China’s US$3.2 trillion headache

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ENTER THE DRAGON By YAO YANG

WHILE the downgrade of US government debt by Standard & Poor's shocked global financial markets, China has more reason to worry than most: the bulk of its US$3.2 trillion in official foreign reserves more than 60% is denominated in dollars, including US$1.1 trillion in US Treasury bonds.

So long as the US government does not default, whatever losses China may experience from the downgrade will be small. To be sure, the dollar's value will fall, imposing a balance sheet loss on the People's Bank of China (PBC, the central bank). But a falling dollar would make it cheaper for Chinese consumers and companies to buy American goods.

If prices are stable in the United States, as is the case now, the gains from buying American goods should exactly offset the PBC's balance sheet losses.

The downgrade could, moreover, force the US Treasury to raise the interest rate on new bonds, in which case China would stand to gain. But S&P's downgrade was a poor decision, taken at the wrong time. If America's debts had truly become less trustworthy, they would have been even more dubious before the agreement reached on Aug 2 by Congress and President Barack Obama to raise the government's debt ceiling.

That agreement allowed the world to hope that the US economy would embark on a more predictable path to recovery. The downgrade has undermined that hope. Some people even predict a double-dip recession. If that happens, the chance of an actual US default would be much higher than it is today.

Reason to worry: China’s US$3.2 trillion problem will become a 20-trillion-renminbi problem if China cannot reduce its current account surplus and fence off capital inflows. — AP

These new worries are raising alarm bells in China. Diversification away from dollar assets is the advice of the day. But this is no easy task, particularly in the short term. If the PBC started to buy non-dollar assets in large quantities, it would invariably need to convert some current dollar assets into another currency, which would inevitably drive up that currency's value, thus increasing the PBC's costs.

Another idea being discussed in Chinese policy circles is to allow the renminbi to appreciate against the dollar. Much of China's official foreign reserves have accumulated because the PBC seeks to control the renminbi's exchange rate, keeping its upward movement within a reasonable range and at a measured pace.

If it allowed the renminbi to appreciate faster, the PBC would not need to buy large quantities of foreign currencies.



International experience

But whether renminbi appreciation will work depends on reducing China's net capital inflows and current account surplus. International experience suggests that, in the short run, more capital flows into a country when its currency appreciates, and most empirical studies have shown that gradual appreciation has only a limited effect on countries' current account positions.

If appreciation does not reduce the current account surplus and capital inflows, then the renminbi's exchange rate is bound to face further upward pressure. That is why some people are advocating that China undertake a one-shot, big-bang appreciation large enough to defuse expectations of further strengthening and deter inflows of speculative “hot” money. Such a revaluation would also discourage exports and encourage imports, thereby reducing China's chronic trade surplus.

But such a move would be almost suicidal for China's economy. Between 2001 and 2008, export growth accounted for more than 40% of China's overall economic growth. That is, China's annual gross domestic product (GDP) growth rate would drop by four percentage points if its exports did not grow at all. In addition, a study by the China Centre for Economic Research has found that a 20% appreciation against the dollar would entail a 3% drop in employment more than 20 million jobs.

There is no short-term cure for China's US$3.2 trillion problem. The government must rely on longer-term measures to mitigate the problem, including internationalisation of the renminbi. Using the renminbi to settle China's international trade accounts would help China escape America's beggar-thy-neighbour policy of allowing the dollar's value to fall dramatically against trade rivals.

But China's US$3.2 trillion problem will become a 20-trillion-renminbi problem if China cannot reduce its current account surplus and fence off capital inflows. There is no escape from the need for domestic structural adjustment.

To achieve this, China must increase domestic consumption's share of GDP. This has already been written into the government's 12th Five-Year Plan. Unfortunately, given high inflation, structural adjustment has been postponed, with efforts to control credit expansion becoming the government's first priority. This enforced investment slowdown is itself increasing China's net savings, i.e., the current account surplus, while constraining the expansion of domestic consumption.

Real appreciation of the renminbi is inevitable so long as Chinese living standards are catching up with US levels. Indeed, the Chinese government cannot hold down inflation while maintaining a stable value for the renminbi. The PBC should target the renminbi's rate of real appreciation, rather than the inflation rate under a stable renminbi. And then the government needs to focus more attention on structural adjustment the only effective cure for China's US$3.2 trillion headache. - Project Syndicate

● Yao Yang is Director of the China Center for Economic Research at Peking University.

London Bridge is falling down !

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WHY NOT? By WONG SAI WAN

The recent riots in Britain have given this nursery rhyme new significance about all that is wrong, but sadly it is nothing new.
Image via Wikipedia

THE world was shocked to see thugs, many barely in their teens, rioting and looting in various cities in England, which many Malaysians consider a heaven, with some unabashedly saying that going there is “balik kampung” (going back to the hometown).

The horror of the whole thing was brought even closer to home by the video clip of Malaysian student Mohd Asyraf Rafiq Rosli being robbed by the rioters after he had been assaulted. It was uploaded onto YouTube for the world to see, and then picked up by all TV stations.

The assault and robbery of Asyraf and the burning of a century-old furniture shop in Hackney were the main haunting images of the riot.

British Prime Minister David Cameron was quick to recall Parliament for an emergency session, where he condemned the rioters and at the same time dismissed the mid-summer nightmare as greed and thuggery.

He rejected any suggestion that his government’s budgetary cuts was the cause of the riots, and declared “all-out war” on gangs, which he blamed for fuelling four nights of frenzied looting, saying they were “a major criminal disease that has infected streets and estates across our country”.

“This has been a wake-up call for our country. Social problems that have been festering for decades have exploded in our face,” he said, adding that a redoubling of efforts to tackle broken families, welfare dependence and educational failure was needed.



“Do we have the determination to confront the slow-motion moral collapse that has taken place in parts of our country these past few generations?”

But has this come a little too late?

Well-known London social worker Sheldon Thomas, an ex-gang member who runs a mentoring programme, pointed out that British society is “broken” and the government action may be too late.

“People like me have been saying this for decades,” he said. “People are angry, people are frustrated. There are no jobs, there is no aspiration.”

Thomas and many of his fellow youth leaders said Cameron’s government was only reacting to the visuals that were seen all over the world, especially when the rioting and looting affected the wealthier part of the cities.

Youth and social workers have been sounding the warning for years but successive British governments were more interested in projecting the growing materialistic part of Britain while the inner city problems were swept underneath the proverbial carpet.

People like Thomas are right. Go to YouTube and type “Moss Side” to see hundreds of CCTV video clips by the Greater Manchester Police on gang problems there.



National Geographic produced an excellent series on Manchester’s underworld, titled Gunchester. It seems there are more guns in this former industrial centre than in any other city in Britain.

Moss Side, the centre of these violent gangs, is one of many inner city projects started in the 1950s after World War II that have turned into a social mess. There used to be thousands of council flats in Moss Side and neighbouring Hulme, where hundreds of Malaysian students stayed in their student days.

Among these, almost 30 years ago, was yours truly. Moss Side then was filled with blacks from the Caribbean and Africa. And they still form the majority today.

It was here in 1985 that the first race riots occurred, and spread to the rest of Britain. As a consequence, the British government decided to do away with the flats, blaming them for the inner city problems.

The truth was that Moss Side and many such inner city areas were a different country from the rest of Britain. They were improvised areas with many unemployed. Moss Side was – and still is, I am told – a bastion of drugs, vice and gangsterism.

A colleague, a fanatical Manchester United supporter, said he had been to the city many times, but he never ventured into Moss Side.

“Be careful when you see a boy wearing a hoodie (a sweatshirt with a hood) walking towards you. I will normally cross the street when I see one,” he said.

I don’t blame him because records show there had been more than 800 gang-related murders in Manchester in the past decade.

About five years ago, a 14-year-old boy was killed by a rival gang in Manchester.

His was not an isolated incident. There have been scores of teenage murders up and down England, especially in the inner cities, like Moss Side.

But to blame the gangs alone for the recent riots is a convenient excuse at best, or political naivete at worst.

Morality is not a word with any meaning in places like Moss Side, where the social structure has broken down. In this kind of place, one competes to be the youngest mother or grandmother.

Most parents do not know where their kids are at any time of the day. Anyway, most fathers and mothers have criminal records or had served time at the nearby city prison.

