My dear Muhammad Ali: Though our petulant neighbours are jumping out of their skins with excitement that our government, such as it is, has confirmed that Ajmal Kasab is from Pakistan, let's deal with that next week because all of us need learning this important lesson. The year gone by was an eminently forgettable one, a unique watershed in which every country in the world ended up much worse off than when it began. It was the most horrible Annus Horiblis in my memory. It began with the national trauma of Benazir Bhutto's death and ended with the triple international traumas of a global economic meltdown, the Mumbai Mayhem and Israel unleashing its horrendous state terrorism on the Palestinians of Gaza with US blessings. Had I been a betting man, I would put my money on 2009 being even worse than 2008. The global economy is going to suffer severe convulsions that some national economies may not be able to survive. Certainly none will remain the same. Nothing will remain the same. Not only do depressions have a life and dynamic of their own, the abysmal level of today's world leadership doesn't fill one with confidence. There's no Franklin Roosevelt on the horizon. The jury is still out on Obama. One should not automatically assume that like Roosevelt he too could shift the global economic paradigm. Nor should one imagine that he could turn the War On Terror around which, let's face it, we are all losing badly. His appointments thus far do not fill one with hope for a significant change in direction leave alone in philosophy. Vision is just a wish list; how to get there is the question. I fear less for the Pakistani economy, which is not so interlocked with the global economy, as I do for the British, which has lived with a woefully over-valued currency and will now have to learn to live with a currency at its true value. Except that now that the concept of floating exchange rates and currencies valued against the dollar has patently flopped, how does one know what real values are given that the dollar is not pegged to anything with intrinsic value and is being buffeted like a rudderless ship in an economic hurricane? One cannot value currency on purchase price parity. We might see the unthinkable happening: the United States opting for a new currency, though how it would help get America out of its huge indebtedness to China and Japan, except for debt-equity swaps, I cannot imagine. Which means that China could end up 'owning' America - its former blue chip corporations and real estate especially. In fact, there is no other way for America but to borrow more from China and Japan. That shouldn't be a problem provided those loans are invested productively in order to pay them back. If not, America will be in even more trouble. By the way, I had been saying for long that Dubai's illusionary economy would collapse. People would laugh at me, not heeding my advice not to invest there. "Dubai is Sheikh Mohammad's dream," I told them. "When he wakes up the dream will vanish." He's woken up. How does one plan in a situation like this? Goldman Sachs was predicting not too long ago that the price of oil would hit $200 by year's end and the US economy would go belly up. The US economy has gone belly up all right, but the price of oil has come down by more than two-thirds. The real reason for the collapse was not oil so much as the hardly regulated, near uncontrolled greed, recklessness and shenanigans of western financial institutions. But when the managers of the most important economy in the world become reckless, borrowing without a thought for tomorrow, the managers of financial houses inevitably follow suit. Everyone was living a dream that has become a nightmare. Today America's debt is 116 percent of its GDP. It's like a corporation's debt being more than its turnover, a fit case for immediate liquidation. Call in the administrator, what? America needs an administrator. Obama perhaps? The Euro too is coming face-to-face with the reality that it is a stateless currency without a country. It's been a new experiment and it will be interesting to see how it survives this turmoil. I think a lot will depend on the oil-producing countries: if they decide to export a significant amount of oil in Euro, then the currency will survive and even thrive and the dollar will be in serious trouble. But if oil continues to be traded in the two privately owned American bourses in US dollars alone the dollar might survive. I'm not using the term 'Great Depression' rhetorically. On December 23 AFP said: "The US economy shrank in the third the IMF's top economist warned of a second Great Depression offering no respite from relentless gloom ahead of Christmas. The abrupt 0.5 percent contraction of gross domestic product (GDP) in the world's largest economy was seen as marking the start of a steep downturn for the United States after GDP growth of 2.8 percent in the second quarter." John Ryding at RDQ Economics forecasts "far bleaker" fourth-quarter data with recession having deepened in the third. He predicts "a 6.0 percent drop in real GDP." The IMF's top economist, Olivier Blanchard says governments should boost domestic demand "to avoid another Great Depression similar to the global downturn that shook the world in the 1930's." He said to the French newspaper Le Monde: "Consumer and business confidence indexes have never fallen so far since they began. The coming months will be very bad." How does the US normally come out of economic downturns and recessions? Just as the US economy is the engine of the world economy, the military industrial complex is the engine of the US economy. This is where we of the Third World have to wake up, especially us Indians and Pakistanis and the Arabs too. They start wars or cause wars between developing countries in order to boost orders for their arms producing industries. The amount of ammo Israel has unnecessarily used against near-defenceless Gaza should replenish much-needed orders some, but not enough. An India-Pakistan war would be a dream come true and save their economic meltdown, for they will then sell billions of dollars worth of arms to both. Kurt Nimmo says (Infowars, December 27, 2008) that Paul Joseph Watson and Yihan Dai wrote in Prison Planet on October 30: "...the RAND Corporation recently presented a shocking proposal to the Pentagon in which it lobbied for a war to be started with a major foreign power in an attempt to stimulate the American economy and prevent a recession. The reports cite French media news sources as having uncovered the proposal, in which RAND suggested that the $700 billion dollars that has been earmarked to bailout Wall Street and failing banks instead be used to finance a new war which would in turn re-invigorate the flagging stock markets." Nimmo notes: "A war between India and Pakistan may provide an ideal pretext for US involvement in the region." He quotes from Joseph and Watson: "Reportedly, the RAND proposal brazenly urged that a new war could be launched to benefit the economy, but stressed that the target country would have to be a major influential power, and not a smaller country on the scale of Afghanistan or Iraq. It now appears a brewing war between India and Pakistan is precisely the sort of conflict imagined by the RAND Corporation to stimulate the deteriorating American economy." Obama realises that the US economy is on the brink of disaster. He also has to realise that wars are no longer the answer. That doctrine has failed. We of the Third World too have to realise that by getting into wars we only play into imperialist hands. Obama should know that the free market economy has failed as utterly and surely as the Soviet Union's command economy failed that led to its collapse. In a last gasp, the Soviets too started a war in Afghanistan. Pakistan defeated them. What is not needed is the patch and paint job of 'bailouts' - better to invest that money in infrastructure, create more jobs and stimulate the economy. What is needed is a clear change of mindset, philosophy and doctrine. Banking is the fulcrum of capitalist economics. The fulcrum has cracked. Stapling the crack will only lead to a bigger disaster. Capitalism needs another fulcrum. Obama needs to craft a new socio-economic model and shift the paradigm, just as the Chinese did under Deng Xiao Ping by adopting the communist political system and the best of capitalist economics. Obama, of course, cannot do that - but he can do the opposite: keep the US political system and adopt the best of the controlled economy through proper regulation and oversight. Private enterprise and initiate will thrive, not stifle, no matter what the free marketers say. Think about it. You can laugh now, but this is what will happen in the end, just you wait and see. The writer is a senior political analyst E-mail: