Renminbi on the way to being the world's most important currency ?

 

Hamish McRae:

 

Economic Life: The road to a world of multiple reserve currencies will be a bumpy one, and people will get hurt

 

Are the dollar's days as the prime world reserve currency numbered? Yes, but dethroning it will take a long time, and the road to a world of multiple reserve currencies will be a bumpy one. Along the way people will get hurt.
 
Several things have come together in the past few days which highlight the inherent fragility of the dollar's position. In the spring, during that period of blue funk, US Treasury assets were regarded as the prime global investment. As confidence has returned, two things have happened. One is that the focus has shifted to other currencies, notably sterling. Yesterday the pound was trading at just under $1.65, about halfway back from its bottom of below $1.38 earlier this year and the $2 level it was at in July last year. (Against the euro the pound was above €1.17, the highest it has been this year.) That is partly a change in perception about sterling: the growing evidence that though the UK economy may not come up much this year, it may have stopped going down. But it also reflects a return to normality: people appreciate that while holding non-dollar currencies carries risks, holding the dollar carries risks too.
 
The other thing that has changed is long-term US interest rates. In the spring the yield on 10-year US Treasury securities was under 3 per cent; now it is 4 per cent. There are two practical consequences of that. Investors that bought bonds earlier this year have lost money, with foreign investors hit by the double blow of a fall in the dollar and the fall in the price of the bonds. And US home-buyers have been hit by a rise in mortgage rates. In the past month the 30-year mortgage rate was well below 4 per cent. Now it is over 5 per cent, and this in a market where the Federal Reserve is supporting it by acting as a buyer of mortgage notes.
 
All this is important because it says two things. One is that investors worldwide now are worrying rather more about the ability of the US government to keep funding itself – yes, it can always borrow the money, but it will have to pay more for it. The other is Fed policy can drive down short-term rates, but long-term rates are set by the market.
 
This leads to a further and even bigger issue: the position of the dollar as the world's premier reserve currency. As you can see from the pie chart, more than half the world's official currency reserves are denominated in dollars, with the euro in second place. The vast majority of these dollar holdings are in short-term Treasury bills, with the result that the US government can in part finance itself in this way. That depends, however, on the dollar remaining the principal reserve currency.
 
Step back a moment. A century ago, sterling was de facto the world reserve currency, though central banks held most of their reserves in gold. That was rational because though the UK was not the world's largest economy – it was number three, behind the US and Germany – it was the largest trading nation. After the Second World War, the pound and the dollar were the two designated reserve currencies under the Bretton Woods fixed exchange rate system, and that just about made sense because most of the Commonwealth was in the sterling area. But successive devaluations of the pound reduced its role, and when the effective devaluation of the dollar in 1972 ended the fixed exchange rate system, reserves came to be held in a mix of currencies, with dollar primus inter pares. Central banks held dollars because of its acceptability, the breadth of US markets and the general underpinning of its position as indubitably the world's largest economy.
 
More recently the dollar's role has been supported by China's willingness to hold dollar assets. It has pumped money into dollars to hold down its own currency and offset the massive trade surpluses it has accumulated over the past five years – rather as Japan did in the 1980s and 1990s.
 
But now two things are happening. China is becoming the world's second largest economy. It may have already passed Japan, but it surely will next year, as the top bar chart suggests. And within a generation it is on track to become the world's largest economy, with the Goldman Sachs Brics' model suggesting that it will pass the US in about 20 years' time. The league table of the world's top 10 economies in 2030, as projected by that model, is shown in the final graph. Note that India is expected to become the number three economy, and both Brazil and Russia will be ahead of Germany.
 
When we reach that stage it would be irrational to expect the dollar to remain the principal reserve currency, or indeed the main denominator for most commodities. Actually the transition will start much earlier, if that is what the principal holders of reserves and other assets really want. So the next question is: what does China want?
 
As a general principle it is worth under such circumstances to listen to what its leaders say. Back at the end of March, an article by Zhou Xiaochuan, governor of the People's Bank of China, the central bank, was posted on its website. He suggested replacing the dollar with a new reserve currency controlled by the International Monetary Fund. The aim would be to create a currency "that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies".
 
"The outbreak of the crisis," he continued, "and its spillover to the entire world reflected the inherent vulnerability and systemic risks in the existing international monetary system."
As it happens, the IMF does have a quasi-currency, Special Drawing Rights, but these were invented for a completely different purpose: to provide additional liquidity for world finance under the fixed exchange rate system and allay fears that the limited stock of gold in central bank reserves would stifle the growth of world trade. So the invention was rendered redundant by the move to a floating rate system. I suppose you could in theory cobble together a system where SDRs replaced the dollar, but in practice it is not going to happen. It was hard enough getting agreement on SDR allocations in the first place, and I cannot see international agreement on that now. In any case, all monetary history shows that currencies have to have international confidence behind them for people to be prepared to hold them, and it is not at all clear who would be the ultimate backer for SDRs.
 