I recall being in a newspaper shop in Moss Side and the local postman strolled in and greeted the woman shopkeeper, who replied: “What can I do for you today, Mick?”

He said: “Can I have a 12-year-old virgin, please?”

To this, the elderly woman replied: “There are no such thing as 12-year-old virgins here. This is Moss Side.”

This conversation has stayed in my mind for the past 30 years and, of course, it was an exaggeration by the shopkeeper and the postman, but not by much.

We in Malaysia must be aware that we are also building inner city estates all over Kuala Lumpur and Petaling Jaya. Tall council or public housing flats are a sure-fire formula for such problems as in Moss Side.

The Women’s and Family Development Ministry must study these areas carefully to ensure that social problems are solved before they become tinder to a highly inflammable situation.

Executive editor Wong Sai Wan was kept awake for three days in Moss Side by Bob Marley’s No Women No Cry when he died on May 11, 1981



Related posts:

British Society is Broken: Cameron's gang war 'long overdue'

UK Riots: Lessons to be learned; Role for US crime guru?

UK riots: resembles more of the Third World, bring up questions about society, moral decay! Anger still burns

Anarchy in the UK - London Riots Sparked by Police Beating, Poverty, Ethnic differences...

Anarchy in UK - London Riots: Malaysian student mugged...

The true meaning of independence

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PUTIK LADA By RAPHAEL KOK

We Malaysians may have freed ourselves of the colonial yoke but we are still lost, having taken more steps backward than forward, and are no closer to the Promised Land. There cannot be unity without equality

ONCE upon a time, we were a great maritime empire. We ruled over the Straits of Malacca. We travelled the seven seas and the world.

Then they came from the West. They were driven by gold, glory and gospel. They came not in peace.

Our empire fell under their superior firepower. First it was the Portuguese, then the Dutch and finally the British. And for more than 400 years, they stole from the rich, the poor, the not very rich and the very poor. But they never stole our hearts. Relentlessly, we fought on.

True, we might not have had epic victories on the military front. Capturing police stations and killing a British officer with his pants down by the riverbank are not quite in the same league of, say, the Vietnamese routing the French at the Battle of Dien Bien Phu.

Nevertheless, through democracy and diplomacy, our forefathers paved the way to independence.
Finally, on Aug 31, 1957, we won our independence.

That was then. Here and now, serious questions remain. How much independence did we win, really? How much good did independence bring to our lives? And when we say “we”, who are “we”?

Independence means freedom. Our Constitution bestows upon us many freedoms, such as personal liberty, freedom of assembly and freedom of expression. But our Constitution also takes away as much as it gives, by bestowing on our government wide powers to restrict such freedoms.

If you think that our liberty is safely protected by the court of law, think again. In Malaysia, a person can be arrested and detained without trial indefinitely. “National security” is the reason often used, but this is rather odd considering that the last remnants of communists hiding in the jungles have been wiped out, and the threat of terrorists hiding in the mountains and caves plotting to crash an aircraft into the Petronas Twin Towers is very low.

Instead, such draconian laws are frequently used on political dissidents, especially those involved in demonstrations. Oh, yes, in Malaysia we aren’t free to hold peaceful gatherings in public.

Neither are we free to express ourselves. There are certain forbidden subjects that thou shalt not question, such as the sovereignty of the monarchy or the special rights of a certain race.

Try saying “Who made you king of anything?” loudly, and you risk suffering the same tragic fate as Socrates who had questioned the existence of the
Olympian pantheon of Gods, or Galileo who spread heretical ideas about how the sun does not spin around the Earth.

Thus, what freedoms we have are actually hollow and illusory. Malaysia may have gained independence as a country, but as Malaysians we have gained little independence as individuals.



Until today, it can be said that corruption exists in officialdom. It even spills over to the commercial sector, where individuals with connections but without competence often get the first and largest piece of the cake.

During elections, many battles are won and lost purely through character assassination, rather than through debates on national issues.

Betrayals and counter-betrayals are another common feature. In Malaysia, party loyalties shift like the monsoon winds. Shakespeare would have enjoyed living here in these interesting times. Et tu, Ezam? Et tu, Nasarudin? Et tu, Zaid? The possible story lines are endless.

And what about racial equality? Oh wait, remember the Special Rights Club? You do not talk about it.

