There is a lesson to be learn't here for India from all of this. Will India learn?Once upon a time there was a family that lived on a hill. The history of the Amerigo family dates back many generations. Their ancestors braved long and arduous journey and many adversities to arrive at and claim this hill as their very own. The hill they lived on was rich in minerals and the surrounding land was very fertile. The Amerigo family used their good fortunes and innovation to produce all kinds of merchandize consisting of agricultural produce, manufactured goods, minerals etc.
Beyond the Amerigo’s land were a number of Villages. Over the years, healthy trading of goods developed between the Villagers and the Amerigo family. Often times the trade consisted of exchanging items, things like shovels were bartered for apples. This bartering system worked fine until things got complicated. And so it was agreed that the Villagers would buy things from the Amerigo family and pay them with slips of paper and little disks (coins). They called this money and referred to it as currencies. Different Villagers had established their own forms of currencies such as the Pondy, Ponky, Inky, Dinky and Finky. There was also a Pinky, but very few people cared about that. The Pondy was the most dominant currency of them all. To keep things simple, Amerigo family accepted Pondys for the things they sold, and would use Pondys to buy things from the Villagers. This went on for many years, and since the Amerigo family sold more than they bought, they started accumulating more and more Pondys.
The Amerigo family accumulated so many Pondys that they decided to take things easy and buy more from the Villagers. They even stopped making things that they sold and started buying the very same things that they made and sold in the past. Ah, they said, it is cheaper to buy, than to make. Let the Villagers toil and we will reap. The Villagers were only too happy to oblige and over a period of time they started producing more and more of what they used to buy from the Amerigo’s. Soon the Amerigos were buying more than they sold creating an imbalance in trade.
The Amerigos were very good at making weapons and since there was some conflict or the other going on between Villages, they always had the latest and the best weapons to sell. They made sure that they kept this activity alive and well because it brought in a steady stream of money. Besides this activity spawned a host of companies that leveraged the technology that got developed from this defense related activities and the Amerigos felt indestructible. They felt they could innovate themselves out of the imbalance in trade.
By and by, the surplus Pondys that the Amerigo’s accumulated started dipping due to this trade imbalance. Besides, as the Amerigo family grew larger, they needed some way of trading between themselves. Initially they used the Pondys they had, but as that became scarcer, it posed a problem. So one day the Amerigos decided to start printing their own money. They said it was only fair that they have their own money like the Villagers did. They also agreed to back their money with gold like the Villagers did. The deal then was that a specific amount of money was backed by specific quantity of gold. The more gold you had, the more money you could print. They called their money the Doozy. The Doozy? Can’t you think of a better name you might say? Well let me know, but the story must go on. This worked well for the Amerigos, they had a lot of Gold in their land and so they were able to print a lot of Doozys as well.
Eventually, the Amerigo family had so few Pondys that they told the Villagers that they could only pay the Villagers with their Gold backed Doozys. Besides, they said it was only fair that the Villagers accept the Doozy since the Amerigos accepted and still accepted the Pondy. The Amerigo’s had a lot of Gold, so they decided to mine more Gold, keep it in a safe place and print more Doozys.
By and by, the market for weapons started declining and the Amerigos found they had more weapons than there were buyers for. So they thought of another ingenious plan. They labeled some Villagers as bad and evil and one particular Villager; Rusty was made to be the Bad Guy. They put fear into some of the Villagers that were headed by Royalty or Dictators and convinced them they needed protection. And who better to provide it than the Amerigos. And when things quieted down and the demand for weapons diminished, the Amerigos took sides in simmering conflicts to add fuel to the fire. They even engaged in covert operations to provoke conflict where tensions existed. There were always new and improved weapons that made old weapons ineffective and so there was a constant churning of bigger and better weapons. The Bad Guy, Rusty not to be outdone did the same and that resulted in an Arms Race. Some of these weapons were sold, others were not, because they were deemed strategic and would adversely affect the security of the Amerigos if these weapons were to be acquired by Rusty or allies of Rusty from the Villagers that bought them.
And so while the arms race kept a lot of Amerigos employed, the sale of weapons did not offset the opulent lifestyle of the Amerigos. They purchased a lot more from the Villagers than they sold to them and soon there were a lot of Doozys circulating in the Villages. The Amerigos had so much Gold to back the Doozy that it soon dwarfed the Pondy. The Villagers accumulated so many Doozys that they started trading in Doozys amongst themselves. And so the Doozy trade took off like a rocket. The Doozy became the International currency for Trade.