What I think will happen is different. I think we will move gradually towards a multicurrency reserve system, with central banks holding a variety of foreign currencies, including the Chinese renminbi and the Indian rupee alongside the dollar, euro and so on. And they will hold them not because of any formal agreement but because it makes commercial sense to hold in reserves the currencies of your principal trading partners.
 
As for the currencies in which the main commodities will be denominated, that will be a toss-up between a single currency, the dollar or the renminbi, and a basket of currencies. But that will be a matter of convenience. At the moment the dollar is used for oil because the US is the world's biggest oil user. But many international steel contracts are in euros, reflecting the importance of Europe as a steel user. Both may change. Once China is the world's largest economy the renminbi will become the world's most important currency.

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History lesson for economists in thrall to Keynes

By Niall Ferguson

Published: May 29 2009 19:23 | Last updated: May 29 2009 19:23

On Wednesday last week, yields on 10-year US Treasuries – generally seen as the benchmark for long-term interest rates – rose above 3.73 per cent. Once upon a time that would have been considered rather low. But the financial crisis has changed all that: at the end of last year, the yield on the 10-year fell to 2.06 per cent. In other words, long-term rates have risen by 167 basis points in the space of five months. In relative terms, that represents an 81 per cent jump.

Most commentators were unnerved by this development, coinciding as it did with warnings about the fiscal health of the US. For me, however, it was good news. For it settled a rather public argument between me and the Princeton economist Paul Krugman.

It is a brave or foolhardy man who picks a fight with Mr Krugman, the most recent recipient of the Nobel Prize for Economics. Yet a cat may look at a king, and sometimes a historian can challenge an economist.

A month ago Mr Krugman and I sat on a panel convened in New York to discuss the financial crisis. I made the point that “the running of massive fiscal deficits in excess of 12 per cent of gross domestic product this year, and the issuance therefore of vast quantities of freshly-minted bonds” was likely to push long-term interest rates up, at a time when the Federal Reserve aims at keeping them down. I predicted a “painful tug-of-war between our monetary policy and our fiscal policy, as the markets realise just what a vast quantity of bonds are going to have to be absorbed by the financial system this year”.

De haut en bas came the patronising response: I belonged to a “Dark Age” of economics. It was “really sad” that my knowledge of the dismal science had not even got up to 1937 (the year after Keynes’s General Theory was published), much less its zenith in 2005 (the year Mr Krugman’s macro-economics textbook appeared). Did I not grasp that the key to the crisis was “a vast excess of desired savings over willing investment”? “We have a global savings glut,” explained Mr Krugman, “which is why there is, in fact, no upward pressure on interest rates.”

Now, I do not need lessons about the General Theory . But I think perhaps Mr Krugman would benefit from a refresher course about that work’s historical context. Having reissued his book The Return of Depression Economics, he clearly has an interest in representing the current crisis as a repeat of the 1930s. But it is not. US real GDP is forecast by the International Monetary Fund to fall by 2.8 per cent this year and to stagnate next year. This is a far cry from the early 1930s, when real output collapsed by 30 per cent. So far this is a big recession, comparable in scale with 1973-1975. Nor has globalisation collapsed the way it did in the 1930s.

Credit for averting a second Great Depression should principally go to Fed chairman Ben Bernanke, whose knowledge of the early 1930s banking crisis is second to none, and whose double dose of near-zero short-term rates and quantitative easing – a doubling of the Fed’s balance sheet since September – has averted a pandemic of bank failures. No doubt, too, the $787bn stimulus package is also boosting US GDP this quarter.

But the stimulus package only accounts for a part of the massive deficit the US federal government is projected to run this year. Borrowing is forecast to be $1,840bn – equivalent to around half of all federal outlays and 13 per cent of GDP. A deficit this size has not been seen in the US since the second world war. A further $10,000bn will need to be borrowed in the decade ahead, according to the Congressional Budget Office. Even if the White House’s over-optimistic growth forecasts are correct, that will still take the gross federal debt above 100 per cent of GDP by 2017. And this ignores the vast off-balance-sheet liabilities of the Medicare and Social Security systems.

It is hardly surprising, then, that the bond market is quailing. For only on Planet Econ-101 (the standard macroeconomics course drummed into every US undergraduate) could such a tidal wave of debt issuance exert “no upward pressure on interest rates”.

Of course, Mr Krugman knew what I meant. “The only thing that might drive up interest rates,” he acknowledged during our debate, “is that people may grow dubious about the financial solvency of governments.” Might? May? The fact is that people – not least the Chinese government – are already distinctly dubious. They understand that US fiscal policy implies big purchases of government bonds by the Fed this year, since neither foreign nor private domestic purchases will suffice to fund the deficit. This policy is known as printing money and it is what many governments tried in the 1970s, with inflationary consequences you do not need to be a historian to recall.

No doubt there are powerful deflationary headwinds blowing in the other direction today. There is surplus capacity in world manufacturing. But the price of key commodities has surged since February. Monetary expansion in the US, where M2 is growing at an annual rate of 9 per cent, well above its post-1960 average, seems likely to lead to inflation if not this year, then next. In the words of the Chinese central bank’s latest quarterly report: “A policy mistake ... may bring inflation risks to the whole world.”