There cannot be unity without equality. There’s no “we” or “us” in Malaysia, but only “I” and “my”.

So how did it all go so wrong? It’s perhaps down to the post-independence syndrome faced by victorious revolutionaries everywhere bestowed with new-found power and wealth overnight.

What history teaches us is that Independence Day is simply the day on which a white knight disposes of a tyrant. Whether after that he becomes a benevolent king sworn to protect his people’s freedoms is a totally different story altogether.

A change of regime may be nothing more than a change of jailors. There may be an extra meal or longer visitation hours, but otherwise the people remain in shackles. They can check-out anytime they like, but they can never leave.

After independence, it’s another day, another dawn. The journey ahead is long and hard. We Malaysians may have escaped from colonialism, but even till today, we are still lost in the desert, taking more steps backwards than forward, and no closer to the Promised Land.

Here and now, what we need is not just one country, but to share one love, one blood and one life. What we need is faith and courage to leave this dream world where there is no spoon, and reach a place high in the desert plain where the streets have no name.

Once upon a time, we won our independence. Now it’s time we win our happy ending.

The writer is a young lawyer. Putik Lada, or pepper buds in Malay, captures the spirit and intention of this column – a platform for young lawyers to articulate their views and aspirations about the law, justice and a civil society. For more information about the young lawyers, visit www.malaysianbar.org.my.

Related posts and articles:

Malaysia still in pursuit of full independence   
 Reviving our winning ways  
MERDEKA DAY: Be Proud To Be Malaysian (thinkaloudtoday.wordpress.com)

Malaysia's GDP Growth Falters to 4% in Q2 2011

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Q2 GDP moderates to 4%

By CECILIA KOK cecilia_kok@thestar.com.my

KUALA LUMPUR: Malaysia's economic growth moderated to 4% year-on-year (y-o-y) in the second quarter (Q2) of the year, after a revised growth of 4.9% y-o-y in the preceding quarter due to a weaker external environment.

The country's gross domestic product (GDP - goods and services produced within the country) growth rate for the three months to June, however, was higher than market expectations of 3.6% based on Bloomberg's poll of 16 economists.

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said Malaysia's overall economy continued to be sustained by healthy domestic demand and strong exports of commodity and resource-based products amid slower global growth.

Domestic demand in Malaysia during the second quarter grew 5.2% y-o-y due to sustained growth in private spending.

Private consumption remained healthy amid robust labour market conditions, while private capital spending was sustained by expansion in production capacity and investment in new growth areas.

“Based on the growth we have achieved so far, it is likely that Malaysia's GDP for the full year would expand by at least 5%,” Zeti told a press conference here yesterday. She said it was still too early to revise the country's GDP growth forecast.

Malaysia's GDP for the first half of the year grew 4.4% y-o-y, compared with 9.5% y-o-y in the corresponding period last year. The official GDP growth target for the year was between 5% and 6%.

If there was a need for revision, it would be done during the Budget period in October, Zeti said, while emphasising that the central bank remained watchful and was closely monitoring the global economic developments.

“If we have a situation where the United States and Europe slipped into a recession or any other trigger factors that could result in the disruption in international financial markets, we will have to make a reassessment,” Zeti said.



Bank Negara highlighted the fact that global growth had moderated since the second quarter of the year due to a various factors, including fiscal issues and structural weaknesses in advanced economies and global supply chain disruptions stemming from the March 11 earthquake and tsunami in Japan.

These challenges, as the central bank revealed, were reflected in the slower growth in Malaysia's manufacturing sector at 2.1% y-o-y during the second quarter, compared with 5.5% in the preceding quarter.

Zeti conceded the downside risks to Malaysia's external demand had increased following heightened uncertainties in external demand. In the immediate term, she said, fiscal uncertainties and structural weaknesses in advanced economies would continue to challenge global growth and increase volatility in global financial markets.

“Categorically, we have to say we have a strong domestic economy... our fundamentals are strong enough to support our economy,” Zeti said, stressing that a contraction of Malaysia's economy was not to be expected despite the deepening euro debt crisis and sluggish growth in the United States.

CIMB Research, in its report yesterday, expressed optimism that Malaysia's economy would remain in the positive growth trajectory. The research house said the stepping up of government capital spending in the second half and the continued vigour of private capital spending would sustain the momentum of the country's economy.

