s maturing debts to Russia, whatever the fairness of the contracts behind them, or watch the economy collapse completely. If such a disaster happens, the US, Europe, the IMF and the other multilaterals will have to compete with Russia to offer humanitarian aid packages, which could be even more expensive.

For the next year, official western and multilateral agency funds will support payments on Ukrainian obligations such as that $500m, 6.875 per cent bond. At 85 it is arguably underpriced, since it comes due before the maturity of the Russian “booby trap bond” in December. However, by the time we get to 2017 or 2019, there could be a crushing burden of official and multilateral debt outstanding, which will claim seniority over privately held foreign bonds. At that point, a drastic outright “haircut” or “reprofiling” of maturities into eternity looks a good bet.

The only way for Ukraine to rebuild enough economic strength and earned foreign exchange to avoid the consequent legal and economic mess is to voluntarily impose effective anti-corruption measures and market-based pricing for energy and other goods that end the oligarch model of development. In turn, these reforms would need to evoke not just reductions in wasteful and corrupt use on the demand side, but new production on the supply side.

To anyone who has past experience with Ukrainian officials, this would appear to require intervention from, say, an archangel with a flaming sword. In this miserable winter, though, there may be enough popular sentiment against past practices to get the job started.

From the bondholders’ point of view, that is probably the only path to their being paid on schedule after the end of next year.

Wednesday, November 5, 2014

Using Palmyra (තල්) as an Elephant Deterrent

Palmyra (තල්) as an Elephant Deterrent

 Mr. S. M. A. Azeez is former Deputy Director of Agriculture. He has been promoting the use of Palmyra trees as an Elephant deterrent for many years.

You can contact Mr. Azeez at 077-348-7114 for further details on how the trees should be planted etc.

Photos are of the model plantation with Palmyra as an Elephant Deterrent.

Wednesday, October 15, 2014

Liberia, Ebola, Firestone and a Rubber Farm

Liberia and Ebola is in the News. A Rubber Farm (Estate for us Sri Lankans) leased by Firestone is also in the news  as one of the few places where Ebola has been stopped from spreading.

What the articles dont mention about the Rubber Farm is that it is a million acres (4% of the land in Liberia), and in 2005 the lease was renewed for 37 years at USD 0.50 cents/acre.   I could not find out if the 0.50 was for a year, or for the 37 years.

Over here in Sri Lanka an acre of Rubber is over USD 10,000 (LKR Million).  So for the price of one acre of Rubber in Sri Lanka one can lease 540 acres for 37 years.   Talk about exploitation of Africa.

Note: Firestone is currently owned by Bridgestone which is Japanese.

Some Facts of Liberia and the Rubber Farm
  • In 1820, the American Colonization Society (ACS) establishes colony of African Americans with tradition infused with American notions of racial supremacy, and political republicanism.

  • 1847 Independent Republic of Liberia created. The leadership of the new nation consisted largely of the Americo-Liberians.

  • Supported by prominent American politicians such as Abraham Lincoln, Henry Clay, and James Monroe, believed repatriation was preferable to freeing of slaves.

  • Indigenous Africans were excluded from citizenship until 1904.

  • 1926, the Liberian government granted Firestone a 99-year lease for a million acres (to be chosen by the company wherever in Liberia) at a price of 6 cents per acre.  Thats 4% of the countrys 27,520,000 acres.

  • Firestone also provided a $5 million loan at a 7% interest rate.

  • The loan was given in exchange for complete authority over the government's revenues until the loan was paid.

  • The loan took a larger and larger portion of the Liberian government's incomes: it grew from 20% of the total revenue of Liberia in 1929, to 32% in 1930, to 54.9% in 1931 and nearly the whole revenue in 1932.

  • In 2005, the Firestone Company and the Liberian government signed a new 37-year deal raising the lease to 50 cents per acre .

Friday, September 12, 2014

False: Illegal Land Grabs By Sri Lanka Navy Destroys Wilpattu National Park Telegraph has an article claiming that the Navy has grabbed 900 acres from the Wilpattu National Park.  It is factually incorrect in so many ways.  Excerpts and the proper view.

Who writes this rubbish.

located along the Northern border of the park
Northern Border and 2 km from Eluvamkulama, Really !!.
Eluvamkulama is on the southern border.

so far for about 2 km along the Eluwankulama – Silwathura road that was also constructed by the SLN illegally.
2 km from Eluvamkulama is outside the Wilpattu Park.
It is 4 km from Eluvamkulama to the Park boundary at Kala-Oya causeway boundary
The Eluwankulama – Silwathurai road is historical.  It was a cart track in the the Early 1900's before the Wilpattu National Park was created.  The road connected the populations of Mannar and Puttalam.  The road is still called the Old Mannar Puttalam road.