The policy mistake has already been made – to adopt the fiscal policy of a world war to fight a recession. In the absence of credible commitments to end the chronic US structural deficit, there will be further upward pressure on interest rates, despite the glut of global savings. It was Keynes who noted that “even the most practical man of affairs is usually in the thrall of the ideas of some long-dead economist”. Today the long-dead economist is Keynes, and it is professors of economics, not practical men, who are in thrall to his ideas.

Economists clash on shifting sands

By Robert Skidelsky

Published: June 9 2009 18:52 | Last updated: June 9 2009 18:52

History is replete with famous intellectual battles. In the natural sciences, these have usually led to decisive victories, with good science ousting bad. There are few Ptolemaic astronomers left, or believers in the phlogiston theory of combustion. In the social sciences, the situation is different. There have been famous battles galore, but no decisive victories. Indeed, it is characteristic of the social sciences that their battles are interminable, temporary defeats being followed by the regrouping of the defeated forces for a renewed assault.

That economics is not a natural science is clear from the inconclusive engagements that have punctuated its own history. A hundred years ago the classical theory reigned supreme. This “proved” that free markets were automatically self-adjusting to full employment. They were either continually at full employment or, if disturbed by an outside shock, rapidly returned to it. The only thing capable of wrecking the workings of the market’s invisible hand was the visible hand of government interference.

Then along came the Great Depression of 1929-32 and John Maynard Keynes. Keynes “proved” that markets had no automatic tendency to full employment. This failing of the invisible hand justified government policies to maintain full employment.

For 30 years or so Keynesianism ruled the roost of economics – and economic policy. Harvard was queen, Chicago was nowhere. But Chicago was merely licking its wounds. In the 1960s it counter-attacked. The new assault was led by Milton Friedman and followed up by a galaxy of clever young disciples. What they did was to reinstate classical theory. Their “proofs” that markets are instantaneously, or nearly instantaneously, self-adjusting to full employment were all the more impressive because now expressed in mathematics. Adaptive Expectations, Rational Expectations, Real Business Cycle Theory, Efficient Financial Market Theory – they all poured off the Chicago assembly line, their inventors awarded Nobel Prizes.

No policymaker understood the maths, but they got the message: markets were good, governments bad. The Keynesians were in retreat. Following Ronald Reagan and Margaret Thatcher, Keynesian full employment policies were abandoned and markets deregulated. Then along came the almost Great Depression of today and the battle is once more joined.

Haunters of the blogosphere will know that the main ground of the current engagement is about the effect of the “stimulus”. FT readers will have caught a faint whiff of the intensity of this battle in Niall Ferguson’s column of May 30, headed “A history lesson for economists in thrall to Keynes”. Prof Ferguson and Paul Krugman, the economist and New York Times columnist, had previously locked horns at a public symposium in New York on April 30. The historian had asserted that large fiscal deficits would push up long-term interest rates. This implied they would have a zero stimulatory effect: public spending would simply “crowd out” private spending. An enraged Mr Krugman responded on his blog that Keynes had proved that such crowding-out could occur only at full employment: if there were unemployed resources, fiscal deficits would not drive up interest rates without also expanding the economy. Prof Ferguson’s ignorant remarks only confirmed that “we’re living in a Dark Age of macroeconomics, in which hard-won know-ledge has simply been forgotten”.

However, this is not a debate between economists and historians. It is a battle within the economic profession – between the New Class-ical Economists and the New Keynesians. What is fascinating is that it is an almost exact rerun of the debate between Keynes and the British Treasury in 1929-30. The Treasury view was that bond-financed public spending was bound to diminish private spending by an equal amount. Keynes replied that if this were true it would apply to any new act of private spending. “In short, the fatalistic belief that there can never be more employment than there is is altogether baseless”.

Later the Treasury retreated to a more defensible position. The danger of extra government spending, it came to argue, lay not in the “physical” crowding out of resources but “psychological” crowding out. If doubts arose about the government’s solvency – a concern Prof Krugman has acknowledged – it might lead to capital flight, which would push up the cost of government borrowing.

Are we doomed to rehearse the same arguments time and again? In this particular debate, I am on Prof Krugman’s side, but I do not agree that Prof Ferguson’s position represents a retreat to a phlogiston state of economics. This is to take economics to be like a natural science, which Keynes never believed it was, because he thought its subject matter was much too variable over time.

Keynes’s view was that we need different economic models at different times. The beauty of his General Theory of Employment, Interest and Money was that it was general enough to accommodate a variety of models applicable to different conditions. Markets could behave in ways described by the classical and New Classical theories, but they need not. So it was important to take precautions against bad behaviour. Ultimately, the Keynesian revolution was a triumph not of good science over bad science, but of good judgment over bad judgment.

For 300 years Britain has outsourced mayhem. Finally it's coming home

 

 

 

• George Monbiot 

 

Why now? It's not as if this is the first time Britain's representatives have been caught out. The history of governments in all countries is the history of scandal, as those who rise to the top are generally the most ambitious, ruthless and unscrupulous people politics can produce. Pushing their own interests to the limit, they teeter perennially on the brink of disgrace, except when they fly clean over the edge. So why does the current ballyhoo threaten to destroy not only the government but also our antediluvian political system?

 
The past 15 years have produced the cash-for-questions racket, the Hinduja and Ecclestone affairs, the lies and fabrications that led to the invasion of Iraq, the forced abandonment of the BAE corruption probe, the cash-for-honours caper and the cash-for-amendments scandal. By comparison to the outright subversion of the functions of government in some of these cases, the expenses scandal is small beer. Any one of them should have prompted the sweeping political reforms we are now debating. But they didn't.
 
The expenses scandal, by contrast, could kill the Labour party. It might also force politicians of all parties to address our unjust voting system, the unelected Lords, the excessive power of the executive, the legalised blackmail used by the whips, and a score of further anachronisms and injustices. Why is it different?
 
I believe that the current political crisis has little to do with the expenses scandal, still less with Gordon Brown's leadership. It arises because our economic system can no longer extract wealth from other nations. For the past 300 years, the revolutions and reforms experienced by almost all other developed countries have been averted in Britain by foreign remittances.
 
The social unrest that might have transformed our politics was instead outsourced to our colonies and unwilling trading partners. The rebellions in Ireland, India, China, the Caribbean, Egypt, South Africa, Malaya, Kenya, Iran and other places we subjugated were the price of political peace in Britain. After decolonisation, our plunder of other nations was sustained by the banks. Now, for the first time in three centuries, they can no longer deliver, and we must at last confront our problems.
 
There will probably never be a full account of the robbery this country organised, but there are a few snapshots. In his book Capitalism and Colonial Production, Hamza Alavi estimates that the resource flow from India to Britain between 1793 and 1803 was in the order of £2m a year, the equivalent of many billions today. The economic drain from India, he notes, "has not only been a major factor in India's impoverishment … it has also been a very significant factor in the industrial revolution in Britain". As Ralph Davis observes in The Industrial Revolution and British Overseas Trade, from the 1760s onwards India's wealth "bought the national debt back from the Dutch and others … leaving Britain nearly free from overseas indebtedness when it came to face the great French wars from 1793".
 
In France by contrast, as Eric Hobsbawm notes in The Age of Revolution, "the financial troubles of the monarchy brought matters to a head". In 1788 half of France's national expenditure was used to service its debt: the "American War and its debt broke the back of the monarchy".
 
Even as the French were overthrowing the ancien regime, Britain's landed classes were able to strengthen their economic power, seizing common property from the country's poor by means of enclosure. Partly as a result of remittances from India and the Caribbean, the economy was booming and the state had the funds to ride out political crises. Later, after smashing India's own industrial capacity, Britain forced that country to become a major export market for our manufactured goods, sustaining industrial employment here (and avoiding social unrest) long after our products and processes became uncompetitive.
 
Colonial plunder permitted the British state to balance its resource deficits as well. For some 200 years a river of food flowed into this country from such places as Ireland, India and the Caribbean. In The Blood Never Dried, John Newsinger reveals that in 1748 Jamaica alone sent 17,400 tons of sugar to Britain; by 1815 this had risen to 73,800. It was all produced by stolen labour.
Just as grain was sucked out of Ireland at the height of its great famine, so Britain continued to drain India of food during its catastrophic hungers. In Late Victorian Holocausts, Mike Davis shows that between 1876 and 1877 wheat exports to the UK from India doubled as subsistence there collapsed, and several million died of starvation. In the North-Western provinces famine was wholly engineered by British policy, as good harvests were exported to offset poor English production in 1876 and 1877.
Britain, in other words, outsourced famine as well as social unrest. There was terrible poverty in this country in the second half of the 19th century, but not mass starvation. The bad harvest of 1788 helped precipitate the French revolution, but the British state avoided such hazards. Others died on our behalf. 
 
In the late 19th century, Davis shows, Britain's vast deficits with the United States, Germany and its white dominions were balanced by huge annual surpluses with India and (as a result of the opium trade) China. For a generation "the starving Indian and Chinese peasantries … braced the entire system of international settlements, allowing England's continued financial supremacy to temporarily co-exist with its relative industrial decline". Britain's trade surpluses with India allowed the City to become the world's financial capital.

 
Its role in British colonisation was not a passive one. The bankruptcy, and subsequent British takeover, of Egypt in 1882 was hastened by a loan from Roths­child's bank whose execution, Newsinger records, amounted to "fraud on a massive scale". ­Jardine Matheson, once the biggest narco-trafficking outfit in history (it dominated the Chinese opium trade), later formed a major investment bank, Jardine Fleming. It was taken over by JP Morgan Chase in 2000.
 
