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As documentary the film does a poor job on banking and banking policy. By and large Inside Job takes an inflammatory, biased tone. At times, it seems deliberately misleading or false. Bankers, will find it more mockumentary than serious analysis. It might still be useful as a case study in propaganda.Strike 1: The opening comparison is rank speculation.The film opens with the factual observation that Iceland's GDP at the start of the crisis was about US$13 billion per year. It then claims that Iceland banks lost US$100 billion.Such a provocative, audacious claim begs further research. Apparently, it has no factual basis. Instead, a speculative dollar figure for Iceland's foreign currency exposure morphed into a claim of loss.The real loss is unknown and the potential loss depends on the value of the assets and liabilities. As of 2Q2008, Iceland's banks had liabilities of about US$166 billion, but they had assets of US$176 billion. Like most banks, the assets have a long duration, while the liabilities have a short duration. Most of the assets and liabilities of the banking sector were denominated in foreign currency. That does not mean that the losses were the same as the foreign currency exposure.While we don't know exactly what the financial position of the Iceland banks was, we can do some judicious guessing based on the quarterly reports of the banks and the information releases of the Iceland Central Bank in the middle of 2008.The banks had assets and liabilities of about US$176 billion and US$166 billion, leaving equity of US$10 billion. About 21% of the assets and 15% of the liabilities were domestic. Refer to the table, below. That suggests (1) that the domestic portion of the bank was highly solvent, while the foreign portion was insolvent by a small amount.Kaupthing regularly published a table explaining the match between their short-term assets and liabilities. If we assume that the condition of Glitnir and Landsbanki was similar, in (2), we find a short term funding shortfall of US$10-$11 billion.Such a shortfall is typical for banks; they cover it in a variety of ways. As the nominal lender of last resort the Central Bank of Iceland was holding more than US$2.5 billion in foreign currency reserves in July 2008. The three main banks also had short-term lines of credit in Sweden, Norway, and Denmark of about US$4.9 billion. That left a further shortfall (3) of US$3.1 billion.The cost of the bank collapse itself should have been about $3 billion. That at least, is a verifiable number, discoverable from sources as varied in quality as Wikipedia and the NYT. http://www.americanscientist.org/After unwinding the banks' positions, another US$5-US$6 billion was owed to foreign depositors in the UK and Netherlands. The Central Bank of Iceland defaulted on those obligations. The home governments, primarily in the UK and the Netherlands, absorbed those costs subject to litigation.In other words, the lower bound on the actual loss to Iceland is about $3 billion. The upper bound is about US$9-US$10 billion. Iceland has said that they believe that the UK and Netherlands will eventually be paid US$9 billion from the receivership trust, i.e., a net gain, not a loss.In any event, the outcome is unknowable until the assets are either sold, mature, or are written off. What is known is that the losses will not be to Iceland or to Iceland's banks. If currently available public information is correct, most of the losses will not fall on depositors, either. As of 2012, other than some depositors in Germany, the depositors have been paid.That leaves the investors (mainly bondholders) holding the bag. The Iceland banks reportedly had little exposure to CDOs, and their asset quality was believed to have been very good.The film gives the impression that Iceland's bankers were uniformly dishonest and incompetent. The opposite is true. The bondholders may wind up doing very well. There is no choice but to wait and see.As of summer 2011, the original Kaupthing still existed. It was holding the bank's foreign assets/liabilities. It had not been declared bankrupt, but it wasn't fully operating. If ongoing legal investigations concerning the possibility of looting bear fruit, there may be some clawback potential. The eventual losses on the bank may turn out to be very small.*Strike 2: Goldilocks always thinks her porridge is just right.Talking heads from Iceland say: "We had the complete infrastructure of a modern society: clean energy, food production, fisheries with a quota system to manage them, good education, clean air, not much crime--a good place for families to live."That is a fair description of the situation immediately before the crisis, but not so great for twenty years ago, i.e., before they took steps to get their economic act together after 1990. Prior to that the situation was, at best, mixed.Iceland itself is economically marginal, constrained by climate, terrain, and resources. Iceland had decent economic growth in the post-WWII period, but it was punctuated by periods of hyperinflation. During the inflationary period in the 1970s and 1980s, the usury laws kept real interest rates negative. Under those circumstances, it's difficult to have a banking system, so what banking there was had to be state-owned, and housing loans amounted to gifts.That is, the government decided who had Christmas and who didn't, and there was a good deal of social resentment by those who didn't get houses of those who did. Among other things, that meant that there was substantial unfulfilled demand. There was a lot of corruption and not much capital formation; industrial projects were done with direct or indirect foreign investment, commonly with government guarantees. The krona was difficult to exchange with any other currency. Part of that was a consequence of uncontrolled inflation.After 1979, when the government legalized loan indexation, borrowers had to pay back the real value of their loans. That stimulated savings and investment. Once you realistically remunerate capital, it quickly becomes obvious that state-owned banking produces an inefficient allocation of a primary economic factor. When Utvegsbankinn (a state owned bank) collapsed, they combined its assets with those of three other banks to create Islandsbanki, the predecessor to Glitnir. (Glitner still exists, too. It has reverted to the older name, Islandsbanki)*Strike 3: Counterfactual use of language to imply victimizationNarrator: "They started by allowing multinational corporations like Alcoa to build giant aluminum smelting plants and exploit Iceland's geothermal energy sources."The government actively sponsored corporate investment in poor, eastern Iceland, which had been suffering from population losses. It was the biggest investment project in Iceland's history. The Ministry of Industry, the State Power Company, and the municipalities cooperated in pulling it off. They cut taxes at the same time.So… we have the privatization of a collapsed state-owned bank, public infrastructure development financed by deficit spending, and massive tax cuts. It amounted to a substantial Keynesian fiscal stimulus.Nevertheless, construction of the Alcoa smelter in east Iceland started after they had already completed the process of privatizing the failed state-owned banks, a process that took more than a decade. The plant came on line in 2007, seventeen years after they started the process of economic modernization.*Strike 4: False claim. "In February 2007 the rating agencies decided to upgrade the banks to the highest possible rate, AAA"Technically, one ratings agency, Moody's, reaffirmed its rating on sovereign Iceland itself, not its banks, Aaa. Moody's was blasted by the financial services industry for the rating. Also, since joint default analysis decreases power to discriminate between banks, that rendered Moody's ratings largely irrelevant.Fitch downgraded Iceland's sovereign debt in February 2006. By March 2006, Merrill Lynch and Den Danske Bank had issued negative reports about the banks and the spreads they had to pay widened to reflect emerging market risk. In March 2006, 5-year senior CDS spreads at Kaupthing and Landsbanki surprised the markets by breaking through 100 bps, 91-92 bps above iTraxx at that time; Glitnir was 38 bps over iTraxx. By August 2008, the spread over iTraxx had widened to 927, 602, and 954 bps over iTraxx at the three banks, respectively.In one sense, that's not a surprise; spreads widened throughout the system. However, at the time the Iceland banks were relatively profitable and liquid in addition to having growing deposits and relatively high capital ratios. That's not usually a recipe for extremely wide spreads, but the overriding concern was not about the banks, at all. It was about sovereign credit and government policy, much as it is today.Until early 2006 almost all of Iceland's bank borrowing occurred in the European debt markets. Unfortunately, after the downgrade the European debt markets largely cut them off. Isolated from their traditional sources of lending, they turned to the US debt markets, instead. They borrowed about US$6 billion in the US debt market in 2006, and a further US$2 billion in 2007. Perhaps predictably, most of that wound up in the CDO market.S&P raised the rating on Glitnir's *paper* from A- / negative to A- /stable in 2007, not AAA. Its short term paper was rated A2, which is to say that during periods of credit crunch, they were out of luck. It isn't always possible to float A2. Their rating on intermediate paper went back to A-/Watch negative in March 2008.In addition, the rating assigned to a bank's paper, or to its host country, is not the same as the rating on the bank itself. Moody's rated Kaupthing in summer 2007. It got a 'C.' In May 2007, Moody's rated Landsbanki Caa1/E/NP/Developing. Fitch rated it D/D/F/Evolving. It is useful to understand what that Fitch rating means:D: A bank that has weaknesses of internal and/or external origin. There are concerns regarding its profitability and balance sheet integrity, franchise, management, operating environment or prospects. Banks in emerging markets are necessarily faced with a greater number of potential deficiencies of external origin.F: A bank that has either defaulted or, in Fitch Ratings' opinion, would have defaulted if it had not received external support. Examples of such support include state or local government support, (deposit) insurance funds, acquisition by some other corporate entity or an injection of new funds from its shareholders or equivalent. In other words, these were shaky banks with serious problems of both internal and external origin, but with apparently reliable government guarantees that Fitch believed were necessary to keep the banks from defaulting.The claim that anyone with experience in banking thought that Iceland's banking system was tenable without a government commitment is not credible.Iceland's banks had access to mezzanine lending mainly because of support of the banks by the public sector and because, at least on paper, Iceland was complying with the requirements of their commitment to join the EEA, a process they started in 1990. That combination created a mismatch between their credit rating and the above-market interest rates they were paying. On paper, they were the cheapest game in town, and it seemed that one could use Iceland paper to both raise the quality rating of a pool of debt securities and its yield.Even the question is misspecified. The real question is how a tight-fisted sovereign, with little or no debt, and a fully funded pension plan gets a rating as low as A or BBB? The answer is pretty easy. It periodically imposes capital controls, allows hyperinflation, and has usury laws that keep real interest rates negative for long periods of time. That a country that does those things would have mediocre ratings on its paper and would have to pay spreads like an emerging market is no surprise at all.As of August 7, 2008 just before the ho-ho hit the fan, CreditSights summarized the prevailing ratings on the Icelandic bank's paper as:Kaupthing Glitnir LandsbankiMoody's/S&P/Fitch A1/NR/A- A2/BBB+/A- A2/NR/AAgain, not a AAA in the lot. What * is * surprising is that anyone would make such a claim as if no one could look up the publicly available information.