Thursday, February 12, 2009


AN UNCERTAIN FUTURE

By, Adhvith Dhuddu

 

U-Shaped, L-Shaped or V-Shaped recovery?

Governments and central banks all over the world have taken unprecedented steps in the last few months to reverse the global economic meltdown, so far yielding little results. Most economists have accepted that this crisis is so deep that an L-shaped recovery is inevitable. A V-Shaped recovery is close to impossible due to the unfortunate and destructive nature of deleveraging. What started off as deleveraging at investment banks and writing off bad loans has morphed into a colossal global economic, finance and trade crisis. GDP's are being revised down, international trade and investments are falling, confidence levels are at record lows and the tentacles of this crisis have extended to affect even philanthropic and aid packages. A U-Shaped recovery cannot be ruled out, but for this to happen; the animal spirits of corporations, capitalists and bankers all over the world have to be rejuvenated and trust and confidence in the system must be restored.


Usually when governments try to, "help," economic recoveries always slow down and take time. And with billions being pumped in by governments, it seems clearer that global economies will take a long period to recover. 


Disturbing statistics

It's widely accepted that the root of this economic debacle was a decline in US home prices. Even though real estate prices in the US and around the world have taken a beating, more downside is inevitable if home prices have to revert back to long term means. In the US, home prices rose at an annualized rate of 0.7 percent from 1930 to 1997, and at a startling rate of 8 percent per annum from 1998 to 2006. This coupled with the outrageous trade and fiscal deficits that the US is burdened with will only aggravate the current crisis. Total US debt as a percent of GDP is increasing at unprecedented rates and savings of households in the US is at near zero levels. Knowing how indebted the US consumer is, it's only more discouraging when you realize that 70 percent of the US GDP is consumer driven.


The current crisis is already dampening consumer spending, but as time goes by deflationary pressures could have even more aggravating affects on consumer spending. Deflation is a vicious cycle that leads to lower wages, lesser spending, less capital expenditure and a depressed economic environment. Wages and incomes are not rising anytime soon, and it will only be a matter of time before employees are willing to accept wage cuts instead of a total job loss. This is when a deflationary cycle initiates, and lower consumer spending forces businesses to cut prices. Anticipating price cuts, both consumers and businesses will postpone spending which will only lead to a depressed economic environment.

 

The Indian picture

It'll be interesting to watch how corporate India and the country as a whole manages this downturn. This economic slowdown is the first significant and full-fledged slowdown striking the Indian economy after liberalization. We have experienced consistent growth over the last 18 years (since liberalization) and have not been confronted by anything of this scale and magnitude. We were relatively immune to the Asian financial crisis during 1997-98, and the dot com bust of 2001 helped rather than hurt our economy.


The resilience of our economy will be tested and decreasing foreign inflows and trade, will also measure the power and sustainability of our internal consumption levels. But we are far better positioned than many other emerging economies and will not be victimized by downgrades on government debt, etc, like Spain or Greece. The era of cheap capital came to an end in the summer of 2007, and countries around the world will have to access to capital at a much higher cost. Again, we will partially be immune to this because our foreign exchange reserves will help pad any significant impact. 


There are many aspects that affect an economy at any given time, and although it is challenging to quantify future foreign investments and assess the overall confidence in a country’s economy, our own Home Minister (and former Finance Minister, P. Chidambaram), once outlined major factors that affect a foreign investors’ decision making process. There could not be a better time to revisit these factors and assess them individually to see how well positioned India is to tackle this crisis.


The eight major risk factors are: Political risk, Security risk, Policy risk, Commercial risk, Legal risk, Legislative risk, Judicial risk and Regulatory risk. Let’s briefly examine each one.

Political Risk: With general elections less than 5 months away, political risk does exist and is an important factor. The outcome of 2009 general elections will decide who will lead India out of an unprecedented global economic crisis. The possibility of a third-front at the center not only adds instability to the government but uncertainty in corporate India’s mind as to what policies will be pursued. During these testing times, a steady hand is required at the helm.

Security Risk: Without doubt the Mumbai attacks elevated security risk to a new level. The magnitude and audacity with which the attack was carried out sent shivers down all our spines. This crisis can be used as an opportunity to improve our security apparatus to thwart future attacks. But unfortunately security risk remains high and this is not a very comforting factor.