50 more acres of land in the national park have been impacted due to being cleared to obtain soil to build the massive nine inch rampart that is being built around the 900 acre land.
Dont know about the 50 acres,  The 900 acres is south of the Wilpattu Border.  Its an old tank (Achchimale tank)  that is being reconstructed to build the Puttalam Water supply being fed by the Kala-Oya.  See progress report in 2011

At the moment (Sept 2014) the earth being excavated is supplied to whoever is willing to pay LKR 300 for a tipper truck load.  Many in the surrounding village are using the earth to fill in low lying property.

Friday, August 8, 2014

Sustainability of Increasingly Complex Societies

A must read article along the lines of Joseph Tainter's Collapse of Complex Societies.  Examines the
viability and sustainability of increasing complex societies.  Is “doing more with less”, i.e. is ever increasing productivity sustainable.

One should also think of increasingly complex Finance and Financial Instruments, and increased instability of finance and economies (kind of touched here) when reading the article.  Its all connected.

Excerpts from the Archdruid Report
recent chatter about “cloud computing.” What is this thing we’re calling “the cloud?” Descend from the airy realms of cyber-abstractions into the grubby underworld of hardware, and it’s an archipelago of huge server farms, each of which uses as much electricity as a small city, each of which has a ravenous hunger for spare parts, skilled labor, and many other inputs, and each of which must be connected to all the others by a physical network of linkages that have their own inescapable resource demands. As with Fuller’s satellite analogy, the ephemeralization of one part of the whole system is accomplished at the cost of massive capital outlays and drastic increases in complexity elsewhere in the system.

The basis of that theory is the uncontroversial fact that human societies routinely build more infrastructure than they can afford to maintain. During periods of prosperity, societies invest available resources in major projects—temples, fortifications, canal or road systems, space programs, or whatever else happens to appeal to the collective imagination of the age. As infrastructure increases in scale and complexity, the costs of maintenance rise to equal and exceed the available economic surplus; the period of prosperity ends in political and economic failure, and infrastructure falls into ruin as its maintenance costs are no longer paid.

The pulse of anabolic expansion and catabolic collapse thus defines, for example, the history of imperial China. The extraordinary stability of China’s traditional system of village agriculture and local-scale manufacturing put a floor under the process, so that each collapse bottomed out at roughly the same level as the last, and after a century or two another anabolic pulse would get under way. In some places along the Great Wall, it’s possible to see the high-water marks of each anabolic phase practically side by side, as each successful dynasty’s repairs and improvements were added onto the original fabric. rably more troublesome if the resource base lacks the permanence of traditional Chinese rice fields and workshops. A society that bases its economy on nonrenewable resources, in particular, has set itself up for a far more devastating collapse.

Buckminister Fuller had a well-earned reputation in the engineering field of his time as “failure-prone,” and a consistent habit of pursuing efficiency at the expense of resilience was arguably the most important reason why. The fiasco surrounding Fuller’s 1933 Dymaxion car is a case in point. One of the car’s many novel features was a center of mass that was extremely high compared to other cars, which combined with an innovative suspension system to give the car an extremely smooth ride. Unfortunately this same feature turned into a lethal liability when a Dymaxion prototype was sideswiped by another vehicle.

The unavoidable tradeoff between efficiency and resilience can be understood easily enough by considering an ordinary bridge.

A society dependent on vulnerable satellite networks in place of the robust reliability of oceanic cables, cloud computing in place of the dispersed security of programs and data spread across millions of separate hard drives, just-in-time ordering in place of warehouses ready to fill in any disruptions in the supply chain, and so on, is indeed more ephemeral—that is to say, considerably more fragile than it would otherwise be.

Another Economic Crash: Reserve Bank of India Governor Raghuram Rajan

Reserve Bank of India Governor Raghuram Rajan says another economic crash is probably in the
books.  Dont dismiss him as just the RB India Governor.  Raghuram Rajan is also a Professor of Finance at University of Chicago and one time chief Economist at IMF.

I personally keep track of Raghuram Rajan and Satyajit Das, both great names in the Finance world but also critical of current Financial Instruments.   Raghuram Rajan had paper out in 2005 "Has Financial Development Made the World Riskier? which I came across in a Salon article in 2006 (see below). 