*Strike 5: Misplaced liability. "American auditing companies like KPMG audited the Icelandic banks and investment firms and found nothing wrong."PwC-Iceland audited Glitnir and Landsbanki. KPMG audited Kaupthing. As for not finding anything wrong with the banks, that's not a surprise. The audit report is based on the information provided by the bank. In November 2010, the Big Four, Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers, testified before the House of Lords in the UK to the effect that the auditor is never responsible for failing to detect the lies their clients tell. Sometimes the auditor gets held responsible anyway, but the basis is commonly flimsy.Interestingly, Iceland is suing PwC-Iceland for audit failure. The basis of the suit appears to be that the auditors didn't catch the banks' lies and shut them down sooner. I find that interesting because on the face of it, I thought the best case could be made against KPMG. As of November 2007, Kaupthing appears to have had a billion-Euro, fake line of credit set up for them by Deutsche. That is 'fake' in the sense that the terms are so punitive that the line would never be used. That strikes me as a detectable, deliberate potential fraud that KPMG could and perhaps, should have noticed.*Strike 6: Definitional mismatch. Banks encouraged depositors to shift to "money market funds"True in a weak sense, but misleading. Depositors disintermediate pretty quickly once they see the difference in return between bank interest and treasuries. Money market funds is in scare quotes because the CESR didn't adopt a standard definition until May 2010. I found the remark itself jarring; in the US money market funds are very tightly regulated to prevent them from breaking a dollar, so I wondered how disintermediation into them could have resulted in substantial investor losses. Surprise. The Iceland banks loaded their own stock into the alleged money market funds. Evidently, the depositors either didn't read the prospectus, or they didn't care.Disintermediation of deposits into US money market funds starting in 1971 forced deregulation of banks in the US, so it wouldn't have been a surprise if it hurt the banks; the surprise was that investors lost money on the funds themselves. They were not, however, the same sort of funds.*Strike 7: Materially false and misleading statement--Financial Supervisory Authority did nothing. The regulators were 'outlawyered?'Not quite true. As sources of borrowing dried up in Europe and the US, the Iceland banks increasingly used short term financing and foreign deposits to raise capital. Rolling over long term debt with short term instruments is very risky. Despite having almost no national debt, no one stepped up to provide bridge financing.You'd have to be very gullible to believe the Icelanders didn't see the potential train wreck. We know that because of what they did. As the amount of foreign exposure in the banks' portfolios rose, so did the currency exposure of their capital ratios. The central bank could have maintained its requirements for reserve balance. Instead, they authorized the banks to hold more foreign assets to dampen the effects of currency fluctuations. That made it possible for the banks to continue to pass stress tests without increasing their capital ratios. Meanwhile, after the shakeup in 2006, all three banks (but especially Kaupthing) were shedding risk, growing their deposits, and by-policy, maintaining sufficient liquidity to avoid going to the capital markets for twelve months.I had to wonder whether the claim about the regulators being outlawyered was even serious. It would have made more sense to claim that they were in on it. At least that would be consistent with the observation that: "1/3 of Iceland's regulators went to work for the banks."The reality is that the banks and their regulators did what people usually do. As the crisis deepened in 2008, they tried to stay ahead of the bear as long as they could. Usually, the bear gets tired, as it did in 2006.*Strike 8: Innuendo/guilt by association. "People are amazed at how much cocaine the workers on Wall Street can use and still go to work the next day."This is an obvious cheap shot. I knew one coke-head on Wall Street. I also knew one guy who was addicted to diet pills. There are also some people addicted to pain-killers, but the drug of choice is alcohol. It's a high stress job. As for the bit about prostitution, it might be true. New York has no shortage of cathouses. I knew one executive who was busted for solicitation of prostitution. The coke addict was also an obese alcoholic. What amazed me was that he was still alive every day; he may not be now.*Strike 9: Historical howler. The film claims that after the Great Depression the US had 40 years of economic growth without a financial crisisReally? It's a Wonderful Life. At 40 years, you would have to count the US hyperinflation in the late 1970s, and maybe the Reagan depression of 1981-82. You could get almost 35 years if you didn't count the collapse of the tech bubble in 1970-71, the Nixon shock and associated failure of the international currency mechanism, or the horrible stock market collapse in 1973-74, two oil crises, the waves of disintermediation in the thrift industry in 1966, 1969, and 1973, the deflationary depression during the mega drought in the 1950s, or the land speculation and bust in the 1950s, and so on.The latter event was so bad that states like California wrote non-recourse statutes to let property owners walk away from their mortgages. That, more than any other single factor, laid the groundwork for the form this crisis took (though I think that something would have broken regardless). Most of the speculative bubble, and most of the defaulted mortgages that account for more than half of the total US losses were issued in those states. Sharing risk with free riders is dangerous. A prudent policy change would be to ban the pooling of recourse and non-recourse mortgages.*Strike 10: Historical revisionism. Ronald Reagan appointed Donald Regan, former CEO of Merrill Lynch, who ushered in a 30-year period of financial deregulation.Barely in the ballpark. Currency issues that started during the Johnson administration triggered the first major round of banking deregulation in the US. Widening spreads between the interest rates paid on bank deposits and treasuries led to disintermediation of deposits from the S&L's that disrupted both home building and the mortgage markets in the 1960s. By 1970, there was substantial pressure to permit money market funds to operate, and the first such fund opened in 1971. Competitive pressure severely eroded capital quality at the S&L's.At the same time, rising inflation and widening quality spreads put pressure on the various state usury statutes. The Supreme Court's decision in Marquette v Mutual of Omaha (1978) set of a wave of competitive deregulation at the state level. Since banking in the US follows (what I think are outdated) federalist principles, the state and federally chartered banks face both different rules and different regulators. Along with ongoing disintermediation, easier terms at the state level put pressure on federally chartered banks, and the Carter administration responded by signing the Depository Institutions Deregulation and Monetary Control Act in 1980 roughly fifteen years after the modern banking crisis got underway.On the investment banking side, the first wave of pension fund reform and deregulation pre-dates that by a further 10-15 years, back into the 1950s. Deregulation of brokerage fees went into effect on May 1, 1975, during the Ford administration.Notwithstanding overall equity market appreciation, the intermittent crises in banking go back a long way (to the 1200s at the latest) in human history. To date, no regulatory regime has been robust enough to survive the underlying economic and population fluctuations.*Anyway, it's a polished piece of shoddy research, with almost non-existent fact checking, and it's loaded with innuendo. On the whole, I found it entertaining, albeit more comedic than informative. Watch it as critically as you can, but do not expect that writing a competing narrative will make you popular.There is simply no such thing as a perfectly safe, stand-alone, deposit-taking bank at transaction costs low enough to serve most of the population, even if it has good quality assets and enough liquidity to cover normal operating variations in deposits and short term liabilities. Under tight regulations, the banking industry breaks and strains the treasury. Under looser constraints, the banks survive longer without breaking, but so far, they still eventually break and strain the treasury. One thing that we cannot say is which way strains the treasury less. We have only one history and it is path dependent.Banks are unpopular. They lend money expecting to be repaid. People like the idea that they can consume more than they earn today, but no one likes the repayment part. The film repeats an old saw: Banking doesn't *create* anything. It tallies credits and debits. That's somewhat true. Ultimately, what banks do is collect the best available information. On the other hand, banking doesn't destroy anything either. It is implausible as the cause of the crisis.The main macro cause is tucked away near the end of the film. Free trade has exposed the developed economies of the world to a massive, global labor surplus. Wages for commodity and semi-skilled labor are severely eroded, but wages for skilled and professional labor have been under pressure, too. To cope with global development, central banks have been releasing waves of liquidity to keep the system from melting down. These problems are not local. They will not be solved by the reimposition of failed regulatory regimes.