We lost our colonies, but the plunder has continued by other means. As Joseph Stiglitz shows in Globalisation and its Discontents, the capital liberalisation forced on Asian economies by the IMF permitted northern traders to loot hundreds of billions of dollars, precipitating the Asian financial crisis of 1997-98. Poorer nations have also been strong-armed into a series of amazingly one-sided treaties and commitments, such as investment trade-related investment measures, bilateral investment agreements and the EU's economic economic partnership agreements. If you have ever wondered how a small, densely populated country which produces very little supports itself, I would urge you to study these asymmetric arrangements.  
 
But now, as John Lanchester demonstrates in a fascinating essay in the London Review of Books, the City could be fatally wounded. The nation that relied on financial services may take generations to recover from their collapse. The great British adventure – three centuries spent pillaging the labour, wealth and resources of other countries – is over. We cannot accept this, and seek gleeful revenge on a government that can no longer insulate us from reality.

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'Success In Your Teens Is Dangerous'

I did not realise it at the time, but I know it now when I can no longer make amends.

MANINDER SINGH BEDI

When I see recordings of my bowling of the time when I was at the top of my game, I often involuntarily say: "Wow!" I played for India when I was 17, but my Test career ended when I was not even 27. To play 35 Tests for India can be called a success, but I don’t feel that way. Sometimes when I am alone, when I think about my career and what went wrong, I feel I let myself and the fans down.
I believe it was my fault. I wish I had followed the advice I was getting from my coach, Gurcharan Singh, and Bishan Singh Bedi, my mentor. Bishan paaji used to tell me that the more you work in the nets, the better you’d become. He would tell me to bowl for 2-3 hours a session. But when I’d bowled for 15-20 minutes, and bowled well, I thought that was enough.

Unfortunately, there are times when you start thinking you know it all, especially when you are young. I didn’t care to practice much. That’s why I lost my confidence, lost my action. People say drink ruined my career. True, I used to drink, but it was never a problem.

At that age, when a kid thinks he’s a know-all, it’s important to have a sports psychologist who could help him keep his focus. Success is intoxicating at any age. When it comes in your teens, it’s very dangerous. I did not realise it at the time, but I know it now when I can no longer make amends. When I criticise players like Yuvraj or Raina, I have my experience in mind. It hurts that these boys have such talent but they’re not realising it.

I also feel that spinners and batsmen need 2-3 years of first-class cricket before they break into Test cricket. Fast bowlers can be thrown into the thick of it early. I think all cricket academies should have a psychologist to help the children, to tell them that there’s more to life than this game, that failure in cricket doesn’t mean failure in life.

Bowling At The Death

Cricket's stars are a ruthless lot, many have crashed and burned at its hallowed pitch

ROHIT MAHAJAN, SMRUTI KOPPIKAR, SUGATA SRINIVASARAJU, CHANDER SUTA DOGRA, DOLA MITRA, AMBA BATRA BAKSHI
The game that begets a few stars is also father to thousands of disaffected, depressed men
Cases of suicide


Rambabu Pal: A prolific batsman from UP, he couldn't make use of the few chances he got in first-class cricket. Committed suicide at 34 in 2007.


Manish Mishra: Was acutely depressed after he failed to make the Uttar Pradesh Ranji Trophy team, committed suicide at 24 in 2007.


Subhash Dixit: One-time captain of India U-17, his career stalled before the Ranji level. Committed suicide at 22 in 2007.

Jhuma Sarkar: A regular in Bengal Under-19 women's team, failed to progress. Committed suicide at 23 in 2007.

***

The Enveloping Blues
Mohan Chaturvedi, 38: Was told he'd be touring Pakistan in 1989, but was left out. A wicketkeeper, he went into depression, says he was saved by his faith in God.
Obaid Kamal, 36: One of the best fast bowlers to never play for India. Was frustrated, says he was saved from suicide because of the Islamic injunction against it.
Suhail Sharma, 27: The all-rounder played for Delhi in Ranji Trophy, but struggled to find a job and was depressed for four years.
Dilraj Atwal, 21: The fast bowler was injured after being invited to bowl in the Delhi Ranji Trophy camp last year. Used to cry himself to sleep.
Feroze Ghayas, 36: One of the fastest bowlers who never played for India. Was depressed for some time, says he hurts even now.
Sumit Kundu, 21: Was Haryana Under-17 captain one year, on the sidelines the next. Went into a depression, gave up cricket forever.
Saikat Ganguly, 17: Was named the best junior cricketer of Bengal in 2006; was dropped at the trial stage even before the first tournament. Still in a slump.
Vinayak Samant, 36: For this lower middle-class boy who played for Mumbai and Assam, the India call never came. Went through lows.
***

Message In A...
Maninder Singh, 43: Hailed as a very special talent, played for India at age 17. Couldn't handle stardom, lost his rhythm, his career unravelled...and he took to drinking.
Sadanand Viswanath, 46: In 1985, he was a superstar in the making. Then he was dropped, took to drink and, lost his way, and lost everything.
Vijay Dahiya, 36: Still wonders why he was dropped from the Indian team, took to drinking and clubbing. Lost his way.
Reasons
Little room at the top
Only a select few can play first-class cricket, about 400 in India. Number of aspirants runs into lakhs.
Limited career options
Being onfield for hours a day, years on end, leaves little time to acquire other vocational skills. So no fallback options.
Arbitrariness of selection
Selection can be arbitrary at any level, and are often very biased. Players can’t come to terms with this.
Early success
Too much too early can distract you. Beginning of the end?
Injuries
Can end a career at any age, at any time.
***