Based on Raghuram Rajan's article and what I knew working in (Fixed Income) Bonds and Derivatives (till 2009) had a  discussion with a Grad school Colleague also in Derivatives (he worked for a Hedge fund) in 2006. I kept on betting against the trend and made some money with PUT options in late 2007 collapse. I used only money I could afford to loose, so made a little money, 1:10 returns or more.)
Date: Fri, Apr 28, 2006 at 5:29 PM
Subject: Re: Credit Derivatives: Wall Street bets on a housing bubble
Wall Street bets on a housing bubble
I think could be optimistic if things are given time to play out. Maybe the time is to equilibrium is a little faster now, than in the past simply because of the "global village" thing.
However, the pessimist in me wonders if two  or three of the pivots of instability give way at the same time.
e.g. In no particular order (Italics: Current additions to explain to non-technical)
  1. ARM's ((Adustable Rate Mortgages) start to collapse (default)
  2. The Lehman defaults kicked in defaults, then mortgages (MBS) and Credit Derivatives defaulted. If the US govt had not stepped in and backstopped the Banks, complete collapse. Anyway that was the end of Investments Bank. The thinking at that time a couple would fail; instead all failed.
  3. Iran requires payment in Euros
  4. China starts pull out of the Treasury Market
  5. Some nut creates a virus that just freezes the net for a few weeks (that would give a run on the banks.)
To me whats scary is that the whole world is so tied together that
instead of it becoming stabler, its created more points of instability not
just for the US but for the world.
I guess the converse also holds in that as everyone is tied together
that there is a vested interest to keep things as stable as possible.
Anyway, the underlying issues of the 2007-2008 Financial Collapse have not gone away. The huge debt loads, by Govts (e.g US: $12.6 Trillion 104% of GDP see post on GDP calculations) and personal debt (US $99,000 103% of Disposable Income) have not decreased.  This can only happen by write off (debt forgiveness) and restarting the clock.  It cannot be decreased by earnings  taxes or austerity, the debts are too large. (see US cant tax its way out of deficits).

Note: Actual liabilities of the US Govt, when Social Security, Medicare, and federal employees' future retirement benefits are included is $86.8 trillion, or 550% of GDP.

The debt in turn is the basis of many Financial Instrument, from simple Bonds to complex Mortgage Backed Securities and CDO's.   These Instruments in turn are the basis of the Asset side Investments of many balance sheets. So when defaults occur it cascades into loss of value in instruments which in turn trigger balance sheet funding requirements.

Triggers can also be political/social turmoil.  Think Ukraine. Ebola or Iraq.

So something has to give, its not a question of IF but WHEN.   If you knew when, you would be a $ millionaire with a small investment against the trend. 

Tuesday, August 5, 2014

US involvement with Ebola Virus

Some interesting facts on US involvement with the Ebola Virus.  Also read this on Ebola.
#20 Researchers from Tulane University have been active for several years in the very same areas where this Ebola outbreak began.  One of the stated purposes of this research was to study "the future use of fever-viruses as bioweapons".

#21 According to the Ministry of Health and Sanitation in Sierra Leone, researchers from Tulane University have been asked "to stop Ebola testing during the current Ebola outbreak".  What in the world does that mean?

#22 The Navy Times says that the U.S. military has been interested in studying Ebola "as a potential biological weapon" since the 1970s...
Filoviruses like Ebola have been of interest to the Pentagon since the late 1970s, mainly because Ebola and its fellow viruses have high mortality rates — in the current outbreak, roughly 60 percent to 72 percent of those who have contracted the disease have died — and its stable nature in aerosol make it attractive as a potential biological weapon.
#23 The CDC actually owns a patent on one particular strain of the Ebola virus...
The U.S. Centers for Disease Control owns a patent on a particular strain of Ebola known as "EboBun." It's patent No. CA2741523A1 and it was awarded in 2010. You can view it here.
It is being reported that this is not the same strain that is currently being transmitted in Africa, but it is interesting to note nonetheless.  And why would the CDC want "ownership" of a strain of the Ebola virus in the first place?

#24 The CDC has just put up a brand new webpage entitled "Infection Prevention and Control Recommendations for Hospitalized Patients with Known or Suspected Ebola Hemorrhagic Fever in U.S. Hospitals".

#11 A study conducted in 2012 proved that Ebola could be transmitted between pigs and monkeys that were in separate cages and that never made physical contact.

#12 This is a new strain of Ebola, so what we know about other strains of Ebola may not necessarily apply to this strain of Ebola.


also see

Monday, August 4, 2014

US may have totured in UK owned Diego Garcia

Looks like the Americans may have been doing some torturing in UK owned Diego Garcia.

Excerpts from the Telegraph
The government stands accused of seeking to conceal Britain's role in extraordinary rendition, ahead of the release of a declassified intelligence report that exposes the use of torture at US secret prisons around the world.

.. will confirm that the US tortured terrorist suspects after 9/11. In advance of the release, Barack Obama admitted on Friday: "We tortured some folks. We did some things that were contrary to our values."

"The government protested America would be angered if this kidnap case ever went to trial – and now we learn the British government is leaning on the Americans not to air Britain's dirty laundry. It exposes their litigation stance as mere posturing," she added.
Confirmation that a British territory was involved in extraordinary rendition could leave the government vulnerable to legal action. Last month the European court of human rights ruled that the Polish government actively assisted the CIA's European "black site" programme, which saw detainees interrogated in secret prisons across the continent.