Yes. The plan itself is flawed.I am reproducing here the article I had written some time ago. This article is going to answer your question. Since associate banks of SBI are getting merged on April 1, 2017, the question has current relevance.Why our banks should not be merged: an un-unionist perspective.I think it's time to write a little on the topic since the cabinet decision to merge associate banks of SBI with SBI has already been taken and the Order to do so has been issued. Come 1st day of new financial year 2017-18, and there won't be any associate banks of SBI anymore. Though I would say that they were already subsidiaries of SBI getting regulated by SBI subsidiary banks act, 1959 having the same brand 'State Bank', same logo, same recruiter, same head & so on. So their merger with SBI does not evoke as injusticed a feeling as it would have, had they been merged with some other banks but SBI. It's like parts of a single group company coming together to the parent fold.Secondly, I'm least concerned about the amalgamations of banks under section 44A (voluntary consolidation) and section 45 (persuasive consolidation of weak banks in depositors' interest or in the interest of the economy) of Banking Regulation Act,1949 taking place. However I do not support the uncalled for merger seeking refuge under this section 45.My contention is for well performing public sector banks. Being the largest stakeholder of public sector banks doesn't mean Government can do anything it wants at will. All the PSBs are first owned by people. It's all people's money that runs the banks and hence the economy. The government is just a custodian and caretaker manager of people's money. And it is for this reason that Finance Ministry and RBI exist. Government in the 2016-17 budget had proposed for amalgamation of banks, which started rapid activism in this direction. The Bank Board Bureau chief Shri Vinod Rai even chalked out some plan and Govt came out with Six Anchor Banks scheme proposal into which all 27 PSBs would be merged. There has been little progress in other PSBs' case except SBI and its associates. The February 22, 2017 Order is a new development in SBI's case.Therefore, while bank unions and trade unions have already presented their vociferous concerns, I'm going to analyse them and put my own views across.THE GOVT. PLAN==============1. Back in 1991, the year of big financial reforms, one Committee on banking reforms headed by Shri Narasimham put forth its recommendations to reform banking and banks in India. It said that we should have three tier structure of banks. First tier of Three Large International Banks, second tier of eight to ten National Banks and numerous local and regional banks at tier three. In 1998, the committee reiterated its already stated recommendations. Since then the respective governments have been contemplating mergers.2. Though being the seventh largest economy in nominal GDP terms (GDP=$2.25 trillion, per capita PPP GDP of $6,658/-; IMF figure dated July 19, 2016), India doesn't have a place in top 50 banks yet. On the other hand China has 13 banks in top 50 with ICBC being the top most and three others (CCB, ABC & BOC) in top ten for several years. Herfindahl-Hirschman Index (HHI) of 518.53 for Indian banks shows that it's highly 'fragmented' and 'diffused'. Hence a consolidation thought out by the government is inevitable.3. Since industries in India are increasingly becoming large, the requirements of larger finance can not be met by existing capital base of individual banks. To finance large projects and larger businesses, India needs big banks. So, by consolidation this objective can be achieved.4. With large size, the businesses of banks can be hugely diversified ensuring multiple strong sources of income. This way it is envisaged that if having diversified businesses, the loss of one kind of business may be compensated by the other's profit, which will reduce the overall risk of banks' failure.5. From 1st of January, 2019, a regulatory provision of BASEL-III is to be invoked. Like Capital Adequacy Ratio(CAR) or Capital to Risk weighted Asset Ratio(CRAR), one new ratio Total Loss Absorption Capacity Ratio(TLAC) is going to be mandatory for globally systemically important banks(G-SIBs) to comply with. This would mean shrinkage of their free-will expansion. Shrinkage of their businesses so as to meet regulatory capital requirements. It has been worked out to be 16% by 2019 and 18% by 2022. In addition to meeting Capital Adequacy norms of at least 10% of Risk weighted assets they will have to set aside 16% more capital to withstand any untoward hazard. Our government by that time intends to put on global stage some big indigenous players to take benefit of the situation and establish our firm presence globally.6. One final aim of the Government that reflected in the early 2016 financial statement of RBI was to consolidate banks in such a way that they focus on their specialized business more than the unrealized obligations to conform to each regulation of a multidimensional bank. In short, from multidimensional structure to unidimensional structure. For example, the bank with greater presence in rural areas will be made to focus on rural banking rather than stepping into corporate businesses involving large credit demands etc. The bank having huge customer base with minimal deposits & lacking in credit will be made to work as Payment Bank. The bank with greater HNI customer base and considerable urban expansion will be made to work as investment bank. They mean specialized business of banks would reap benefits for one & all.In two words, the phenomenon can be termed as 'Business Consolidation'.REASONS AGAINST THE PLAN========================1. Poor people can not make banks rich. Indian people had in total 1170 million savings bank account in 2015 according to statistics released by RBI on 10th of March, 2016. In banking arena, this savings bank account is seen as the root of all accounts. Given the tendency of customers to have more than one such account in different banks, it is not hard to assume that a large chunk of our 1300 million population is having no access to banking services at all. They are completely out of the financial system. Maybe by next few years they get inside the fold through financial inclusion measures like Jan-dhan yojna etc.Now a little comparison between our biggest bank SBI and Chinese biggest bank ICBC would illustrate the premise. ICBC was established on 01/01/1984, whereas our SBI was established some 200 years back but let's take the nationalisation date which is 1st of July, 1955, way ahead of ICBC. In 1970s China adopted reformist measures under Deng Xiaoping. We in 1991. In 2000s the ICBC driven by its increasingly export oriented industries started expanding globally, while our SBI continued to focus on domestic business. Time passed, today ICBC's business figures shown on its website and The Banker's website state that it has a total assets of $3.55 trillion (more than our national GDP) whereas our SBI will have it around $550 billion after merger with its associates. ICBC has 49 crore customers whereas our SBI will have around 50 crore. Evidently our SBI outnumbers the biggest ICBC by 2% in terms of customers' base becoming the world's largest bank in the same terms. But on the other hand, the ICBC belittles that achievement of SBI by showing the total assets figures, currently at 645% of that of SBI. In short, while the number of customers of ICBC is almost same as the (would-be) number of SBI customers, its assets are a whopping 6.5 times more. It means the people who form the customer base of SBI are poorer than that of ICBC.Secondly, let's take a look at IMF’s World Economic Outlook Data, October 2016. India is second to China in terms of population by not a huge difference. But in terms of economy, the difference is so staggering that it will make you take a frowning sigh. Chinese GDP stands at $11.3 trillion whereas ours at $2.25 trillion. Chinese per capita PPP GDP stands at $15,423/- whereas ours at $6,658/-. Chinese biggest contributors to its GDP are Manufacturing 45%, Services 45% and agriculture 10%. Our biggest contributors to our GDP are Manufacturing 26%, Services 57% and Agriculture 17%. Evidently our generators of wealth are not as much powerful as Chinese. The traditional dependence on Agriculture has decreased considerably since 1991. But still its role dominates in the performance of our economy. About services, I would say we can not be Lee Kuan Yew's Singapore. Lee drove Singapore from zero to top on the vehicle of services. It was a small country, and so it sped with unprecedented speed. Ours is a huge one both in size and diversity. It can not be dependent on either of the vehicles. If we have to make our people wealthy, we shall have to give larger impetus to manufacturing. We shall have to compete with China. There is no other way out. And to those imagining how shall we acquire market share, which is already saturated by Chinese products, I would say to look at Reliance Jio strategy. Though the freebies can not be given like Jio but the prices of consumer goods can be considerably reduced. How? Just like our ISRO. At the cost of Gravity film, a satellite in Mars' orbit. Similarly at the cost of iPhone we shall offer automobile. At the cost of calculator we shall offer smartphone. At the cost of tea-pot we shall offer microwave. At the cost of paper books we shall offer e-book-readers. Unless we do this, we can not bring wealth to our people. And with no wealth to the people, how can a bank be wealthy?But what our government is trying to do is to make banks wealthy and large based on numerical strength of our people rather than their capital strength. What we need to do is to make our peoples' income better, the Banks would automatically become the best.2. Acceptability issue in foreign lands. Since our industries are not major exporters of public goods, the demand of our banks' services would not arise in foreign lands. An example. Here in our own country, there is an American company Procter & Gamble that sells various daily-use goods. Even to small wholesale dealers they ask to remit money in its Bank of America, Mumbai accounts by way of RTGS/NEFT. And why do they do that? Because it's easy for them to collect funds from all those countries where they sell. So prior to have banking business in a certain country it's imperative to have goods business first. The goods businesses, I mean, exports of goods abroad pave the way for its bankers to establish business there. Even today wherever our branches are, they are run because of Indian Diaspora. Completely alien people can not do banking business in an alien land no matter how much TLAC requirements are made mandatory for banks, G-SIBs under BASEL-III.Second issue is of acceptability of our Banks' letters of credit. It is said that except SBI and a few others, the rest of the Indian bank's LC is not accepted abroad. And hence our importers face problems; sometimes giving into the pressure, they open accounts in foreign banks to obtain LCs. I think so long as our banks have not evolved on their own on global platform, the services of Indian Banks like SBI and others should be nationalistically sought without giving in to the pressure otherwise. And the exporter who can not trust SBI and those which figure in top 1000 world banks' list, our importers should not import from them and abandon all their mutual business dealings. It's exporters who are dependent on the importers, not the other way round. After all, the customer ( be it any buyer or importer) is always right.3. 