Been Laden

The week gone by  has, along with Osama bin Laden, put to rest several  things—the speculation that he had been killed on at least a hundred  occasions in the last decade , that he was no longer a potent force in the scheme of global terrorism , the debate that America will finally always  have its say and way  even though it may be in the wrong with sovereign  rights. However  its not been able to put to rest  the world’s biggest terrorist – Inflation.  

Terrorism ends a life, Inflation ends a living . One grows with time and the other slows  growth.  Terrorism starts with politics and can end with economics , whereas inflation starts with economics and can end  only with economics . In both cases few gain and many perish .They  are caused as  a result of  poor policy and result in poor people . Both have the power to unite and divide .Over time you  get used in both and used to both . Spreading  misery and bitterness  and gathering  blame , both  call for severe action.

For inflation the action has been limited given the fears of de growth in a recessionary environment . Thus ,the US keeps alive its support to the economy through quantitive easing. Europe and Japan unsure about its revival chooses to keep interest rates modest even though inflation would warrant otherwise . China keeps re- evaluating the situation along with  its currency to check the rise in commodity prices and fall in its growth. India often praised for financial prudence has begun to succumb to the pressures of inflation with a regular hike in interest rates at the sacrifice of growth

Reasons for inflation are several at the domestic level . At the global level though it finds its common source in rising oil and commodity prices .Oil prices thrive on a certain demand and an uncertain environment. Its  terror was unleashed with the crisis in Egypt and Libya . It reacted the day the terrorist  bin laden was killed plummeting by 8% .All commodities followed suit. However , that it shall last is unlikely as the reason for its fall may well be the reason for its rise The rationale for the oil price drop was that America now has a better grip of  terror emanating  from west asia  . This means greater stability and  thus lesser crude prices , assuming demand stagnates . The rational for the oil price hike , when it happens , will be Osama’s death and the manner in which he died. Revenge could well become the new found motivation for the terrorist groups . This will fuel  jihadism and thus uncertainty and  and push up fuel prices. Israel was a test and now a testimonial .  Assasination of Hezbollah founder Abbas Mussawi or Hamas leader Sheikh Ahmed Yassin by Israel has only intensified  Israel’s problems . Killing  an  individual does not mean killing the idea and certainly not the ideology . In Israel’s case it proved to be counter productive . It may well prove to be the same post Laden . A revival and unification of fragmented fundamentalists in the region , aided by insecure  monarchs post  the Egypt and Libya scare would cause greater uncertainty. This could mean even higher oil prices .   India , reeling under the additional burden of a wrecked Pakistan may have to  hike its  defence expenditure and thereby its fiscal deficit . America has shown that problems have to be eliminated at the root. That Pakistan was  one major root has been proven . For inflation in India , insufficient supply and inefficiencies caused by mal practise , political whims , corruption  and subsidies are the major roots . Hiking interest rates is cosmetic, misdirected  and proven to be ineffective. What’s more ,it threatens  growth , which has given India its  new found populism . Its a short term solution which will create a long term problem. We need a long term solution to a long term problem. Don’t forget it took America a decade to get Osama

We have killed Bin Laden but we have been laden with the weight of inflation . We need to put this burden to rest . Else the RIP would read – Rest in Poverty. 

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