Solutions
Keep expectations in check
Cricket must be a passion, not the career option.
Counselling
From very early, players must have access to sports psychologists who can guide them.
Fair selection
Save players from trauma, ensure that the selection process is absolutely fair.
Sports medicine
Still a developing science in the country, many careers are destroyed due to the lack of it.
More other jobs
The BCCI, with all its money, could assist players above U-17 to develop vocational skills, as is done in England.
(Outlook accessed many others who narrated their experience of confronting the dark side of cricket—but they didn’t want to be named.)

***

"The others become drunkards, slip into depression or just fade away into inconsequential careers, where they remain unhappy forever" —Yograj Singh, Cricket Coach

"Cricket can never be a career prospect. Disappointment is guaranteed. Success is not. Once that is established, depression cannot defeat you."—Arun Lal, Former Test cricketer

"You get selected 10 times and then you are dropped for no obvious reason. You see yourself as a failure. Even at the first-class level, it’s a gloomy life." —Aakash Chopra, Ex-India opener

***


Vijay Dahiya, 36, India
Last played for India in 2001, he couldn’t fathom why he was axed. "When you realise you won’t be chosen, the sacrifices you made earlier seem futile," he says. Started visiting nightclubs and drinking. No more bitter, he says all he has today is because of cricket.

In the alleys of old Lucknow, where the affluent share a wall with the indigent, there’s a three-storeys-high dwelling which houses 22 people of one extended family. In a second-floor room which betrays the lower middle-class background of its owners, Manish Mishra grins back at you, his eyes glinting. But it’s only a photograph, and Mishra’s siblings don’t smile, because he hanged himself here two years ago. In life, he overdosed on a passion for cricket. In death—apparently triggered by a tiff with his estranged wife over the phone—he embodies what is very often the fruit of that passion: the lingering frustration of failing in the game and a deep regret for having spent so much time at the nets that it left him with little else in the end. Not even time to escape with some other minimal skills that could help him pitch his tent in some other field.

"He used to say he wished had worked so hard in some other field... for he'd have found a good job..."

Mishra joined the Agra cricket hostel for coaching at the age of nine. He worked hard at his game, ultimately playing for Uttar Pradesh in the junior teams. Early morning, he’d walk to the field, often in borrowed trousers. That’s approximately where his cricketing career got stuck, and he ended up with a fourth-class job in the Railways, a whole world away from his dream of wearing the Indian colours. "He used to say he wished he had worked so hard in some other field...," his cousins say.It didn’t stop there. Bad luck dogged him, his mother died, there was marital discord. Then, without warning, came the night when he dragged the bed across to block his door and hanged himself from the fan.

Mishra didn’t die just because of cricket. No doubt, he took the extreme step because of circumstances at home also. But his frustration at the abject failure in his chosen field, at real or perceived injustices done to his talent, his anger at the venality of system, it all played a part till one day he snapped. In our cricket fields, this anger and frustration is shared by tens of thousands of boys and men who’ve played cricket. The game that begets a few dazzling stars also fathers thousands of disaffected, depressed men.

There are too many guileless, potential ‘cricket victims’ out there for us to ignore it any more. Raw, underage and prone to being felled by the game’s vicissitudes. Lots of cricketers and coaches Outlook spoke to testified to the fact that depression is a major malaise. Some confessed to suicidal thoughts. The list of 15 cricketers who admitted to suffering the ‘cricket blues’ isn’t exhaustive—they are just a few who agreed to go public with their stories, in the hope that the Indian cricket establishment would be prompted to help the young cope with the dark side of the sunny sport.

Former Test player Arun Lal, who runs the Bournvita Cricket Academy in Calcutta, admits that "depression exists in a big way in cricket". Coach Yograj Singh, who played one Test for India, admits a plain professional truth: only a handful among the hundreds of hopefuls have it in them to make it big in cricket. "The others become drunkards, slip into depression or just fade away into inconsequential careers, where they remain unhappy forever."


Saikat Ganguly, 17, Bengal
Jrs Named the best junior cricketer of Bengal in 2006, he was dropped at the trial stage before the first tournament. Slipped into depression, still avoids visitors. Flips through his scrapbook filled with clippings reporting his rise and fall in cricket. Advises his cousin to not play cricket.

The really disturbing thing is, the opposite of a life of glory is often not just a life of misery—some simply terminate. The gloom that descended upon Subhash Dixit’s house in Kanpur two years ago will probably never dissipate. In 2007, the family lost Subhash, the family’s beloved as also its main hope for he was at one time the junior India cricket captain. He was then 22, when cricketing dreams often start to die and a search for livelihood begins. But Subhash lacked the skills of the usual job-seeker. Aunt Sushma, her voice trembling, says he just couldn’t find a job. "He used to say he would have been selected for the Ranji team if we had the money or the contacts," she told Outlook. "Earlier, he used to pledge that he’d ‘do something in life’. Now I just wish he’d come back somehow."

