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N. S. Vageesh

ONCE upon a time it was deposits that attracted the limelight and the incentives.

As one bank manager put it: "Earlier, depositors would be received warmly — welcomed with coffee and given the Manager's attention. Borrowers would be treated disdainfully. If the manager were busy with his deposit collection work, borrowers would be asked to come later or tomorrow! Now the situation is the reverse."

The situation is similar in finance companies too. Those who put in money into such companies were rewarded with various forms of incentives — brokerage, cash incentives, steel plates, utensils, and sometimes gold coins.

The wheel has turned a full circle. In these days of flush liquidity, the depositor is not as welcome. It is the now the turn of the borrower to have his moment under the sun. A handbill of a finance company passed out at a traffic intersection in Chennai reads: Cash when you need it. Personal loans from GE Countrywide. And free silver coin with every loan!" Some baits, it appears will continue forever!

Shift to euro — beware!

RECENTLY there have been a few reports about banks encouraging companies to shift to invoicing their export receipts in euro from the dollar which has been depreciating for some time.

Business is business of course. But there are some strategic consequences from any shift. We share the highlights of a recent article circulating on the Web about the "Real reasons for the war with Iraq: A Macroeconomic and geostrategic analysis of the unspoken truth" written by a W. Clark.

The hypothesis of this article is that "Saddam sealed his fate when he decided to switch to the euro in late 2000 (and later converted his $10 billion reserve fund at the UN to euros) — at that point, another manufactured Gulf War become inevitable under Bush II. Iraq made significant gains since then because of the switch (the dollar declined 17 per cent against the euro in 2002).

The article argues that the US administration has embarked on this war to prevent other countries (mainly the OPEC) from following suit. The article quotes an anonymous economist "The Federal Reserve's greatest nightmare is that the Organisation of Petroleum Exporting Countries (OPEC) will switch its international transactions from a dollar standard to a euro standard."

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