Things went on well for a while until there was less and less gold to be mined. The cost of mining gold exceeded the value of gold itself. Besides storing and guarding all this gold became an expensive proposition. The Amerigos needed Doozys to support their lavish lifestyle and also purchase more goods from the Villagers. So one day, Nukem Amerigo, who was head of the Amerigo family at that time, thought of a great plan. He decided to abandon the Gold Standard and establish other means to acquire Doozys. One was in the form of an IOU to the Villagers. They were told that if you invested in these IOUs called Treasury Bills, they will be paid a handsome interest rate and also the re-payment will be guaranteed. They said that these T-Bills were as good as the Gold Backed Doozy. There were so many Doozys circulating in the Villages, that the Villagers readily agreed. So every once in a while the Amerigos would float an IOU and the Villagers would exchange these IOUs with their Doozys. Another method was an extension of a policy that existed to print more Doozys. Even when the Gold Standard existed, occasionally, the Amerigos needed to print more Doozys, but the gold to back it had not been mined yet. So the Amerigos would write an IOU to their Treasury that controlled the printing of Doozys, with a promise that they would deposit the gold at a future date. And they would keep that promise. But since Nukem did away with the Gold Standard, he came up with another idea. He decided that it was OK to write an IOU to the Treasury once in a while and since this was an IOU, it included an interest component, much like the IOUs that were issued to the Villagers.
And so life went on with IOUs being written to Villagers and occasionally to the Treasury. Whenever the Villagers balked at the number of IOUs being written the Amerigos encouraged them to come invest in Doozyland and even offered some of their assets for sale. Quite a few Villagers did that. Rather than manufacture far away and transport the goods to Doozyland, they set up shop in Doozyland itself.
By and by, the Bad Guy Rusty relented and they met with the Amerigos to smooth each other’ previously ruffled feathers and they agreed to abandon the weapons race. This had a major negative impact on the Amerigos. All of a sudden, there was no need for so many weapons. Besides maintaining these weapons cost money. So the Amerigos thought of another plan. One of the Village Dictators named Sodom, the Amerigos had supported was acting up. He was upset with his neighboring Village, Quiet and wanted to attack them. His beef was that Quiet was secretly dipping into his Village from beneath the ground. Quiet was also an ally of the Amerigos. The Amerigos did not respond to Sodom’s acting up and Sodom interpreted this nonchalance as tacit approval. And so Sodom attacked Quiet. Quiet cried for help and the Amerigos rose to the occasion and thumped Sodom. Quiet was so happy, that they paid the Amerigos handsomely for their help. The Amerigo’s realized that these conflicts are good business. First you sell arms, then you create conflict, then you take sides and finally you have the one you helped pay you. Of course you make sure you help only the ones who are capable of paying.
Time went by and there were no major wars to participate in and this got the Hawks in the Amerigo family worried. Then a major disaster struck. Some renegades, infiltrated the Amerigo estate with stolen planes and crashed them into a few Amerigo buildings. Everyone was aghast and condemned this barbarous act. It was later ascertained that this suicide mission was carried out by a group of terrorists known as the Quacks. However, there was a problem. This attack was by a group of renegades, the Quacks and not by a Village. Besides the Quacks that attacked the Amerigos were hiding out in Argone Village that the Amerigos helped in fighting the Bag Guy Rusty. Furthermore, the Amerigos had given this very group of Quacks, weapons to fight with the Argone Villagers against the Bad Guy Rusty. Nevertheless, the Amerigos went after the Quacks. But this did not result in a war that would use up a lot of weapons. So the Amerigos set about manufacturing another bad guy. Sodom, who they thumped before was frequently thumbing his nose at the Amerigos. He even threatened to kill the Amerigo head at one time. The Amerigos seized this opportunity; they claimed Sodom had amassed a lot of weapons, that he was a friend of the Quacks and needed to be taught a lesson. And Sodom’s village was rich and once they liberated the Villagers from their evil dictator, they would only be too happy to pay the Amerigos back. So they unleashed a rain of bombs on Sodom’s palaces, his bases and his weapon installations. After the rain of bombs, they commenced ground operations; they neutralized Sodom’s forces, went after him and captured him. Butch Amerigo, the head of the Amerigo family at that time, proclaimed that the Mission as Accomplished and that Sodom would be tried for his bad deeds. Unfortunately, for Butch, things didn’t go as planned. Removing Sodom opened a can of worms, two street gangs – the Sheets and the Sooners, of Sodom’s Village; started fighting amongst themselves. This fight had been going on for over a thousand five hundred years, ever since the death of Marmalade, who both proclaimed as their Messiah, and as numero Uno. But they could never agree on who was Numero Dos. This thousand five hundred year conflict was “put on hold” forcibly by Sodom. With him out of the way, all hell broke loose. Meanwhile, a number of Quacks being chased in Argone Village decide to join in the melee and the fighting escalated. Unfortunately, the Amerigos were caught in the crossfire and having stuck their feet in there, tried to bring some sense to the situation. Much as they tried, this conflict went on and on and on and some claim that having started more than a thousand five hundred years ago, it is quite possible that it will go on for another hundred years or so.
