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EDITORIALS

Bloodbath on Friday
RBI in wait-and-watch mode

I
n
the worst-ever single-day crash in the Indian corporate history, the NSE Nifty fell by 12 per cent on Friday. The BSE Sensex too closed 1070 points down at 8701. Adding to the gloom, the RBI left all key rates — the repo rate, the SLR and the CRR — unchanged, disappointing sections of Indian Inc badly in need of ready money.

It’s not about religion
Terrorism by anyone is reprehensible
T
HE arrest of six persons having links with the hardline Hindu Jagran Manch and the Akhil Bharatiya Vidyarthi Parishad for the September 29 explosions in Malegaon and Modasa in Gujarat gives a lie to the oft-repeated refrain of the Sangh Parivar that all Muslims may not be terrorists, but all terrorists are Muslims.



EARLIER STORIES

Violence versus violence
October 24, 2008
Date with the moon
October 23, 2008
Goons at work
October 22, 2008
Vote in J&K
October 21, 2008
Our congrats, Sachin!
October 20, 2008
Taming the Tigers in Lanka
October 19, 2008
Threats to the Press
October 18, 2008
Conflict of interests
October 17, 2008
No exception
October 16, 2008
Over to people
October 15, 2008
Fundamentals are fine
October 14, 2008
Crowning glory
October 13, 2008


THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE
TERCENTENARY CELEBRATIONS


Marx out of the closet
West rediscovers Das Kapital
T
HOSE who live by the market always swear to also perish by it. But when teetering on the brink, free-market ideologues and cheerleaders look for any ghost of a chance that can come to their rescue. 

ARTICLE

India in West Asia
Gradual move towards realism
by Harsh V. Pant
I
N the wake of the first state visit to India by President of the Palestinian National Authority Mahmoud Abbas it is important to assess the remarkable reorientation in the Indian foreign policy towards West Asia over the last few years. At a time when that region is passing through a phase of unparalleled political, economic, and social churning, India is being called upon by the international community to play a larger role in West Asian affairs. 

MIDDLE

A poet of broken hearts
by R. Vatsyayan

I had met Sahir Ludhianvi in 1970 when he came to attend the golden jubilee celebrations of his alma mater, Government College, Ludhiana. He was a well-built, tall and slightly hunch-backed person whose big and protruding nose fitted fine on a face which had a large and ascending forehead.

OPED

Elections in US
Protection of voters’ rights inadequate
Dateline Washington by Ashish Kumar Sen
O
N November 4 Americans will go to the polls to elect a new president. Their two main choices are Democratic Senator Barack Obama, who would make history as America’s first black president should he win, and Republican Senator John McCain, who at 72 would be America’s oldest president.





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Bloodbath on Friday 
RBI in wait-and-watch mode

In the worst-ever single-day crash in the Indian corporate history, the NSE Nifty fell by 12 per cent on Friday. The BSE Sensex too closed 1070 points down at 8701. Adding to the gloom, the RBI left all key rates — the repo rate, the SLR and the CRR — unchanged, disappointing sections of Indian Inc badly in need of ready money. Other major Asian stock markets too witnessed similar bloodshed on fears of recession and lower corporate earnings. Also in a free fall was the rupee, which touched a new low of 50.15 to the dollar. The stock markets opened weak, but after the RBI decision of maintaining the status quo became public, panic gripped investors and traders, who furiously went on a selling spree. The Finance Minister’s pep talk to bolster the stock markets turned out to be a damp squib.

To be fair, the RBI or the government cannot be accused of inaction. In fact, the speed with which the apex bank reacted to the emerging situation must have pleasantly surprised many. Instead of waiting for its scheduled policy review meeting on October 24, the RBI intervened swiftly and sharply, cutting the cash reserve ratio by 250 basis points, the SLR by 150 basis points and the repo rate by 100 basis points. The government too has done its bit by raising capitalisation of public sector banks, easing curbs on companies’ external commercial borrowings and allowing FIIs to invest in stocks through the participatory notes.

Perhaps, the RBI could have gone further in easing the liquidity crunch. It is clear the central bank has shifted its policy stance from fighting inflation to boosting growth, especially after the poor industrial growth data for August. Understandably, it has revised the GDP growth target to 7.5-8 per cent, which is still commendable, given the difficult global environment. Besides liquidity, the problem is of fear and lack of confidence. As long as negative news keeps coming from the US and elsewhere, all the positive developments here will not have the desired effect. Perhaps, that is why the RBI has chosen to wait and watch. The central bank and the government do not seem to be in panic, whatever the news from Dalal Street.