“We maintain this year's GDP growth estimate at 5%, implying an average growth of between 5% and 5.5% in the second half, compared with 4.5% in 1H11,” CIMB Research said in its report.

Bank Negara also highlighted that the country's inflation, as measured by the consumer price index (CPI), had eased marginally last month. CPI for July gained 3.4% y-o-y, compared with 3.5% y-o-y.
Zeti said Malaysia's full-year CPI would remain within target of 2.5% to 3.5%.

The convenient scapegoat barring technology and social media

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The convenient scapegoat

ALONG THE WATCHTOWER By M.VEERA PANDIYAN veera@thestar.com.my

Barring technology and the social media is not the answer to quelling unrest.
Image via CrunchBase

IS the social media and free flow of information via digital technology good or bad? It depends on where it happens and whom it affects.

Text messages, Twitter and Facebook were hailed as powerful tools against repression when the people of Tunisia, Egypt and Libya took to the streets to protest against their authoritarian rulers in February.

British Prime Minister David Cameron declared then that the Internet and social media belonged to people who had “enough of corruption, of having to make do with what they’re given, of having to settle for second best”.

But when riots and anarchy broke out back home in London and elsewhere in Britain, the reaction was patently different.

“Everyone watching these horrific actions will be struck by how they were organised via social media.

“Free flow of information can be used for good. But it can also be used for ill. When people are using social media for violence, we need to stop them.”

And Cameron told an emergency session of the British Parliament: “So we are working with the police, the intelligence services and industry to look at whether it would be right to stop people communicating via these websites and services when we know they are plotting violence, disorder and criminality.”

The UK police have rounded up close to 5,000 people and taken about 1,000 rioters and looters to court since the ugly wave of unrest and arson hit.

Britain’s entire national intelligence machinery – including its Security Service, or M15, which usually handles espionage and terrorism – is now focused on identifying the culprits and trying to prevent future occurrences of disorder.



The authorities have been generally blaming the misuse of social media for the mayhem; it appears that Research in Motion’s (RIM) BlackBerry Messenger (BBM) was the most effective tool used because of its tight security features.

The BBM application provides password-protected messages to individuals or groups that can only be read with a PIN.

During the height of the riots, British MP David Lammy used Twitter to call for the halt of the service by tweeting: “BBM clearly helping rioters outfox police. Suspend it.”

RIM, Facebook and Twitter have since given assurances that they would comply with the UK’s Regulation of Investigatory Powers Act, the country’s privacy laws.

Besides his government’s willingness to consider shutting down or blocking access to social networks, the British PM also pledged a “zero tolerance” system of policing under which no form of law breaking would be condoned.

Critics have been quick to censure Cameron’s call for curbs and tough measures as smacking of hypocrisy and as a violation of free speech, civil liberties and human rights.

Index on Censorship news editor Padraig Reidy slammed it as “a bizarre and kind of knee-jerk reaction by the government”.

“More recently, we’ve seen this kind of thing in Egypt,” he said.

Actually, the most recent incident of shutting down a phone network happened last week in the United States.

The San Francisco Bay Area Rapid Transit (BART) shut down the cell phone service at four stations to prevent a protest rally over the shooting of two men by police.

BART deactivated the service from 4pm to 7pm to stop protest organisers from communicating.

Meanwhile, China, which was subject to Western sermons over its fierce crackdown on dissent in the wake of the Arab Spring uprisings, has raised safety concerns over the 2012 Olympics to be staged in London.

The Chinese media has responded to the UK riots with “a mixture of shock and schadenfreude”, as fittingly described by the Daily Telegraph.

“The West has been talking about supporting Internet freedom, and opposing other countries’ government to control this kind of websites. Now we can say they are tasting the bitter fruit (of their complacency) and they can’t complain about it,” wrote a People’s Daily commentator.

But the real issue to be addressed by governments everywhere is distrust brought about by the gap between the haves and have-nots and unfairness, whether real of perceived.

Ian Williams, a veteran journalist and analyst, described it aptly when he said the UK government’s posturing ignored the fact lawlessness in the highest places was at the root of the riots.