Sunday, May 25, 2014

Forced Migration by own Militia

Does this excerpt sound familiar.
The FDLR understood how to win over the do-gooders: You win by putting your people in misery, not by standing up for yourselves. Leftist victim-rhetoric has a lot to answer for in the pro-Hutu tilt of European opinion. In fact, Europeans raised on victim-rhetoric, like Georges Ruggiu, actually served as mouthpieces for the genocide while it was happening.
So the Hutu militias turned their guns on their own people and led a forced migration, out of Rwanda into Kivu in Eastern Congo..

More at

Friday, May 23, 2014

US did fake vaccinations to bin Laden family DNA.

One wonders why the places like Pakistan are violently resistant to having vaccinations done.  The normal arguments trotted out are that of Islamic fundamentalism.  Maybe there is a different fire to that smoke.

In 2011 the US organized a vaccination program in Abbottabad to find the DNA of Osama bin Laden's family and confirm that he was hiding in the compound.
The CIA organised a fake vaccination programme in the town where it believed Osama bin Laden was hiding in an elaborate attempt to obtain DNA from the fugitive al-Qaida leader’s family, a Guardian investigation has found.

As part of extensive preparations for the raid that killed Bin Laden in May, CIA agents recruited a senior Pakistani doctor to organise the vaccine drive in Abbottabad, even starting the “project” in a poorer part of town to make it look more authentic, according to Pakistani and US officials and local residents.

The doctor, Shakil Afridi, has since been arrested by the Inter-Services Intelligence agency (ISI) for co-operating with American intelligence agents.

Prostitution and Illegal drug sales to be used for GDP in Italy.

Out here in Sri Lanka we think our powers that be are cooking the books to paint a rosy picture of the Economy.  However, we still have a long way to go to catch up with the shenanigans that the West uses to cook the books.

Just a year ago the US added intangibles such as films, books, magazines and iTunes songs to its GDP calculation. That added USD 500 billion (3%) to the US GDP.  This brought down the debt/GDP to just less than 100%.

Then the UK followed by adding to GDP, Research and Development, building of arms, including aircraft carriers.  That increased the GDP by 2.5 - 5%.  Future pension benefits were added as current income and that increased savings rate from 5% to 10%.

Update (30th May 2014) the UK too added prostitution and illegal drugs to the GDP calculation.
Illegal drugs and prostitution boosted the economy by £9.7bn – equal to 0.7% of gross domestic product – in 2009, according to the ONS's first official estimate.

A breakdown of the data shows sex work generated £5.3bn for the economy that year, with another £4.4bn lift from a combination of cannabis, heroin, powder cocaine, crack cocaine, ecstasy and amphetamines.
Netherlands includes its drug trade of about EUR 2.5 billion in its GDP.

Italy just outdid them all by including Drugs, prostitution and smuggling as a part of GDP calculations.

Sri Lanka should follow suit by adding kassipu (moonshine), kudu (drugs) and Prostitution to its GDP.

Saturday, May 10, 2014

Elephant Incursion

Coconut Palm leaves broken by Elephant
We (Wilpattu House) had an elephant coming into the property on 8th May 2014.  This was regardless of the Elephant deterrent 6 foot deep ditch around the place.  This smart elephant broke the earth on the ditch to make it less steep and managed to climb over to the property.  Luckily not much harm was done other than breaking two coconut palm leaves.  The watcher/caretaker was awakened and had lit a couple of crackers.  I dont think this Elephant was scared away, he just wishes to avoid confrontation.

This elephant, who nobody has really seen, much less photographed is a really large animal with a footprint of   1.5 feet (457 mm).  I guess old too, older than the New Eluvamkulam town.  New Eluvamkulam town was established in the 90's when the old village moved to the South of the Army and Navy points to avoid LTTE attacks.
The Elephants Foot print 1.5 feet across

This big old elephant probably lives in the replanted jungle of the Holcim Quarry site at Aruwakkadu/Gangewadiya.  New Eluvamkulam, Kala-Oya and Wilpattu are probably his territory. 

See link (in Sinhala thanks Tilak Ranaweera) for plans to fill old quarry pit with garbage from Colombo.

Economics of  Elephant Destruction of Plantations
Compared to Paddy fields, destruction of a coconut, cashew or other plantations by Elephants has long term consequences.  Thats because destruction of a Paddy field affects only that harvest.  In the case of a plantation, the destroyed tree/s will need to be replanted and loss of income until the tree starts yielding.

Earth on Ditch broken to
enable climbing by The Elephant
In the case of a  coconut tree which bears about 15 nuts per pluck every 45 days means a loss of 120 coconuts (=15x12/1.5) a years.  Assuming it takes 7  years for the coconut tree to bear 15 nuts/pluck and a coconut sells at LKR 25, that is a loss of LKR 21,000 (=120x25x7) per coconut tree.