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It’s not about religion
Terrorism by anyone is reprehensible

THE arrest of six persons having links with the hardline Hindu Jagran Manch and the Akhil Bharatiya Vidyarthi Parishad for the September 29 explosions in Malegaon and Modasa in Gujarat gives a lie to the oft-repeated refrain of the Sangh Parivar that all Muslims may not be terrorists, but all terrorists are Muslims. It is a proof, if any was needed at all, that killers have no religion. Putting the same fact another way, they could belong to any religion. Actually, no religion teaches or even condones killings, but most murders are committed in the name of religion. There cannot be a bigger irony. The involvement of Hindu zealots at least means that it has lost control over its more volatile constituents it has been approving of. The Jagran Manch’s activities are a serious reflection on the face of the self-styled keepers of the Hindu conscience. The unravelling of the conspiracy in a professional and impartial manner may bring to light many dark secrets about the way the saffron brigade has been going about “protecting” Hindutva outfits.

The least that the Parivar can now do is to dissociate itself from the activities of such elements and condemn it in unequivocal terms. That would have been the first step taken by any responsible organisation but the Parivar tends to have its own spin on everything. It delayed condemning the violence against Christians in Orissa and Karnataka till it was too late. Nor has it shown any remorse over the demolition of Babri Masjid.

Initially, the blame for the blasts had been placed at the door of Islamic fundamentalists. It is good that the police has not acted blindly on that perpetual bugbear and has sifted through the camouflage. Now it is the duty of the government to ensure that the investigation against the suspects is carried out in a fair and firm manner without any trace of partisanship. They must be handed down the strictest punishment irrespective of the religion to which they belong. 

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Marx out of the closet
West rediscovers Das Kapital

THOSE who live by the market always swear to also perish by it. But when teetering on the brink, free-market ideologues and cheerleaders look for any ghost of a chance that can come to their rescue. Thus, has the spectre of Karl Marx returned to haunt Europe, and the rest of the world, which consigned his seminal works to the dung-heap of history, the end of which was proclaimed by a man who has much to rethink today. No longer are the financial engineers triumphantly talking about mark-to-market value of assets and equities. Instead, they are taking a break to mark pages in volumes written by Marx to see if wisdom of the hind can show a way out of the crisis of capitalism.

It is not just the secular worshippers of Mammon who are reiterating the relevance of Marx’s work in these troubled times but also religious figures. Notwithstanding the historical opposition of the Church to Communism, even the Pope has been quoted as having praised Marx’s Das Kapital for its “great analytical quality”. Archibishop of Canterbury Rowan Williams recalled Marx’s analysis of capitalism in “glowing terms” to say: “Marx long ago observed the way in which unbridled capitalism became a kind of mythology, ascribing reality, power and agency to things that had no life in themselves”.

The drift of sneering at Marx being reversed by the global meltdown has led to renewed interest in his works, and publishers and booksellers are seeing a sharp and sudden rise in the sales of the work of Marx as well as Engels. Western leaders who once poured scorn on Marx have taken turning pages of his tomes. French President Nicolas Sarkozi and German Finance Minister Peer Steinbruck are reading Marx, maybe for the first time. As the citadels of neo-liberalism are crumbling, it is no longer fashionable to call Marx a “false prophet”. Marx is proving to be profitable not only for those in the business of books. To cash in on the revival of interest in Marx, there is a plan to turn Das Kapital into a movie. Obviously, Marx didn’t move with his times. He was way ahead of it. His problem in life and death has not necessarily been capitalists, but the Marxists themselves whose latter-day ideas and interpretations might embarrass the old man if he had been around.

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Thought for the Day

Thought is the blossom; language the bud; action the fruit behind it. 

— Ralph Waldo Emerson 

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India in West Asia
Gradual move towards realism
by Harsh V. Pant

IN the wake of the first state visit to India by President of the Palestinian National Authority Mahmoud Abbas it is important to assess the remarkable reorientation in the Indian foreign policy towards West Asia over the last few years. At a time when that region is passing through a phase of unparalleled political, economic, and social churning, India is being called upon by the international community to play a larger role in West Asian affairs. This is evident in the pressure on India to adopt a more visible role in Iraq and to use its leverage on Iran to curtail Iran’s pursuit of nuclear weapons. In a first of its kind, India was invited by the US to participate in the West Asian peace conference at Annapolis in November 2007 as a recognition of India’s growing stature in the international system.