'Too big to fail' fallacy. Banks are very volatile structures if left without certain regulations. These structures stand on basic values of customer confidence, customer loyalty and customer integrity. It is not said that banks have to be large. But it should never be so large that economy can not exist without it. We all saw 2007-08 Global Economic Crisis. The big banks like Lehman Brothers and Merrill Lynch failed. This failure brought America to its knees. A ready reckoning in this regard. Suppose we have ten banks with assets accounting for 90% of our GDP. With so much of money banks would be tempted to give credit at lower cost and relaxed provisions. People would throng banks to avail benefit of the opportunity. Banks would extend them best possible credit. Now borrowers would go and spend for their respective purposes. Let's suppose the moratorium is fixed for one year during which only interest would be serviced. After full disbursements, when banks with bated breath will be waiting for return, customers one by one would start to default- some wilfully and some with even genuine reasons. Now banks would have nothing at hand to payback to its depositors. It would start trembling. Since too big to fail, govt would rush in to action to weather the crisis. It would inject bailouts in the systems of banks. The sheer volume of bailouts would further have implications. Like it would reduce the value of money resulting in rampant inflation. High Inflation would reduce demands. With reduced demands, the manufacturing houses would cease their output. With unavailability of public goods, public outcry would rise resulting in complete political, social and economic chaos. Ultimately the government would realise that the very reason for which they made 'too big to fail' banks has itself failed. And it would be too late by then. Something similar happened to America in 2007-08. But their government's swift acts with sheer visionary Federal Reserve and SEC decisions, the impending failure of economy was averted.4. To meet capital requirements for big industries, it is not that only merger of banks is the way forward. There is something called Consortium Finance. This way their huge credit needs can be met. And our banks have rich experience in this kind of finance. Even the common public know it well thanks to Vijay Mallya's wilful defaults.5. Business diversification to have risk diversification is a good concept. But it does not necessarily necessitate huge pool of capital base and hence banks' merger. There are banks in India having around $10 billion to $100 billion assets and they have every kind of business like Bank of America, Standard and Chartered, HSBC and ICBC. And they have been making profits incessantly. It is not that they do not have risky assets, NPA burden and big provisioning requirements. But they have not failed due to the lack of risk diversification. What is earnestly needed is their proper monitoring and regulation, which is deftly being handled by our RBI.6. Business consolidation. While the proposal looks good on face, but it's injustice to the public bank nature of the PSBs. It is like telling a public bank to finance only auto loans since it has good exposure in it and deny financing housing projects because of not having enough proposals. On 19th July, 1969 those 14 banks were not nationalised based on any particular business they were good at, but capital base. Capital generation doesn't have a single route. It comes from multiple sources. Becoming unidirectional would make it lose its sheen & become vulnerable to risks. Specific services providers would get reduced. Therefore if now Government says that this or that specific bank should stop certain kind of business and focus on something else, it curtails the peoples' right to choose what services to avail from where.Shallow Unionist Reasons=====================There are some people in all the unions who rake up issues which has little relevance practically. They try hard to make ordinary things look behemoth. With this practice, they ensure their relevance actually. This practice dilutes the real objectives of Unions like standing against any injustice meted out to its brethren, ensuring collective welfare of co-workers and their fair working conditions, raising voice against wrong and illegal practices and exploitation, ensuring discipline and truthfulness among its brethren, motivating and assisting its cadres to rise and work effectively, guarding against unruliness and sycophancy.Now let me list those reasons which have little or no relevance, but are cited as big ones.1. Cultural Problems. India being a country of numerous ethnicities, races, creeds and cultures has offices filled with all these diverse people. And they do not have problems working together as a team. But once they come out of that team and are made to work with other teams, will they have cultural problems? One example. MS Dhoni worked well with Indian cricket team. Whether he failed with Chennai Super Kings or Jharkhand teams? He was and is a good cricketer. He performed (played and captained) equally well with all the teams regardless of the differences in systems, rules and pattern of the formats. The same is true with we bankers. If someone can adapt to the work life with colleagues of way different cultural backgrounds, it is least to assume that he will perform equally sensibly at other teams as well. The corporate culture imbibed during the stint at a certain place can not prohibit him to adapt to the other cultures of different corporates. Simply, the culture of one place can never become obstacle for other place. That too in India, the land of unity in diversity. No way. There are people who work as officers in one bank and go to others to work as executives. Yes, there may be individual genuine problems to some but overall it's not such a big issue.2. Contagious Effect. It's been assumed by some that if weak or loss making bank is merged with well performing bank, the weakness of former gets induced to the later. This is not entirely correct provided the management of the merged entity is carefully done. There are examples of Canara Bank acquiring Lakshmi Commercial Bank in 1985 and Oriental Bank of Commerce acquiring Global Trust Bank in 2004. Both these LCB and GTB were on the brink of being insolvent, but the managements of acquiring banks have to be commended that they managed to make profits only. So, it depends on the management of the acquiring bank whether the merger with weak would make it weak or strong. It can not be said in general that on acquiring sick bank, the healthy bank would become sick itself.3. Heavily Unionized Atmosphere. It is observed by some that since banks are heavily unionized, it can not let mergers take place easily. The driving thought behind this thought is the assumption that Unions are obstructionists. Instead of saying fair, weighty and constructionist reasons, some Union people have put the blame on themselves by uttering this.4. Software difference. It's true that people accustomed to work with a certain kind of software would find it difficult to work with a different one unless they are trained in it. But it is not a hindrance. Recall the early CBS period of 2000s, when banks used to adopt a software for a while and change it with a better one. This adoption and change continued for quite some time before having present systems. Our people adapted to the changes with proper training. The same may be done to the merging bank employees. They will be trained. If they are not trained, the Union may come to their rescue. That is the constructive role of the Union. But since there is difference in CBS systems, the banks should not merge seems more like a lame excuse than a constructionist reason.5. Kill competition. The competition at locations where both merging banks' branches competed would stop but not the overall business competition of banks.6. Lay off of employees. Since two branches would get merged, some employees may be laid off is the perception being promoted by some. But thinking logically, the business which is managed by a certain number of employees can not be managed by the same once the business suddenly shoots up. It will require more people. So the employees of both the banks would have equal number of tasks, yes, under one roof. People say that since technology would be heavily used, banks may not need as much employees. No. I don't agree. Technology can not take decisions. Technology may make execution of documents and other works easier but it can not act on its own. Hence it will necessitate more focussed approach and expertise not lay-offs. With the help of technology, the processing and monitoring will be eased, delivery of services will be prompt and employees' productivity will increase which will take banks to newer heights.7. Privatisation. By merger, some people see the impending privatisation coming up. If such was the case, why would they merge banks? They can straightaway go for privatisation. But there is no such announcement. Some people in the govt do say it as panacea to cure bad loan problem. But they undermine the real consequences and circumstances of doing so. I don't see it happening any time soon.8. Illogical Provisions. Though it may sound illogical, but the same prudential norms of provisioning on standard assets has stood the test of time since its introduction by RBI. It ensures the repayment capacity of banks to its lenders and weathering the crises of various risks. It is in no way detrimental to the health of a merged bank.Profound Unionist Reasons======================1. Bad loan problems. The banks are given targets to achieve. The managements use every method to ensure that the targets of individual branches are achieved. To meet the targets banks start hunting the right borrowers. Sometimes they get some good borrowers but not always. Here the problem is created. Bad loans evolve from here only. And the cycle starts from Bad loans to NPA to Loss to filing of suit to possession of collateral to auction. By the time of auction, the outstanding liability far exceeds the market value of collateral making banks compelled to sacrifice some amount and settle down. This ultimately results in absolute losses. The mergers would raise the targets and hence the bad loan problems would also rise. What is needed to fix this, is stringent and strict laws to ensure immediate recovery.2. Political Interference. Since banks are pressurized to fund big corporates by cunning politicians in power, it is not hard to assume that once the size of banks becomes big, the demand of credit will also be of same proportions. If such was not the case, there would never have been any Vijay Mallya case. Given the cunning prudence of these politicians, quite possibly the plan stated by them might be a proxy for covert corrupt practices and deals with corporates. Once merged, the Vijay Mallyas would not have to knock a dozen windows to avail bulky credits. They could dupe those large-sized jumbos one by one. This will be the biggest bane of mergers. Political interference in lending must go. The political announcement of bank loan waivers must stop. And until these concerns are not addressed, until zero political interference is not ensured, merger of banks would mean danger to the banking system and hence economy.3. Corporates are the biggest defaulters. Those defaulting must be punished. The names of such borrowers must be published and let people know who they are. Moreover the general public should stop using their products and services so as to make them learn a lesson that defaulting on peoples' money (in the form of Credit from PSBs) would result in complete boycott of their business. Unless they learn some stern lessons, they won't mend their ways.Given the reasons above, the merger of banks except SBI must stop and the concerns raised must be adequately addressed.[The views expressed in the article are entirely personal.]