Policy Risk: Although policy risk is not as directly tied to general election results as legislative risk there will definitely be some impact on policy making with a new government. While our fundamental long term growth policies are deeply rooted, many policy changes will be driven by the new government and might affect the way certain sectors of our economy function. For example, the different ministries like, the petroleum ministry, telecommunications ministry, ministry of power etc, largely affect how businesses in those sectors function. So any drastic changes that significantly affect our long term policies will be unwelcomed.  

Commercial Risk: Commercial risks exist everywhere and the general risk of being in business and succeeding is something that the business owner or proprietor largely controls. However, the general business environment when it pertains to corruption, level of transparency, accountability, etc, has drastically improved from a decade or two ago. This should not be a deterring factor.

Legal Risk: In the wake of an extraordinary corporate governance failure at Satyam Computers, all eyes are currently on the legal and judicial system in India. Although some commendable action has been taken, it’ll be important to watch how the legal proceedings of the case unfold. The magnitude and extent of the Satyam saga will mean the decision taken by the courts will leave a dominant precedent. The only other factor in this area is the ability to enforce laws well. Having world class laws means little if they are not enforced with authority due to fear of retribution. 

Legislative Risk: Legislative risk is again interrelated with political and policy risk. All these three factors, legislative, political and policy risk hinge on the outcome of the general elections in the next few months.

Judicial Risk: Judicial risk largely pertains to how our courts apply and interpret the laws of the land. This is driven by how well separated the judiciary, the legislative and executive branches of government are. Although it is generally accepted in India that there is some intermingling between the three branches, over the years, the judicial independence practiced has improved dramatically. So even though a factor, it would definitely not be a risk.  

Regulatory Risk: The biggest fear given the current global economic scenario is widespread protectionism for India or any other economy. This will drastically affect the progress of our economy, and take us backward rather than forward. If populous policies are followed and over-regulation or misguided regulation takes over, then our economic growth will slow down and eventually stagnate. Although a valid fear, over the years the loosing up of regulators and the freedom given to the markets is an encouraging sign.

So one can think, analyze and assess for themselves how India ranks in all these categories and come to a conclusion as to how well we are positioned for short and long term growth. 

Online link to this article: Click here

Monday, February 2, 2009



AMERICA'S ARAB PROBLEM

By, Rohan Mathur


 

It is not often that a promise made by a single individual 60 some years ago has an ever lasting impact on a region or seals the fate of millions of people. What I am referring to is the deal made by President Roosevelt to Saudi King Abdul Aziz 60 years ago aboard a US aircraft carrier when Saudi Arabia had just discovered oil and America was victorious after world war two. The deal was oil for security and has been popularly called the Roosevelt Doctrine. The Saudis promised air bases and oil supplies to the US in return for American arms and protection. This deal has been upheld by every President/administration since without any change or rethink of policy given our ever changing world.

 

As the new Obama administration gets its bearings around the Middle East issue with all its complexities, it would be wise to rethink the above pact. The US has been a champion of human rights and democracy only with its foes but has conveniently forgotten that its closest allies in the world such as Saudi Arabia, Yemen, etc are the biggest violators of our freedom agenda. These nations are ruled by autocratic rulers and with Oil as a weapon; they yield an enviable amount of influence around the world. Their oil wealth has made them immune to US pressure to modernize and shun their tribal way of thinking. We all must understand that even though our gulf allies enjoy one of the highest standards of living, their societies still think in traditional and often tribal ways. Getting new malls and highways might reflect 

These nations are ruled by autocratic rulers and with Oil as a weapon; they yield an enviable amount of influence around the world. Their oil wealth has made them immune to US pressure to modernize and shun their tribal way of thinking.

material progress, but is not a sign of intellectual/social progress. Women’s rights and freedom in general are unheard of. It should then come as no surprise to the US that Arab public opinion is wary of America’s influence as the populations derived of freedom turn to extremism. Their movements to reform their governments are not supported by the US as one would expect.


I am not saying that we should isolate these friendly nations and throw them to the dogs. But we have to rethink and re-strategize our policies. I am not sure if closing Gitmo was the best thing to do when we are at war. Obama did give his first interview to Al-Arabiya news channel which represents moderate Arab voices and helps explain our position to the Muslim world. This was a step in the right direction as it shows a more humane side of this nation and helps to isolate anti-American voices. The administration should work actively to bolster up reform movements in nations like Saudi Arabia and press the government for more freedoms.

