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Q & A: Signs of economic recovery

  • Published in Analysis
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Lately, the western media has speculated that the worst of the financial crisis is over and that the economies of some western countries are showing signs of economic recovery-the first green shoots, so to speak of. The media reports are often supported by economic experts and politicians who point to the buoyant stock markets, bank profits and the rise in the price of oil as evidence that the world economy has finally reached the bottom and is on the path of recovery. Hence the question arises is the western world really witnessing an economic revival or is it all media hype designed to instil confidence in the global financial system and prolong the crisis? And if this is the case, then why it is noticed such rise in the oil price, bank profits and buoyant stock markets?   


It is wrong to exclusively look at the financial indicators such as the rise in the value of the stock markets or the rise in the value of commodities to determine the health of the economy. If one looked carefully at the level of corporate production, GDP, unemployment numbers, retail sales, corporate and consumer spending, number of foreclosures and bankruptcies including famous companies like General Motors...,and other economic indicators then there is not a single economy in the world that is showing a positive trend-when these indicators are considered as a whole.

Here is some indications showing this fact:


Take the US economy for example where the chorus about green shoots in the economy rings the loudest. US jobless rate up to 8.9% the highest in 26 Years. US GDP shrank by 6.1 per cent in the first quarter of this year. To cope with falling sales, businesses reduced their inventories the most since Second World War by $103.7 billion in the first quarter of 2009 compared with $25.8 billion in the fourth quarter of 2008.Business investment declined by 38 % at an annual rate. Exports of goods and services decreased 30 per cent in the first quarter of 2009, compared with a decrease of 23.6 % in the fourth quarter of 2008. Foreclosure filings rose in March 2009 to 341,180. This figure is up by 17% from February 2009 and 46% from March, 2008. Yet this despite the fact that US government has spent billions to shore up ailing banks and improve credit flows within the economy. The same can be said for other western economies.


In Germany the unemployment rate is at 8.2% the worst since the Second World War. However, if it was not for the upcoming federal election and the change in the way the government reported the unemployment figures the jobless rate would be much higher. The Federal Labour Office said on 28/5/2009 that the seventh straight jobless rise was restrained by statistical changes and widespread use of shorter working hours. UniCredit economist Andreas Rees noted that the statistical changes to the jobs data were being phased in gradually so that June unemployment would also prove surprisingly positive. "There cannot be any doubt that further job cuts are in the pipeline," said Rees. "The labour market remains the Achilles heel of the German economy on its road to recovery." Furthermore, new data from the VDMA plant and equipment makers' association offered a stark reminder that German industry is still heavily exposed to weak global demand. German engineering orders fell in April by 58 % in real terms from the previous year, the biggest decline since records for the sector began, the VDMA said. Foreign orders dropped 60 %, with the domestic intake down 52 %. The government expects Europe's largest economy to contract by a record 6 % this year, and some observers are even more pessimistic.


European retail sales declined at a faster pace in May 2009 as rising unemployment prompted consumers to hold back spending, the Bloomberg purchasing managers index showed.  "Consumers still face a lot of bad news from the labour market as unemployment will continue to rise," said Nick Kounis, chief European economist at Fortis Bank Nederland in Amsterdam. "Europe's unemployment rate rose to 8.9 % in March, the highest in more than three years. The rate will increase to 9.9 % next year and 11.5 % in 2010, the EU commission forecasts. The euro area economy may shrink 4 % this year, according to the European Commission, as exports decline and companies cut output and jobs.


Japan's jobless rate hit the highest in five years at 5 % in April. In the reported month, 3.46 million people were without jobs, up 25.8 % from April last year, the Ministry of Internal Affairs and Communications said in a preliminary report. There were only 46 jobs available for every 100 jobseekers, making the ratio the worst since June 1999. The government also released the nation's core consumer price index (CPI) Friday, which showed a 0.1 % fall in April, compared to a year before. The core nationwide CPI, which excludes fresh food prices, fell in March for the first time in a year and a half, and remained in deflationary territory in April, reflecting falling petrol prices and weakening demand amid the global economic slump.  Also households spent less in April, down by 1.3 % to 306,340 yen ($3,175) from the same month a year before. Household spending figures are a key indicator of private consumption, which accounts for more than half of Japanese gross domestic product (GDP). Japan's GDP is shrinking at an annual rate of almost 10 per cent .The latest figures, for the period from January to March, showed the worst decline in Japan's economy since 1947. Glenn Maguire, Société Générale's chief Asia economist, said: "Generally, a 10 per cent contraction in growth is considered a depression. Japan has come terribly close to this, with the economy contracting by 9.7 per cent over the year. This point serves to highlight that Japan is the developed economy on which the financial crisis has had the most pernicious impact."