Anyway, to get back to our Doozy story, the costs of fighting Sodom and trying to bring about a peaceful resolution to the Sheets-Sooner conflict cost the Amerigos a lot of lives and money. This was more than anyone bargained for. To fund the war, Amerigo issued more and more IOUs. Villagers who were flush with Doozys exchanged their Doozys for these IOUs.
Meanwhile, the Amerigo family was hurting as well. Johnny “Come Lately” Amerigo pointed out to Butch Amerigo that he better do something for his family as well. Many were in dire need of Doozys, jobs were getting scarcer and scarcer. The Amerigo dream of a white picket fence and a chicken in every pot was fast receding and Johnny suggested that they look into financing the Dream. Butch thought it was a great idea. Just about every idea that was proposed to Butch was proclaimed a good idea. So he authorized a number of IOUs to be given to the Treasury; some money for the war, some for the other good ideas that were presented to him and one for money that was loaned to Johnny to fund the Amerigo Dream. Johnny in turn accepted responsibility for the Big IOU written on his behalf with the understanding that we would loan money to the family members who would buy houses. The families wrote Johnny a lot of Lil IOUs, with the understanding that they would pay Johnny a slightly higher interest than Johnny had to pay the Treasury and eventually return all the money. Johnny would keep the difference as Management Fees and when things improved, the family members would pay Johnny back the principal and Johnny would pay the Treasury. And so Johnny went about loaning money right and left at a slightly higher interest rate and collecting a lot of Lil IOUs. At times he even loaned the money at a lower interest rate with the stipulation that the unpaid interest would be added to the principal. What has been termed sub-prime interest is a “Pay Less Now and Owe More Later” scheme. There was another catch too. You paid less now and then the interest rate increased after two or three years and one landed up paying more on “ owe more” later!
This resulted in a housing boom. Things were hunky dory for a while. The housing industry employed a lot of people. Demand was up, house prices were up, and loans were being granted to just about anyone who asked for one. Didn’t have a job? No problemo. Bad credit history? No problemo. No down payment? No problemo. The loan was made out to be more than the value of the house and the excess money was retained by the lender as down payment.
But the post-Sodom conflict kept going and going and going and the costs kept mounting and mounting and mounting. Meanwhile Johnny who had taken responsibility for the Big IOU to the Treasury, decided to make a quick buck, he met with some Villagers with a lot of money and convinced them to buy a lot of the Lil IOUs. His clinching point was that some these Lil IOUs paid more interest than the Treasury IOUs and therefore more attractive. Other IOUs – “The Pay Less Now – Owe More Later” ones he argued grew fatter with the passage of time and gave an even bigger return. Technically, Johnny should have returned the money he received back to the Treasury to pay down the Big IOU, but he decided to keep some for himself and loan some of the money he received to more of the Amerigo family. And so he accepted more Lil IOUs and as before he bunched them up and sold bundled lil IOUs to more Villagers.
Unfortunately, things continued to get rough and the Amerigo families, who borrowed from Johnny, ran out of Doozys and stopped paying the interest on their home loans. Which meant the Villagers who bought the IOUs stopped receiving interest as well. In the meantime Johnny having sold bunched up IOUs a couple of times, not only ran out of money to loan, he also lost track of how many times he re-loaned money he received for selling bunched up lil-IOUs. With people defaulting right and left, Johnny cried “Uncle” and said he can no longer make good the promise to payback the Big IOU he took responsibility for.