 

We have to be prepared that some of these nations may have popular voices that are against the US but in the long run, the world will be better off with a more democratic Middle East. A beginning has been made with Iraq. As the saying goes, free societies do not fight with each other, they discuss and debate. Time has come to break the shackles of Oil and embrace a new beginning for the Arab street. This would be an important legacy that Obama could leave as a precedent for future administrations and from that day it would fondly be called the Obama Doctrine.

Tuesday, January 27, 2009


The Cruelty of Humanity

By, Prachi Sharma

December 10, 2008 marked the 60th anniversary of the signing of the Universal Declaration of Human Rights.  While this day was celebrated by the United Nations as a reminder of progressive movements that have shaped the modern, globalizing world, it does, in no way denote the progression of human nature. UN Secretary General Ban Ki-moon himself stated that, “the challenges we face today are as daunting as those that confronted the Declaration's drafters."

Today’s top stories include those of government bailouts, stock market downturns and failures in the auto industry.  Many top political analysts see these issues at the forefront of both the next U.S. administration and international relations, but are these really the ‘daunting challenges’ that plague the next four (hopefully eight) years of the U.S. administration and the future of the 21st century?

Second in line to these stories are those international emergencies that are important enough to be publicized and discussed by political experts—the tragic Mumbai bombings and the ongoing religious and territorial disputes between Israel and Palestine, for example.

However, in the past six months we have also overlooked a myriad of other international crises—power struggles and a cholera outbreak in Zimbabwe leaving thousands brutally murdered or left on the streets to die, Somalia nearing a ‘total famine,’ and fatal school collapses in Haiti that killed more than fifty and left several injured in addition to the ongoing rapes in the country’s slums to name just a few.

Although some of these events have had media coverage, they have been mere snippets of news articles or inserted as hollow commentaries from news anchors, reporting what “horrible travesties these nations face.”

Why is it that we—as Americans, as Westerners, or more importantly as human beings—revert to this sort of behavior?  Is it justified to pay more attention to those with closer U.S. ties, to simply ignore that part of our conscience that says otherwise in order to sleep better at night?

Thomas Hobbes’ human analysis of the ‘state of nature’ (human nature, that is) in constant conflict without the sovereign state, on the other hand, has valid consideration.  Rules and regulations are essential to stability and are undoubtedly grounded in the basic principles of the modern global political system.  It is not always prudent, for example, to send diplomats or aid workers to a region where the results would cause more danger to the local population and those who are sent to help.  This mentality creates a desire to preserve one’s own life (or the lives of a State, a people, or a cluster of nations sharing similar ideals).  It is, therefore, clear why more emphasis would be put on Mumbai or Israel—the principle of practical rationality, that people should adopt what they see to be the necessary means to their most important ends (Stanford Encyclopedia of Philosophy).

The signing of the UNDHR was a groundbreaking event, but a contract is not a panacea to conflict and the human condition.  It is reassuring to see that the media, be it through television, newspaper, internet, or films as the wonderfully inspiring “Slumdog Millionaire,” acknowledge and bring to life some of the worst conditions that people all over the world (mostly the developing world) must face.  But we have come to point in history where acknowledgment is just not enough.  The word “change” can not simply resonate in a speech for the duration of a campaign.  It is time to permanently instill the belief of “all are equal” in our minds and to act now. “…We live in an important time.  It is now time for you to wake up from your sleep…The ‘night’ is almost finished and the ‘day’ is almost here…Let us live in a right way, like people who belong to the day” (The New Testament, Romans 13:10).

References and Further Reading:

“World marks UN Human Rights Day” BBC News

“Mugabe crisis 'infecting' Africa.”BBC News

“Somalia nearing a 'total famine.” BBC News

“Deadly school collapse in Haiti.” BBC News

Rape looms large over Hait slums.” BBC News

“Hobbes's Moral and Political Philosophy.” Stanford Encyclopedia of Philosophy

Thursday, January 22, 2009



"CHANGE HAS COME TO AMERICA."-President Barack Obama

By, Danoosh Kapadia


The time has come. President Obama is in office and CHANGE has come to America. Obama may be a savior, but what can one man really do? The truth is, America is already in the midst of a revolution and Obama is merely the instrument for realizing this change. This New America comes from an internal revolution within each citizen—not just the election of a savior.

Economically speaking, 2008 was one of the gloomiest years in recent history. In the first six months, gas prices doubled. This drove the price of basic commodities (like milk which crossed $4 a gallon in July) through the roof. In the latter six months, the foundation that held the American economy as the anchor of the world fell to pieces. America taught the world how to invest—and the investment banks failed. Ford taught the world how to manufacture cars—and the automakers failed. So it’s not without reason that many Americans are anxiously awaiting the new presidency and its promise of economic reform.