In 2007, the family lost Subhash Dixit, their lone hope, for he was at one time the India Jrs cricket captain.

But Subhash isn’t coming back. He jumped to his death after leaving home, ostensibly to practise at the Green Park grounds in the city.

Obaid Kamal, who played for UP and Punjab and now coaches in Lucknow, says "people don’t know how frustrating it is to become a cricketer. (I found life in the jaws of death)." A swing bowler, Kamal was a regular feature in the Duleep Trophy teams of the 1990s. "Even when I got the most wickets, I did not get a call.When (Javagal) Srinath was injured in New Zealand in 1994, everyone said I should be sent to replace him. A spinner was sent instead!" he recalls. He declares he’s now put it all behind him, yet there were moments of despair when Kamal contemplated suicide; he says his mother’s words when he was a child—that suicide is "haraam, a sin that won’t be forgiven"—is what saved him.


Mohan Chaturvedi, 38, Delhi
Hailed as India’s best keeper, he went into depression after he was not chosen for the ‘89 Pak tour. Seen in Delhi’s Connaught Place with his pads and keeping glove on; he’d keep awake at night, crying. Says he’ll never let his son take up cricket.

Faith saved Mohan Chaturvedi too, who teetered on the edge for a while. Chaturvedi, a Delhi wicketkeeper, had been measured for the team gear before the 1989 tour of Pakistan. But he was not picked up; for an 18-year-old it was shattering. Always the standby, he gave up the game at 24. Depression ensued. "I withdrew from the world, I confined myself to my room," Chaturvedi, who’s now with the Income Tax department, says. "I stopped watching cricket, I hated the game, I had no hope." What saved him was his faith in god. Chaturvedi says, "God gave me the power to come out of depression. I used to go to the holy shrines every year, and that saved me."

It's emotionally sapping to play a game where luck has such a crucial role. The strain breaks cricketers.

Cricketers seem more vulnerable to depression than other sportspersons because the game, as writer David Frith (see column) puts it, "is unique in its propensity to take over a man’s psyche". In recent times, there have been many reports of high-profile cases of depression, including England’s Marcus Trescothick, Australia’s Shaun Tait and New Zealand’s Lou Vincent. For it’s emotionally sapping to play a game where luck has such a crucial role. The strain can break cricketers. Take the case of fast bowler Firoze Ghayas, who took 13 wickets on his first-class debut. Yet he struggled to become a regular for even Delhi, forget playing for India. "For a player with skill and ambition, sitting on the bench is like being in jail," he says now. "It still hurts, this pain will never go away. Why did it happen? Eventually, to make peace with yourself, one comes to the conclusion that it’s fate. Even if you are good and have performed well, if you don’t have luck or someone backing you, it all adds to nothing." Some, unlike Ghayas, are never reconciled.


Feroze Ghayas, 36, Delhi
Javagal Srinath once told him, "You’ve got raw pace, man!" Dennis Lillee thought he was a hot prospect. But he never played for India. His frustration in the mid-1990s bordered on depression. A coach now, he hopes to protect his wards from what he went through.

Cricket is also unique among team sports because of the clout the captain or the coach enjoys. In football, basketball or rugby, a player’s talent can’t be hidden, despite any level of scheming. "If the captain doesn’t like you, he can restrict you to a short bowling spell, or ask you to bowl when the batsmen are completely set, or to bowl only against the wind," says a former Delhi junior player. And heard of this? A Delhi cricket official whose son is a left-arm spinner managed to get all his counterparts dropped from the junior teams. The reason: so that there’s no competition for his son when he’s old enough to play first-class cricket. Then there are the debilitating injuries that nip the careers of hundreds of hopefuls.

All this, naturally, begets cynicism and frustration—always a close ally to depression.Many give up the game to brood indoors, cursing their fate or the system. Like Sumit Kundu, 21, for whom cricket was life for 10 long years. He was captain of the Haryana under-17 team, but in 2007, when he was preparing for the state’s under-19 team, he was told he was not good enough. Kundu slipped into depression. "I stopped going out with friends, used to cry for hours," he says. Kundu was wise enough to relinquish his dream early, providing him time to prepare for an MBA course. "I’ll never go back to cricket again. It’s too painful," he says.


Suhail Sharma, 26, Delhi
Couldn’t cement his place in the Ranji team. Went through torrid times for two years. "I feared I’d have to give up cricket and work crazy shifts like some of my friends, who start work at 4 am to oversee newspaper distribution, with no time for cricket," he says. A job with ONGC helped.

Outlook cited a few of these cases to Nimesh G. Desai, head of the Institute of Human Behaviour and Allied Sciences in Delhi. He confirms that the symptoms do indicate depression, but adds that no study has been done to gauge the incidence of depression among cricketers specifically. He also explained why the impact of failure in cricket is more severe than in other fields of human endeavour: "In cricket, as also in the movie industry, the stakes are very high, expectations are high, and there’s a high degree of emotional and physical investment. At stake is a high degree of social adulation, or retribution for that matter."

