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GDP of a country gives some idea about how well it is doing in terms of production. In the last two centuries, Western economies overwhelmed others by far.

In the 1950s, US and Europe combined made up 60% of world economy. That’s not counting Canada, Mexico and Australia.

If we look at the fractional share of US+major European countries over the last four decades:

GDP of the US and Europe as fraction of world GDP

We see that their share has been falling over the years. From 62% in the early ’70s, to about 47% now.

So who’s gaining?

There’s a lot of talk about the so-called BRIC (Brazil, Russia, India and China) countries. These countries are supposedly rising stars in the world economy- and have seen unprecedented economic rise. Let’s see if that’s true.

Here is BRIC’s share of world economy over the years:

Fraction of world GDP controlled by the BRIC countries

So it did indeed go up from about 8% of world economy to about 16% now. Impressive.

However, it’s not the whole picture. Let’s examine each of the countries separately. First, Brazil-

Brazil’s GDP divided by the GDP of the world

Brazil has seen a steady rise in the last decade in it’s share of world economy. It now commands about 2.7% of world economy, not very unlike it’s share in 1996 (2.9%), 1982 (2.7%), and 1976 (2.6%). So its position now is by no means “unprecedented.”

Next, Russia:

Russia’s share of world GDP

Russia saw a steady decline in it’s share of world economy through the ’90s. It has recovered it’s strength of the early ’90s now. It had 2.5% of world economy in 1990, now it has about 2.7% too.

What about India?

Indian economy as a Fraction of world GDP

We can see that India has seen a steady rise in it’s share of world economy from the ’90s from about 1% to 2.2% now. But it’s nowhere near it’s best days in the early ’60s share of 3.5%. (Note that we fought two major wars right around that time- with China and Pakistan, and focus shifted from development to armament.)

So, as you’ve guessed, among the BRIC countries only one that has seen real unprecedented rise is China. Here is how it’s share of world economy have changed over the years from a mere 2% to about 7% over the last two decades. It is interesting to note that it had a share of world economy similar to India in the ’60s. Now China’s economy is four times that of India’s.

China’s GDP/world GDP.

But that’s not all. Here is the total share of the major Muslim economies in the world (Turkey + Indonesia + Malaysia + Saudi Arabia + UAE + Qatar + Pakistan + Bangladesh + Libya + Algeria + Kazakhstan).

Fractional share of Muslim economies in the world (total gdp of Muslim countries/world gdp)

That goes up from a baseline of approximately 2.7% in the ’90s to 5% (and rising) now.

This list includes Kazakhstan (became free only in 1991) and Bangladesh (created in 1971). Excluding Kazakhstan, and Bangladesh we see the following:

Fractional share of Muslim economies in the world (Excl. Kazakhstan and Bangladesh)

Therefore, Muslim economies have yet to reach the share they had in the ’80s, in spite of their rise in the last decade. I can only hope and pray that their growth will not be stifled this time. Ameen.

It would be good to know the causes and be able to make some predictions.

Data is from Wolfram Alpha.

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Al Jazeera English gains cachet in U.S. during Egypt rallies

Mubarak’s Fall Prompts Double Takes by Anchors

Al Jazeera English Blacked Out Across Most Of U.S.

Al Jazeera gains popularity during uprising

Egypt coverage gives Al Jazeera surge in US viewers

UPDATE: Here is a collection by AJE itself.

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This was first published as part of a separate post, but it should be it’s own post.

There is a lot of talk about the “subprime mortgage crisis,” but there is not much talk about the underlying systemic reasons that led to the crisis.

The main problem was that property values in the US were overinflated. Average house prices in the US hovers around $200,000. Compare that with the average household income of around $46,000, which means that the average house is more than four years worth of income of an entire family. If the cost of financing is factored in (because most Americans buy house that way), then the cost become in excess of $400,000. Nine years worth of income of an entire family-  twenty to thirty years worth of saving of an entire family. It makes no sense.

As early as mid 2000s there was an indication that prices will start to adjust (i.e. reduce) due to a saturated market. However, US consumer spending is closely tied to property value due to ubiquity of mortgage. As a result of price adjustment, then, the total size of US economy would have shrunk, and would have cause significant short term uncertainties.

