"Robust Economy - Everybody wants it. Nobody understands it. Economy is the great taboo. People just want to talk about it. And that is what leads to an economic meltdown." ~ Joseph Schumpeter. Apparently, our new economic managers are doing the same: simply moaning about how bad the previous policies were, in what a terrible state they have inherited the state's financial figures, how it tends to be an impossible task to meet the challenges ahead, etc. My question would be why don't they make up their mind whether they want to do the job or not? Presumably (a safe assumption) they do. Then perhaps the country's interests will be better served if they can finally move on and focus their undivided attention on the strategies they want to adopt both in the short and long term. If rationality and upward trends always reigned supreme in economic management periods, sitting governments would simply become a permanent phenomenon. What the nation now awaits is economic vision, innovative thinking and some out of the box solutions. Talking of out of box solutions, Ben Bernanke, US Federal Reserve Chairman, never ceases to baffle. In a unique move a couple of weeks back, we heard him talking down the capital cushion of America's banking system - the equivalent of a CEO shorting his own stock. What Bernanke is now pressing for is for the American bankers to write down the principal on millions of mortgage loans. Voluntary loan modifications are not doing enough to stop foreclosures, declared the chief steward of the US financial system. "In this environment," he said, "principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure." Mull over this one for a moment. Mr. Bernanke and the Fed are charged with protecting the soundness of the US banking system. The bulwark of such protection is shareholder equity - capital - which is generated in part by income-producing assets known as loans. Yet he is now advising that as a matter of public policy banks should take a chunk of that capital and transfer it to mortgage debtors. In other words, what he is arguing is that the story of American banking in the last few years has been one of phenomenal riches and this perhaps is in a way 'pay back' time. At a time, when the US economy is facing the threat of real recession and serious economic challenges relating to fixing a financial mess with multifaceted issues, the advocates of a government mortgage bailout (e.g. Barney Frank, Financial Services Chairman, Chairman Federal Housing Administration's Authority, and others) are not only endorsing, but also hailing Mr. Bernanke's proposal. Ironically, the banking boom, a faltering economy, a rising cost of production and capital that keeps getting dearer by the day are all issues, which also depict a perfect fit to the basket of challenges Pakistan currently faces. However, it will be interesting to see, in the days ahead, whether our Governor State Bank (equivalent of the US Fed Reserve Chairman) would also take some unprecedented actions like Mr. Bernanke or she will simply choose to steer the traditional path by maintaining a restraint on this moral hazard and regard it as 'political panic'? Further, in the days ahead, the nation's economic managers will need to lock horns with some of the myths surrounding the donor cum lending institutions. Myths like institutions such as the World Bank, IMF, etc., may be hard taskmasters but not above petty politics. If the World Bank's controversial role in Kenya's recent political unrest is anything to go by, then Pakistan needs to be careful about leverages and possible exploitations by the institutions that account for its swelled foreign debt, now in excess of $44 billion. The question being asked in the global circle these days is, that how come Kenya a country, which until last year was being touted by the World Bank as an African success story, has become its latest tragedy? This brings us to a culture of politics and corruption within the large global donor organizations. Just days after the Kenyan elections, the World Bank made itself notorious when Colin Bruce, its country director in Nairobi, wrote a memo reportedly endorsing Mr Kibaki's claims to victory and dismissing as "not thorough and precise" statements by an EU observer mission that the election had been riddled with irregularities. The bank has since backpedalled from Mr. Bruce's comments, but not without harming its reputation. As it happens, Mr. Bruce lived until recently in a home owned by President Kibaki. Then there is the case of corruption in the bank's own projects in Kenya. In early 2007, the bank's internal anticorruption unit known as INT completed a detailed review of four bank projects in Kenya involving $357 million in bank financing. The review was never made public, but a Wall Street website discloses that in three of the four projects, INT found "numerous indicators of serious irregularities" as well as "actual occurrences of fraud and corruption consistent with findings of previous forensic audits and examination." - Sounds familiar Now, why does all this matter? Because, what is at stake here is a culture of corruption at the highest global financial tiers that makes unnecessary the borrowings, mismanagement of funds, inept prioritising in spending, and fraud as being distinct possibilities at the expense of the borrowing nation, its public and its taxpayers. Not that one is insinuating similar wrongdoings in our case. However, it may be prudent to closely scrutinise the underlying weaknesses in the financial outlays of the Pak economy; especially vis-a-vis borrowings over the last five years. Finally, some structural parameters need to be re-visited to calibrate key elements like unhealthy spreads being enjoyed by the domestic banking industry, realistic relationship of external and internal debt requirements with an in-depth analysis of net productivity growth achieved through recent borrowings, terms and conditions of the recently negotiated borrowings, determining the real value of the Pak rupee and ascertaining the optimum level of foreign exchange reserve requirement, to name only a few. There is serious work cut out for the new government and the sooner it gets on with the job, instead of boring the nation with an endless blame game, the better. And sooner can it deliver on the promises that brought it to power.