Monday, April 28, 2014

East Coast: How to Cross Kokilai Lagoon

This was meant to be part of a post of travel by tuk-tuk along the East Coast, from Paranthan-Mullativu-Kokilai-Pulmoddai-Trincomalee.  However, there seems to be minimal information about how to get across Kokillai Lagoon. (See Facebook comments for places to stay around Mullativu)

For those who are thinking of traveling by bus/bicycle/motorbike along the East coast of Sri Lanka from Mulativu - Trincomallee - Batticoloa -Arugam Bay, the lagoon at Pulmuddai/Kokilai should not be a deterrent.

Kokilai Lagoon, Kokilai. The other side of the lagoon is Pulmoddai
Just get to the fishing village at either Pulmuddai or Kokilai and arrange with a fisher to take you across. Its about LKR 500 for a person, LKR 1000 or so for a small motor bike and some where in between for a cyclist.  At times there is a boat that can take a tuk-tuk across the lagoon.

If you are traveling in vehicles larger than a tuk-tuk there is detour (42 km ) around the Kokkilai Lagoon.  It should be motorable even by a small car during the dry season.  During the rainy season, as some sections of the road are gravel, small cars might not be able to go over potential mud holes.

For detailed instructions for detour by vehicle see

Monday, April 14, 2014

Landowners to be evicted to make way for Chinese Investment project

Landowners to be evicted  to make way for Chinese Investment project.  No, this not a story from Sri Lanka.  This is from the "land of the free".

In this case it is Senator Harry Reid's (the Senate Majority Leader) son who has been negotiating with Chinese Investors to locate a Solar Energy project on ranch land.  Federal Agents stormed Cliven Bundy's land, began rounding up his cattle, arrested one of his sons and Tasered another, and allegedly shoved his sister—a cancer survivor—to the ground.

As news of the “Old West-style showdown” spread last week, armed militia members and self-proclaimed patriot types began streaming onto the ranch, escalating tensions and stoking fears that the situation might unspool into another Waco or Ruby Ridge.

On Saturday, federal forces retreated and claimed it was for the sake of public safety, although they vowed to pursue their case against Bundy.

It was suggested that their retreat may have been linked to embarrassing revelations that Nevada Senator Harry Reid and his son had been negotiating with Chinese investors to use that part of the desert for a solar-energy project

Friday, April 4, 2014

Businesses Refuse Spend a Few Cents More Per Garment to End Labor Exploitation in Emerging Markets

Fantastic article by Satyajit Das on how businesses refuse to spend a few cents more per garment to
end labor exploitation. 

The first excerpt is the last sentence in the article and is a quote from George Orwell the author of Animal Farm.
“… we all live by robbing Asiatic coolies, and those of us who are ‘enlightened’ all maintain that those coolies ought to set free; but our standard of living and hence our ‘enlightenment’ demands that robbery shall continue." 

There is a race to the bottom in costs and working conditions, as emerging market manufacturers compete for the business of foreign purchasers. Everyone in the supply chain seeks to maximise market share and profitability, sometimes by cutting corners. In emerging markets, corruption and failures of government and business compound these pressures.
Bangladesh must compete with Vietnam, Cambodia, Laos and Myanmar for foreign clients. Continuous cost pressures and competition make this economic model difficult to sustain. Prices have decreased by 10-12% over the last 5 years. Return on investment in the garment trade has decreased from 50% to 20%, which is close to the cost of debt in Bangladesh, effectively around 15-20%. In turn, this drives further cost reduction measures.

e.g. If you take a shirt that is sold at US$ 22.50 (appox LKR 3,000) to US consumers, 75% (LKR 2,200) of that price is profit for the retailer. If the shirt is made in Sri Lanka the labour cost is only 2.8% (LKR 81) of the price. Up to the CIF value it is only 23.1% (LKR 675) of the retail price,
None of this is new in emerging markets. Its origins lie in the colonial past.

Using superior military power and technology, European powers, such as England, Spain, Portugal, Netherlands, Italy, France and Germany, established and maintained colonies in Asia, Africa, and the Americas. The basic driver was cheap resources, labour (often in the form of slavery) and new markets for the colonizing nation’s products.

Colonialism fuelled the growth and prosperity of the old world. Portuguese explorer Vasco da Gama was exultant at being able to buy pepper in the East Indies for 3 ducats a hundredweight from indigenous traders knowing they would fetch for 80 ducats in Venice.

Karl Marx approved: “the question is not whether the English had a right to conquer India, but whether we are to prefer India conquered by the Turk, by the Persian, by the Russian, to India conquered by the Briton”. Whilst recognising that the exploitation of Indian markets and labour by the East India Company for commercial gain, Marx argued that capitalism would transform the subcontinent. India would benefit from the fruits of industrial revolution, such as improved communications and a free press. It was a sentiment worthy of George Macdonald Fraser’s Flashman who regarded the Victorian empire as “the greatest thing that ever happened to an undeserving world”.
Peter Whitfield writing in Travel: A Literary History identified the link between earthly power (wealth) and spiritual glory (Christianity) that provided the justification for colonial conquest:
It amounted to a theory of cultural destiny – that the European maritime nations were destined to bring Christianity and civilization to a pagan and savage world, and their reward was to be the wealth and riches which the indigenous populations themselves were incapable of appreciating and valuing. Underlying colonialism was what Edward Said in 1978 termed: Orientalism. This was a reference to the patronizing attitude of Westerners towards Asian, Middle Eastern and African societies. They were seen as static and under developed, which a superior West could shape in accordance with its own image.