5- World economy

Perhaps the best indicator of the economic revival is the health of the world economy. According to The New York Times the economies of the developed world have had their worst quarterly showing in decades, the Organization for Economic Cooperation and Development (OECD) said on 25/5/2009, even as more signs emerged that the pace of the decline was easing. The combined gross domestic products of the 30 countries in the organization fell 2.1 % in the first quarter when compared with the previous quarter. If that preliminary estimate holds, it would be the largest drop since 1960, when the organization began collecting such data. The G.D.P. of member countries fell 2 % in the final quarter of 2008. The O.E.C.D. economies accounted for 71 % of world G.D.P. in 2007, according to the World Bank. Those economies shrank 4.2 % in the first quarter from a year earlier. The United States contributed 0.9 %age point of that decline, while Japan contributed 1 %age point, the 13 largest euro-zone countries 1.3 points, and the remaining member countries 1 point. China, which is not a member of the organization, is one of the few countries where the economy has continued to grow in the first quarter.

The increase noticed in the value of the stock markets, and some goods and services , can be attributed to three factors:

First, the US government bailed out AIG by giving it $173 billion. AIG used more than $90 billion of tax payers' money to pay money it owed (due to Credit Default Swap Contracts) to US and European banks. On March 15 2009, AIG revealed that through three separate types of transactions, Goldman received an aggregate $12.9 billion, Merrill Lynch $6.8 billion, Bank of America $5.2 billion, Citigroup $2.3 billion and Wachovia $1.5 billion. Among European banks, SocGen was the biggest recipient at $11.9 billion, Deutsche got $11.8 billion, Barclays was paid $8.5 billion and UBS of Switzerland got $5 billion. Describing the importance of AIG payouts the Federal Reserve Chairman, Ben S. Bernanke said: "Here was a company [AIG] that made all kinds of unconscionable bets. Then, when those bets went wrong, they had a - we had a situation where the failure of that company would have brought down the financial system."  Unable to give money directly to the banks for a fear of public backlash the Fed routed the money through AIG which eventually reached the banks. Subsequently, many of these banks posted profits (Bank of America (BAC) made $4.2 billion, Citigroup $1.6 billion, Goldman Sachs $1.8bn and in Europe, Barclays Bank unveiled record full-year profits of £5.28 billion the 1st quarter of 2009) and the stock markets increased in value.

So this increase is not because of profit due to economic activities, but because of that money support which will not stay for long time.     

Secondly: the US government early this year announced its stress test program for US banks designed to instil confidence in investors that the US banks were healthy and not too deeply leveraged. The stress tests were specifically crafted by US Treasury Secretary Timothy Geitner to give the impression that most of the troubled assets of banks can be erased from the balance sheet.  On May 6 2009 the US government announced that some US banks such as JP Morgan and Goldman Sachs did not require government funds, whilst other banks such as Bank of America and Morgan and Stanley required some funds. In total, ten of America's top banks required just under $75bn, which could be easily covered by the TARP fund which still has $75 billion remaining-thereby reducing the need for the US government to ask congress for more funds. Subsequently, stock markets posted hefty gains and shares in US banks rose in value. Wells Fargo was up 8.5%, Morgan Stanley was up 0.9, Bank of America up 4% and Citigroup 7% respectively. However, despite the upbeat mood amongst investors, many experts have stated that the tests were fatally flawed. "The stress tests are, at best, a waste of time," said Mike Holland. "At worst, they're misleading and testing the wrong things. The idea of using some level of unemployment to say whether Citigroup is not as strong as JP Morgan to me is laughable. And therefore I will be glad when this process is over." "I would argue - as others have - that a lot of (banks') models have been badly flawed in the last few years anyway, which is why they're in the mess they're in," said Yra Harris, a currency trader with Praxis Trading. On May 4 2009 the International Monetary Fund estimated that U.S. financial institutions could suffer $2.7 trillion in losses from the global credit crisis, nearly double its projection six months ago.