In the eyes of the world, the average American was obnoxious and over consuming. Americans ate too much food, guzzled too much gas, and shopped too much. Nowhere in the world did people spend money as frivolously as they did in America. It seemed there was a bottomless pool of credit; which is why the baby boomers lived and died in debt. Twenty-something’s (who were up to their eyeballs in student loans, car loans, and credit card debt) thought nothing of paying upwards of $200 for a pair of jeans or $50 for a bottle of vodka. When it was possible to buy a home without putting a penny down, it became clear that something was drastically wrong. Clearly there was an urgent need for change—a change of mindset, a change of attitude.

Although American markets were put through the wringer in 2008, the world markets are in even worse condition. Amid all the doom and gloom, the U.S. still remains the world’s largest economy—a heavyweight title it isn’t likely to relinquish without a tough fight. Europe and Asia are still waiting on the dollar to regain its strength to boost their own flailing economies. One thing is certain: after an unprecedented $850 billion-dollar government intervention, the virtual nationalization of many industries, and a massive shakeout of many sectors ranging from finance to print media, the post-recession economy is not going to resemble the pre-crisis one by any measure.

The recession, however wrenching, will lead to the restructuring of many sectors. Thirty million dollar bonuses in the finance industry and $0 down mortgages will likely be a thing of the past. Many industries, such as aerospace, technology, and pharmaceuticals are expected to remain competitive. After all, the world still wants its iPhones and a cure to cancer. The U.S. will still be a big market for cars, but hopefully we will soon see the demise of the Trailblazer and the Hummer.

The new stimulus package should create jobs and get consumers back in stores. General trade should not change too much either. America will continue to sell airplanes to the Chinese, who will in turn ship back inexpensively manufactured apparel. But if American consumers stick to their new, thriftier ways the biggest loser in all of this might be the retail sector. As consumer confidence dips and the pressure to cut prices and trim losses increases, more chains might join the fate of Circuit City.

Mauro Guillen, a professor at Wharton School of Business said it best; “The U.S. economy is dynamic and technologically advanced, and that won’t change. The U.S. will continue to be ahead.” China may have mastered low cost manufacturing and India may be the land of the call center, but the new ideas that make it all happen still come from the land of innovation—the United States of America.


The Red, White and Blue

By, Danoosh Kapadia


General Motors (GM stock price) was once the world's largest corporation and still holds its place in the top 10 largest corporations of the world according to the Fortune 500 list. What was once heralded as the symbol of American Capitalism has now been reduced to Rick Wagener (CEO) taking a begging bowl to Capitol Hill. In light of the current economic meltdown, it is time to re-visit the very concept on which America as we know it was built – Capitalism!

RED:
Whichever way you look at it, America is in the Red. One industry after another is not only taking a hit, but is virtually collapsing without government "bailouts." First we saw the mortgage industry collapse, then came the financial industry, and now, the auto makers. And now, the numbers don’t look very sanguine for the big players in retail and the print media industry.

The big question this year has been whether the government should continue bailing out businesses or let them fail? When the government injects money to save an industry giant from falling, it often comes with numerous regulations and strings attached. This goes fundamentally against the free market concept and in fact moves towards that of an over-regulated market. According to the free market theory, when the going was good, corporations prospered, and CEO's made millions in bonuses. By the same measure, when things go south, shouldn't the CEO's be accepting no salary and paying the price? And shouldn't the companies be forced to file for bankruptcy, regroup, break free of contracts and trim themselves into shape? If this fails and there's no hope of future profits, then shouldn't they be forced into liquidation and pay the price for poor decision making and inept management? The tragic part is that economics is theoretical, but reality is a different ballgame.

WHITE:
The white collar workers are coming under the gun day by day. They made millions when free markets reigned – even as the companies took a nose dive into the ground. Rick Wagner (CEO) made $15 million last year (a 65%increase from the previous year) as his company was consistently losing market share to Toyota. Merrill Lynch CEO, John Thain had the audacity to suggest he get a 2008 bonus of as much as $10 million even though his company lost $10 billion this year. Isn't this ludicrous? I believe in capitalism and agree with the fact that these CEO's have earned their right to a substantial pay. They went to the best schools, put their shoulder to the wheel and sacrificed their personal lives for their careers. But isn't $10-$15 million ridiculous amounts to ask for in troubled times? Its one thing to get an enormous bonus when the company is doing well, but in troubled times, shouldn't this be the first cost cutting factor before a single job is cut?