You asked - "Who would win a trade war between China and America?"This is a very delicate and sensitive question to ask in an obviously 'Cold War' polarised, if not paralysed, world, where we are all, whatever nationality or political affiliation or spirituality we belong to, subconsciously entrenched in our respective 'worldly reality' which is in fact our own personal subjective paradigm, where we are subsumed within the perspective wrought upon us by our societal, cultural, philosophical and spiritual (or religious) values in the environment that we were born into and grown up with. Making a paradigm shift to transcend to the higher level of immutable absolute universal scientific truths or principles is like teaching a fish to walk on water.So, I shall come straight to the point that if this question is predicated on judgement based on universal principles or immutable truths, on who is right or wrong, then there can never be an absolute answer. For any human answer or judgment will by definition be personally subjective. Speaking in the abstract however the inconceivable answer in truth will inherently and inevitable arise or follow as a self-evident consequence. For East or West or North or South, whatever the cardinal points, whatever the language or the spiritual (or religious) expression, the indiscriminant and non-discriminatory Law of the Harvest or the Immutable Law of Karma will apply. Thou shall reap what you sow! Every action will have its corresponding karmic weighted reaction.But before I move away from universal principles or immutable truths I like to point out another truth or universal reality. It might lend to a greater geopolitical understanding of the world if people were to accept the obvious truth or principle that we do not actually live in a homogenous world of humanity with one singular immutable hegemonist set of universal values but rather that we live in a heterogenous world of multicultural, multi-religious and multilingual humanity with multifarious multilateral and multitudinal values, mindset and psyche and mores and norms.And so I shall treat this question here with total equanimity, like a bookie or probably as someone giving a 'form' guide on the betting odds in a two horse race or the NBL championship. I shall leave it to each individual based on my 'form' guide as to who might win. Each reader is entitled to make up his or her own mind. After all the loyal supporters of the respective horses or basketball teams are never going to barrack for the other. But however from the sideline (or even illegal) activity of 'betting' you are somehow or somewhat just interested in the gambling 'odds'. And whatever horse or team you support, i.e. the 'politics' aside, you will bet in such a way that you base it not on emotional or patriotic fervour but on calculated 'odds' based on the 'form' of the horses or players and the track or playing 'conditions'.And please note that in this gambling whether you win on your wager on the 'odds' has nothing to do with which horse or team actually wins or loses or claims so. For here there is no umpire or arbitrator and no definitive rules for the race or game. I need to say this from this start so that you appreciate, depending on the wager, you as a gambler might win even if China loses by 1 miserable point to America at the end in this NBL. Or, in simple quirky terms China might also be the winner by just putting up a good fight, or by reaching a stalemate or even just tying down America to a a hundred year race or game, for it might turn out to be a protracted test of mental or physical or even stoic if not economic resilience and stamina and endurance. Also we are yet to firm up on what the track or playing conditions might be. These are simply put 'at large'! It depends on how stubborn, incalcitrant, intransigent or even how fanatical, maniacal and demented the team managers of the horses or teams might be. Also the scoring are subjectively discretionary, and on the relative merits. I will give you a hint or illustration from history. China already won at the point it stopped America at the 38th Parallel in Korea and the 18th Parallel in Vietnam. See Footnote*1Although I shall do my best to objectively and without bias put everything down to the differential paradigm of 'form' and 'conditions' (as metaphors), I must declare that I am Chinese but I am Westernised in the sense that I am a Western trained lawyer, accountant and economist, that I have worked both in the public sector and the private sector, and that particularly as a banker I have a working knowledge about trade. I have a traditional Chinese upbringing and on Quora my major contribution is as a writer on Taoism, Confucianism and Zen Buddhism. I am like, for want of a good analogy, Amy Chua, the Yale Law Professor who wrote 'Battle Hymn of a Tiger Mother'. In short I can think, as I choose, as I prefer, as and when, like an Oriental or an Occidental. I am mentally and intellectually ambidextrous and flexible and dexterous!Ideally, we should be taking a 'helicopter' view of the forest battlefield. If we were to do so we would then realise that there are many concurrent battlefronts, the main being 'ideology' (in which I would include 'culture' and 'philosophy', 'military' and 'trade'). So, even though we are talking 'trade wars' please see it merely as a convenient expression to identify that we just happen to be standing in the part of the forest in front of trees of the species called 'trade'. The other trees like 'ideology' and 'military' are elsewhere in the jungle. But it does not really matter where the raging fire is in the forest. If not managed and controlled, any fire or fires (ideology, military or trade etc.) will destroy the entire forest.Form Guide - Ideology of AmericaI have discreetly earlier on given a strong hint as to a particular 'form' that America has. Did you pick it up? If you train only in 'Western boxing' when the actual style of boxing in the ring today is 'Thai boxing' then you are at a paradigm or set of values that is/are further away from the universal principle or ultimate reality then you think applies. America sees itself as the World Sheriff, the bastion or bulwark of democracy or the 'free world' in its assuming that Western style 'democracy' is more than a paradigm, that it is in fact a universal truth! And that to be 'free' is synonymous with 'democracy'.At this point, in terms of 'form', as a betting man, we will have to consider whether we should prefer or not prefer the 'blinkered' horse in or that is America. Why? Let me explain. America has no homegrown indigenous intellectual or spiritual philosophical thought. 'Democracy' is sort of loosely borrowed from the ancient Greeks, the Athenians in fact. But of course the ancient Greeks are long extinct! The Greeks today are more European statis (as in Thucydides) republican like ancient Sparta was than ancient Athens was, and they are orthodox Christians rather than practising Greek philosophy or worshipping Greek Gods. America despite the 'democracy' banner that it flies is actually more an Anglophile or is Anglospheric then Greek, more White Anglo-Saxon Protestant than anything else that it pretends to be. Despite its Constitution, America actually believes in an abstract aegis form of law that transcends any written law, whether it is in the constitution or otherwise, and that is the absolute freedom or entitlement of the individual to live in his own self-reliant world, free to rule and protect his roost or turf or private land, free even to choose his own ruler in fact, the 'king' or 'ruler' is just the first amongst equals. It is the British way or should I say the ancient Anglo-Saxon way, a mutual covenant set and established by independent spirited and minded tribal people in village tribal councils long before the invasion by William the Conqueror from Normandy in 1066A.D - simply called in the abstract - 'English Common Law' or 'the unspoken Law that commonly binds the people'!In other words, in Anglosphere, it is everyman for himself, the world is your oyster, you make your own destiny. Unless America is being attacked the Government should stay away from an individual's life, and therefore taxes and everything else by the Government should be kept to the bare minimum (and thus the raison d'être for the Boston Tea Party and the American War of Independence) unless the whole nation of the American people is being threatened, and America needs to raise an army. Otherwise everyman for himself, to feed, clothe and support and protect his own welfare and wellbeing, and thus the personal right to bear arms.It is always the paradigm of the paramountcy of individual rights before communal or societal rights. And when you try to interpret American democracy as representing 'the Government of the people, by the people, for the people' in a Greek sort of way, of the term 'people' as meaning a social 'collective' when in America it actually means 'individuals' (the liberty and freedom of an individual, everyman is his own castle) you are 'blinkered'! And you are found wearing double blinkers when you realise that the freedom of an 'individual' in the WASP sense in America now extends by legal fiction to a 'corporation', even though a 'corporation' cannot vote or bear arms in defend of the Anglosphere 'village', and not just simple corporations mind you, but American multinational corporations, who as 'individuals' as legal fiction can donate to or fund political candidates and election campaigns. Of course behind the American 'multinationals' you have the same ubiquitous 'Illuminati' - the 1% exalted and elite private individuals who owns 90% of America. America is accordingly in practical terms, now ruled by a 'Government of the individuals called multinationals, by the individuals called multinationals, for the individuals called multinationals'. American 'democracy' revealed as the 'Illuminati' is meretricious and not meritorious. It is more insidious than 'communism' because one can plainly see the possible 'devil' in the panoply of 'communism' but when the 'Illuminati' is seductively disguised as the outwardly 'angel' in 'democracy' you are being deceivingly blinded by a false sense of safety and security, and are thus potentially vulnerable to its life-sucking scourge. I trust you are getting a proper picture of the 'hidden' traduced ideological 'form' of America due to it having being sabotaged or usurped by the 'faceless' saboteurs in the Illuminati.More so than anything else the two teams or horses here are fighting an ideological warfare. The 'trade wars' are just a consequential skirmish in this ideological warfare. But take this important note down. Forget all the diatribe about China being responsible for America's huge deficit and must therefore remedy the situation, as the malfeasant party. For that is obviously a case of America being the prosecutor judge and jury, changing and shifting the goalposts in the middle of the game because it is losing! The simple fact is the American multinationals are American only in name but are not for the American people, who are not part of the Illuminati - the ordinary people of America, the workers of America. America as the Illuminati is not a democracy of the people or a government for the people, it is only