Thirdly:  early this year both the US Federal Reserve and the Bank of England announced plans that they would embark upon on ‘quantitative easing' or the creation of money to buy bad assets of banks, corporate bonds and other troubled financial assets. The increase in the money supply will inevitably lead to inflation and increase the price of goods of services.  Already the Bank of England is concerned about the high inflation in an economy that is suffering its worst economic downturn since the 1930s, In its statement the Bank of England (BoE) said there are 'promising signs' that the pace of Britain's downturn is slowing. But the BoE also said it has been taken aback by the stubbornly high level of inflation, which at 2.9 per cent is ' significantly' higher than its 2 per cent target. This explains why the prices of certain commodities (the price of oil has increased to more than $58 a barrel from a low of $36) have risen and how it is being misinterpreted as a sign of economic recovery.  Furthermore, it should be noted that oil prices usually increase when the value of the dollar is very low. The increase is not due to an increase in demand for oil rather it is because the US actively manipulates the price of oil to prevent further erosion of the value to the value of the dollar.

Also when we know that according to The Impact of the Financial and Economic Crisis on Global Energy Investment prepared by the IEA in May 2009, the world electricity consumption dropped in 2009 for the first time since World War II- a clear signal that the world economy is very far from an economic revival.

For the aforementioned reasons the economic recovery in the West is premature. At best, western governments by pursuing a policy of low interest rates and quantitative easing are delaying an inevitable economic collapse. In fact it can be argued that by flooding barren economies with money manure, western governments are most likely to re-inflate collapsed commodity and currency bubbles, which will produce greater calamity then what the world is witnessing today.


Pakistan Embassy Unwilling to Listen to Criticism about American War in Pakistan

Sydney, Australia, 27th May 2009 - The Pakistan High Commission in Canberra refused to meet with a delegation of Hizb ut-Tahrir Australia from Sydney yesterday afternoon. The delegation travelled from Sydney with a letter about the current hostilities in Pakistan. However both the Ambassador and the Deputy Ambassador refused to afford even a five minute meeting wherein Hizb ut-Tahrir Australia could deliver its message. The letter which was to be delivered is attached.


Sydney Demonstration against American War in Pakistan

Sydney, Australia, 22nd May 2009 - Over 2 million civilians have been made refugees, on top of the thousands that have been killed or injured, as a result of the Pakistani Government's recent assault on the north-western regions of Buner and Swat. The subsequent chaos created inside Pakistan has not stopped the Zardari regime from persisting in facilitating the American agenda in the region. President Zardari and Prime Minister Gilani are happy to use the sincere Muslim sons of the Pakistan army to fight other Muslims, in what is the height of treachery.


Q & A: Sri Lanka and the Tamil Tigers

  • Published in Analysis
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On 19/5/2009 speaking on state television Sri Lanka's President Mahinda Rajapaksa declared victory against the Tamil Tigers. He said, "Our motherland has been completely liberated from separatist terrorism." The state television also broadcasted images of the Tamil Tiger leader's body after it was recovered from the battlefield. "A few hours ago, the body of terrorist leader (Velupillai) Prabhakaran, who ruined this country, was found on the battleground," army Chief Gen. Sarath Fonseka told state television. In his victory speech the President Rajapaksa was anxious to strike a reconciliatory tone with Tamil people. He said,"Our intention was to save the Tamil people from the cruel grip of the (rebels). We all must now live as equals in this free country."

What is the reality of the conflict in Sri Lanka? Is it a local or regional conflict or an international conflict? In who's favour was the result of this conflict? Is it possible to say that the conflict in the island has come to an end or not?


To answer these questions we shall say:

1-  The Sri Lankan conflict has often been portrayed as a protracted conflict between the Sri Lankan government and the militant movements of Sri Lankan's Tamil population. However, in reality the conflict is a classic Anglo-American struggle to control the strategic waterways of Sri Lanka and has been fought with the aid of regional proxy powers such as India and Pakistan.

2- Sri Lanka's importance lies in its location. It is situated about 19 miles off the southern coast of India thus overlooking one of the most important sea routes between West Asia and South East Asia. It is separated from the Indian subcontinent at its narrowest point by 22 miles of sea called Palk Strait. America has for sometime desired to control the Palk Straits and to make it part of Pentagon's military foot print. This will spur America to dominate the Indian Ocean and cut off vital oil supplies from the Middle East and Africa to China, as well as to thwart China's naval expansion westward. Immediately, after September 11 2001 attacks, the then US defence secretary Rumsfeld embarked on initiatives to bolster further the ties between Sri Lanka and the US. The control of Palk Straits would also hurt India's sea supply route to its eastern states and may necessitate traversing around Sri Lanka to reach these states thereby increasing the journey time and making it a very expensive alternative route. A reduction of influence of the Palk Straits would also hurt India's ambitions to become a regional naval power and limit its naval expansion plans eastwards. It is for these very reasons that China established military ties with the Sri Lankan government and supplied it with military equipment. It is also important to note that a decline in Indian influence over the Palk Straits would also affect British interests in the region. For hundreds of years Britain has sought to dominate the Indian Ocean to keep open sea routes located in the region to supply goods to far Eastern markets. American hegemony over the Indian Ocean and the Palk straits would hurt both Britain and Europe.  Hence the control of Sri Lanka is of immense importance to the US and will enable it to curb the threat of China and limit British and European influence in South East Asia and the Far East.

