As economists around the globe debated last week whether recovery will be V shaped or W shaped, the US consumer continued to close the gap between his income and expenses, Obama continued to harp more on healthcare insurance than health itself, and Russia initiated a renewed offensive against alcohol, China quietly recognized the need for offering a decent and safe return to individual savers, prescribing a minimum yield of 4.2% for corporate bonds.

Chances are that this is the proverbial foreplay before the act and the world’s second largest economy would begin raising interest rates before Geithner manages to raise his eyebrows in a manner that disguises annoyance as surprise. Now don’t start guessing where RMB will go if China hikes rates. Leave that to Soros and Buffett, for Bernanke certainly can’t figure it out. Japan is continuing with 0.1% as its basic interest rate, to force its citizens to spend more, still not realising that in Asia, a lower rate of interest spurs savings, not spending.

Lenders (Asia) keeping their currencies undervalued and borrowers (US-EU) ensuring their currencies are valued at or above real value is a rather bizarre phenomenon that has lasted nearly two decades. Its time Asia found economics teachers other than Keynes and Krugman, though it is because of this absurdity that Asia is sitting smugly on a pile of cash and has started admonishing the developed world for its profligate ways.

While on currencies, financially illiterate Russia’s simple exchange-rate basket should provoke some thought – 55% dollar, 45% euro. If Putin also knew that for staving off currency speculators, there is no need to spend hard currency (central banks too are free to buy and sell forward), probably Russia would have been in a slightly better shape today.

Economically indicative news that came in last week included oil dipping below 70 again, expectations of US consumer bankruptcies hitting 1.4 mn and trade deficit plunging 50% this year, consumer confidence dived unexpectedly last month, and big banks continue to sell toxic assets at discounts in excess of 50%. At least 140 ‘distressed-debt’ deals have already been stuck, for about $85 bn. If reports of corporate executives selling their personal holdings and Obama’s approval ratings declining are correct, claims of recovery are incorrect. The people are never wrong.

Like China, South Korea and India too continue to look for energy assets abroad, ING (The Netherlands) has cut over 8000 jobs and has put its private banking assets up for sale, Switzerland has more or less given up attempts to continue to be cosy with tax evaders from all over the world, OECD is planning a Global Forum of 84 nations for sharing tax information, and India is facing a severe drought that may impact global grains prices significantly.

Algeria has started curbing consumer loans for conserving forex, aggregate allowance received by 5.7 mn German children from parents is down by €600 mn, and Mexico has started handing over pension money to builders of infrastructure. Meanwhile, one report says US banks are charging penalties of $40 bn a year for overdrafts by consumers.

Russian President says alcoholism has been a national disaster (18 litres per capita), Cuba is running short of toilet paper, Americans have discovered that the good old rum isn’t so bad, after all, a Paris swimming pool has firmly refused to let Muslim women swim in burkini (a suit that covers the entire body), and US Congressmen have dropped plans for buying new jets for roaming around the world at public expense.

Desperate situations, measures and responses are becoming the norm. GM is selling cars online through eBay and Gap says its jeans being retailed for $60 a pair are ‘premium’ jeans. Gucci is suing Visa because fake bags were bought with its credit cards and the US military, which was finding it difficult to recruit high school diplomas until yesterday, has started receiving applications from post graduates and it is even refusing to accept people with criminal backgrounds.

Arrest of Rio Tinto employees by China has resulted in consternation in several countries. Whatever the truth behind this specific incident, bribing developing world officials has been routine for MNCs. The latest example is Control Components of California, which has pleaded guilty to having bribed officials of more Chinese companies than one can count. What the St has robbed the world of can be counted in trillions and yet US leaders have the temerity to teach ethics to the third world. By the way, Sicilian is not the only breed of Mafia; reports of another (’Ndrangheta Mafia) having a firm presence in Germany came in last week. US airlines have started asking passengers to provide birth dates and full names as in govt records.

All seems to be quiet in Iran, Iraq and Pakistan, though Hillary Clinton did thunder a little while in Congo last week that she, not Bill Clinton, is the US Secretary of State. Well, well, everybody knows that but please clean up your house before travelling abroad to eradicate corruption. An interesting view has been put forth by former Kennedy aide Schlesinger who says future leaders of LatAm will be less hostile toward America because they didn’t see the West destabilize neighbours. Perceptions can be very perplexing. Australia is the world’s largest emitter of carbon dioxide per capita and Afghans say they are as happy a people as any average nation.

China has allowed computers not equipped to screen pornographic content and WTO has ordered it to let private firms also import DVDs from US but that doesn’t mean the dollar would go up. Wal-Mart has realised that US style giant stores cannot be set up in crowded cities like Sao Paulo but JetBlue is offering unlimited flying within US for $599 between 8 Sep and 9 Oct. So the right course of action is to have a holiday in God’s favourite country while the Sun is still shining there.

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