Sunday, March 30, 2014

Chronic Kidney Disease: Cause Hard Water + Heavy Metals + RoundUp

A research article by Jayasumana et al (2014) proposes the cause for Chronic Kidney Disease  of Unknown etiology (CKDu) are chemical complexes formed by Glycphosate (RoundUp) when it combines with  hard water and heavy metals in fertilizer.
I would not rule out dioxins as a another contributory cause to CKDu.

Bullet points from the article.
Prevalence  15% [2] affecting a total population of 400,000 patients with an estimated death toll of around 20,000 
Individuals who drink treated water from large water supply schemes (especially in the twocities of Anuradhapura and Polonnaruwa), while living in the same endemic areas, do not have the disease.
Jaffna and Northern province which has very hard water (Fig 1) has low incidence of CKDu because agro chemicals were prohibited during the war.
Three potential sources of glyphosate/AMPA-metal complexes:

  • [Glyphosate/AMPA + Ca/Mg/Fe/Sr ] complex in drinking water.
  • [Glyphosate/AMPA + Cd/Cr/Ni/Co/Pb/Vanadium (V) or As] complex in food.
  • [Glyphosate/AMPA coming from dermal/ respiratory route] + low amount of [metals/As] from water and foods, here the complex is formed within circulation.
  • I can well attest to the heavy usage of RoundUp out here in the Wanathavillu/Eluvamkulam area.  RoundUp is used to clear paddy fields, vegetable plots, road side, gardens of weeds.  Its much cheaper than using manual labor.  That said as far as I know there arnt any patients suffering from CKDu.  Probably attributable to drinking water wells are by the side of tanks/wewas like Ralmadu and Nelum Wewa or are diluted by Kala Oya waters.  All other wells the water is absolutely hard and undrinkable.

    Research shows that Roundup (glyphosate) and its principal breakdown product, Aminomethylphosponic acid (AMPA) is taken up and accumulated in GM soy bean.
    All of the individual samples of GM-soy contained residues of both glyphosate and AMPA, on average 9.0 mg/kg. This amount is greater than is typical for many vitamins. In contrast, no sample from the conventional or the organic soybeans showed residues of these chemicals .

    Full Article
    Jayasumana, C.; Gunatilake, S.; Senanayake, P. Glyphosate, Hard Water and Nephrotoxic Metals: Are They the Culprits Behind the Epidemic of Chronic Kidney Disease of Unknown Etiology in Sri Lanka? Int. J. Environ. Res. Public Health 2014, 11, 2125-2147.


    Sunday, March 9, 2014

    UK Morals: No sanctions because of Russian Money in London.

    Many here in Sri Lanka happen to think that the West is more moral and less corrupt than Sri Lanka.  Yes, they appear to be moralistic with us poor folk in Asia and Africa. Thats because the money involved is peanuts and we are/were dependent on handouts.  No different from the upper class in Sri Lanka who used to screw the female help and throw them out when they became pregnant.  I am sure everyone knows of such family secrets. On the other hand the same upper class would deplore the "loose morals" of the poor.

    Now we find that Germany and the UK are not willing to sanction Russia on its invasion into Crimea, because it will hurt their monetary interests.

    one country that has the most to lose from Russian sanctions, Germany, and specifically its industrial superlobby has already said "Nein" to any truly crippling trade blockade of Moscow would backfire on Germany's own economy and bottom line.
    The White House has imposed visa restrictions on some Russian officials, and President Obama has issued an executive order enabling further sanctions. But Britain has already undermined any unified action by putting profit first.
    It boils down to this: Britain is ready to betray the United States to protect the City of London’s hold on dirty Russian money. And forget about Ukraine.
    Britain, open for business, no longer has a “mission.” Any moralizing remnant of the British Empire is gone; it has turned back to the pirate England of Sir Walter Raleigh. Britain’s ruling class has decayed to the point where its first priority is protecting its cut of Russian money — even as Russian armored personnel carriers rumble around the streets of Sevastopol. But the establishment understands that, in the 21st century, what matters are banks, not tanks.

    The Russians also understand this. They know that London is a center of Russian corruption, that their loot plunges into Britain’s empire of tax havens — from Gibraltar to Jersey, from the Cayman Islands to the British Virgin Islands — on which the sun never sets.