The loosening of the structural constraints imposed by the Cold War has given India greater flexibility in carving its foreign policy in West Asia. The most notable change has been India’s attempts to enhance its ties with Israel on the one hand and with its traditional antagonists such as Iran and Saudi Arabia on the other. India is no longer coy about proclaiming its gradually strengthening ties with Israel despite apprehensions in some quarters that the Arab world will not very take very kindly to these developments. On the contrary, it seems that the Arab world has reacted cautiously so far and has deepened its engagement with India for fear of losing India wholly to Israel. But the biggest test of this balancing act remains in India’s management of its relations with Iran that remains the most openly hostile neighbour of Israel.

There is also a realisation in India that India’s largely pro-Arab stance in the Middle East has not been adequately rewarded by the Arab world. India has received no worthwhile backing from the Arab countries in the resolution of problems it faces in its neighbourhood, especially Kashmir. There have been no serious attempts by the Arab world to put pressure on Pakistan to reign in the cross-border insurgency in Kashmir.

On the contrary, the Arab world has firmly stood by Pakistan using the Organisation of Islamic Conference to build support for Islamabad and the Jihadi groups in Kashmir. It is also natural for India to ask if Arab nations, such as Jordan, have been able to keep their traditional ties with Palestine intact while building a new relationship with Israel, there is no reason for India not to take a similar route which might give it more room for diplomatic maneuvering.

Domestic constraints imposed by India’s Muslim community have traditionally been a significant factor in shaping India’s Middle East policy. While this remains a potent variable, there are signs that Indian foreign policy has had some success in recent times in overcoming this constraint.

Again, India’s relations with Israel are a case in point. India has developed these ties despite a significant opposition from the left parties. More recently, India has chosen to side with the West on a few occasions on the issue of the Iranian nuclear programme, keeping aside domestic political considerations.

India’s ambivalent response to the hanging of Saddam Hussein and the passing of the United Nations Security Council resolution against Iran, however, underscores the continuing salience of domestic political imperatives in shaping Indian foreign policy. India found it difficult to unambiguously support a Security Council resolution imposing sanctions on Iran backed even by Russia and China.

Domestic political constraints were also responsible for the Indian Parliament’s lopsided view of the conflict in Lebanon last summer when it criticised Israeli attack against Lebanon and its civilian population but remained silent on the actions of Hezbollah against Israel.

Another factor that is increasingly shaping not only India’s approach towards West Asia but also broader Indian foreign policy priorities is India’s burgeoning demand for energy. Burgeoning population, coupled with rapid economic growth and industrialisation has propelled India into becoming the sixth largest energy consumer in the world, with the prospect of emerging as the fourth largest consumer in the next 4-5 years.

Not surprisingly, perhaps, the focal point of India’s energy diplomacy has been Middle East as around 65 per cent of its energy requirements are met by this region. It is in this context that India’s relationship with Iran has come under global scrutiny in recent years and the Iran-Pakistan-Iran gas pipeline continues to generate intense commotion.

India’s foreign policy towards West Asia will also be increasingly influenced by the rise of Islamic extremism and India’s growing wariness about the impact of global Islamic extremist networks on its domestic Muslim population. A major impediment in India’s ties with Saudi Arabia is the proliferation of Saudi-funded religious schools in the country. New Delhi is especially sensitive given Saudi links to jihadi groups such as Lashkar-e-Taiba, which have staged attacks within India. The group has tried to recruit Indian Muslims-so far with only limited success-for its radical causes from the Indian diaspora in Saudi Arabia and other states in the Persian Gulf. It has achieved limited success so far but the potential remains.

China is becoming a major player in global politics and its influence in West Asia is on the rise. The two Asian giants are vociferously trying to compete for global energy resources. China’s ties with major West Asian nations are on an upswing and this would be a major factor in how India shapes its West Asian policies over the long term. The US, meanwhile, remains the predominant player in West Asia despite the visible failure of its policy in Iraq. India’s ties with the US have dramatically expanded in the last few years and this has already emerged as a significant factor in shaping Indian foreign policy towards Middle East.