“The rioters who were interviewed and people on the streets all remarked upon members of parliament stealing expenses from the tax payer, mostly with impunity, although some went to jail,” he said when interviewed by Press TV.

“They look at the bankers making billions of dollars and getting away with it; they look at Rupert Murdoch, the head of News International, hacking innocent people’s telephones, and getting away with it.
“So basically the message that is being sent from the ruling classes of Britain is that the law is not there to be obeyed.

“So to start shouting that the lesser people - the people who steal televisions - should be locked up for life whereas the people who steal whole industries and banks and countries should be given knighthoods and peerages for it is not really a sustainable one on the streets I suspect.”

> Associate Editor M. Veera Pandiyan likes this quote by Edgar Allan Poe: The nose of a mob is its imagination. By this, at any time, it can be quietly led.

Malaysians are always an ‘exception’?

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We are always an ‘exception’

Musings By Marina Mahathir

Malaysian policies often state that we are different and therefore cannot be compared with others. Yet those who join peaceful marches are likened to British rioters. Suddenly we are the same?

ARE we getting progressively schizophrenic? Judging by current responses to events around the world, it would be easy to conclude that we are.

Schizophrenia is a mental disorder that makes it difficult to tell the difference between real and unreal experiences, to think logically, to have normal emotional responses and to behave normally in social situations.

If you read up on Malaysian policies and statements on various issues, the one striking factor is our insistence on exceptionalism. That is, we are different and therefore cannot be compared with any other country.

Fiery aftermath: The violent riots in London left many properties in ruin. — AFP

In the early years of the AIDS pandemic, we thought we were protected because we were different. If non-Muslims in other Muslim countries use the word “Allah” for God with no fuss, ours can’t because we are different. We are apparently unique and incomparable to anyone else in the world.

Which is why it puzzles me that all of a sudden our citizens, or at least the ones who want to voice their opinions with peaceful assemblies and marches, are being compared to British rioters and looters.
If we are always different, how come suddenly we are the same?

Going by the statements of our leaders, basically we are nothing more than savages who would rob, rape, loot and pillage given half the chance. Therefore, we need all sorts of laws to keep us in check and not venture in groups of more than five outside our homes.

Now, this is why that schizophrenic inability to think logically comes into play. Despite evidence that none of the 30,000 or so peaceful marchers last July robbed, raped, looted or pillaged, our leaders insist that we would have. They must be looking at mirrors.

Just a few days ago the fellow who demonstrated how inconvenient a protest is by inconveniencing everyone in Penang declared that he would burn down two online news portals whose reports he disagreed with. Now if that’s not London rioter behaviour, I don’t know what is.



More disturbingly, after already having insulted all the good citizens who exercised their right to peaceful assembly, our leaders go on to insult them some more.

Instead of being proud that we did not have the type of violence that the UK experienced, instead of talking about how so much more civilised our people are, our leaders liken us to rioters who have vandalised, stolen and killed.

Talk about the inability to distinguish between reality and fantasy.

A certain amount of hypocrisy also rears its ugly head. What if Mark Duggan, the man who was shot by police in London and whose family’s peaceful protest became the original rallying cry for the rioters, was Mohamad Duggan?

Between 1987 and 1993 and 2000 and 2005, the Palestinian people went through two uprisings against the Israeli government, known as the First and Second Intifadas, respectively. Both Intifadas involved demonstrations, protests and, yes, a certain amount of violent rioting.

They were met with an even more violent response from the Israelis that resulted in many deaths and the eventual blockade of Gaza, still in force today.

Our government supported the Intifadas then. Does that mean that our government supports the right of Palestinians to demonstrate, protest and riot, but refuses its own people’s right to do much less, that is to just march peacefully?

Or is the logic that when governments are democratically elected, its people then lose the right to protest against them?

Conveniently ignored, too, is the fact that in the UK, protests and demonstrations are held all the time without the type of violence we saw recently.

One of the biggest was in 2003 when hundreds of thousands of people marched against the Iraq war. At the time we looked benignly at this because we had the same stand. Did we tell the Brits and others round the world that they should not demonstrate against the war?

So what is the message here? We may be trusted to peacefully protest as long as the subject of our protest is in sync with the Government’s. Otherwise, if we should protest for free and fair elections, against corruption or anything else that the Constitution gives us the right to, we are labelled as unpatriotic thugs out to disturb the peace and destroy the economy and image of our country.