    British residency is up for sale. “Investor visas” can be purchased, starting at £1 million ($1.6 million). London lawyers in the Commercial Court now get 60 percent of their work from Russian and Eastern European clients. More than 50 Russia-based companies swell the trade at London’s Stock Exchange. The planning regulations have been scrapped, and along the Thames, up go spires of steel and glass for the hedge-funding class.

    Britain’s bright young things now become consultants, art dealers, private banker and hedge funders. Or, to put it another way, the oligarchs’ valets.

    Russia’s president, Vladimir V. Putin, gets it: you pay them, you own them. Mr. Putin was absolutely certain that Britain’s managers — shuttling through the revolving door between cabinet posts and financial boards — would never give up their fees and commissions from the oligarchs’ billions. He was right.

    The Shard encapsulates the new hierarchy of the city. On the top floors, “ultra high net worth individuals” entertain escorts in luxury apartments. By day, on floors below, investment bankers trade incomprehensible derivatives.

    Come nightfall, the elevators are full of African cleaners, paid next to nothing and treated as nonexistent. The acres of glass windows are scrubbed by Polish laborers, who sleep four to a room in bedsit slums. And near the Shard are the immigrants from Lithuania and Romania, who broke their backs on construction sites, but are now destitute and whiling away their hours along the banks of the Thames.

    The Shard is London, a symbol of a city where oligarchs are celebrated and migrants are exploited but that pretends to be a multicultural utopia. Here, in their capital city, the English are no longer calling the shots. They are hirelings.
    The Shard encapsulates the new hierarchy of the city. On the top floors, “ultra high net worth individuals” entertain escorts in luxury apartments. By day, on floors below, investment bankers trade incomprehensible derivatives.

    Come nightfall, the elevators are full of African cleaners, paid next to nothing and treated as nonexistent. The acres of glass windows are scrubbed by Polish laborers, who sleep four to a room in bedsit slums. And near the Shard are the immigrants from Lithuania and Romania, who broke their backs on construction sites, but are now destitute and whiling away their hours along the banks of the Thames.

    The Shard is London, a symbol of a city where oligarchs are celebrated and migrants are exploited but that pretends to be a multicultural utopia. Here, in their capital city, the English are no longer calling the shots. They are hirelings.


    Also Read 

    A comment: Well, I do not believe that a few thugs will produce a grassroots uprising but that there is a real dissatisfaction in the population towards the corruption of the government. It represents a worldwide trend that questions increasingly the decision makers who are not really responsible (immunity) but ensure a comfortable lifestyle for themselves while the rest of the people are increasingly struggling. We see corruption left and right and the increasing concentration of power has to reverse so that decisions are again made on the lowest possible level of the hierarchy.

    Contrary to the commenter,  I think the last 50 years or so of history was an aberration, where the poulace had a say in the politics of their country.   The oligarchs and industrialists initially did not know how to respond and keep control of the general populace.   Now oligarchs and industrialist Worldwide have figured out mechanisms to grab control into their hands.  Using laws and loopholes in laws which they "sell" to the general population as in for their own good power is consolidated in a few as in most of history.

    Wednesday, February 26, 2014

    What the Modern World Owes Slavery

    At this time when all the talk in Sri Lanka is about human rights violations, it may
    be also the time to look at slavery and its economic gains for the west.

    Haitian slaves began to throw off the “heel of the French” in 1791, when they rose up and, after bitter years of fighting, eventually declared themselves free. Their French masters, however, refused to accept Haitian independence. The island, after all, had been an extremely profitable sugar producer, and so Paris offered Haiti a choice: compensate slave owners for lost property — their slaves (that is, themselves) — or face its imperial wrath. The fledgling nation was forced to finance this payout with usurious loans from French banks. As late as 1940, 80% of the government budget was still going to service this debt.

    Corps of doctors tended to slave ports up and down the Atlantic seaboard. ..... Priceless epidemiological information on a range of diseases — malaria, smallpox, yellow fever, dysentery, typhoid, cholera, and so on — was gleaned from the bodies of the dying and the dead.

    Enslaved Africans and African Americans slaughtered cattle and sheared wool on the pampas of Argentina, spun cotton and wove clothing in textile workshops in Mexico City, and planted coffee in the mountains outside Bogotá. They fermented grapes for wine at the foot of the Andes and boiled Peruvian sugar to make candy. In Guayaquil, Ecuador, enslaved shipwrights built cargo vessels that were used for carrying more slaves from Africa to Montevideo. Throughout the thriving cities of mainland Spanish America, slaves worked, often for wages, as laborers, bakers, brick makers, liverymen, cobblers, carpenters, tanners, smiths, rag pickers, cooks, and servants.

    Slavery, as the historian Lorenzo Green argued half a century ago, “formed the very basis of the economic life of New England: about it revolved, and on it depended, most of her other industries.” Fathers grew wealthy building slave ships or selling fish, clothing, and shoes to slave islands in the Caribbean; when they died, they left their money to sons who “built factories, chartered banks, incorporated canal and railroad enterprises, invested in government securities, and speculated in new financial instruments.”  In due course, they donated to build libraries, lecture halls, botanical gardens, and universities, as Craig Steven Wilder has revealed in his new book, Ebony and Ivy.