The most visible manifestation of this has been India’s attempt to recalibrate its ties with Iran. The shadow of the US will loom large over Indian foreign policy in the years to come especially as the conflict between the US and Iran gets intensified.

India is trying hard to project itself as a responsible nuclear power, especially after the signing of the civilian nuclear cooperation agreement with the US. It will be very reluctant to challenge US non-proliferation priorities in West Asia that views Iranian nuclear program as a major challenge. Moreover, it is in India’s interest now that nuclear proliferation in its neighbourhood is contained.

India today is focusing on a pragmatic engagement with all sides and has tried to shed its covertly ideological approach towards the region. Most countries in the region are also now seeking comprehensive partnerships with India based on a recognition and appreciation for India’s role in shaping the emerging regional and global order. As India tries to redefine its interests in West Asia, Indian diplomacy should become more outcome-oriented. From energy security to defence ties, from countering China to pursuing stability in the region, India now has an array of interests in West Asia. These interests will be best served by a greater degree of realism in Indian foreign policy.

The writer teaches at King’s College, London.

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A poet of broken hearts
by R. Vatsyayan

I had met Sahir Ludhianvi in 1970 when he came to attend the golden jubilee celebrations of his alma mater, Government College, Ludhiana. He was a well-built, tall and slightly hunch-backed person whose big and protruding nose fitted fine on a face which had a large and ascending forehead.

I requested one of my teachers to introduce me to him. Sahir, who was standing with another famous poet Jan Nissar Akhtar (father of Javed Akthar) had a brief chat with me and obliged me with his autographs.

Sahir remained in the college for two days and was a craze with the students. Contrary to his mercurial temperament as we had heard, he appeared to be very happy to visit his old college which had earlier expelled him for his non-conformist behaviour. His native city too seemed to celebrate the visit of its prodigal son, when scores of his old friends and acquaintances continued to come to meet him.

Born Abdul Hayee, Sahir’s parents had a very loose and estranged relationship and despite coming off a rich Muslim Gujjar family, fear and financial deprivation surrounded his formative years of life. Though Sahir gave ample evidence of his poetic abilities right in his college days, he really shot into fame with the publication of his poetical collection “Talkhian” in mid forties. Two poems of this volume “Taj Majal” and “Chakley” became instant hit and these continue to be popular even today.

In an era when poetry of socialistic fervour dominated the Urdu literary scenario, Sahir inspired a whole generation of young people. During our college days we used to emphasise our point of view by using his couplets as quotations. Though he was the most recognised mast of the progressive writers movement, much of his poetry made a reflection of his failures in love and his commitment to undo the injustice done by society to the underprivileged.

After joining the film industry, he composed hundreds of songs and most of these became distinctively popular. Films, no doubt, brought him immense fame and money but he catapulted the standards of Hindi film songs to a level that became benchmark for quality poetry. Still many people believe that cinema obstructed full growth of his poetic genius. His fans had to wait in vain for another collection and had to be content with his long poem ‘Parchhaiyan’ which though is an anti-war resolution but is also an amazing canvas of many sensitive moods of human life.

I remember the morning when while tuning in the Urdu service of All India Radio, I heard the sad news of his death due to a heart attack. That was on this day 28 years ago. Today when I tell and translate his poetical work to my college-going son who belongs to an era where depths of Urdu poetry are not clearly understood, I meet another generation which has full admiration for Sahir.

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Elections in US
Protection of voters’ rights inadequate
Dateline Washington by Ashish Kumar Sen

ON November 4 Americans will go to the polls to elect a new president. Their two main choices are Democratic Senator Barack Obama, who would make history as America’s first black president should he win, and Republican Senator John McCain, who at 72 would be America’s oldest president.

Wendy Weiser directs work on voting rights and elections at the Brennan Center for Justice at New York University School of Law. During the run-up to the 2004 and 2006 elections, she masterminded litigation and advocacy efforts that kept hundreds of thousands of voters from being disenfranchised.

In an interview Weiser says she is concerned about the rise in vote suppression efforts across the country and the inability of some states to cope with the huge voter turnout expected this year.

Excerpts:

Critics of HAVA [Help America Vote Act of 2002] say it provides an excuse to scrub electoral rolls of thousands of voters. Do you agree with this criticism?