there for and to look after profits for and the shareholders of the American multinationals. It is a faceless State of its own, exclusive of and from the political State of America. To the Illuminati it is the responsibility of the political State of America, the federal government to look after the American workers, the American capital debt and trade deficit and the factories and the public infrastructure. So China did not in fact force anyone or coerce anyone, let alone the powerful political State of America but it was the American multinationals who voluntarily without any concern for the welfare or employment of the individual workers of America, shipped the factories that they owned, shipped the requisite technical management expertise and the technological expertise and intellectual property and investment capital, in other words, American industrial productive capacity over to China.The huge trade American trade deficit is the consequence of American goods made in China by American multinationals consumed by the now mainly resultant unemployed American workers and other individuals for the major profit of the American multinationals and their Illuminati shareholders who also at the same time in Anglosphere benefit from their control of the American governmental process of low taxes for the rich, minimal spending by the government on public infrastructure, social welfare and wellbeing, for it is everyman for himself.So forget about the misdescription of America being a 'people' democracy. It is simply a plutocratic capitalistic state where capitalism is supreme because even the American Government is controlled by the capitalists - the American multinationals! Unlike, as we shall now turn to compare and contrast, China which has its own Chinese version of 'common law' called Confucianism where the social 'family' is the basic unit of society and the Government is controlled by or is the 'Emperor' who thus provides a check on China's equivalent of the Chinese Illuminati - its Capitalists in its Capitalist Private Sector.Form Guide - Ideology of ChinaCompared with a young Turk of a few hundred years old America, China in sharp contrast is a living 5000+ years of a continuing antiquity of a people civilisation or culture as a State. Until the Manchu Qing Dynasty was overthrown on 1/10/1912 and the Republic of China formed, and later replaced after the Civil War between the Kuomintang and the Communists by the Communist People's Republic of China on 10/10/1949, China had always been ruled by an autocratic or totalitarian Emperor.For the present discussion it makes better sense to treat China as still being ruled by an Emperor except that the 'Emperor' is now in the abstract sense - the Communist Party. But like in the past, the government or administration is still in the hands of a 'Confucian Mandarin' class of bureaucracy based on meritocracy. [For the record Mao Tse Tung was not just a Communist instigator - he was in fact an erudite classical Mandarin Confucian Scholar].Strictly speaking, China or the Chinese People see themselves as an abstract called the 'Middle Kingdom', to which they belong. In this insular, parochial and introverted sense you cannot be 'Chinese' even though you are a Chinese citizen because you are a resident in geographical Chinese territory! Just like in an ultra-Orthodox sense you cannot convert to a Jew, you can only be a Jew if your mother is a Jewess. If it were not for the fact that the China and the Chinese were conquered and ruled by foreigners - the Jurchens in the Jin Dynasty, the Mongols in the Yuan Dynasty and the Manchus in the Qing Dynasty, the abstract 'Middle Kingdom' of the Chinese would not now include areas inherited from the foreign conquerors - like West and South Tibet, Sinkiang, Inner Mongolia and of course Manchuria. But China as a geographical State in the modern sense is however keeping these 'inherited' areas as 'reparations' for years of oppression and exploitation by its foreign conquerors. Imagine America being conquered by the Whiteman and somehow the conquerors assimilated and became Native Indigenous Americans. That is how you have to picture the Chinese.So the Chinese personal sense of feeing superior is akin to that of the Jews in that it does not extend beyond a personal or private sense of self-esteem, self-worth and dignity and of belonging to a special class or breed of your own. You cannot add or subtract from what is 'territorially' in the abstract the 'Middle Kingdom'. And the Chinese belong to the 'Middle Kingdom' rather than the 'Middle Kingdom' belongs to the Chinese!Contrast this with the Western or American sense of superiority or supremacy, of being a hegemone, that you want others to be subservient to you, that your values and judgement are paramount and universal, and that others who are inferior belong to you or are subject to your dictates and demands, you want others to be a clone or a replicate of you.Do not be blinded or misled that China or the Chinese are Communists or Capitalists in ideology! China and the Chinese are neither (and because they are neither they can appear to be synonymously Communists and Capitalists) and have always been what they have been and still are - animists, atheists, shamanistic etc or whatever you would describe or ascribe ancients tribes as or to. But the Chinese have fine-tuned these ancient spiritual beliefs or philosophy into an ideology that they called the Three Pillars of Chinese Society. The Chinese like to talk descriptively and figuratively like that e.g 'let a hundred flowers bloom'! The Three Pillars are - Taoism, Confucianism and Chan (Zen) Buddhism. For our purposes here in terms of ideology we are mainly interested in Confucianism which is a humanistic philosophy and the foundation of Chinese society and public administration.Taoism is spiritual occult like philosophy based on Mother Nature but it impacts on the Chinese mindset and psyche and decision making in the way that it views the duality and the 'cycle' of life in the 'yin and yang' and 'qi' flow in all things.Zen Buddhism is a transcendental or metaphysical or esoteric spiritual philosophy but it impacts greatly on the Chinese mindset and psyche and decision making as well because it stresses on the retribution of the immutable law of karma and teaches one not to fear death but to take it positively as a gateway to good karmic rebirth and better still, on never ever rebirthing again. Two salient features of what Zen Buddhism is about are (1) focusing on being 'selfless' because the 'self' is subjective and therefore what the 'ego of a self' clings or attaches to or makes judgement on is only a 'paradigm' (in Buddhist terms - an illusion) and also (2) in focusing on one's self journey through life, that you cannot compel others how to walk the Snakes and Ladders of Life - to each his own karma, you just mind your own karma or business. We have alluded to this at the beginning as to what is the difference between a 'principle' and a 'paradigm'.However the humanistic philosophy of Confucianism is the mainstay ideology of Chinese society. It dictates how one can be an exemplary or epitome of an ideal human being in the various human relationships beginning from the basic unit of society which is the 'family'. Thus it is about the human relationships of parent/child, teacher/student, employer/employee, official (Mandarin)/subject, Emperor/Populace etc. So the primary focus is on the mutual duties, obligations and responsibilities of an exemplary human being within a particular human relationship. Individual human rights therefore weigh nothing at all or are secondary, in the sense that they are relegated to a private personal matter or level or domain. In the public domain for all to expect and to see is how you, and the expectations of you to, conduct yourself as the exemplary human being. In a broad brush sense it is about attending and learning in the public school of or called life. There are no individual rights as such or at school as such. It is about being disciplined and orderly and compliant or even obeisant behaving in a certain way and so that you can avoid detention!The training starts from birth and obviously the training ground is the unconditional loving-kindness of parents for their children. In a Chinese sense the greatest love of all is the 'selfless' love of a mother for her newborn child! Duties, obligations and responsibilities are predicated on this altruistic qualities of being 'selfless' to another that one is bound to by duty. The epitome of 'selflessness' in Confucian thought and culture is 'filial piety' to one's parents. And by extension therefore the Chinese respect their elders and have reverence or 'worship' their ancestors. This filial or familial relationship and the mutual duties, obligations and responsibilities that it engenders and enjoins at its pinnacle of a mutual covenant between official (Mandarin)/subject or Emperor/Populace is termed the 'Mandate of Heaven'.At this pinnacle level we can see that China is neither Communist nor Capitalist, despite the appearances, in a strict sense. It is a totalitarian meritocracy as it has always been since the Zhou Warring Period. The Communist Party is now the new 'Emperor'. And the mutual covenant of the Mandate of Heaven and the Confucian filial piety family relationship as the basic unit of society - father/son, teacher/pupil, ruler/subject etc still applies - that is mutual duties, obligations and responsibilities before private individual rights. It is about 'freedom from' public insecurity, poverty, homelessness, unemployment before or rather than 'freedom to' individually publicly say, do and think, which are private freedoms like sex - to be confined within one's house.Like any paradigm it is not a judgement of what is right or wrong! Different ideologies are predicated on different priorities. With China with its population size and its hundreds if not thousands of different ethnic dialectical and cultural groups, if individuals were given free rein to do what they want before or ahead of their societal duties obligations and responsibilities China would self-implode!So, the underlying foundation of Chinese Confucian humanistic philosophy sees as its end or objective a peaceful and harmonious and virtuous society or simply put - peaceful co-existence. All else are subordinate and peripheral if not irrelevant. China's foreign policy ideology to this day is founded or expressed in the Five Principles of Peaceful Coexistence,” or Panchsheel, which were originally conceived by India’s first prime minister, Jawaharlal Nehru, and China’s first premier, Zhou Enlai, in 1954.The Five Principles of Peaceful Coexistence are:1. Mutual respect for each other’s territorial integrity and sovereignty.2. Mutual non-aggression.3. Mutual non-interference in each other’s internal affairs.4. Equality and cooperation for mutual benefit.5. Peaceful co-existence.China discovered and realised during the Opium Wars instigated by the Western Colonial Powers that with its Three Pillars of Chinese it was not quite keeping with modern times. That the West did not accept its insularity and introverted-ness and reclusivity. In fact the Western Colonial Powers treated it as weak feeble and impotent! So, this ancient or ailing old man China in its endeavour to stay alive in these changing modern times had to inject or vaccinate itself with moderated