    Even the tony clothier, Brooks Brothers (founded in New York in 1818), got its start selling coarse slave clothing to southern plantations.  It now describes itself as an “institution that has shaped the American style of dress.”

    More at

    Sunday, February 2, 2014

    Trip to Palugasturai (in Wilpattu) Wadiya Church

    Approaching Palugasthurai
    Palugasthurai (Palugahaturai) is a fishing outpost (wadiya) on the coast within Wilpattu National Park, a few km south of Kudiramalai and Pookulam.   Kudiramalai is considered to be where Vijaya landed.  Pookulam is another fishing outpost (wadiya) on the coast within Wilpattu National Park.

    Interestingly all these fishing wadiyas are referred to as "Dupath" (Islands).  Apparently till the Navy camps were built at these locations, there was no access to the Wadiyas by road, only by boat.   Even now most transport of provisions, fuel and fish catch is by boat.

    Left at 9:00 am for the Palugasthurai Church Festival at 9:00 am from Wilpattu House in a Mahindra three wheeler.   Just a few km from Pallekande church, got startled by a lone elephant who was in the scrub jungle right by the road.  I am not sure who was more startled, us or the elephant.  Just accelerated as fast as possible regardless of the pot holes and ruts.

    The Church
    At Periya Villu saw a herd of about 12 elephants.  Camera phone was not good enough to get a photo.

    The turn off to Palugasthurai is a very sandy road and we had to push the three wheeler a couple of times because it sunk in the sand.  Arrived at the wadiya around 10:30 am.   Beautiful location, miles of lonely sandy beaches. Too bad access is bad.

    Returned at around 1:00 pm. Uneventful except for seeing that the Elephant herd had moved towards th North of Periya Villu.

    Facing North.  The headland in the North is Kudiramalai

    Tuesday, January 28, 2014

    Linux: Configuring a Dongle (Mobile broadband)

    I had some problems connecting to the Internet using a dongle (Huawei) on my old laptop running Linux (SUSE 12.3).  After many hours using various command line instruction found it was quite simple using NetworkManager.
    If you have KDE or similar desktop installed, the NetworkManager icon is at the bottom right hand corner (just like Windows).  If it is not installed, use Yast and Install. 

    Open the NetworkManager.
    On the bottom right hand corner select Manage Connections.
    The Add Edit Network connections window will open.
    Select the Mobile Broadband Tab.
    Add/Edit to go to Edit Network Connection window
    • Enter a connection name
    • Tick Connect Automatically
    • Number: *99#
    • APN: mobitel3g (see below for other Sri Lankan providers)
    • Tick  Allow roaming.
    Thats it, OK and OK and back to Network Manager,

    Nows the tricky part, or what took me a long time to figure out.  You may be taken to tab that shows info on the Mobile Broad band.  On the left hand tab use the arrow on top.  This will take you to the tab that shows all the Network Connections.  Click once on Enable Mobile Broadband. It may look like it did not get selected.  Just wait a few seconds and the Broadband connection will say initializing connection.

    Model:        HP G60 Notebook
    OS:             openSUSE 12.3 (x86_64)
    Processor: AMD Athlon Dual-Core QL-64
    Dongle    :  Micromax  (previously Huawei)

    Access Point Names (APN) for Sri Lankan Mobile Broadband Operators 
    Access Number

    Monday, January 27, 2014

    Harley Davidson production in India

    Yes, Harley Davidson motor bikes, the all American Icon is now produced in India.

    From Company Website
    • Harley-Davidson India commenced operations in August 2009 and appointed the first dealership in July 2010. Since early 2011, Harley-Davidson has been assembling motorcycles in India at its CKD (Completely-Knocked-Down) assembly unit at Bawal in Haryana. India is the second country where  Harley-Davidson has CKD assembly operations outside the US, after Brazil.

    also see

    Sunday, January 26, 2014

    Penis Length and GDP Growth

    This was a research done by Tatu Westling of University of Helsinki in 2011.

    To quote

    This study has made three contributions.
    First, it reveals the somewhat perplexing link between the size of male organ and economic growth.
    Second, it provides some rudimentary interpretations which state that macroeconomic growth might be related to populations' risk-taking and/or self-esteem.
    Third, for the best of author's knowledge the interplay between sex and macroeconomic outcomes is novel, and has not been discussed in the literature before.
    Obviously the proposed `male organ hypothesis' should be tested with more elaborate methods and data. Until then it remains an intriguing statistical artefact.

    Sri Lanka, like India and the Philippines had low growth and short penises. Yikes.

    Some Interesting Comments
    Glad someone took the time to look at the hard data.

    Perhaps the engine of economic development is less about bore or stroke and more about total displacement.