When the financial industry collapsed, the government scrambled, shored up the cash and threw it at Wall Street without a question. The financial industry is largely viewed as white collar, and in comparison the auto industry is largely viewed as blue collar. It has been deeply questioned as to why money was thrown at the white collar workers, but the blue collar workers were made to beg in Washington and every aspect of their plans had to be laid out in detail before they would get a penny in bailouts. The justification by Washington is that the companies that were bailed out had the potential to make profits in the future and sustain or even create jobs. The corporations were falling more because of unavailable credit, than poor performance. The automakers (A five year history of GM and Ford's stock price) on the other hand had poor management and foresight in consumer needs and have been consistently losing market share to foreign auto makers like Toyota. A bailout to them would essentially be a band aid, and the root of the problem would not be solved.

BLUE:
As we have historically seen, when things go bad, it seems that the blue collar workers end up paying the price. However, they also deserve some portion of the blame. If it weren't for the UAW (UAW homepage) making lofty demands and tying the big three into iron clad contracts at a time when business was good, this problem would have never come about.

GM was inclined to give the UAW what it wanted in 1976 because it was selling everything workers could make. Today, GM is staggering under a combined $114 billion in retiree health liabilities shouldered as workers hold the union and companies to the promise of a pension and lifetime health care. GM's share of the U.S. market has tumbled from 46.9 percent in 1976, when those contracts were negotiated, to 23.6 percent today. How is it possible to provide the same benefits when they have half the market share?

In the 70's these workers believed they could do anything since they owned the automobile industry. They indulged in drinking and drug abuse during work breaks, because they were protected by the Union and couldn't be let go easily. They became complacent and this showed as the quality of cars coming out of Detroit was steadily declining. In the mean time Toyota was perfecting its manufacturing technique and streamlining its process to minimize waste and maximize quality. Moreover each worker was trained to do only one task, so error was minimized. Bankruptcy is a terrible option for the UAW as it will nullify the union contracts. Unions have captured a significant portion of the Democratic Party and they rightly sense they can get a better deal from the Democrats in power than from a bankruptcy judge. Some people argue that it's management calling for the bailout, not the union. Well, the individual interests of management and the UAW seemed aligned perfectly. It may be management doing the lobbying, but its union muscle that's opening doors and gaining audiences.

Where has the spirit of capitalism gone in all this? Why did things reach this stage? The CEO's of the big three went to Washington with a tin cup saying if they weren't doled out cash, they would bleed to death at their doorstep taking millions of jobs, costing taxpayers over $100 billion, and plunging the economy into a depression with them. Where was the vision? The leadership that gets paid $15 million? Where was the American spirit of innovation? When they first came, they came with no plan, when they came a second time they came with a loose, ineffective plan basically telling congress it was now their problem to save the industry.

If the very platform and ideology that made this country what it is; is now failing? What hope is left? White collar and blue collar workers need to get together and re-structure. This is not the problem of the CEO's or the UAW or Congress; it's a problem of attitude, foresight and vision. Look at Toyota (Toyota's stock price) and Honda (Honda's stock price) – why are they not in the same boat? A 'Car Czar' looking over the big three bailout operations is free market sacrilege. It's time for the Red, White and Blue spirit to prevail, time to regain the capitalist spirit and that's the only way to get out of this mess and return these corporations to their former glory. Or has capitalism really failed, leaving us on the brink of another revolution?

Monday, December 15, 2008


A Case for the survival of Israel

By, Rohan Mathur

 

All of us have been through a phase in our life where we had an annoying cousin or friend who we quarreled with and calm was always kept by a mature adult in the family. I am asking the people and the government of the state of Israel to do the same. We all are aware of the ongoing tensions between Israel and its arch rival- Iran. Just to give everyone a background to this complex problem, Iran wants to have the capability of enriching uranium to produce nuclear energy even though it has the 2nd largest deposits of Natural gas. But Israel is concerned that Iran will use it to make a nuclear weapon thus creating the 2nd holocaust. Though these fears are genuine, they are not as real as the Jewish state may want the US and the word to believe. Iran is a nation with a well educated middle class and a vibrant society. It is not a threat to US interests as the hawks in Israel would have us believe.