3- The roots of the conflict lie in the disenfranchised Tamil population that was brought over by the British from India's Tamil Nadu region to work on the coffee and tea plantations thereby transforming the island into a major tea producer. However, the majority Buddhist Sinhalese community disliked Britain's preferential treatment of the mainly-Hindu Tamils.  The independence of Sri Lanka in 1948 only accentuated the bitterness between the two communities, as successive Sinhalese governments stalled on promises to grant the Tamils who resided in the North of the country greater political rights. Disappointed by these turn of events, Tamils lost faith in their political leaders as well as the Sri Lankan political process that blocked every attempt to accommodate them. During this period a number of militant groups sprung up. The most prominent of them was The Liberation Tigers of Tamil Eelam commonly known as the LTTE or the Tamil Tigers, which was formed in 1976 and headed by its founder, Velupillai Prabhakaran. Its aim was to create an independent Tamil state named Tamil Eelam in the north and the east of the island. It was only in the 1980s that the LTTE grew in popularity, especially after the failed attempt in 1983 of Tamil legislators to push through reforms for their people.  However, the LTTE quickly became infiltrated by British, Indian and US agents- leading to infighting and confrontation with other militant groups. In the 1980s Britain pushed India to support both LTTE and the Sri Lankan government in response to the growing American influence in Sri Lanka. Eventually, India under the pretext of preventing Tamils in India joining the Tamils in Northern Sri Lanka to create a separate homeland directly intervened in the conflict, especially when the Indian Congress ruling party realised that the Sri Lankan army was close to wiping out the LTTE. The intervention of India was continued in the form of a political face of it, and in the form of help to the Tigers from behind a curtain, On July 29, 1987, Indian involvement led to a peace accord signed between Indian Prime Minister Rajiv Gandhi Sri Lankan President Jayewardene. Under this accord, the Sri Lankan Government made a number of concessions to Tamil demands, including devolution of power to the provinces and the establishment of an Indian Peace Keeping Force in return for stopping support to Tamil insurgents.

4- Indian occupation of parts of Sri Lanka backfired and led to a humiliating withdrawal of Indian troops. America exploited the negative sentiments against India to cement its relations with the LTTE as well as the Sri Lankan government. But America gave preference to the latter. Thereafter, America's relations with the Sri Lankan government grew stronger and reached a new level of cooperation in the days after the attacks of September 11 2001. America now gave Sri Lankan government the green light to pursue the fight against LTTE as part of the global war on terrorism.  In return America sought to establish strong military and economic ties with Sri Lanka. In June 2002, Washington held discussions Colombo on a far-reaching Access and Cross Servicing Agreement (ACSA) that would enable US warships and aircraft to use facilities in Sri Lanka.  In July 2002, President Bush met with then-Sri Lankan Prime Minister Wickremesinghe at the White House and pledged U.S. support for peace and economic development in Sri Lanka. The United States and Sri Lanka signed a new Trade and Investment Framework Agreement (TIFA) in 2002.An immediate casualty of this newfound relationship was Britain which found itself increasingly isolated for two primary reasons. First, the congress party in India had been replaced by the pro-American BJP, which was reluctant to adopt an aggressive policy towards Colombo. Second the Sri Lankan government was now under the influence of America. Thus Britain resorted to supporting the LTTE until its demise this year.

5- However, it was not until the election of President Mahinda Rajapaksa's in November 2005 that America finally got a Sri Lankan government in place that wholeheartedly supported the destruction of LTTE. In fact Rajapaksa's was elected based on his promise to defeat the LTTE.  Rajapaksa formed pacts with the hardline Janatha Vimukthi Peramuna party and extremist Buddhist monks. America openly welcomed his re-election."We remain committed to maintaining the historically close ties between our two countries," a press release from the US Department of State in Washington DC said. Adam Ereli, deputy spokesman for the US Department of State said: "The United States looks forward to working with President Rajapaksa as he confronts many significant and immediate challenges. " America through Rajapaksa and his brother who is  Chief of army staff embarked on a campaign to uproot LTTE. Sensing the change in Colombo Britain, India and Europe did their utmost to prevent Rajapaksa's government to wipe out the LTTE.