I do not believe that any federal law, including HAVA, justifies purging the voter rolls of thousands of eligible voters.  HAVA and other federal laws make it clear that states must make sure that they do not remove the names of eligible voters from the rolls. 

That said, HAVA did provide states with a more effective tool for conducting mass purges – state-wide voter registration databases.  Those databases can and should be used to improve list maintenance and to protect voters, but sometimes they are misused by officials conducting overly aggressive purges of the voter rolls based on faulty processes.

Which are some of the states in which you anticipate problems this year and what are the reasons for these problems?

We anticipate problems in many states.  Across the country, states are not prepared to handle the record voter turnout expected this year.  Early voting has already started in a number of states, and there have already been reported problems of long lines and voters being turned away. 

The Brennan Center did a report on the level of preparedness in the states to deal with voting system-related problems.  We found that the states that are least prepared are: Colorado, Delaware, Kentucky, Louisiana, New Jersey, South Carolina, Tennessee, Texas, Utah and Virginia.

We are especially concerned about the rise in new barriers to voting and the rise in vote suppression efforts.  The states which raise the most significant concerns include Florida, Ohio, Colorado and Virginia.

In all four states, there is reason to fear that partisans will mount widespread challenges to voters at the polls.

Do you believe adequate steps have been taken to ensure voters' rights are protected this year?

No, I do not believe adequate steps have been taken to protect voters' rights.  In many ways, the voter registration systems in the United States are fraught with error and vulnerable to manipulation and gaming by political operatives. 

Few states have procedures in place to ensure that voters who were wrongfully purged, challenged, kept off the voter rolls, or otherwise deterred can remedy the problem and cast a ballot that will count on Election Day. 

Several states have recently taken steps to prevent unfair, intimidating and disruptive challenges to voters at the polls, and we hope that the remaining states follow suit before the election.  After the election, the United States should implement a system of universal voter registration in which the government takes responsibility for ensuring that all eligible citizens are on the voter rolls, that voters' registration information is automatically updated when they move, and that there is a failsafe procedure available on Election Day to capture any eligible citizens who may be missed. 

The United States is an outlier among the world's democracies in not having a systematic voter registration system and in placing the onus of voter registration on individuals and non-governmental groups.

To what extent have provisional ballots protected voters' rights? Are these ballots fairly scrutinised after the election or merely tossed aside as some critics have suggested?

Provisional ballots are an effective failsafe for a minority of voters who would otherwise be turned away.  It is not an adequate failsafe against wrongful disenfranchisement since a significant number of them never get counted.  The level of scrutiny paid to provisional ballots varies widely from state to state.  The counting rates similarly vary widely, from less than 7 to 92 per cent.

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Helping them age with grace
by Triloki Das Khandelwal

A society is measured by its attitude towards the weak, the helpless, the children and the aged. Societies that do not take care of the physical needs of this segment of their population have no right to talk about human rights and human dignity.

Launching man on the moon has little relevance, if men do not develop sensitivity to the plight of the old and the marginalised.

All religious scriptures — the Vedas, Upnishads, the Gita, Ramayan, Jainism, Buddhism, Taoism, the Quran, the Bible and Granth Sahib have called upon their followers to spread and share the love of God and serve their less fortunate brethren.

The plight of the aged can be explained in the advancement of science and technology, which, on the one hand, adds longevity to life but demands its price in terms of physical infirmities and mental senility.

The rural migration to urban clusters renders human beings lonely and socially alienated. Devoid of a joint family the senior generation suffers handicaps and physical pain that gets aggravated without a touch of social healing

Urban dwellings cannot accommodate the seniors and distances make old life miserable in the advancing years. The absence of old age homes and the stigma that they carry with them put the seniors in a dilemma of suffering the tortures of a nucleus, working family or fleeing to religious centres to mitigate the pangs of a wretched existence.

Medicare has become prohibitive and even routine check-ups are so exhausting that life looks like a struggle not worth fighting. Pseudo-religious organisations are minting money and the danger of being cheated in the old age renders life too insecure and even unbearable.

All this is a day-to-day common experience of life at 65 years or above in India. Even those who plan social security through savings and pension also need old age services like food, medicare, social entertainment and religious fulfilment.

Most of these services, including a decent funeral, do not exist in India. Children are becoming increasingly global in pursuit of their new careers. The cruel realities of age and change look stark in the face of both generations.