Iran is a shitte majority nation unlike the oil-rich Gulf States who make up the Sunni majority nations. These nations are closely aligned in an unholy alliance with the US but are adamantly against the state of Israel. Such hypocrisy would make anyone’s head wobble.  The oil-rich states were wary of the Iraq Invasion as Iraq is a predominantly Shitte majority nation which was being ruled by the Sunni majority. The overthrow of the regime in Iraq has created an ally of Iran which they dislike. Along with Iran backed Hezbollah, this created a shitte crescent from Iran to Lebanon. This is truly the biggest nightmare for the Arab states. This is also true for Israel. So what we see is a targeting of Iran by both sides to limit its powers and its influence. I am not suggesting that Iran has a right to a nuclear bomb but the question to be answered is who decides that. All the major powers are nuclear armed and Israel is rumored to have its own.


The media is abuzz with stories that Israel is thinking of bombing Iran’s nuclear facilities. This will be a monumental folly. Israel should not compare bombing Iraq’s nuclear reactor in the 80’s to Iran. As Iraq learned in the 10-yr war between itself and Iran, even though Iraq was backed by the whole world, the war was inconclusive. Not a single inch of territory was annexed. By bombing Iran, Israel would have to face its wrath and drag the US into another war for no fault of its own. We should not give a chance to Iran to bomb US allies in the gulf like Kuwait and Saudi Arabia where tens of thousands of US troops are stationed.  This would be catastrophic for the already volatile oil markets. Iran has a number of warheads already aimed at these vital installations. This would give Iran the excuse it was looking for to get rid of the gulf monarchies once and for all.


Iran also controls the strategic straits of Hormuz which controls about 40% of trade for nations like India, China, Japan and the whole Far East. We should not fall into this trap laid out by Iran and Israel should have confidence in its retaliatory strikes. It should prepare its defense mechanisms so that any strike by Iran can be intercepted and shot down. This is one headache President elect Obama does not need and want at this time nor should our ally and friend Israel. I would strongly plead with the Israeli government and media to instead focus its energies on resolving the conflict with Palestinians so that we can see an end to this once and for all. This would win Israel lifetime of peace and security. President elect Obama would have a vital role to get this message across to them in order to safeguard US interests too and may be the biggest foreign policy victory the world has ever seen. That would really be the change we all have been looking for. 

Thursday, December 11, 2008


Bio-fuels, Food crisis & The Genetically Modified Organism Industry

By, Harsh Doshi

The era of "agrofuels" has arrived, and the scale of the changes it is already forcing on farming and markets around the world is immense. A study conducted at Yale University found out that across the US, 20 percent of the whole maize crop went to ethanol last year. How much is that? --Just 2 percent of US automobile use. A majority of the countries have promised to commit themselves to alternate energy and therefore farmers are rushing to grow profitable crops such as maize, sugarcane, palm oil, all of which can be turned into bio fuels, but that means growing less of other crops.

While bio-fuels may be a good form of alternate energy it is having a considerable effect on food prices. Almost all the maize that was grown until a couple of years ago was used for human and animal consumption, but now most of the maize grown in the US is used for ethanol production. And as US grows most of the world's maize, its price has doubled in a year and the price of wheat has risen by about 50% as per the Yale study.

The increase in demand for agrofuels is hitting the poor the hardest. The United Nations World Food Program, which feeds about 90-million people mostly with US maize, stated that 850-million people around the world are already undernourished. There will soon be more because the price of food has increased by 20% in a year. Even climate change has started to affect the global food supply system tremendously. With unpredictable weather and longer lasting droughts it has become increasingly difficult for farmers to foresee the weather patterns for planning.

A lot of industry experts have pinned their hopes on genetically modified (GM) crops which would be drought resistant and produce higher yields. Even though the GM crops seems like an excellent solution to the increasing food crisis, it can have a negative impact too.

The largest plant breeders are Monsanto, DuPont, Syngenta and Dow Chemical, the global plant-patenting GMO giants. Monsanto holds world patent rights together with the United States Government for plant 'Terminator' or Genetic Use Restriction Technology (GURT). Terminator is a technology by which a patented commercial seed commits 'suicide' after one harvest. This clever genetically engineered seed forces farmers to return every year to these GMO seed suppliers to get new seeds to grow their crops. If broadly introduced around the world, majority of food producers will become dependent on these companies which are backed by the US government. Such control and power over the food chain can create a lot of destruction as these companies on the order of the US government can deny seeds to a nation whose government's policies go against Washington's.

Only time will tell whether such a crisis will ever materialize but God forbid if it does then it definitely seems like a scary world to live in.