And so the Treasury got stiffed and so did the Villagers that dealt with Johnny. Besides this put the Treasury in a real pickle. The Treasury still has to pay the Villagers that received the Big IOU that Johnny was responsible for. And there are all those Villagers who bought those bunched up lil IOUs, that Johnny sold them.
The Treasury was faced with a double jeopardy if it were to make good the IOUs Johnny handed out as well. That would mean paying for the same loan more than once. Or the Treasury could say, Johnny’s problem is not our problem. That is Johnny’s problem. Meanwhile, the Amerigo family started hurting more because they were addicted to the “buy now, pay later” lifestyle. And with Johnny having run out of money to lend, their source of money to “buy now” dried up. So the Treasury could either give Johnny more money with strict instructions to lend to only those families that are financially responsible, and who can pay back the loan, or find another Johnny or Jane.
The Amerigo family decided to do a little of both. Not paying some of Johnny’s creditors would hurt the future sales of T-Bills. The Villagers would interpret Johnny as an intermediary, a shadow that the Treasury created to absolve itself of any guarantee. After all Johnny was a trusted member of the family and despite the fact that he took a cut, he did do what the family asked him to do. So the Amerigos wrote the Treasury another BIG IOU, to bail Johnny out and put some more money into lenders hands to lend to members of the family who had the capability to pay back.
This solved only part of the problem. There were a lot of members of the families who lost their jobs because the Amerigo family decided it was cheaper to buy than to make. These families had no source of income and could not qualify for any loans under the new guidelines.
Some in the Amerigo family believed that in helping the families that have assets will result in these “asset rich” families creating new jobs. These new jobs in turn will help the families with little or no assets. Others in the Amerigo family believed that they should take money from the “asset rich” family and give it to the families with little or no assets. Both sides believed that bringing jobs back to Doozyland is the answer.
The discussion on how to bring jobs back to Doozyland goes on, while the number of unemployed members of the Amerigo family keeps growing and growing and growing.
Some say that this too will pass and that there will be a happy time ahead. Some feel that things will get a lot worse before things will get better.
Yes there are Happy Times ahead and that will be addressed in Part II of the story…..stay tuned.
But meanwhile, the moral of this story is that there are many issues that the Amerigo family has to wrestle with:
- How long can you get by, by borrowing? You can, as long as you earn enough to pay back the loan and have some money left over to pay for other essential items.
- Will a point be reached when the Amerigo family has borrowed more than they can afford to pay off? Every year the interest component of the Amerigo family increases leaving less and less to be spent on essentials.
- How long can the Amerigo’s keep buying because it is Cheaper to Buy - than to Make? The answer the “experts” suggest is that the Amerigo’s are an innovative lot and that they are a good at providing the Next New, New Thing. The Amerigos always come up with something new that none of the Villages produce and that will provide the new jobs. Well, as it turns out the Amerigos invent some nifty products. But the manufacturing of those nifty products is done in far flung Villages where it is cheaper to manufacture.
Can the Amerigos continue to rely on innovation to provide abundant jobs? - Well some pundits decry the education system saying it is not producing enough qualified people to fuel innovation. Some Villages are better at that and there are many who wish to come to Doozyland to work on the Innovation Train. The pundits claim that if Amerigo produced more qualified people then that would mean less reliance on Villagers. But what about the “Joe-Six-Pack”, who is not interested in books. He is interested in using his brawn instead of his brains. It appears there are a lot of “Joe-Six-Packs” out there and some in the Amerigo family identify with them. Wink. Wink.
- How long will Villagers accept the Doozy as payment for their goods? This is a Catch-22 situation. The Amerigo family is a big consumer and as long as that is the case, sellers don’t mind accepting Doozys. Besides lots of Villagers have a stash of Doozy’s and if the Doozy Trade collapse, so will the value of the Doozy. Everyone looses. So the Villagers prop up the Doozy so that it doesn’t wipe away the value of their Doozy holdings.
Durga
Saraswati
Mother India
Mogul King & Brahmin
Einstein, Gandhi, Marx & Hitler
Mother India
Mogul King & Brahmin
Einstein, Gandhi, Marx & Hitler
Hanuman, Ravana & Sita 
Hanuman, Ravana & Sita 