or bespoked versions of Occidental (or Soviet) Communism and also Occidental Capitalism but suitably tailored appropriately and accordingly with Chinese characteristics so that there is no 'organ rejection', so as to evolve, to rejuvenate, to survive in modernity. In 'form' terms, China today is old China rejuvenated!Imagine how rejuvenated old China might feel with a hegemonistic young spritely America with a presumed God-ordained right to exhort - you cannot just choose to partially evolve as you so wish, you have to fully evolve to be an exact replicate of me, be an exact clone of the American democracy! What audacity! What arrogance! If that were to be the case, there will no longer be a living continuing antiquity that is China then! The Chinese will all become 'bananas', excuse the jocular!In the future therefore China would have to continue to metamorphosise with suitable 'genetic engineering' likewise with Occidental Democracy and other foreign ideologies, to get the best features out of them that suits and befits China, like it did so with Occidental Communism and Occidental Capitalism.You will note that in China unlike America, the Capitalists in the Private Sector do not control or cajole the Government - the Mandarins and the Emperor - the Communist Party. In fact in the Taoist 'yin and yang' sense the Communist Mandarins and Emperor are the countervailing power which controls the Chinese Illuminati in the Chinese capitalist private sector. The Chinese people must come first before the Chinese individuals, whether it be the Emperor, the Chinese Illuminati or otherwise. The Chinese people must come first before the interests of the Chinese corporations, Chinese multinationals and their shareholders! Because the Mandate of Heaven requires that the Emperor meets its duties, obligations and responsibilities to the Populace!One important point that Chinese Capitalism is not quite Western Capitalism is that in China urban and unclassified land is owned by the State and agricultural land is owned by rural collectives or farming communes. There is no private ownership of land in China. There is only registered or granted usage (usufructuary rights) of land for a term of tenure (up to 70 years). Land is the major source of acquisition and accretion of wealth (mainly through windfall through inflation and scarcity of land) to individuals in a Western Capitalist Democratic society like the Anglosphere. In China the wealth arising from the intrinsic land value belongs to the People!Also any proprietary right to do business or economic activity is subject to operational or occupational or professional licensing by the State. This is to curtail the exploitation of private ownership to benefit only the individuals given the licence to operate an economic activity without benefiting the rest of society. This goes back to the Taoist principle of duality and 'yin and yang' and the Confucian tenet of mutual duties, obligations and responsibilities. Even in the Zen Buddhism tenet of mutual interdependence you are taught that what you are is because of what others are or have been!You would not have the situation like in America where the corporation has the rights of an individual when in China individual rights are secondary to societal duties, obligations and responsibilities. You will not have the situation where the multinational is like its own State outside the State of the People.The same logic applies to human rights or privacy. Once you step into the public realm or terrain all is public or subject to State knowledge. Any human rights or privacy are restricted to and within the confines of your four walls at home. In China with the latest facial, genetic recognition technology, you can just walk into any bank, present your national identity card containing all your bio data, and withdraw money etc. You do not need cash or a credit card or all sorts of other documentary evidence. Why am I stating all these? It is important when we are comparing 'form' between the two horses or teams, that we know that China knows everything about its Chinese multinational corporations or their shareholders or Illuminati, that it is in full control of them and not like in America where the the Illuminati has background control of the political State of America instead.With China the Emperor is in control and more than 90% of the people are happy with the State performance whereas with America the people are divided. A nation divided does not look good on the 'form'. And the Chinese are also a very homogenous society, like the Koreans and the Japanese. Like an army of worker ants they all basically move in synchrony and rhythm.You cannot put Chinese and American nationalism at the same level. The Chinese citizens or netizens will take their own self-initiative to defend the country when it or its honour is under attack. This is another facet of Confucian ideology. This is the inexplicable Chinese Confucian concept of shame or humiliation or 'face' that cannot be fully explained or translated into Western terms. It is like we cannot explain why Muslim zealots resort to suicide bombing. Chinese netizens on their own accord would put out a clarion call to stop buying or consuming Japanese or Korean products etc. They will be tempted to do the same if required in this trade war with America. This willingness to make a personal sacrifice to put the country first before one's individual needs is an important consideration when it comes to 'form'.Last but not least in terms of Confucian ideology of work ethics and frugality in spending and conversely saving for the future and contingencies means that in terms of 'form', the Chinese work horse might not technically be a good premium Arabian steed horse when compared with the American racehorse but it is nonetheless a reliable and trusted tough assiduous and enduring resilient mule that can survive with meagre feed and spartan conditions. The Chinese cockroach against an American honey bee might be an appropriate analogy!And the Chinese working and studying twice as hard or more aside, I need not explain that whilst the Chinese save 30% or more the Americans in sharp contrast spend more than they have. The Americans spend first and pay later and thus are enslaved by the very same American multinationals that export American factories, employment, capital and technology to China. These same American multinationals 'screw' the American workers both ways - first by exporting their future livelihood and then when importing the American goods made in China back to America, then prey on the American working class to lend to them to spend on credit and oppress them usuriously like Shylock.The trade deficit is just a common syndrome of a sickness of spending more than you earn by a nation. In this case it is also because (1) the American multinationals and the Illuminati are disinclined or allergic to paying taxes or people welfare and wellbeing, on the Angloshere principle of self-help and self-initiative and self-incentive, and they are also hoarding profits and evading tax in off-shore tax havens and (2) the American Government is spending scarce capital resources on military expenditure instead of civil public infrastructure - being high tech it does not employ a huge pool of workers and also in fighting wars you are burning away money; but guess what? Defence spending is making huge profits for the American multinationals and the Illuminati behind them! What an irony!The Chinese ideology is manifesting itself in 'construction' as in OBOR/BRI, expanding infrastructure to facilitate further trading and new markets and accelerating trade logistics - all towards enhancing the volume and turnover of international or global trade but the American ideology of hegemony is manifesting itself in wanton 'destruction' and killing.Alas, it appears that I have bitten more than I can chew, I have to start writing in bullet points or this might end up as a book!Form Guide - Trump's tariff tacticsThis part is mainly for those punters who knows a bit about trade economics. America cannot negotiate away trade deficits by simply raising tariffs to protect against and reduce imports from China. Economics are not simple like that! All previous instances of raising of tariffs and the gearing up to a protectionist trade policy and forsaking freer global trade have failed. Take the failure of the raising of tariffs on China tyres by President Obama which resulted in a loss in chicken exports in retaliation.Also the result will just be a tit for tat volley exchange of ping pong. Trade wars would be internecine (mutually destructive). In this tit for tat volley America's working class consumers will suffer. Equally the American multinationals manufacturing contractors (or subcontractors as the main contractor would normally be a subsidiary in Taiwan - and so in many ways Taiwan, although politically apart, is already intricately interwoven into the 'economic' entity that is China) in China will suffer as the producers. But note that with China's peculiar intra-provincial migratory laws, most of the retrenched workers can go back to their homes and farms in the inland rural provinces. For most migrants working in the Eastern Seaboard cities is just for acquiring wealth above their subsistence or basic farm income in their home provinces. They would not be impoverished nor homeless! There is no such thing as a rural homeless man in China! That is the salvation that Communism brings. Contrast with America - where can the retrenched factory workers there go?Any housewife fighting with her neighbour as to whose sponge cake should be given preference at the local school fete knows that the solution is not to reduce the volume of trade but to increase and widen the volume and the range of cakes for sale. If A is making money from B then widen the NBL and have more teams and more games and fixtures and more spectators and reduce entrance fees and so B can be making money from C and C is making money from A. The aim is to have a bigger cake so that more people can have a slice!In any case, as I hinted above, the trade deficit starts off as an investment/savings imbalance in America. The American people as well as its Government are not saving enough and not living within their means. Trump's tariffs will put the working poor into greater debt or suffering because the same basic consumer goods that they now buy at the low non-premium non-luxurious end of the market will in the near future cost much much more, because a tariff works like a tax, and since this level of basic consumer goods are never ever going to be ever made in America - what is the point in making the working class poor suffer more? And it feeds inflation obviously! A double whammy against the working class!Also America instead of building new productive capacity that would provide new employment like spending on public infrastructure, job retraining programmes or public work schemes like building low cost housing, beautifying parks and gardens and restoring heritage sites or increasing the number of domiciliary or primary health care positions with funding from a higher tax on the American multinationals and the Illuminati, there is this wistful forlorn thought that raising tariffs will magically bring back the factories and the capital and the technology that the American multinationals exported out to China in the first place!No, it