Social security in the era of technology and connectivity has to be searched in a new pattern of living, wherein the seniors can have a “second family career” without a haunting worry of daily food, reasonable shelter, avoidable disease and less painful death.

It requires an unprecedented and massive efforts on the part of the state, the society, the family and senior citizens themselves to conquer the incapacities of old age.

They have to build a new kind of social order for the seniors without distinctions of caste, class, sex or creed.

The leaders of society and religious groups and the enlightened and affluent ones among our seniors have to take the lead and build an effective social network and a huge infrastructure of social security to meet the challenge.

Awareness at the state level is too low and some states are paying as low as Rs 35 per month as old age pension. Others pay Rs 100 or 175 which is too paltry a sum to keep the body and the soul together.

Our elected representatives should chalk out policies and ensure a decent sum of at least Rs Rs 500 per month as old age pension to all eligibles by 2010.

The Indian society has not organised itself to serve venerable elders. Doctors, Industrial houses, social workers, young students, journalists, lawyers, teachers and professionals from all walks of life have to launch regular campaigns and join hands to provide all those facilities.

There is enough scope for all sorts of organised help at the village, block, district and state levels. The private and public sectors can have a fruitful partnership in this challenging venture.

The fortunate seniors can also follow the models of Bill Gate, Warren Baffet and Bono, who placed their well-earned surplus wealth and influence for the service of the weak and the disadvantaged.

They can constitute trusts and missions to which average citizens, including the seniors may make contributions. These corporate bodies may ensure medicare, food guarantee and healthy and decent living for all people in the evening of their lives.

Religious leaders and social reformers may join them. The citizens will also have to become conscious of their own social security much before they cross the threshold. The institutions of old age care should train these people to accept “aging with grace”. The old age services should be made available to all seniors by trained professionals in the field.

In this age of rapid globalisation, with its premium on youth, people must not forget their obligations to the elderly. Civilisation teaches us the need of a social family system conceived as a unity. Economic and social pressures have fractured this unity today. There is need for healing it and making it whole again.

The writer is the Secretary General, Social Security Foundation, Jaipur

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Greenspan says his world view flawed
by Stephen Foley

ALAN Greenspan, the former chairman of the US Federal Reserve, has dramatically repudiated large parts of his laissez-faire ideology and joined the chorus of voices saying that the credit crisis reveals a need for more regulation of the finance industry.

Returning to Capitol Hill to testify before Congress, where lawmakers were once in awe of his intellect and his reputation as a steward of the economy, a bewildered-sounding Mr Greenspan admitted that his view of the world had been flawed.

Self-regulation by Wall Street had failed, he said. "Those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity – myself especially – are in a state of shocked disbelief.”

And he went on: “I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works. That's precisely the reason I was shocked... I still do not fully understand why it happened and obviously to the extent that I figure where it happened and why, I will change my views. If the facts change, I will change.”

The 82-year-old former chairman, who ran the Fed for 18 years under four presidents before retiring in 2006, has seen his reputation torn to shreds by those who accuse him of having contributed to a credit bubble which, on bursting, has brought the world to the brink of economic calamity.

The housing market was inflated to unsustainable levels, in part by Mr Greenspan's keeping interest rates too low for too long, his critics argue. And he rejected calls as far back as 2000 to beef up the Fed's regulation of the mortgage lending business in the US, where so-called “sub-prime” borrowers were handed home loans they couldn't afford by predatory lenders who operated without strong oversight.

Those sub-prime loans were parceled up into mortgage-backedsecurities and other derivatives, which were sold throughout the world — and which have subsequently collapsed in value as US borrowers defaulted on mortgage payments in record numbers and as house prices slumped.

The explosion of these derivatives markets was based on flawed assumptions, by traders and their counterparties, about the levels of risk that they were taking, Mr Greenspan said. “The whole intellectual edifice collapsed in the summer of last year because the data inputted into the risk management models generally covered only the past two decades, a period of euphoria.”

Although the former Fed chairman said he had warned as far back as 2005 that markets might be underpricing risk, his testimony was a major departure — following many months in which Mr Greenspan has declined to identify mistakes he made during his tenure and has insisted that he could have done little to prick a bubble in the credit markets in any case.

He called for better oversight of the financial markets, and in particular those issuing mortgage-backed securities and other derivatives. “As much as I would prefer it otherwise, in this financial environment I see no choice but to require that all securitisers retain a meaningful part of the securities they issue,” he said.

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