Looking at the UK riots, are we even talking about the same thing? What cause was the UK rioters espousing?

Some wide reading instead of political posturing might be more beneficial here. The UK rioters did not loot bookshops, and some have suggested it’s because they don’t like to read.

Perhaps they are not unlike some of our politicians.

British Society is Broken: Cameron's gang war 'long overdue'

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Cameron's gang war 'long overdue'

Source: AFP

For the communities and youth workers facing the daily horror of gang violence on England's streets, Prime Minister David Cameron's vow to tackle the problem following last week's riots is long overdue.

Cameron has declared "all-out war" on gangs, which he blamed for fuelling four nights of frenzied looting and said they were "a major criminal disease that has infected streets and estates across our country".

He has hired US "supercop" Bill Bratton to advise on tackling street gangs and has rolled out the use of court injunctions to stop gangs wearing colours of allegiance, congregating in certain places and using dangerous dogs as weapons.

Cameron also admitted that "social problems that have been festering for decades have exploded in our faces", and vowed to redouble efforts to tackle broken families, welfare dependence and educational failure.

But to those living and working with the problem, many question why it has taken so long for the government to notice -- during which time gangs are getting more and more violent, and their members younger and younger.

Sheldon Thomas, an ex-gang member who runs a mentoring programme in London, supports Cameron's assertion that British society is "broken".



"People like me have been saying this for decades," he said, adding: "People are angry, people are frustrated. There are no jobs, there is no aspiration."

He also accused Cameron of only acting on gangs now because shocking images of youths rampaging through relatively wealthy areas of London last week caused a national outcry, when successive governments failed to respond in the same way to up to 800 gang-related murders in the past decade.

"Are we now a nation that values materialism -- businesses and shops --more than the life of a 14-year-old kid who was chased down a road by several gang members who stabbed him 17 times for his BlackBerry?" he asked angrily.

Youth worker Patrick Regan, who has been advising Deputy Prime Minister Nick Clegg on the recent violence, agrees that the government has failed to address the issue, although he is more hopeful that ministers can help.



"People have been warning for years that something like this could happen. I'm hoping there will be a long-term view of things, that we won't paper over the cracks," he told AFP.

Regan, the chief executive of youth charity XLP, cautioned however against any simplistic definition of gangs, and also warned that it was unlikely that organised criminal groups were entirely responsible for last week's riots.

"It wasn't all young people, and some were just purely opportunistic. Young people who just got wrapped up in it, crowd dynamics took over," he said.

He said he had spoken to his local authority who reported that known gang members had actually stayed home during the riots, "because they knew if they went out they'd get targeted by police".

One of the main pieces of research on British gangs, a 2009 report by the respected Centre for Social Justice thinktank, found that 170 gangs operated in London, although Thomas puts the number at 260, with 15,000 individual members.

Another 170 operate in the Scottish city of Glasgow, where police and local authorities claim to have cut violent offending among gang members by almost 50 percent in two years through a targeted community initiative.

Community workers are calling for more resources for proven mentoring and intervention schemes, and the US supercop, Bratton, warned this weekend that a police crackdown alone would not solve Britain's gang problems.

"You can’t just arrest your way out of the problem. It’s going to require a lot of intervention and prevention strategies and techniques," he said.

Although in the past gangs used to be defined by ethnicity, most are now about territory -- the Pembury Boys take their name from the Pembury housing estate in Hackney, east London, for example -- and they often control drugs within that.

Although they range from criminal organisations to groups of disaffected teenagers, a recent government report found that people join them for protection, a sense of belonging and status as well as a way of making money.

Gavin McKenna, 21, was in a gang in Newham in east London before he turned his life around. Although he carried a knife and robbed people, he told AFP that he and his friends weren't an organised group, "we were just trying to survive".

He grew up with an abusive father who left when he was young, had little money and his gang represented both a way of earning cash and a substitute family -- a story that is played out over and over among Britain's gang members.

McKenna says he has little faith in the government's new drive against gangs.

"I think they're going to patch it over, like they always do," he said, adding: "They don't care about us."

-Sapa-AFP

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