won't happen! It is all water under the bridge! The American multinationals will just shift their Offshore Productive Capacity in China to the nearby ASEAN countries and repeat there what they did in China.And when we take as an example that China makes $25 from a $850 Smartphone, not forgetting these clever American multinationals are absolutely brilliant in creatively spreading out cost and charging centres all over Korea, Taiwan, Japan etc for the different components as well as intangibles like management services or IP rights through creative accounting and tax avoidance and tax evasion, it is truly a laugh and a joke that the landed cost for customs declaration of $850 of a Smartphone is all charged against China's account. Get it! China makes $25 and the Balance of Trade docos which are neither commercial or tax accounting show China as making $850! Simply ridiculous!And guess what? You do not know whether to laugh anymore when you hear of the double jeopardy. The American multinationals then sell tons of branded goods including Smartphones to China (just go to China and see for yourself how the American multinationals are laughing at Trump for his 'ignoramus') but again because of the creative complicated web of tax avoidance and tax evasion cost and charge centres these sales to China are chalked up as sales through their intermediary subsidiaries in Korea, Singapore, HK, Taiwan and Japan. So they appear as exports to countries other than to China!So, if there were proper trade accounting China's export to America would be less than 20% of its exports, and when you contra for the counter trade in services and intangibles through cross-intermediary countries the trade deficit is perhaps a quarter of what it is. Refer back to the anecdote about increasing the range and extent and scope of the NBL. That is why when China studied the value-added to China's GDP from exports to America it was only 3%! And this ties in with economic statistics that China is its own economic engine with its homegrown boom in infrastructure stimulus and domestic consumption and the resultant shift of factories and non-financial sectors to the inland provinces. Chengdu in Sichuan Province is poised to be the new manufacturing capital of ChinaAnd with the inherent power of the Chinese government to shift direction and focus of economic activity, quite aside from market supply and demand forces, retrenched workers can just be transplanted to OBOR/BRI projects. And exports previously headed for America can now be redirected down the fenceline that is OBOR/BRI. This include a plan to shift factories now on the Eastern seaboard to the Western border regions so that they are closer logistically to land exports to Eurasia and Europe and from there to Africa via the Middle East and thus circumventing the Straits of Malacca and the Indian Ocean. This is true economic power in terms of 'moving and shaking'! America cannot say that it has this power except in shifting its overseas armed forces around the globe, which is a money spending and not a money making enterprise! What a miss of opportunity? Why not join the OBOR/BRI and make it a more enhanced OBOR/BRI?Form Guide - Other Considerations"Made in China 2025.” This refers to the Strategic Economic Plan that China released in 2015 listing 10 industries that China wants to develop: (1) advanced information technology; (2) robotics and automated machine tools; (3) aviation and aerospace equipment; (4) marine engineering equipment, (5) modern rail transportation equipment; (6) electric and other new energy vehicles; (7) electrical generation and transmission equipment; (8) agricultural machinery and equipment; (9) new materials; (10) biopharmaceutics and other advanced medical devices.So it appears that Trump's tantrum is not about trade wars after all but about an Artificial Intelligence War. Accordingly, Trump’s rhetoric complaining that China had forced its American multinationals to give up their IT and AI technology in the past to get to their current productive export capacity and ruining America, is getting nowhere with anyone with a legal background. Come on! These American multinationals can afford better lawyers than Trump and are properly wealthier than the political State of America! Let them sue their China subcontractor for breach of contract or breach of good faith or even sue China for breach of fair trading with the WTO. I suspect the tariffs is just a ruse to come up with a ban of American IT and AI exports by the American multinationals to China and also bar China or Chinese multinationals from acquiring IT and AI companies in America.In that case call a spade a spade and not obfuscate and be mendacious about the trade deficit. Refer - Trump’s Trade War Isn’t About Trade. It’s About Technology. - MacroPoloBut the China bull has bolted! China has been the world leader in new patents in IT and AI and high tech the last few years. The disciple is now one of the masters. But the real master is still the American multinationals and the Illuminati. That is why there has been a ban in China on many of the global sites. All I will say is remember Facebook and Cambridge Analytica.America owes lots of money to China! China currently holds or owns about 19% of foreign held U.S. Treasury notes or simply put U.S.$ of about $1.17 trillion at the end of January 2018. Its main use currently is for China is to facilitate conversion from Yuan to U.S.$ for the Yuan is not yet a world fiat currency like the U.S.$. But when it comes to the crunch and a fight to the death, if China were to sell its U.S.$ holding there will be another global depression that the America will never fully recover from. It will be like a bank going bankrupt. It will never be the same bank again! Refer - How Much Does the U.S. Owe China?Speaking of global fiat or reserve currency China last week launched a yuan-denominated crude oil futures market. The new “petro-yuan” will be convertible into physical gold at the Shanghai and Hong Kong gold exchanges. Imagine how enticing it is for nations who are sick and tired of the bullying by America that petroleum can only be globally traded in U.S.$. Gaddafi of Libya and Saddam Hussein of Iraq tried to sell petroleum in gold or equivalent (the U.S.$ is no longer convertible or fully backed by gold) and got killed! At long last! Crude oil futures contracts priced in yuan fully convertible into gold. Just imagine! It is God-sent for petroleum producers like Russia, Iran and Venezuela. In fact it is God-sent to any part of the world that wants no dealing with America. Just imagine Trump causing inflation by raising tariffs followed by such countries asking to redeem their U.S.$ holdings. This two pincer approach will result in hyper inflation that will bring the American economy crashing down. Refer - China taking the long road to solve the petro-yuan puzzleJust as an aside India and China and the Middle Eastern countries, or should I say its peoples, have a tradition of hoarding gold and gold jewellery. It is a common dowry item in a marriage. So China does not have to rely on itself to buy gold. the Chinese people themselves have a tradition to buy gold. This is an important element or point to remember about the facility that 'petro-yuan' provides convertibility into gold and indeed U.S.$ because China has all three - Yuan, gold and U.S.$.Sorry to have to cut in short in the latter half, as it was getting too long for an answer to a simple short question.But you, the reader, can make up your own mind on this form guide of mine, as to who you think will win this trade war. Whoever wins, in my opinion, it will be a Pyrrhic victory.As to other nations I would say, stand back and just watch and study and work out the arbitrage in the differential relative tariff rates and then move in for the kill. Make money out of both China and America. Be like the American multinationals and its Illuminati - weave your way through a cobweb of intermediary countries - make a monkey out of the WTO because there is no standard trade accounting regime that matches and synchronises with public listed company tax accounting. Go on, have a hundred sets of books and fiddle the books and practise creative accounting and tax avoidance and tax evasion. Join the Anglosphere! Everyman for himself!The real enemy is not America, Russia or China or the ordinary working man in these countries. It is the faceless Illuminati behind the multinationals - the State san frontier!Footnote*1Try to imagine America and China as 'Apple' and 'Orange'. They have different psyche and mindset. I shall illustrate it by way of Chinese 'wei-qi' v American or Western 'chess'. Wei-Qi is the same game as Gomaku in Japanese and Baduk in Korean. It is played by two players like in Chess. But instead of the medieval chess pieces of soldiers, knights, bishops, castles and King and Queen, in Wei-Qi all you have are stone pebbles in black and white. One player has black and the other white pebbles.In Chess you win when you get the other player's King. In Chess it is a game of fight till you win or when both side are stalemated as in both are as equally as good as dead with all the pieces gone.In Wei-Qi, you take alternate turns to insert your respective black or white stones across the grid, in a manner where you acquire or 'fence' in as much territory as you can. Nobody gets 'killed'. All pebbles are the same worth. In war and strategy, every pebble counts, whether King or soldier, you are of equal worth. In Chinese thought if Kings fight wars then victory can only depend on the quality of the King. But if wars are fought on the basis of a people v another people, no 'people' can ever lose! For all 'people's have their entitlement under the sun. The failure to understand this tenet is why the West or America will continue to lose in a foreign place or the home of a particular 'people' like Afghanistan, Syria, Iraq, Iran. The Western Chess mentality is a stratagem of doom and failure!The issue in Wei-Qi is simply only who has more territory relative to the other. It is not about winning or losing but about win-win, except one win is relatively speaking a better win than the other. But both still win in anycase. It has always to be win-win. Because one type of people have to peacefully co-exist with other people. Unless one thinks in the absurd hegemonistic sense that the world can only be of exclusively white stones or exclusively black stones. That is why Sun-Tzu in his 'Art of War' stresses that victory is no victory if you do not allow the defeated to lose honourably - that he can be allowed to go back to his own territory leaving you in peace, and the victor also leaving the defeated in peace. It is not a virtuous or honourable victory if you do not respect life or honour the dead of both protagonists, of both peoples. All people are families. They have parents and children. They have two eyes, a nose, two ears, a mouth and a need to live!And so, America sees victory only when it wins 'totally'. If China were America, it would not have bombed Nagasaki or Hiroshima. America would still have won WWII and in fact had defeated the Japanese at the time that America decided to test out its atomic bomb on the Japanese. Anyway, this question is not about WWII.So, both in Korea and Vietnam, the Chinese were playing Wei-Qi but the Americans were playing Western Chess.Vincent Cheok @ https://whirlwindrambler.com/