6-  America provided Rajapaksa's military with vital equipment by instructing Pakistan to help Sri Lanka. In March 2006, Sri Lankan authorities had sought Multi-Barrel Rocket Launcher System (MBRLS) and other advanced weapons from Pakistan when Sri Lankan President Mahinda Rajapaksa visited Pakistan. In May 2008 that Sri Lankan Army Chief Lt-Gen Fonseka came to Pakistan and finalised a deal as per which Pakistan sold 22 Al-Khalid tanks to Sri Lanka in a deal worth over US$100 million. General Fonseka also gave a shopping list of weaponry worth about US$65 million to the Pakistani military authorities. On Jan 19, 2009, in a meeting between Pakistani Defence Secretary Lt-Gen (retd) Syed Athar Ali and his visiting Sri Lankan counterpart Gotabhaya Rajapakse in Rawalpindi, the two countries had agreed to enhance cooperation in military training, exercises and intelligence sharing regarding terrorism.

7-  As the Sri Lankan army made vital battle field gains against the LTTE, Britain her proxy India and Europe sought reconciliation between Rajapaksa's government and the LTTE. Their aim was to protect LTTE from being destroyed. America would occasionally join Britain and Europe in encouraging Rajapaksa to support a ceasefire and engage in peace talks-but this was only lip service. Hence a familiar pattern emerged-Britain and India would voice concern for Tamil civilians caught up in the conflict and advocate reconciliation. In response Rajapaksa's would reject such overtures. In fact in the latter days of the conflict Britain, Europe and India repeatedly called for a ceasefire and encouraged worldwide demonstrations by mobilising the Tamil diaspora to protest against Rajapaksa government's killing of civilians. The Sri Lankan government ignored such please and through US assistance via Pakistan managed to crush the LTTE-a militant organization that controlled vast swath of land in the north, ran its own police force, boasted of its own navy and air force.

The defeat of the LTTE means that British and Indian influence in the North of the country has been marginalized and now gives America the opportunity to consolidate her stranglehold over Sri Lanka and establish a permanent military presence in the country. It also allows America to control the Palk Straits and wield her naval power in the Indian Ocean to counter the Chinese threat. Furthermore,  America can use Sri Lanka to pressurise India -given that the congress party has returned to power for another 5 years-to follow its policies for the region. However, a lot depends on Rajapaksa's ability to repair relations with the Tamils and accommodate their political concerns. America has already voiced support for such an endeavour and has earmarked vital aid via the IMF to Rajapaksa's government to accomplish such a task. A stable Sri Lanka is vital for American interests, and given the history of the region, Britain and her surrogate India will be looking to re-establish themselves in Sri Lanka. The Anglo-American struggle may have subsided for now, but it is certainly not over.  


Hizb ut-Tahrir in Denmark held a protest gathering in front of the Embassy of Pakistan

Approximately 400 people participated in a protest gathering on Friday May 29th 2009, arranged by Hizb ut-Tahrir in Denmark, against the military offensive which the government of Pakistan has launched in the tribal areas. Several speeches were held, during the gathering in front of the Embassy of Pakistan.


Hizb ut Tahrir Wilayah Pakistan conducts multiple protests near Nasir Bagh, Rawalpindi

  • Published in Asia
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Hizb ut Tahrir Wilayah Pakistan conducted multiple protests near Nasir Bagh, Rawalpindi at the spot where their members met faced arrests two weeks ago.  Shabab of Hizb ut Tahrir Junaid Khan and Waqar Saddiqi addressed the gatherings.  They stated that the ongoing chaos, bomb blasts and the operations taking place in Pakistan are benefitting none other than the Americans.  They demanded the immediate stop to the operations and called upon the people of power to give support to Hizb ut Tahrir to re-establish the Khilafah "Caliphate".
















The rulers are waging American war on the hard earned money of the poor people of Pakistan

The last year has been the worst year in the 62 year economic history of Pakistan, thanks to the IMF "throat strangling" policies and American war contract, while 38 year worst record has been shattered in respect of economic growth rate. As per government admission, 35 billion dollar (Rs 2800 billion) of the people's money has been thrown into this foreign war, which is equal to the total foreign debt we had a year ago.

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