It meant there will be major upheaval if the establishment allowed markets to adjust itself (which means “let prices fall” in this case.) So they panicked.  They decided to pump up property values by stimulating demand by encouraging mortgage lending. The banks played along because it cost them very little to lend, and they earned big. Banks started giving out loans without verifying ability of the person to pay back. For a while.

But then it came to the brink of collapsing.

As people (so called subprime) failed to pay their monthly instalments, their houses were seized (foreclosed) and banks were left holding property. (It is transfer of “real wealth” from “market” to “bankers” because the banks got these properties for free- the money the lent out to the mortgage holders were created out of thin air. It’s not an anomaly- that’s how US economy works.) However, the banks don’t know what do with this wealth. First of all, they don’t trade in houses, moreover, if they start selling these- prices will plummet.

What happened at this stage is unclear, but Robert Scheer of truthdig.org claims that the banks threatened to bring down the economy unless they were bailed out. Maybe they were threatening to sell these properties which would have brought property prices down thus bringing US economy down. Who knows what happened behind closed doors. Anyhow, the government saw potential for trouble there, and decided to bail the banks out- so that the banks can hold on to these properties until they can sell them at current market values. It’s ended up working well for the banks, although they are not entirely responsible for what happened.

Even after bailout, the main problems remain. Unemployment remains high. Production is low. Wages are stagnant. It seems, therefore, that property values still are inflated. Manifestation of that imbalance has only been delayed but sooner or later markets will have to “adjust.” Something has to give.

The establishment is not done yet. Fed is going to print 600 billion in order to “stimulate the economy.” Not sure if it’ll help the US economy- likely the money will flow out of the country as investments/purchases into surplus (exporting) economies. But more importantly it’ll hurt anybody who holds US dollars. It’s a involuntary transfer of real wealth of sorts. A stick-up.

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This is likely a conspiracy theory that has no basis whatsoever.

Wikileaks is merely the messenger. They are publishing internal memos and reports etc of the US army, and of course that will be written in the US perspective. Much of these are first information reports- not all of them are factual. (For example the people killed with the Reuters photographer were logged as “insurgents.”)  We should not take these documents at face value, and certainly not conclude that WLks is trying to push US interests.

Here is why: these documents provide legal basis for the US to be sued at International Criminal Court for specific instances, including it’s personnel. Two, they portray a horrid picture even from the US’s own perspective. They will never want that out. I mean 60% of the people they killed could not be passed off as insurgents. Do you really think they will want this stuff out? Are they mad?

Don’t shoot the messenger.

I seriously think Julian should get the Peace prize. Now that will be a real bold move by the Nobel committee. Let’s see if they have the courage. It’s easy to grant Chinese dissidents Nobel. It’s another thing to recognize western dissidents.

I am also wondering how the internal documents of Indian army in Kashmir, Pakistani Army in NWFP, and Israeli army in Palestine will reveal, if they were ever to come out. Who knows?

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No surprise here. But now we have proof. A Brazilian woman, Iara Lee, has managed to smuggle some video of the massacre on Mavi Marmara, and it shows Israelis shooting (they are claiming it wasn’t live ammunition, but I am sure that’s also a lie) and throwing stun grenades at the activists. Some of the activists are seen throwing stones using slingshots.

I was trying to edit the Wikipedia article. It’s infested with Israeli trolls. We need more Muslims involved in there.

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You probably know that Greece is in trouble. That it is deep in debt (to the tune of $400 billion, about the size of it’s yearly GDP.)

That’s true.

You may have heard that the Greek don’t work much. They retire at 50. They don’t work after midday. The economy failed because of the low production and high consumption.

That’s not true.

What has really happened is the following: Greece had a reasonable debt before the financial crisis hit in 2008. Although it is a small economy compared to UK/France/Germany, the government decided to run a bank bailout package. (I am guessing here- but probably to keep the banking institutions in their country or in exchange of favours. I don’t know exactly why.)

That was the beginning of their problem. After providing the bailout, the government did not have much money left for public services. The banks said- cut your expenses.

If you add all that up, basically what happened is the banks ate the tax money, and the people who provided the tax are being asked to pay for the loss.

Although this story is not what’s being reported. That’s because the newspapers are afraid/allied with the banks or they are just as ignorant about financial systems as most people are.

Wa’Allahu ‘Alim.

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Fantastic efforts are being made in Indonesia to clear up corruption and set up a honest, transparent system. My prayers are with them.

Some background:

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