"In cricket, the stakes are very high as are expectations. There's a high degree of emotional, physical investment."

Often, budding cricketers chase their dreams till the very end, unable to read the writing on the wall. Some, like Vinayak Samant, 36, have managed to survive the trauma. From a lower middle-class family from the Mumbai suburb of Virar, this gritty wicketkeeper-batsman had had his share of lows—but never slipped into the darkness of depression. It’s only now, after 20 years of hoping, that he’s reconciled to his shattered dream of playing for India. Former India opener Aakash Chopra, who’s no stranger to disappointment, told Outlook, "Young players have big dreams, sometimes you are not good enough, other times you realise you need more than just performance on the field. You get selected 10 times and are then suddenly dropped for no obvious reason. You see yourself as a failure. Players, even at the first-class level, live gloomy lives, away from the glamour and money associated with cricket."


Sadanand Viswanath, 46, India
A rising superstar in early 1985, dropped from the team the same year. His father committed suicide; mother died soon after. He went "over the limit" with alcohol. A qualified umpire now, he says "too much expectation at a young age leads to disaster. Better to have delayed gratification".

In a sense, the Indian Premier League (IPL) is a welcome development for the forgotten, poor men of Indian cricket, for it has opened up new avenues for them. "It’s a boon," agrees Chopra. "First-class level players have worked very, very hard to reach where they are. Now more of them can make a better living from the game."

To succeed at the top, youngsters need endless passion, ambition and absolute confidence. For doubt is fatal.

But most are doomed to suffer in the shadows. Maninder Singh, a prodigy who faded away, says it would help if the coaches were honest with the parents."The coach’s conscience has to be clean and pure," he told Outlook. "They must be honest with a player, ask him to focus on studies if he has little talent or no future in the game." Adds Arun Lal, "Disappointment is guaranteed. Success is not. Once that is established, depression cannot defeat you. Cricket can never be a career prospect. It should be a passion and if it happens to become a career one day, great! But don’t count on it."

For the young players, the algebra for success is baffling: to succeed at the top, they need endless passion, ambition and absolute confidence. For doubt is fatal. This must be accompanied by maturity, for disappointments must and will buffet them at every step. It’s a very rare blend that succeeds, most don’t have it in them. All the more reason why parents must prepare their children for heartbreak...and a career in other fields.

Aam Aadmi First

by Vinod Mehta
 

Now that the wicked Stalinists have been thrown into the dustbin of history, the "unfinished business" of 2004-09 can be completed, most of it hopefully in the first 100 days. Retail should be opened up so that Tesco and Wal-Mart can move in; part of our pension funds should be invested in the dodgy stockmarket, labour laws need to be made employer-friendly; profit-making PSUs should be urgently sold; strikes and morchas require to be banned in the national interest.... Before the free market ayatollahs and pink papers start distributing laddoos and bursting crackers, I offer a word of caution. To see Election 2009 as a mandate for radical economic reforms is a gross misreading of the mandate. If anything, it is precisely the opposite. I know I run the risk of being called the S-word, socialist, but now that the Bible for FICCI and CII (The Economist) has announced the death of laissez-fare capitalism, we need to tread carefully.   First of all, we require an honest rendition of the election results. One does not have to be a rocket scientist to conclude that the verdict is for, yes, more social sector spending and anti-poverty programmes. The much-mocked NREGS and the Rs 65,000-crore loan waiver to farmers were the real game-changers. The recent decision to extend NREGS to urban areas is politically shrewd, economically sound and morally unimpeachable. I am delighted that serious efforts are afoot to plug leakages in the delivery system. However, even with the leakages, the measures have brought about a mini rural revolution in consumer spending patterns. The pockets of farmers and labourers are not as empty as they used to be. And they are spending.   We have had economic reforms in India since 1991. The opening up has given the country unprecedented GDP growth. Alas, it has also made the rich richer and the poor poorer. If not poorer, at least without any significant improvement in their lives. The government's own figures are at once shameful and repugnant. Nearly 800 million of our citizens—many of them voted Congress—live on less than Rs 25 a day. And on the human development index, we are neck-and-neck with Rwanda and Somalia. The advocates of swift and bold reforms will tell us the answer to this unacceptable situation lies in having completely unregulated markets. The inflow of money thus generated is bound to trickle down. I ask: if it did not trickle down in 20 years, what guarantee is there that it will trickle down in the next decade? Remember, the poor vote with their feet!   I am not anti-reform. India must selectively and gradually extend the scope of reforms, but we should not be hustled by those who have benefited from and been fattened by the World Bank, the IMF and the American embassy in Delhi. I have argued previously that Messrs Yechury and Karat have a point: the Left did save India from financial ruin. Imagine our fate if our banks and insurance companies and airlines and newspapers were American-owned?   We are a unique country with a unique set of problems. Our first and immediate task is to provide relief to those of our citizens who eat leaves of trees and die on our pavements. Sure, reforms must be pursued, but not at the cost of the aam aadmi. He comes first.

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